Mistakes tell you what you know and what you don’t know. Simple. Yes mistakes can be costly but let us examine the topic more objectively and then I’ll talk, or rather write, about a few that I have made as it relates to investing.
The word “mistake” often has a negative connotation. And yes, it is not good nor healthy to make the same mistakes repeatedly. However, much can be learned from mistakes if we change our mindset and remove the [negative] emotions we normally attach to them. When we “mess up” or make a mistake, our first response, especially as females, is to react negatively. And note, responding is different from reacting…that’s a different blog. Reacting, is not necessarily, totally bad or incorrect. When we realise that we are reacting we need to stop, vent and process the emotions in a healthy and safe manner and space. Afterwards we need to objectively assess what went wrong in order to not repeat the mistake.
I often tell my students this. When you get back an assessment in my Spanish class, where did you go wrong? Was it the question type that you didn’t understand? Was it that you understood the question but lacked the vocabulary? Is it that your understanding of the instructions was more perfunctory than plenary? Is it that you thought you knew how to conjugate the verb but it turns out that you really don’t know? The issue cannot be corrected unless an objective analysis is completed. It is commonsensical really; you can’t fix what you don’t know. Or as they say, knowing is half the battle. The reason you have to talk in a counseling session is that in speaking, the trained counsellor will be able to identify the issue(s) based on your verbal and nonverbal communication.
The same is true with life. Yes we ought to be careful who we tell our mistakes and our faults; but that aside, sometimes it is only after much introspection and objective deliberation with a confidante, that we are able to analyse the issue. Is it an issue of knowledge (information and know how)? Is it an issue of strategy? Is it an issue of timing? Is it an issue of execution? Is it an issue of poor planning? Miscommunication? Funding? Support? Whatever the issue is, no solution can be proffered if the problem remains unidentifiable. So process the situation, process the emotions associated with the mistake. Don’t discount them! It is actually helpful to acknowledge how you feel. In processing the emotions you heal and you clear your mental space to begin creating again. With that said, I am human and I have made a plethora of mistakes during my lifetime. However, I want to briefly enumerate some of the mistakes I have made while investing…
Lack of knowledge – yes it is good to get started but I’d advise you to get some knowledge before starting. Guys, I did not even know Jamaica had it’s own stock exchange when I started. Yes, it was that bad! I did not know the difference between trading and investing. In my mind the only way to make money was to buy stocks and hold them ad aeternum. Your investing or trading strategy must align with your goals! As such a great stock for me might be a horrible stock for you.
Over-diversification of my portfolio – A word I heard a lot was diversify. Don’t put all of your money into one stock or product, they said. Well, that is true but to a point. If you only have $5000, instead of spending $1000 on 5 different stocks, it is better to find one stock that can turn your $5000 into more than $5000. Then once you have more money, you can buy into different products and stocks and appropriately balance your portfolio. I am in the process of rebalancing my portfolio as we speak…I mean write.
Researching the market – As Gerald always tells our group…guys research the COMPANY, not the market! It is overwhelming to figure out everything about the market all at once. Start by looking at one company each time. Yes, you need to have an idea as to how the market is doing and how that company looks within the market. However, in order to maximize your gains in any one stock, you need to know all the details about that company. You also need to research the timing of reports. This helps you to know when to buy and when to sell.
I need a lot of time to research – Yes if you are looking to make gains in the short term, it can feel like a full time job. Studying the queue, reading the candlestick (I still can’t as yet), knowing every overt and covert detail, subscribe to every group and YouTube channel, and on and on and on and on. It can be stressful and overwhelming but you have to do the research. It is hard to narrow down your resource list but you must. Set aside small blocks of time each day to do the requisite research. The more you work at it the more adept you become. And then the same research that used to take you forever and a day to complete, is now something you can almost do in your sleep. Just as everything else, it takes practice and practice takes time.
I am not quite there yet. Much more for me to learn and understand. However, I am working assiduously towards mitigating against the mistakes made. So, what are you going to do differently this year? How are you going to learn from your mistakes? What are some of the mistakes that you have learned from?