Adversity

Another thought provoking article from the finance pages of Yahoo!, this time on the topic of rejection, although for my purposes here I suggest that the article could also be considered to be covering adversity in general.

When a system stops working, or Lady Luck simply deals you one of those long losing runs, how do we react? How do we deal with our bad decisions? Do we really learn from them as we say we do in our blogs and postings, or are we creatures of habit destined to repeat our errors?

I'm still learning. I've learned not to drink and trade, and I've learned not to trade when I'm tired. Discipline of that kind is one of the easier lessons to learn.

I've learned that it's better to specialise than to try and master everything, and I've learned how to accept that a trade isn't working and bail out with no regrets, whether the original trade goes on to win or not.

I've learned that stats and spreadsheets motivate me. I keep good records.

What have I not yet learned? My biggest problem is that I still have a tendency to overstake. If there's 5/2 on a coin toss, I lump on, to use the common parlance, with little consideration of Kelly.

"The truth is, everything that has happened in my life ... that I thought was a crushing event at the time, has turned out for the better," Mr. Buffett says. With the exception of health problems, he says, setbacks teach "lessons that carry you along. You learn that a temporary defeat is not a permanent one. In the end, it can be an opportunity."

The mention of health problems is a reminder that, however important investing and making money may seem, even the biggest loss pales into insignificance when compared with real life and death issues. Keeping everything in perspective is essential.