For Investors it is inevitable to experience losses along the way. These losses might be very heavy and hard to take. You will feel awful and desperate. You know you have made a terrible mistake and you want to correct it right away and eliminate the losses. Finally, you will realize that the money is gone and there is no way to undo what had happened before. The feeling from such an event is generally shock and shame. Those feelings might blur your perceptions, judgment and decisions. Investors might suffer, even feel depressed and fall into a cycle of self-criticism.
But it is important that we show ourselves compassion and benefit from the mistakes made. One of the most important skills to learn, is to pick yourself up and carry on when you stumble. This kind of resilience is essential for investing and wealth building success, an area that delivers occasional hard knocks to even the most experienced investors.
If you want to improve anything for the better, be compassionate with yourself. If we continue to berate ourselves about the past, after we’ve taken the steps to make it right, we actually undermine our ability to establish better habits. The important thing is to change our faulty behavior. Just having compassion for our human failings without taking corrective action keeps us on a steady course of disappointment. This requires a perspective based on realism. Do not forget your mistakes but do not dwell on them. All the great investors, including Warren Buffett, Peter Lynch, George Soros, John Templeton among many others, recognize that they made numerous errors in their careers. But these mistakes never defined them. Self-compassion helps us to deal with the occasional failure. It has to do with accepting a degree of self-doubt, some negative self-evaluations and a bit of adversity as part of life.
When you understand this and you think clearly again, made the necessary corrections and improvements, you will recover the loss and start making profits again. After learning from your errors, you probably will do well. Shame and regret drain our willpower but willpower is exactly what you need to make positive changes.
Sven Franssen