Dogs don’t fly and birds don’t run. When they do, bad things happen. This invaded my thoughts as I attempted to avoid hitting the carcass of a rather large dead bird in the road. After gaining control of my vehicle, the question hit like those falling bricks onto the cab in that Dodge Truck commercial. What was the bird doing in the road? How did he get hit? After all, he has wings! It was actually quite disturbing.
Unlike the multiple animals I come across on back country stretches, this particular road kill, or sky kill, was memorable. I tried to avoid the hints and implications this had for investing philosophy, but was unsuccessful. We, like that bird, are psychologically designed to exist at a certain level. A level that has evolved over time. Deviation from our comfort or natural zone results in bad events.
Most people enter into an investment with a certain duration in mind. Maybe it is to hold onto the asset for the next 5 years, or even to stay vested until a specific profit is reached. Inevitably, life happens and we find reasons (or they find us) to change, ever so slightly, the original plan. The best decisions are made in advance of the situation requiring them. It is difficult to look at a profit or loss encountered and make a clear, well-thought-out, spontaneous decision that is better than its thought-out predecessor.
Maybe that bird saw something exciting on the ground and said, “Let me check out that crushed squirrel.” Maybe it was something else dead whose smell attracted its senses and he was deciding to swoop down really quickly and get a bite. Deadly.
There’s Still Time!
Learning our limitations is the surest way to expand them; ignoring them only tightens their grip. In order to consistently grow as investors we must invest in knowledge, and in those who’ve walked before us with success and with failure.
The next time I see a bird flying low I think I’ll blow the horn or do something to take away whatever excitement he thinks is on the ground. Controlling risk is controlling the situation we willingly invite into our lives. We don’t have to recklessly come down off our perch of understanding and invite disaster.
Unlike that bird, you and I still have time.