Thanks for joining me for another edition of the SerenityThroughSweat blog. In the last few months, I’ve been reading more about investing (as well as watching old seasons of ‘billions’ on Prime video), and I wanted to share something that stuck out to me.
I came across this quote from Warren Buffet from his 2023 Berkshire Hathaway investor meeting. It reminded me of advice that my mom has been giving me for the last three decades.
“Thanks to the American tailwind and the power of compound interest, the arena in which we operate has been – and will be – rewarding if you make a couple of good decisions during a lifetime and avoid serious mistakes.”
From the investing standpoint, you want to maximize your upside potential, while also minimizing your downside risk. The problem is, those two things are often not possible simultaneously. Generally speaking, in order to have a large potential, the risk is inherently greater.
Making a mistake in that risk/reward equation, or in the way you evaluate an investment, will have monetary consequences. If you can learn to impartially evaluate those mistakes, to make sure they are small mistakes, not life changing ones, there are incredible lessons to be found.
If you can learn from those lessons and at the same time avoid the big mistakes, you are probably going to pretty well for yourself. In investing and in life.
Mistake in this context casts a very wide net. It can be moving your body incorrectly, and having a jui jitsu move not work. It can also be moving your body incorrectly, having a jui jitsu move not work while also tearing your knee apart. The tricky part about a lot of mistakes, is that it is hard to fully comprehend the potential outcomes before you are already committed.
Mistakes are an interesting subject. They are a critical part of the learning curve. Our brain needs to understand the wrong way to do something (the mistake) in order to properly wire in the correct process. Small mistakes create neuroplasticity and learning.
As long as those mistakes are not catastrophic, they are an important part of the process. (Doing the BJJ move wrong 5 times before getting it right the 6th, while avoiding that whole tearing your knee apart thing)
But what about mistakes of omission, or mistakes of substitution? What we’ve talked about so far is investing in the wrong company or moving our body in the wrong way. What about things we opt not to do, or things we should do that are replaced with so thing else?
We all know we should eat healthy and move more. Skipping your morning workout or walk and replacing it with idle scrolling would hardly be a “serious mistake” in the sense that Buffet or my mother cautioned about.
That kind of choice, (replacing healthy movement with idle screen time) certainly wouldn’t have the catastrophic effect of tearing apart your knee or drastically altering your family finances.
But, what happens when that small mistake becomes a habit. When momentum shifts from healthy choices to frivolous ones.
I’ll admit I’ve felt a bit stuck in this loop. Building momentum in healthy habits, only to falter back into less productive choices. What is the cost of these mistakes? Are there enough good choices and tailwind to stay ahead of the consequences?
The magic of compounding is dispassionate and directionless. It can work for you just as easily as it can work against you. How long before those small mistakes compound into a serious one?
Most small mistakes, especially in a first world country, are relatively harmless. They are also easily dismissed, and almost mindless. It is precisely these qualities that make them so dangerous. You ingest the poison without any immediate or significant consequence. By the time the dosage has built up it is too late.
As I write this on my phone, I know that the same device is a large source of my small mistakes. Rushing back for innocent seeming dopamine hits, while neglecting the things that truly matter.
Worse still, my limited ability to recognize this mistake. My occasional stumblings into a more mindful existence, leave me feeling ashamed and guilty rather than refreshed and relieved.
I know that this is a natural human tendency to focus on the negative over the positive. To be ashamed of the mistake rather than celebrate the recognition and correction of it. Again, a loop I am often stuck in.
But that’s the battle right. To identify those mistakes. To fight in order to shift the focus from the guilt to the mindful acceptance. To take advantage of the compounding and the tailwinds on good habits.
Avoid the big mistakes. Cut off the loop on the small ones. Establish habits that can take advantage of the magic of compounding. And, maybe find some serenity in the process.
Thanks for joining me. Stay safe and stay sweaty my friends.