During the dot com boom and crash there was a time when Stanley Druckenmiller lost $3 billion in six weeks. When asked what he learned from this debacle, he answered, “You asked me what I learned. I didn’t learn anything. I already knew that I wasn’t supposed to do that.”
How like our own experience is that?
We all do it, possibly not to the $3 billion level but there is the tendency. Druckenmillers’ totally honest comment is proof of Mitch McConnell’s idea that “There is no new lesson in the second kick from a mule.”
Many very successful investors claim to not try to find only winners. They know that’s at best unlikely. Instead they go through a rigorous process to find potential value. The best of them claim they do it to be less wrong.
It is if there is much in the way of excitement and emotion involved.
Money affects us each differently. Losing happens to the best, but catastrophic losses should not. If you have not lost money you needed, you have trouble being objective. People who lost meaningful amounts tend to avoid the situations in future. Those who have not, especially those with a long record of winning, seem not to know.
Perhaps it like being a painter, houses, not canvas. You’ll be afraid of heights until you fall off a ladder. After that you will respect heights and take care to avoid the problem.
That’s how experience works. Never let a good mistake go to waste.
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