Gratitude vs Regret

My daughter and I were driving to school this week and something she said got me thinking. She mentioned that she wished she was “better at a certain activity” I can’t remember what per say. But I do remember telling her that regret wasn’t typically helpful. Rather gratitude was a better fuel for describing things. IE “I’m glad that I’ve now got the opportunity to grow and get better.” As we were driving, I had an analogy that came to mind that I thought I’d share.

I told her that rather than wishing she was better at something or regretting her performance in an activity, she should be grateful for the opportunity to grow and progress. This I said was like looking out the windshield of a car. Conversely, I told her that regret is the equivalent of looking in your rearview mirror while driving. It may be okay for split second, but if you do it for longer than that, you are probably going to crash. As always, this conversation caused me to start thinking about how the analogy fits for an investor’s journey also. You’ve heard me say before that the seven deadly sins are probably the greatest danger to client capital because so many poor decisions are rooted in one of them! As I thought about my paradigm of trying to pit gratitude against regret this came into focus again.

Sadly, if you focus on regret, it tends to grow. The odds of you making further poor decisions increase because you are distracted rather than focused. It is almost as if regret crowds out the ability to see clearly. You can regret that you didn’t save more, or that you made unfortunate investment decisions etc. But it isn’t productive in the present. Rather than focusing on the rearview mirror, look out the windshield and think through how a certain event was a learning opportunity that better informs you for the road ahead and your greater financial plan and wellbeing. I’ve noticed over the years that those people that I looked up to were not perfect, far from it. They made plenty of mistakes, it’s just they didn’t dwell on them. If I asked for advice, they would think back to an event in life and use that as a parable for a lesson they learned that I could apply. What I also discovered is that no one has an “undefeated” record of financial success in all situations. Everyone has had moments that got “the better of them.” The difference is what they did from that point forward.?

One of the key ways I can think of that can help you continue to learn and grow is by simply starting with your investment policy statement. If you are reading this and are thinking “I’m not sophisticated enough to have one of those,” I’d encourage you to think again. You in fact are sophisticated enough to have one and you should start today by jotting down what you know and believe and how you want that to influence your investment decisions. Furthermore, you should pass that on to your kids and grandkids. A word document will do, but just start. Many of you have probably heard me talk of a person’s “intangible balance sheet” before as a way of capturing life experiences and stories etc. A policy statement is similar, but meant for cataloguing and collecting the principles which guide your investment philosophy and life. Jason Zweig in his commentary on Benjamin Graham’s book The Intelligent Investor called it an “Investment Owner’s Contract.” Whatever you call it, start collecting what you believe and how you want those principles to direct your efforts and desired outcomes. Below I’ll share some brief thoughts on how to begin sketching an initial outline.

Introduction

• Start by capturing what first principles drive your investment philosophy. ?I’d also encourage you to be humble enough to capture mistakes that you made in the past and what emotion, feeling or belief drove those mistakes. Over time you’ll have something which you can revisit, challenge and adjust where necessary, but at least you’ll have a plan from which you can adjust.

Always and Never List

• Make a list of the actions you will commit to doing monthly, quarterly etc. and take those actions.
• Beside this list make another one stating what you will never do. IE having certain thresholds for spending, allocations to a certain sector, measuring portfolio growth in terms of what is required to meet your goals etc.
• Make sure you walk through this with your spouse or whoever is going to inherit your assets down the road.

Shiny Objects

• Make a list of all the shiny objects that you have been pitched over your life and what the common traits that they all had. What were the red flags? These things are all helpful from a generational perspective.

My reason for bringing all this up is that often investors tend to choose investments and advisors based on performance and feeling. What I’ve discovered is that they know very little about the advisors they partner with or the companies they invest in. This is why partnering with someone who is transparent about what they believe, how they make decisions and why, is so vitally important.

I’ll leave things here for now, but again, I would encourage you to look through the windshield and not become focused on the rearview mirror. Start that process by working on beginning, or perfecting and passing on your investment policy statement. It will be a gift to your family.

Please reach out with questions as they come up and remember that I’m wishing you and your family continued Truth, Beauty and Goodness on the road ahead!

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