How do you let go of decisions that turned out to be the wrong ones?

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Sidneyplace
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How do you let go of decisions that turned out to be the wrong ones?

Post by Sidneyplace » Tue Sep 03, 2019 6:56 pm

Hi. How do you let go of decisions you made that ended up costing you a lot of money or you missed out on gains you could have had?

We made a decision for our kids college funds that seemed to make sense at the time when everyone thought interest rates were going to rise. We took all their money out of bonds in January and put it into stable value since they have three years left until college. Who knew it would be a banner year for bonds? I am not so upset with my retirement money (which we don't really change anyway) but this is for my kids and it is eating away at me. That is tax free money and we are in a different position now and can't save anymore. There is nothing helpful about this type of thinking and I am grateful we saved what we did but I am struggling a bit every time I see bonds go up more and more. And now, deciding if we should put a little back. Any advice to look at it differently would be appreciated.

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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by livesoft » Tue Sep 03, 2019 6:58 pm

One easy way is to make so many bad decisions is that one gets used to it. I know that works because I'm not bothered anymore by bad decisions.
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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by fabdog » Tue Sep 03, 2019 7:10 pm

You made a call that you weren't comfortable with the risk of bonds, and moved into a more stable investment (which hasn't lost money, just didn't make as much) as you were only 3 years away from needing it. That's a valid decision. Perhaps not optimal in the very short run, but now that it's done see how it plays out

So now that bonds have run up quite a bit... you are tempted to move some money back... How will you feel if interest rates go up from here, causing a loss of funds before kids head to school... that would be a bad decision...

I have no idea what interest rates will do over the next 3 years, and neither do you.

It doesn't help to beat yourself up over it. What would help going forward is documenting when you make these changes and why, so you can look back and learn from past decisions

Mike

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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by ionball » Tue Sep 03, 2019 7:10 pm

Find someone else to blame, then it won't be your fault anymore. Perhaps you could blame the kids, or your boss who overworked you to the point that you could no longer think straight after work. There are many options, so be creative and have fun with it.

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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by shariron » Tue Sep 03, 2019 7:13 pm

Moving money that's needed in 3 years out of a potentially volatile bond market and into a stable value fund is a reasonable course of action and a common glide-path for college savings. Your decision was not unwise, and although the short term results were not in your favor, they easily could have been and still might be. The worst thing you could do is make a hasty change that you'll really regret. Trying to "make-up-for-a-mistake" usually leads to a disaster, and is completely unnecessary as you've done nothing wrong- your college fund is secure. Today's "I missed out on a couple points of yield" can become "I gambled on my kids college fund and lost" in an instant. Bottom line- no regrets needed, all is OK!

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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by stlutz » Tue Sep 03, 2019 7:14 pm

I think you need to better determine how to evaluate good vs. bad decisions.

What you care about is how much money you have to spend on the college education, not what happened to the portfolio holding in August of 2019.

The bond fund front-loaded returns into this year. The stable value fund will collect those returns over time. Over the period you're looking at (3-6 years assuming a 4 year education), the bond fund and stable value will probably return about the same. (Unless you sold a long-term bond fund to move to stable value--in that case the result will be different).

Check back again in 3 years to see if it was still a "bad" decision. It probably won't have been--at least to the extent that it will matter in any serious way.

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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by PhilosophyAndrew » Tue Sep 03, 2019 7:25 pm

OP, will you meet your objective for higher education funding? If your decision didn’t harm your family’s ability to meet that goal, then it was entirely appropriate for your family’s needs and was not a mistake.

By contrast, Bogleheads understand that allowing fear or greed to cause you to chase performance is a significant mistake. If you believe that any decision that does not lead to optimal gains was a mistake, then (1) you will drive yourself crazy and (2) you are in danger of letting greed cause to lose your way.

Andy.

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Sidneyplace
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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by Sidneyplace » Tue Sep 03, 2019 7:38 pm

This is all so helpful and insightful! Yes, fear and greed is getting the best of me. And yes, we'll see in the future what the real affect was. To the person who said blame someone else, that was hysterical! I am in the early part of my learning curve. I will keep reading and learning from all of you. Thank you.

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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by CoastalWinds » Tue Sep 03, 2019 7:44 pm

ionball wrote:
Tue Sep 03, 2019 7:10 pm
Find someone else to blame, then it won't be your fault anymore. Perhaps you could blame the kids, or your boss who overworked you to the point that you could no longer think straight after work. There are many options, so be creative and have fun with it.
This is genius! I can use this advice in a number of aspects of my life!

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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by scubadiver » Tue Sep 03, 2019 7:45 pm

If you have limited yourself to decisions that were only bad in retrospect, you're doing better than I am.

The trick is to recognize that you can't change the past, so focus your energies on being less of a schmuck in the future.

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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by Northern Flicker » Tue Sep 03, 2019 7:46 pm

We made a decision for our kids college funds that seemed to make sense at the time when everyone thought interest rates were going to rise. We took all their money out of bonds in January and put it into stable value since they have three years left until college. Who knew it would be a banner year for bonds? I am not so upset with my retirement money (which we don't really change anyway) but this is for my kids and it is eating away at me. That is tax free money and we are in a different position now and can't save anymore. There is nothing helpful about this type of thinking and I am grateful we saved what we did but I am struggling a bit every time I see bonds go up more and more. And now, deciding if we should put a little back. Any advice to look at it differently would be appreciated.
Sounds like you made the right decision to me. Just stick with the stable value fund now. If you are not in a position to save more, were you in a position to continue taking risk with intermediate bonds? Why would you be more able to bear the risk of bonds now than in January?
Index fund investor since 1987.

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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by 1789 » Tue Sep 03, 2019 7:46 pm

CoastalWinds wrote:
Tue Sep 03, 2019 7:44 pm
[quote=ionball post_id=4732570 time=<a href="tel:1567555854">1567555854</a> user_id=130317]
Find someone else to blame, then it won't be your fault anymore. Perhaps you could blame the kids, or your boss who overworked you to the point that you could no longer think straight after work. There are many options, so be creative and have fun with it.
This is absolutely the best advise :beer
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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by Gardener » Tue Sep 03, 2019 8:16 pm

livesoft wrote:
Tue Sep 03, 2019 6:58 pm
One easy way is to make so many bad decisions is that one gets used to it. I know that works because I'm not bothered anymore by bad decisions.
Agreed Livesoft. This has worked for me as well.

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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by Dottie57 » Tue Sep 03, 2019 8:22 pm

My late father told me to stop beating myself up about past decisions since you can’t change the past. He was and is right.

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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by chevca » Tue Sep 03, 2019 8:22 pm

livesoft wrote:
Tue Sep 03, 2019 6:58 pm
One easy way is to make so many bad decisions is that one gets used to it. I know that works because I'm not bothered anymore by bad decisions.
Darn it, beat me to it. :happy

Just make lots of 'em like some of us... you get used to it then.

But really, let it go... you can't do anything about the past.

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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by Mullins » Tue Sep 03, 2019 8:25 pm

I'd say the way to let regrets go, isn't easy, but it starts with to stop thinking about it. As long as you keep thinking about it, the feelings those thoughts generate will follow, and fester, and keep eating away at you. At some point it gets ridiculous because the amount of time feeling regret becomes larger in scope than the actual loss you might say... but we're capable of replaying the same tape over and over again and so we get real good at making ourselves antagonized many times over instead of just once.

So you make a choice to let it go by refusing to keep thinking about it and dismissing the thought when it comes. After a while it becomes an old memory. It's like going through the stages of grief.

You're at the next stage of that path by realizing there's nothing helpful about that type of thinking and searching for something you could do about it. You've probably extracted some lessons out of it so that was useful. Now take the next step which is to practice acknowledging the thought and then promptly turning your attention to something else.

Hope that helps.

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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by J295 » Tue Sep 03, 2019 8:31 pm

I care about faith, family, and friends. I’ve been lucky financially. When I have made financial mistakes, I just shrug and learn from it. I suspect I’ll make more in the future. But they will be from acting out of goodwill, and not from fear or greed.

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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by bluquark » Tue Sep 03, 2019 8:36 pm

stlutz wrote:
Tue Sep 03, 2019 7:14 pm
The bond fund front-loaded returns into this year. The stable value fund will collect those returns over time. Over the period you're looking at (3-6 years assuming a 4 year education), the bond fund and stable value will probably return about the same.
That can't be right. It implies that everyone who currently holds intermediate term bonds in a 401k should sell them all and buy stable value.

No, what just happened is the insurance companies' opportunity to profit, and they will take their profit instead of returning the capital gains to fundholders. In fact, even if they wished to return the capital gains, there is no practical mechanism to do so -- a promise to do that would cause a stampede of new fundholders after yields drop. In the end, stable-value funds behave fairly similarly to short-term bonds even though they are wrappers for intermediate-term ones.

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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by Vanguard Fan 1367 » Tue Sep 03, 2019 8:40 pm

The decision that you call "wrong" is one where people that I trust say something like it is pretty tough to predict interest rates.

I do like John Bogle's advice to have some sort of asset allocation for retirement funds that includes stocks and bonds but with both of those assets he doesn't recommend timing the market. I don't know what he recommends for college funds.

I am like another poster, I have made a bunch of bad decisions. I like to try to forget the past and today make the best decisions I can make. I appreciate a mentor suggesting that we learn from our mistakes, and I try to do just that.

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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by harrychan » Tue Sep 03, 2019 8:42 pm

1) Stop looking at how bonds are doing. It's irrelevant.
2) Do you still have sufficient funds to take your kids through college? If so, the gains were irrelevant.
3) Are you and your kids healthy? Everything else is irrelevant.
This is not legal or certified financial advice but you know that already.

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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by Sheepdog » Tue Sep 03, 2019 8:56 pm

I am an old f... who learned a long time ago and have advised here "do not invest assets which you will absolutely need in the next five years. Keep those assets safe." Why is that? Isn't it obvious? Sure, you may not gain possibly , but you can't lose what you cannot recover in time.
You did that.....you made sure you did not lose what you needed. You were correct. Please do not have regrets. Edith Piaf so beautifully sang that https://www.youtube.com/watch?v=fFtGfyruroU
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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by whodidntante » Tue Sep 03, 2019 9:00 pm

I stopped calling her.

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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by yangtui » Tue Sep 03, 2019 9:18 pm

Every time I make one I treat it as a learning opportunity. Knowing that I learned from it means that going forward I am now a better person. It is important to look at the aggregate results of all of your decisions. Chances are even with a bunch of big, and probably stupid, mistakes you are moving forward in life.

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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by SevenBridgesRoad » Tue Sep 03, 2019 9:20 pm

Sidneyplace wrote:
Tue Sep 03, 2019 6:56 pm
Hi. How do you let go of decisions you made that ended up costing you...and it is eating away at me...There is nothing helpful about this type of thinking...Any advice to look at it differently would be appreciated.
Our brains are hardwired to ruminate over past decisions. Natural selection, evolutionary advantage of learning from mistakes and all of that. Our ancient ancestors who didn't have this hardwiring didn't pass on their genes. But overdoing it is not helpful. And not just in financial matters.

Rather than just looking at this one decision that you regret, is there an overall approach to past decisions and rumination? Of course. There are any number of philosophical systems addressing the problem of over-thinking the past. I latched onto Stoicism years ago. If you haven't looked at Stoicism at least little, I'll bet it's not what you think. They had (have) a whole approach to the past that will allow you to live with greater happiness in the present. Look into any of Ryan Holiday's books on the subject, or William Irvin's "A Guide to the Good Life" (my favorite). Bogleheads are a studious bunch overall and a better way to deal with past decisions is worth a just few hours of your exploration.
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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by cherijoh » Tue Sep 03, 2019 9:33 pm

Sidneyplace wrote:
Tue Sep 03, 2019 6:56 pm
Hi. How do you let go of decisions you made that ended up costing you a lot of money or you missed out on gains you could have had?

We made a decision for our kids college funds that seemed to make sense at the time when everyone thought interest rates were going to rise. We took all their money out of bonds in January and put it into stable value since they have three years left until college. Who knew it would be a banner year for bonds? I am not so upset with my retirement money (which we don't really change anyway) but this is for my kids and it is eating away at me. That is tax free money and we are in a different position now and can't save anymore. There is nothing helpful about this type of thinking and I am grateful we saved what we did but I am struggling a bit every time I see bonds go up more and more. And now, deciding if we should put a little back. Any advice to look at it differently would be appreciated.
A good strategy (e.g., investing college funds more conservatively the closer your kids get to college) can yield mediocre or at least non-optimal results. Occasionally a bad strategy can lead to very good results (e.g., making a concentrated bet on a single stock that then takes off making you millions). When it comes to figuring out the market, you don't always get it right but you shouldn't beat yourself up if the strategy was reasonable based on the facts known at the time.

A truly bad decision would have been to decide to go 100% stock (or cryptocurrency :shock: ) because you were worried you hadn't saved enough and needed to make up for lost time!

I retired last year and had been selectively selling shares (and not reinvesting taxable dividends) for several years before my retirement. The purpose was to build up a cash stash to dampen sequence of return risk. I was (and still am) convinced that we are overdue for a major stock market correction. Clearly, in hindsight, I was premature selling the shares to bolster my cash cushion. But I'm not going to undo the decision and repurchase shares at a higher cost than where I previously sold them. That would be performance casing pure and simple.

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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by HEDGEFUNDIE » Tue Sep 03, 2019 9:37 pm

fabdog wrote:
Tue Sep 03, 2019 7:10 pm
You made a call that you weren't comfortable with the risk of bonds, and moved into a more stable investment (which hasn't lost money, just didn't make as much) as you were only 3 years away from needing it. That's a valid decision.
Vanguard Fan 1367 wrote:
Tue Sep 03, 2019 8:40 pm
The decision that you call "wrong" is one where people that I trust say something like it is pretty tough to predict interest rates.
Northern Flicker wrote:
Tue Sep 03, 2019 7:46 pm
Sounds like you made the right decision to me. Just stick with the stable value fund now. If you are not in a position to save more, were you in a position to continue taking risk with intermediate bonds? Why would you be more able to bear the risk of bonds now than in January?
Here's the problem. The OP did not adequately consider reinvestment risk (i.e. the risk that future bonds will pay lower interest), and that risk blew up in his / her face. The OP should have learned more about the risks of bonds both ways before making this decision, and should have chosen bonds that matched the time horizon of the investment, in this case, probably intermediate term bonds to match when the kids would start college.

So yes, water under the bridge and everything else. But let's not pretend that there is nothing to be learned from this episode.
Last edited by HEDGEFUNDIE on Tue Sep 03, 2019 9:39 pm, edited 1 time in total.

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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by BradJ » Tue Sep 03, 2019 9:38 pm

There’s good decisions/choices, and better decisions/choices.

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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by Doom&Gloom » Tue Sep 03, 2019 9:45 pm

livesoft wrote:
Tue Sep 03, 2019 6:58 pm
One easy way is to make so many bad decisions is that one gets used to it. I know that works because I'm not bothered anymore by bad decisions.
That's my method: practice, practice, practice.

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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by rich126 » Tue Sep 03, 2019 10:18 pm

While I have a tough time letting a lot of stuff go when it comes to money and investing it seems easy. Not sure why. I just try not to do the same mistake multiple times.

I have tougher times letting go of job decisions, dealing with people and wishing I had done things different when I was younger.

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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by finite_difference » Tue Sep 03, 2019 10:31 pm

ionball wrote:
Tue Sep 03, 2019 7:10 pm
Find someone else to blame, then it won't be your fault anymore. Perhaps you could blame the kids, or your boss who overworked you to the point that you could no longer think straight after work. There are many options, so be creative and have fun with it.
In jest, absolutely!

It requires great skill to be able to acknowledge responsibility for your actions without becoming trapped by the resulting negative or positive outcomes.
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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by jbuzolich » Tue Sep 03, 2019 10:34 pm

How do you know that the decision you made was the wrong one? Sometimes the decisions we make, even if that single decision had negative outcomes, were precisely the decisions we needed to make in order to have the best foundation for successful long term outcomes

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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by typical.investor » Tue Sep 03, 2019 10:40 pm

Sidneyplace wrote:
Tue Sep 03, 2019 6:56 pm
Hi. How do you let go of decisions you made that ended up costing you a lot of money or you missed out on gains you could have had?

We made a decision for our kids college funds that seemed to make sense at the time when everyone thought interest rates were going to rise. We took all their money out of bonds in January and put it into stable value since they have three years left until college.

When you made the decision, surely you considered your move could turn out wrong. And surely you concluded that the possible downside was acceptable at that time. If you were ok with it then, why are you not ok with it now?

And if you are in the habit of making moves with downsides that are unacceptable, then I suggest reconsidering how you make decisions.

In any case, you have neither worst case to the down side (rates spiked) nor best case to the upside (rates dropped). Isn't that what you set out to do? And if you accomplish your goal, then why the regret?

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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by Northern Flicker » Wed Sep 04, 2019 1:50 am

Here's the problem. The OP did not adequately consider reinvestment risk (i.e. the risk that future bonds will pay lower interest), and that risk blew up in his / her face. The OP should have learned more about the risks of bonds both ways before making this decision, and should have chosen bonds that matched the time horizon of the investment, in this case, probably intermediate term bonds to match when the kids would start college.
Stable value fund rates generally are much stickier than money market funds. It of course depends on the crediting rate of the stable value fund, but if it is a competitive rate, there is nothing wrong with re-allocating from an intermediate bond fund to a stable value fund 3 years before the funds are needed. SVF’s are bond fund alternatives where an insurer absorbs the volatility, which can go either way at a point in time.

Perhaps half could have been left in the bond fund for another couple of years for the last two years of college funding, but a decent stable value fund is a fine choice. The bond fund would be managed for a relatively constant duration even though the time horizon is getting shorter.

The end of the story is not yet writ.
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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by Northern Flicker » Wed Sep 04, 2019 1:53 am

That can't be right. It implies that everyone who currently holds intermediate term bonds in a 401k should sell them all and buy stable value.
Most 401Ks disallow moves between stable value funds and bond funds to prevent precisely such arbitrages.
Index fund investor since 1987.

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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by rossington » Wed Sep 04, 2019 3:14 am

What was the actual difference between your stable value and bonds? I can't see how it can actually be that significant to be stressed about.
"Success is going from failure to failure without loss of enthusiasm." Winston Churchill.

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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by NotWhoYouThink » Wed Sep 04, 2019 7:07 am

Since the money is for college, consider it an educational expense. You learned something.

We make decisions with the information we have a the time. Now you know more about predicting interest rates, but you haven't really been harmed.

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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by Rus In Urbe » Wed Sep 04, 2019 7:15 am

Great thread....I learned many NEW techniques for forgiving myself for past decisions (LOL find someone else to blame!)
----not that I spend a lot of time kicking myself frankly.

I have a wise friend who taught me to say this:

That was then. This is now.

That helps me a lot whenever I find my thoughts veering into things I cannot affect or control.

Here's to keeping ourselves on the positive straight and narrow! :beer RUS
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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by livesoft » Wed Sep 04, 2019 7:34 am

One of the great things I learned when involved with youth sports was that a lot of the decisions made are the wrong ones. It was always amazing to me that after a bad decision leading to a loss that no one seemed to care and life went on just as cheerily as ever.
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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by pennywise » Wed Sep 04, 2019 7:35 am

I find that some behavioral finance reframing has helped me the most when pondering how my past decisions have turned out: as long as I know that I made the best choice I could GIVEN WHAT I KNEW AT THE TIME I am ok. That takes into account available information, logical thought processes and of course the emotional component.

OP, I'm sure that you used all three of those factors to try to optimize one of your most important financial decisions that would affect your highest priority, your children's future.

So be at peace with yourself knowing that you did not act in any way other than the one that you thought at the time would help your children the most based on what you knew to be true and felt to be optimal.

We cannot predict the future and we can't change the past, we can only do the best we can in the present.

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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by SchruteB&B » Wed Sep 04, 2019 8:37 am

rossington wrote:
Wed Sep 04, 2019 3:14 am
What was the actual difference between your stable value and bonds? I can't see how it can actually be that significant to be stressed about.
This. How much did you REALLY miss out on?

And I would never call this decision “wrong” to begin with. Did you perhaps not make as much as you could have? Ok. But you got some return on money that is needed very short term. That is not wrong. I know families that lost SIGNIFICANT money in their 529s in 2008 just when their kids were starting college because they were too heavy in equities. That to me is a true wrong decision. So to answer your question: I let go by realizing it really isn't that bad and some have made far, far worse decisions!!!

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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by cashboy » Wed Sep 04, 2019 7:31 pm

Sidneyplace wrote:
Tue Sep 03, 2019 6:56 pm
How do you let go of decisions you made that turned out to be the wrong ones?
my approach on how to let go for ANY 'wrong' decision is:

do NOT try to let go of them.

the harder I attempt to let it go, the greater its hold on me.

instead, when the thought about the decision/choice/etc. arises
i am honest with myself about it,
I acknowledge it,
i often laugh to myself or shake my head side to side wondering to myself: what was i thinking when i did that....
then i move on.

how odd a life it would be if every decision we made was the right one.
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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by bearcub » Thu Sep 05, 2019 1:35 am

I keep 7 to 10 years money safe. I don"t care if stocks or bonds soar. I sleep well anyway.

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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by 3feetpete » Thu Sep 05, 2019 8:10 am

Just because a decision doesn't stand the 50/50 hindsight test doesn't mean it was a bad decision. Many decisions can be good, well thought out decisions that just don't work out because there are too many unknowns. Just move on and know that as long you continue to make thoughtful decisions the odds are that everything will work out.

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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by Sandtrap » Thu Sep 05, 2019 8:16 am

How do you let go of decisions you made that ended up costing you a lot of money or you missed out on gains you could have had?
I have enough of these to last lifetimes. Huge ones and little ones.
Water under the bridge. I can't do anything about the past. So I don't.
Do I forget? Absolutely not. Remember every one in detail. (If not, DW will remind me as she has better memory).

Mistakes of the past are our guideposts for the future.
Know them well.

j
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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by TallBoy29er » Thu Sep 05, 2019 8:48 am

I'd be buried under an Everest size mountain of bad decisions if I let them accumulate. Make enough of them, and it becomes part of your daily routine, and you can easily move on.

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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by Bronko » Thu Sep 05, 2019 3:44 pm

I used to visit a great cigar bar where the owner left a stack of 3X5 index cards and a sharpie in the mens room. The walls were cork board. He encouraged patrons to write advice, wisdom, jokes, and poems then stick them up. The owner would occasionally pull many down to make room and change the pace.

One card was never removed and remained in the place of prominence.

"In this life you do what you do and you learn to live with it"

I can still picture the block letters and curled edges of that index card.
Never let a little bit of money get in the way of a real good time.

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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by JoeRetire » Thu Sep 05, 2019 3:46 pm

Sidneyplace wrote:
Tue Sep 03, 2019 6:56 pm
How do you let go of decisions you made that ended up costing you a lot of money or you missed out on gains you could have had?
You learn that decisions are made all the time, both good and bad, and that once made, they cannot be unmade.

I found that, at least for me, that understanding got easier as I got older.
Very Stable Genius

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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by aristotelian » Thu Sep 05, 2019 4:58 pm

It's never a bad decision until you sell and lock in the loss. Yes, the price of bonds has gone up, but the yield has gone down. It is quite likely that your stable value fund will outperform given enough time. So, I would reject the premise that you made a bad decision, and stay the course.

(I am currently lagging badly in a small position I took in small value. It would definitely be a bad decision if I sold now and locked in the loss. I will stay the course and hope it goes back up. That said, I am not sure I will double down and buy more any time soon!)

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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by bluquark » Thu Sep 05, 2019 5:49 pm

aristotelian wrote:
Thu Sep 05, 2019 4:58 pm
It's never a bad decision until you sell and lock in the loss.
I know somebody who went all in on Nvidia stock and is HODLing onto it on this reasoning. That just compounds his original bad decision in service of a psychological trick -- in reality every day held onto this asset is a day taking uncompensated risk.

(Of course, choosing bond duration mismatched to liability, although it's also objectively a mistake IMO, is not a bad decision of anywhere near the same magnitude. Nor am I telling you to drop your small value tilt, which in my opinion is not a bad decision even if it happened to underperform recently.)
It is quite likely that your stable value fund will outperform given enough time.
I think this is a misunderstanding of stable value funds. They behave like money markets -- any asset that can't lose principal has to, regardless of how it's constructed. (Analogy: your bank savings account is constructed from long-term mortgage lending, but also behaves like a money market.) And in a bond bull market, short-term instruments underperform.

Stable-value funds are incredibly complicated mystery meat that I'm not sure I fully understand myself, though. And I suspect that's deliberate.

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Re: How do you let go of decisions that turned out to be the wrong ones?

Post by aristotelian » Thu Sep 05, 2019 8:10 pm

bluquark wrote:
Thu Sep 05, 2019 5:49 pm
aristotelian wrote:
Thu Sep 05, 2019 4:58 pm
It's never a bad decision until you sell and lock in the loss.
I know somebody who went all in on Nvidia stock and is HODLing onto it on this reasoning. That just compounds his original bad decision in service of a psychological trick -- in reality every day held onto this asset is a day taking uncompensated risk.

(Of course, choosing bond duration mismatched to liability, although it's also objectively a mistake IMO, is not a bad decision of anywhere near the same magnitude. Nor am I telling you to drop your small value tilt, which in my opinion is not a bad decision even if it happened to underperform recently.)
It is quite likely that your stable value fund will outperform given enough time.
I think this is a misunderstanding of stable value funds. They behave like money markets -- any asset that can't lose principal has to, regardless of how it's constructed. (Analogy: your bank savings account is constructed from long-term mortgage lending, but also behaves like a money market.) And in a bond bull market, short-term instruments underperform.

Stable-value funds are incredibly complicated mystery meat that I'm not sure I fully understand myself, though. And I suspect that's deliberate.
My understanding is that the principal would be held constant along with a guaranteed interest rate, say 3%. If interest rates fall, bond values increase so his stable value fund looks bad. However, if he is still getting 3% yield while bonds are now yielding 2%, his fund will catch up.

I don't think there is any way you can equate HODL with NVDA to staying in a stable value fund when interest rates are crashing. The first is a bad decision to take uncompensated risk, as you said. The second is a sound strategy that happens to be underperforming due to unlucky timing.

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