Sunday, September 25, 2011


Yesterday, I framed some of my investing habits as being conservative in nature. Perhaps the word I should have used was defensive. Dividends? Defensive. Cash positions? Incredibly defensive. It's like girding for a sharp decline in equity prices. Or it's the nature of my character.

Sport provides some good examples of this defensive character, especially since there are usually very clear defensive and offensive roles. The last time I was a leading goal scorer on a soccer team I played for was second grade. Since then, I have largely played defense, very rarely in the midfield, and almost never as a forward/striker. It is much more satisfying to me to be that stalwart last line and endlessly stymie opponents during a match. Playing youth basketball, I want to think I was a capable shooter and didn't shy away from offense due to a lack of skills (and I did finish sixth in the Junior Olympic free throw event back in sixth grade!), but I much preferred the defensive end. Rebounding and shot-blocking were more fun or maybe I just enjoyed shattering dreams one blocked shot at a time. This trend existed even while playing video game basketball. My brother and I used to play NBA Jam together and he would shoot and go for inbound steals and I camp under the basket and rebound and take advantage of the game's generous goal-tending policy.

It is much more than just about sports. I used to hate being wrong. It was more than just needing to know all the answers and getting the best score. It was also about the more subjective elements of the world. Which route is fastest, what's the best policy to address social problem XYZ, who will win competition ABC. I could be incredibly defensive, illogically so, even after being shown I was wrong about something. The need for rightness probably fueled much of the defensiveness when I was younger.

As one grows up, life generally becomes increasingly less structured, the decisions made are more open, and there are less clearly obvious right and wrong answers or choices to make. It goes from clear right and wrong to a gradient of good and bad. Even that is terribly gray as the desirability of each outcome is subject to the different interests of all affected parties. In many cases, some decisions are clearly better than others, but that insight often only exists in the clarity of hindsight. And even then, it is sometimes only clear which choice should not have been made, not necessarily which choice should have been made. Not only is it necessary to accept that one (meaning me) can make a decision where there are no good outcomes, but that even when there are, I will still make the wrong choice from time to time. Not wrong in an absolute sense, but the idea that there would have been a generally better outcome that could have been reached. This acceptance has only been possible through the making of many, many mistakes over the years. The acceptance of these mistakes was the first real step in letting go of my inherent defensiveness for it is near impossible to learn and make a better decision the next time if I already think my decision is the best possible one. This is very basic maturation, but tremendously helpful with the next basic step: risk taking.

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