Market losses and mistakes are two completely different things

You are close friends with someone and the friendship intensifies to a point when you are both spending all your free time together and are in a kind of bubble.

- DEVINA MEHRA

You think that it is becoming more than a friendship and you ask the girl (or guy) if they feel the same way. Instead of answering, they disappear from your life. So now you have lost the friendship as well. You are kicking yourself for having asked the question in the first place. (The stories you hear as an unofficial agony aunt!)

Coming to the drab realities of markets. You made an outsized investment which went down 60% and then went up a hundredfold, which meant a 40 times return.

Or, you had a chance to invest in Tesla or Apple a couple of years after their IPO and did not. And as everyone and their kid knows, they went on to be multibaggers.

Now, the question is, which one of these was a mistake? You'd be surprised to know that it is likely the second one.

What are the mistakes you have made in your investing career? This is an oft-asked question. When I think about the mistakes in my investment career, there are three aspects to consider. One involves the evolution of the investment analysis and process to come to better decisions. The second has to do with a better understanding of hardwired human biases and thinking fallacies, and the devising of methods and strategies to get rid of those. The third is even more fundamental. It is about the definition of a mistake, and it holds for all aspects of life.

What do you call a mistake? The answer appears obvious, but it is not.