There was an article I wrote a while ago entitled “Why a $20,000 loss was the best investment I ever made.” The gist of it was that a number of years ago I invested $30,000 on a stock tip from none other than famed “guru” Jim Cramer. Although this wasn’t a tip from his TV show. This one actually came from one of my best friends who actually worked closely with Cramer on a daily basis. He told me about a stock that Cramer was very bullish on that he’d likely be announcing his show. Apparently Cramer was going to put a nice sum into the stock from his Charitable Trust that he talks about on Mad Money. So here I am thinking that this thing’s going to pop. Obviously you all know the end of the story. I got clobbered on the stock and took a $20,000 loss on it. But the funny thing is that even though at that time the loss was substantial, it just made me angry. I didn’t feel sad. I didn’t feel helpless. I didn’t feel that I’d be duped. I just felt angry at myself for having put that much money into something I knew nothing about. When the anger subsided I actually breathed a sigh of relief. Relief because I knew I’d never make that mistake again. I knew that from that point on every investment decision I would make would be my own and that I would totally own up to it. I also knew that I’d never just put money blindly into something without at least having some semblance of an idea of what I was getting into. So in this particular case I think the mistake I made was incredibly valuable. Which brings us to:
Dumb decisions you know are wrong
This is pretty much my disclaimer. What I’m trying to focus on today are “normal” mistakes. The kinds of mistakes we make in our daily personal and business lives. I’m not talking about egregious errors or rampantly breaking the law. I’m pretty sure that murdering someone is wrong and that most people know its wrong. I don’t count murder as the kind of mistake you make, learn from, and then your life is better. And yet, even in high circumstances like that there are exceptions. But for the sake of this piece, let’s just agree that with common sense we can pick off the normal mistakes from dumb decisions people know are blatantly wrong.
Fool me once
The reason I write “fool me once” is because these are our lesson learning mistakes. Most of these mistakes are valuable or at least teach us to do better next time. These kinds of mistakes start at a very early age. When you’re a little kid and you try crossing the street without looking both ways or don’t pay attention to traffic lights, what happens? The parent you’re with (hopefully you’re with) stops you from doing so and explains to you why it’s wrong. The hope is that the next time you cross the street you’ll look both ways or pay attention to the traffic light. Through our lives we make these kind of mistakes that range from petty, small mistakes to much larger ones. Sometimes we learn the hard way that drinking too much alcohol gives us headaches the next day. What do we usually do? We avoid alcohol for a while. We make the mistake, we learn from it. In bigger instances? What about a divorce? Is the entire relationship a mistake? Of course not. But in hindsight, most people who have been divorces picked up on many instances where the relationship went wrong. They hopefully learned from these errors and work to improve on them for the next relationship. There are countless examples of these but the “fool me once” mistakes are what I consider to be ” valuable.”
Fool me twice
Like the saying goes, “fool me once, shame on me, fool me twice, shame on you.” For many mistakes in our lives, they are correctable. For example, if you bought the farm on a penny stock and got your ass kicked, maybe you don’t buy penny stocks anymore? But if you do the exact same thing again? Well, that’s where you deserve the beating you take. That’s an example of a bad mistake. A bad mistake is the kind where you haven’t altered anything to try and correct the first mistake. But let’s get this straight too. Not all mistakes are correctable on the first try. We evolve as people and so do our preferences and actions according to our evolved selves. Just because one relationship didn’t work out, doesn’t mean the next one will. Just because one employee didn’t work out for you doesn’t mean the exact same one wouldn’t 10 years later with your new self. But there are also some mistakes that are just flat out obvious that you simply DO NOT repeat. What makes life interesting and makes or breaks you is the interpretation and actions taken after mistakes.
Sometimes even mistakes are OK if it’s worth it
The true challenge in life is balancing your mistakes. For example, we know that drinking too much alcohol is wrong, yet we still do it every once in a while. But that’s the key right? Every once in a while it’s OK to get a little tipsy, relax, unwind, and lose yourself for a bit. But doing it every single day? Well that leads to some potentially harmful things. In other words, each mistake must be weighed, calculated, and analyzed so that you can figure out its potential effects. Some mistakes are OK to repeat. Others can change and ruin an entire life. It’s those those who make the right decisions after these mistakes and those who manage these mistakes that will come out ahead.