Investment Regret: How deal with it

Definition: Investment Regret: That horrible feeling you get when you know you made a big investing mistake.

How to Get Over It

The world of investing is really not all that separate from the wider world. Because of this, many of the same laws apply. For instance:

What’s in the past cannot be undone.

Think about it. Time only ever moves in the forward direction. Never backwards. Always forward. This is absolutely undisputable.

For example, if you were to fail a calculus class, how would that make you feel? Dumb or annoyed? Like you should have studied more? Those are all natural reactions. Similarly, when you buy an investment which loses half of its value, how does that make you feel? Dumb or annoyed? Like you should have looked into it more? Those too are natural reactions.

In both cases, regret is an inevitable, unavoidable outcome of an unfortunate event. What your brain is trying to tell you is:

That was a bad move pal. Don’t do that again.

– Your brain after you lose big.

The problem is that your brain still thinks it is talking to a caveman. Not the smart, savvy, capable, and modern person which you know you are. For this reason it thinks that the only way to make you learn is to make you feel horrible. Obviously you’ve got to show it that you know what’s up.

Navigating Investment Regret

Essentially, you only have two options once investment regret takes over: A) Wallow in a miserable spiral of self-hatred and loathing, or B) Pay attention to the regret, learn your lesson, and move forward better equipped than you were before.

What is the purpose of the regret? How can you incorporate the knowledge the regret is giving you going forward. Most importantly, what things are in your control that you can change the next time you decide to buy an investment?

It is even very possible that the regret is wrong. Maybe it was a fluke that things turned out so badly, maybe nine out of ten times you know things would have turned out wonderfully. It was simply that one time. In this case, you can simply dismiss the regret feeling outright.

George Washington did a great job of summarizing this line of thought when he wrote:

“We should not look back unless it is to derive useful lessons from past errors, and for the purpose of profiting by dearly bought experience.”

George Washington

Hopefully this can help someone learn from their mistakes and not be forever burdened by guilt, in life and in investing.

Until next time.