Risks and Regrets

Actor David Cassidy's last words are “I've wasted too much time in my life”

It's scary to realize it too late in life. As many of us spend all day aimlessly playing with our phones, this waste of time will become more common.

Regrets are dangerous liabilities because their final costs are often hidden for years or decades. Decisions that are easy to make in the short term tend to be more costly in the long run.

Daniel Kahneman (Daniel Kahneman) once said that to be a good investor, one important quality is an accurate perception of one's future regrets. If things aren't going as you'd expect, you need to understand and get the direction right.

Regret is the best definition of risk.

Risk isn't how much money you might lose. It's not even how you feel when you lose it—over time, many painful experiences become valuable lessons. The real risk is that you may regret it years or decades later.

Jeff Bezos (Jeff Bezos) once described his decision to launch an online bookstore, Amazon in the mid-1990s: “The framework that made the decision incredibly easy was how to minimize regret. Predict yourself to be 80, then look back on your life, and minimize your regrets. When you're 80, you don't regret trying to participate in this thing called the Internet; it's a very important thing when you're 80, you don't regret trying to participate in this thing called the Internet.”

“But I know what I'd really regret is if I never tried it from beginning to end. I know it would definitely bother me every day. So when I think about it this way, it's a very easy decision.”

Most people probably don't have the kind of personality that allows him to come out quickly from a project you've worked on your whole life but failed to do, but Jeff Bezos does. What's important is that he knows that if Amazon fails, he'll be very upset; but by the age of 80, he'll laugh with no regrets and satisfaction because he tried.

On the other hand, most ordinary people are capable of being less great investors, but people don't want to be bad investors. Warren Buffett (Warren Buffett), who once commented on the failure of the hedge fund Long Term Capital Management (Long Term Capital Management), said, “It's foolish if you risk getting something you don't need, it's foolish.” I also agree with this statement. “YOLO” You Only Live Once's life is short is also one A good reason not to do something”

We spend a lot of time trying to quantify risk when the goal is just to figure out whether you will or won't regret it. The anonymous Twitter account FedSpeak writes, “The purpose of life is to experience things you'll be nostalgic for later.” This is the definition of no regret.

Morgan Housel Feb 9 2023