It’s What We Don’t Notice That Matters

Delta_Air_Lines_B767-300_N130DLThis last week I was flying from Minneapolis to Houston. I had a 9am flight. Due to timing in getting the kids to school, my wife dropped me off at the airport at 6am. I figured I would grab a bite to eat, read the paper and do some work. But I found out the 7am flight to Houston had quite a few seats available, so I decided to take that flight instead. Boy, am I glad I did.

Bad Luck

We often notice when something unfortunate happens to us. I notice this when traveling. “My plane always seems to have a mechanical problem…if only I had taken that other flight” or “I always get singled out for TSA’s secondary screening.” This becomes our perception, resulting in faulty logic, because we don’t notice the times when everything goes according to plan, and the times this happens to other people. Lately I have been trying to notice what I had previously not noticed to see if it is really me, or my faulty perception.

And Then I Noticed

It started at 6am in the TSA Pre Check line. Bags going down the X-ray machine and we are in line to go through the metal detector. The guy in front of me goes through it, a second later it beeps. Oops, sorry says the agent, he has been randomly selected for additional screening. I walk right through. That could have been me. It wasn’t. So it does happen to others and not just me. And to be truthful, it hasn’t happened much at all this year…ever since I started noticing.

Airport delayThe 7am flight I got on took off on time and arrived to Houston 20 minutes early. It was perfect. Very pleased with my decision. Later that day I looked up to see how the 9am flight went (that was my original flight), expecting to see all was well since weather in both cities was perfect for flying. Low and behold it was delayed over 2 hours. In the past, I have managed to pick the “wrong flight”, this time I picked the right one.

Noticing what would have been is kind of fun, but it requires effort. However, it may be worthwhile so we can get a more accurate assessment of our decision making abilities and understand just how random things are in the world. While sometimes it may feel like the world has it out for you, the truth is unfortunate things happen all the time to everyone. We just don’t notice.

Noticing Our Investment Decisions

LargeJournal_Acadia_Green_75x975_029353We can take this one step further with investing. Most investors do not buy and hold. We buy, sell, buy something else etc… We notice how we do with the securities we own at the time we own them. But what about the security we just sold, how did that perform 6, 12, 18 months later? Was it a wise decision? Many times we don’t know because we don’t take the time to look. Yet, that information can be very helpful in identifying decisions that were good and those that weren’t. Once we identify our successes and mistakes, we can then see if there are any detectible patterns in what causes the success/mistake. That is how we can get better.

Some suggest an investment journal. Writing down when you buy a stock, why you bought it, when you sold it, why you sold it and then track its performance over some period(s) of time. That will take effort and time. But it will also provide you with information necessary to study your investment behavior, learn from mistakes and improve your decisions over time.