My favorite pair of dress shoes are cordovan, which is a deep reddish tone. I love these shoes because it’s a color I don’t see around too often, but also because I ripped them the first day I wore them.
That’s right, I ordered them online from Ecco and excitedly laced them up when they arrived. I wore them the next morning when I was heading on a business trip, only to acquire a huge scratch on the top of the shoe which I noticed when I arrived at the hotel that evening.
While some may have gotten upset, tried to get them fixed, or even just ordered a new and unblemished pair, I immediately fell in love with these shoes because they were a constant reminder that things just don’t need to be perfect.
Just like the book Beautiful Oops taught my daughter that messing up a drawing wasn’t a very big deal, these shoes taught me that being imperfect is ok.
You see, I’m a recovering perfectionist. I’ve dealt with anxiety, depression, and all sorts of bad habits due to my crazy unrealistic expectations for myself and those around me. The good news is that positive habits like meditation have helped me to accept who I am and what’s happening around me. I’m good enough.
As investors, we often have unrealistic expectations for our analysis, for our process, and for our returns. We expect our calls to always be accurate. We expect our process to be flawless. We expect our returns to be stellar.
And when any of those things aren’t perfect, we can take it pretty hard.
I settled on the name Market Misbehavior for this blog because I loved the idea that we’re all misbehaving in some way as investors, making decisions that are often not in our best interest. I liked the alliteration as well.
The second name on my list? “The Imperfect Investor.”
“One of the toughest realizations for novice investors is to accept the fact that they will be wrong. A lot.”
When so many investors are overconfident and make poor decisions because they’re sure they will be right, reminding investors of their imperfection seemed like a good choice.
But perfection is an illusion.
In her fantastic book Big Magic: Creative Living Beyond Fear, Elizabeth Gilbert describes the allure of perfectionism:
The most evil trick about perfectionism, though, is that it disguises itself as a virtue. In job interviews, for instance, people will sometimes advertise their perfectionism as if it’s their greatest selling point–taking pride in the very thing that is holding them back from enjoying their fullest possible engagement with creative living. They wear their perfectionism like a badge of honor, as if it signals high tastes and exquisite standards.
But I see it differently. I think perfectionism is just a high-end, haute couture version of fear. I think perfectionism is just fear in fancy shoes and a mink coat, pretending to be elegant when actually it’s just terrified. Because underneath that shiny veneer, perfectionism is nothing more than a deep existential angst that says, again and again, “I am not good enough and I will never be good enough.”
I’ve worked with many investors who have found success both inside and outside of the financial industry. One of the toughest realizations for novice investors is to accept the fact that they will be wrong. A lot.
The way you keep your sanity as a person is by accepting your imperfection as a human being.
The way you keep your sanity as an investor is by recognizing that you are hardwired to make imperfect decisions. The good news is that you’re also very capable of recognizing that fact, adjusting your own expectations, and learning how to make better decisions.
That’s how an imperfect investor becomes a successful investor.
RR#6,
Dave
Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. Please see the Disclaimer page for full details.