Are you making the same mistakes over and over?

Hi,

Hope you had a good and smooth weekend and are full of energy for this week.

Saturday we relocated from Vilnius to Sevilla on a two flight hop. I like flying because since there is no internet I can’t really work so I get good time to read and think.

My thinking time mainly revolves around my business and life progress which basically means assessing my mistakes and trying to learn from them.

When we make a mistake, or there is something we do not like, for some reason our first reaction is always to blame all other circumstances than our own, even if we know better.

Do you recognize this?

This is the Blame Bias, and it is a notorious one more than you think. It can sabotage our progress a great deal both in investing and in life.

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Growing up as a child, if I would blame someone else for something, for example one or both of my younger brothers, my mom would always remind me: when you point your finger at someone, always remember that there are three fingers pointing back at you!

Skateboarding, programming and building startups, not to mention investing, have given me a healthy relationship with the concept of failing and seeking the lessons in order to improve and do better next time.

If we are self aware and in calm and healthy states of mind and surroundings, it is easy to not start blaming external factors and seek the lesson.

Often we don’t have this luxury and as usual emotions get the best of us to everyone else’s annoyance, depending on our character.

So step one is of course to learn to look at ourselves with introspection first. Most adults know this.

What many of us do not know though, is that often we think we learn the lesson, but in reality we don’t!

Quite often our introspection is superficial and the lesson doesn’t etch itself in us to start with and we proceed to cause a similar situation. Because the situation is similar and not identical we don’t see the pattern.

Other times, usually when it is a quite painful lesson, we do get it. For a while.

Unfortunately our brains operate on the principle of seeking pleasure and moving away from pain. This applies to memories as well. If you find yourself nostalgic of past times, this is your brain forgetting the bad parts.

Unless we are very self aware, we move through life repeating the same patterns just in new disguises. Changing behavior is not easy and our decision making is the same, unless we work hard to upgrade ourselves.

This way of progressing is painfully obvious in our trading and investing. Even more if we can’t keep our emotions in check to make our decisions.

Do you feel like the market is treating you badly and you are unlucky? What decisions have you been making that led you to being involved in the bad market event?

Identifying our decision patterns when we invest is super important. This allows us to uncover mistakes and learn from them. Instead of blaming the market or bad luck.

But how do we ensure we do not repeat the mistakes in the future?

I teach my students to log all their trades including their emotional states.

Additionally I recommend boiling down their decision making to written rules based on the criteria the assets and markets they invest in need to meet.

If we uncover our successful patterns and turn them into recipes we can reuse, we vastly minimise the chance of repeating past mistakes simply because we don’t recognise the new similar situation.

To a profitable life with less mistakes of the same sort.

Have a good one,

Chris

Originally posted 6th November 2023 on ElliottSays.com

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