As Humans, everybody has their own regrets in life, Some of them are really intensive and related to major failure or loss in life and some regrets are related to miss of opportunity, As you know that investing is a game of nerves, and investors have their regrets with their investing strategies and experience. With so many regrets in investors’ life, there are two very common regrets I have heard in my life from even greatest investors of all time.
These regrets are apparently very contradicting, the best way to describe them is using very two very common phrases used frequently among investors. First is ‘Opportunity loss is better than the actual loss‘ and the second ‘Opportunity loss is greater than the actual loss‘. Sounds insane right? No, lets get deeper.
Some people are really loss averse, or have incurred a greater loss in their investing life, commonly the result of Buying High and Selling Low, but wait, isn’t the statement “Buying High Selling Low” vague ? Yes it is, How do you know if there is a high in asset prices or low in the same, there are obviously some tools to judge but even if the tools indicated assets price to be under valued, it can be a high, and prices can go down. The Actual term should be buying overpriced assets and selling out of fear when the prices go down. Remember rising prices do not mean it is going to rise forever and falling prices do not mean it is going to fall forever. Buying just because asset prices are surging is buying High and selling just because its a plunge is selling low, these mistakes are regrets, and in this scenario opportunity loss is better than the actual loss.
Some people just can not deal with uncertainty, its Human tendency to act paralyzed whenever faced with greater uncertainty. Investing in a game in which most of the value comes in future and future is really uncertain, no one can reliably predict when will the next boom or bust or when exactly any asset price is going to rise or fall. The regret here is missing the opportunity, and that is because of in-action on the right time, even Warren Buffet had regretted not buying Wal-Mart on the right time and price. A much wiser way to deal with such situation is to make best educated guess or estimate on the future performance of assets, totally eliminating uncertainty is impossible, but it can be minimized to a greater extent.
Tell us about your regrets in Investing Experience by leaving a comment on the post, let others know what could be done to avoid mistakes in future.