Taking our feelings out of the investing process is a very difficult thing to do. One way that we make it worse is to look at things we’ve done in the past and say “I shoulda sold that…”, or “I coulda bought that stock Uncle Fred recommended…” and especially “I woulda made so much money if I’d kept that stock….”.
These are killers, for a number or reasons. First, they make us take our eyes off the ball. We worry about what we could have done, instead of worrying about what we can do going forward. It also makes us doubt our competence when we look at all our mistakes. And it sets an emotionally negative tone, making us risk averse when taking risk might be the exact right thing.
I’ll tell one on myself. About 20 years ago I purchased some options for my personal account. I spent about $1,000 altogether. After six weeks I sold them for about $1,100 after commissions. So I made an okay profit of 10%. 10 days later those options were worth $10,000. For about six months after that I kicked myself “I shoulda hung onto them”, I told myself. But then one day I realized how fruitless that was. I realized that I might have kept them for another 10 days, made that 900% profit, and then been hit by a bus on my way out celebrate. Or it might have made me overconfident and it could have led to bigger losses. Who knows?
The future is unknowable, but at least it hasn’t happened yet. Worrying about permutations of the past? A waste of time. We definitely must learn from past successes and mistakes. But playing the coulda, shoulda, woulda game is just silly.