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We've all made mistakes andwe'll keep on making them.We know right away with some ofthem, and later with others. Personally,I worry most about the onesI never hear about but know theymust exist, somewhere.
Mistakes are all a matter of perception,like the classic tree fallingin an uninhabited forest that mayor may not make a sound. A foiledor frustrated intent requires a witnessto declare it a mistake, even ifit's our own conscience making thecall sometimes. And there must bean unintended consequence to passthe judgment of a mistake, even ifsubsequent events allow you towithdraw the "m" word.
For instance, if you buy a stock orfund and it goes down, you decideyou've made a mistake. Before youcan sell, it goes up, and now youroriginal decision appears not to be amistake. Or suppose your brokerbuys the wrong equity, which goesdown, and the one you asked themto buy goes up. That's a big mistake.So both intent and consequencesmatter in the definition.
FOLLOWING LEADS
Money matters seem to attractthe mistake label with alarming frequency,probably because it's soeasy to keep score of financial upsand downs. Thanks to the informationage, time can be a factor in ourdefinition; if we wish, we can knowright away the results of an economicaction.
Another subtler aspect of weighingthe use of the appellation mistakeis that it's often comparative.And the media, if not our friendsand family, are quick to tell us ofany errors of commission, andsometimes worse, omission. We'revulnerable in both directions. It's awonder we ever get any of ouraffairs right. Thank goodness muddlingthrough still works.
It's that drive to get things rightthat seems to accomplish greatthings. Being oblivious to failuremarks those who acquire and thosewho effect change, even if the successrate for great things is quite low.
No one can determine who willdo what or when that will make areal difference, in this case, on thefinancial horizon. But we must payattention to any telling signs thatmight give us a precious, temporaryedge, rushing to the hottest technologyfund or initial public offering.
COMPETITIVE DRIVE
That psychological drive thaturges us toward competitive successand away from mistakes forms partof the herd mentality and part ofthe genesis for economic cycles. Allthings financial fluctuate because ofthe weather, governmental action,and many other forces. But all areaccentuated by our tendency tooverreact and jump on the bandwagon.That's why Graham, Buffett,and the other pundits insist the bestadvice is to act against the herd.
My advice:
It's easy for the few to say so afterthey've captured lightning in a bottleand made their fortunes whilewe're wondering what to do withour IRAs and 401(k)s. Considering most people's trackrecord, if you are ever given achoice between smart and lucky,pick lucky. Until then, play it smart,keep saving, and muddle on.
Jeff Brown, MD, CPE, a partner
on the Stanford Graduate
School of Business Alumni
Consulting Team, teaches in
the Stanford School of Medicine
Family Practice Program. He welcomes
questions or comments at jeffebrownmd@aol.com.