I went on my friend Bill Brewster’s the business brew pod to talk about the aftermath of the spirit loss (and, surprisingly, a lot about Sustainable Aviation Fuel). I’ll be honest: I have not relistened to the pod, but after Bill and I hung up I had two thoughts:
While I am a card carrying member of the process over outcome anti-resulting fan club, the simple math of expected outcome which works so well for casino owners making millions of time-tested positive expectation bets per year requires adjustment when used by an investor making only a handful of custom wagers over the same time period. We will never have the perfect information and unlimited betting opportunities of the MGM grand.
The only solution that works for me is to keep the size of any individual binary bet below my pain threshold (a capital loss big enough to make a real difference). This raises the question as to whether making these 0.25-1.0% bets is worth my time. It's still yes for favorably priced CVR's which pay back multiples of cost if successful, but it generally stops me from spending time on arbs that would collapse significantly if broken. (I'll run in front of a steamroller for $20 but not for a quarter).
I am retiring in 3 months with just enough money so I am in a far different position than you are. However what you are talking about, is controlling our emotions instead of them controlling our behavior. It makes us better people as well as investors.
Andrew…You know much more than me about investing but if you ever need anyone to talk to about mental health game / psychological part of investing or chat about doing investing and family stuff, just know you can reach out. Have a good one ✌️and congrats on the little one 🥳
While I am a card carrying member of the process over outcome anti-resulting fan club, the simple math of expected outcome which works so well for casino owners making millions of time-tested positive expectation bets per year requires adjustment when used by an investor making only a handful of custom wagers over the same time period. We will never have the perfect information and unlimited betting opportunities of the MGM grand.
The only solution that works for me is to keep the size of any individual binary bet below my pain threshold (a capital loss big enough to make a real difference). This raises the question as to whether making these 0.25-1.0% bets is worth my time. It's still yes for favorably priced CVR's which pay back multiples of cost if successful, but it generally stops me from spending time on arbs that would collapse significantly if broken. (I'll run in front of a steamroller for $20 but not for a quarter).
I am retiring in 3 months with just enough money so I am in a far different position than you are. However what you are talking about, is controlling our emotions instead of them controlling our behavior. It makes us better people as well as investors.
You are a really nice person Andrew!
Andrew…You know much more than me about investing but if you ever need anyone to talk to about mental health game / psychological part of investing or chat about doing investing and family stuff, just know you can reach out. Have a good one ✌️and congrats on the little one 🥳
Andrew, thank you for talking about investment setbacks. Only great investors do that, e.g. Buffett does it as well.
I like to read your old investment ideas on VIC. How can I search for them?
Fantastic post, thank for being open and honest I will keep this on my desktop to reread every so often.