No one likes to be wrong. No one likes to make a mistake investing and lose money. But it happens. Have you learned from your mistakes?
Everyone makes investing mistakes, even the most successful investors. Warren Buffet is considered by many to be the greatest investor of our times. He has made mistakes. In an interview with Jeremy Hobson on Marketplace.org, he explained one of his big investing mistakes. He invested in a company named Dexter Shoe. He paid $400 million and the company went to zero.
The important point is to realize that failures and errors are a part of investing. Not every investment will do well. Do not strive for perfection. You want to aim for more successes then failures.
How do you do this? One way is to learn from your mistakes. Take time to analyze what went wrong. Can you see a mistake in your planning? Were you greedy? Did you not properly allocate your funds?
Some things are out of our control. The financial crisis of 2008-2009 is one of them. Other things we could have done differently. This is where you learn from your failures and improve your performance.
One thing investors fail to take into account is their emotions. Perhaps you bailed during the financial crisis. Understandable but costly. But now you know your level of comfort with volatility. You can reconstruct your finances going forward.
You may choose to diversify to less stock. You may choose to use an advisor, or trusted mentor, who can encourage you to stay the course when volatility occurs. You may choose to lock your money into an investment that will discourage you from bailing.
Maybe you were too impatient. The more you encounter adversity the more you learn to weather it patiently. Experience is a great teacher and leads to a lot of wisdom. We all want ideal market conditions. It is the adverse conditions that teach us the most and hone us into better investors.
Another thing mistakes do is open up new opportunities. One investment may fail but helps you to see a better and new investment. Perhaps you are sitting on cash from your last mistake. Time out of the market may allow you to step back and find a better stock investment.
Mistakes can be painful. Learning from them can make you a stronger investor. Plus, mistakes can provide you with new investing opportunities.
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Investing $10K in 2014 (Sandra's Investing Basics)