Just heard a podcast between Mark Howards and a chess master talking about investing in terms of chess.

In both, you have to make sacrifices in order to be a good player.

First it’s obvious. You have to take risks and you might lose money on your investment when you invest.

However from what I’m hearing it goes much beyond that.

For example if someone is doing DCA, there is still risk but it’s for the most part mitigated and there is really no decision making.

I think the more difficult part is, making risky decisions that might not turn out to work in my favour.

I will be wrong

So for one thing it’s easy to logically understand that I will be wrong with some of the judgment and decisions I make.

It’s another thing when the outcome actually turns bad and not getting upset over that.

OR, not getting so fearful that I’d rather not make a decision or go in half-ass because I’m scared.

What I got out of the podcast episode was, if I’m sure about a judgement, then go for it.

Don’t risk everything but on the other hand don’t be too timid.

Be okay with the fact that I might be wrong, anticipate the possibilities but take the necessary risk so in case if I’m right, I’m rewarded appropriately.

The risk of “wrong”

Another thing I’ve come to realize after hearing this episode is, the risk of being wrong isn’t just monetary.

There’s also the hit on confidence.

Why did I do that? That was stupid. I should’ve never done that.

But I need to look more carefully.

I did make the decision after contemplating and with my experience, knowledge, and information at the moment, it was the best judgment and decision I could’ve made.

So what if it was wrong?

A bad outcome does NOT mean bad decision.

And I should review the decision and see if I can do better next time, but I should also applaud myself for making a decision and taking a risk.

I think what will really help as well is journaling on all my bigger decisions, which I’ll be doing in this blog.

I already have kind of for my long term theses but I think I’ll write down even more detailed maybe down to each trades so I won’t have as many regrets and also I can learn better from my previous decisions.

Also bad outcomes make me doubt whether I really know anything, and project in the future that I might keep making incorrect decisions.

But as my experience and knowledge grow, the quality of decisions and success rate will definitely improve.

Sleep well with the decisions

This is also the difficult part but I need to learn to sleep well with whatever decisions I’ve made.

Trust my decisions and don’t let fear or doubt get in the way too much.

If I can master this, that would probably make me a great investor in the long term.