I have recently started investing (my time) in value investing. The journey so-far has been amazing, not because i am going to make tons of money but being acquainted to some of the greatest minds and amazing knowledge one gets acquainted with.
This post is about one of the key lessons in value investing "Importance of avoiding failures". As i believe this learning has far reaching applications beyond investing.
Most of us believe it is success which is important and is the only path to change one's destiny. I believe that it is more critical to avoid failure / making mistakes to achieve your destiny.
The above quote says it all, know where are you going to make a mistake and avoid it. Such a simple thought but amazingly effective.
One of the key things my firm's Partner advised me during a personal interaction after my promotion was avoid making failure.
How should one use this in investing, it is not always important to emphasize on "return on capital" more critical is return of capital. Make sure your capital/principal is secure only then one should look at returns.
If this simple rule is clear one will avoid investing in enticing real estate deals, dubious financing schemes which promise phenomenal returns in short period.
In life know what irritates/dangerous for you and try avoiding it. If peak traffic irritates you trying starting a bit early, if you are used to a sedentary lifestyle try getting out (to be frank i need to start doing this myself). If i look back at my life only thing i have been consistently doing to not achieving success but avoided failures. May be i played it safe but i am happy with my present state.
A little digress from the topic: [There is an interesting mental model called "contrasting affect" or boiling frog affect. If changes are minimal across time then your mind will not be able to detect it and will get adjusted to the change without a revolt. A frog if put into a boiling water will jump right out of it, but if it is put in a water at room temperature and if the water is heated gradually with very minimal increase frog never notices the gradual change leading to its death in the boiling water.
I will try to use this to get up early and start exercising let's see how this works. The target is to get up early by 10 minutes for first week and then by 20 minutes for next week and so on. Will keep you updated if this works, hopefully it should work.]
I will end this post with this : When someone interviewed Michelangelo on how did he make such a beautiful creation "David". He replied " I simply removed what is not david". It is not always the right way to strive for success it is extremely important to avoid mistakes.
P:S : I will try to keep up to my earlier promise of regular updates.
