Better Decision Making

The insidious impact of regret

I enjoy reading Vishal Khandelwal who writes at the intersection of investing and psychology. He wrote a note to "Regret", an emotion I was well acquainted with as an investor. If your investment was good, you didn't buy enough and if it was bad, you bought too much.

Regret can negatively impact decision making in multiple ways:

◆ having made mistakes the fear of regret causes us to stop making decisions (regret aversion)

◆ having missed an opportunity, it creates FOMO and we jump on the next idea without enough thought

Regret aversion is exacerbated by hindsight bias - mistakes look obvious after the fact and we blame ourselves unnecessarily.

But the great thing about investing is that every day brings you a new opportunity. You are continually making decisions, which has a number of benefits:

◆ you can build a process to measure your decisions

◆ you learn from your mistakes and improve

◆ you have to play forward (you can't dwell in the past)

◆ good decisions compound and you can look at the long-term

...and these lessons can be applied to all decisions 

https://www.safalniveshak.com/dear-regret/

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