Sometimes You Win, Sometimes You Learn
Earlier this year, I interviewed J.L. Collins. During our conversation, I told him about one of the biggest investing mistakes I have ever made.
When I was just 18 years old, I invested all of my money into a penny stock.
Spoiler alert: I lost all my money.
The interesting thing was how J.L. responded to that fun little story. He said, "If you had done well in that trade, you probably would have lost a lot more money."
That one stuck with me.
What he was basically saying is a timeless lesson that I have learned over and over and over again. Sometimes you win, and sometimes you learn.
Why Your Mistakes Are Not the End of the Storyโ
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Many times, we see our failures as some of the worst things that could have possibly happened to us.
Maybe you had a business that failed. Maybe you had an embarrassing moment at work that you still replay in your head.
Maybe you made an investment that lost money. Or maybe you got into credit card debt and it took years to climb out.
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โThe reality is that sometimes you win, and sometimes you learn.
Think about what J.L. meant. If that penny stock had doubled, the lesson would have been the wrong one. I would have learned that gambling works.
And I would have kept doing it, with bigger and bigger amounts of money, until the market taught me the real lesson at a much higher price.
A small loss early can be the cheapest tuition you ever pay.
Here is what that looks like with real numbers. Say you put $1,000 into a speculative trade and it drops 80%. You now have $200.
To get back to $1,000, that $200 has to go up 400%. That is the brutal math of big losses.
Now say you take the lesson instead and put that same $1,000 into a boring index fund. At 8% a year for 40 years, it grows to about $21,700.
Same $1,000. One path teaches you to chase. The other teaches you to wait.
Those who learn from their mistakes are the ones who are successful in the long run.
Those who take their mistakes and turn them into a source of anxiety stay stuck. They stop investing. They stop taking any risks at all. And that keeps them stagnant for the rest of their lives.
A mistake is only a loss if you walk away without the lesson.
Why We Hide From Our Mistakes
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Most people do not want to look at their mistakes. It feels better to close the brokerage app, stop opening the credit card statement, and move on.
But ignoring a mistake does not make it go away. It just guarantees you will pay for it again.โ
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Money mistakes are also oddly private. People will tell you about their best stock pick at a barbecue. Almost nobody tells you about the one that went to zero.
That silence makes everyone feel like they are the only one messing up. You are not.
Every successful investor you have ever heard of has a list of expensive mistakes. The difference is that they studied theirs.
So the goal is not to feel bad. The goal is to get something back for what the mistake already cost you.
Ask yourself three questions. What happened? Why did I make that decision at the time? What would I do differently next time?
If you can answer those honestly, the money you lost starts working for you instead of against you.
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โHow to Actually Learn From Your Mistakes
So how do you make sure the lesson sticks? Here are a few things you can start doing today.
1. Do not make the same mistake twice. The first time is tuition. The second time is a choice. If you paid 24% interest on a $5,000 credit card balance, that is about $1,200 a year gone. The goal is not to never mess up. The goal is to never pay that same bill again.
2. Learn from mistakes that are not yours. Warren Buffett has said something along the lines of, "It's good to learn from your mistakes. It's better to learn from other people's mistakes." Every friend who bought too much house, every coworker who cashed out a 401(k) early, every investor who went all in on one stock is a free lesson. You do not have to pay for it yourself.
3. Keep a running list of your mistakes and what you learned. Open a note on your phone. Write the date, what happened, what it cost you, and the one rule you are taking from it. When you are about to make a big decision, read the list first.
4. Read often about the cons and mistakes people have made. Read about frauds, bubbles, failed businesses, and investors who blew up their accounts. The patterns repeat. Once you have seen how a scam or a bad trade usually plays out, it becomes much easier to spot the next one before it gets your money. A guaranteed 20% a month return, a stock pushed hard on social media, a deal you have to decide on today. Those are the red flags you only recognize after you have read about them.
None of these are complicated. But almost nobody does them.
Most people either ignore their mistakes or let them haunt them. Very few people take the time to write the lesson down and use it.
That is the difference between someone who keeps losing money the same way and someone whose mistakes eventually become their edge.
Hit reply and tell me about one money mistake that taught you something. I read every single response, and I might share a few lessons (anonymously) next week.
Sometimes you win.
Sometimes you learn, and that is how you win the next time.
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