The other day I was struck by the fact that the finance industry, probably more so than others, is wholly intolerant of those who make mistakes. Anyone in the industry who makes any sort of public mistake is absolutely lambasted.
Witness Tom DeMark and his 1929 crash call from a couple of years ago. Witness John Hussman and his funds’ travails in recent years. Even Warren Buffett has been trashed for his underperformance recently.
These are the guys who are pushing the boundaries. These are the guys who are trying to innovate. These are the guys who are actually trying to do something of value with their careers. And for this, they are persecuted.
“A life spent making mistakes is not only more honorable, but more useful than a life spent doing nothing.” -George Bernard Shaw
And because they have been so lambasted for their mistakes, it has compelled a huge majority to shun any sort of trying to accomplish anything in the markets at all. This is really the sole reason why passive investing has become so incredibly popular with both retail and professional investors alike in recent years.
Passive investing is the apex of untrying. It the ultimate form of abandoning any sort of personal risk or responsibility. It is the perfect answer for those paralyzed by their fear of failure. And to an industry that has become terrified of making any sort of mistakes, it’s become a clarion call.
“I realized that every time I had a loss, I needed to learn something from the experience and view the loss as tuition at the College of Trading. As long as you learn something from a loss, it’s not really a loss.” – Tom Basso
Now I’m all for limiting the mistakes we make in the markets. This is an extremely important part of any successful methodology. At the same time, I applaud those who, despite having failed and paying the social price for it in the process, persist in trying to accomplish something of value.
Because where is the value in spending all of your time and capital desperately trying to avoid making any sort of mistake at all rather than actually trying to accomplish something?