Jon writes about this on his blog https://novelinvestor.com/. He quotes Stan Druckenmiller “Every great money manager I’ve ever met, all they want to talk about is their mistakes. There’s great humility there.”

Investing is just a long series of decisions where some end in gains and others end in losses. If you’re doing it right, the gains outweigh the losses in the end, hopefully, by a large enough margin that your goals are reasonably satisfied. In other words, every investor makes mistakes. Those that don’t are lying. That’s the uncomfortable truth. Those that go on to be great investors, learn this through experience…and apparently love to talk about it. So what’s the benefit of constantly talking about their mistakes? For one, they embrace the inevitable.

Peter Bernstein writes about the importance of this realization and why it matters: The trick is not to be the hottest stock-picker, the winningest forecaster, or the developer of the neatest model; such victories are transient. The trick is to survive! Performing that trick requires a strong stomach for being wrong because we are all going to be wrong more often then we expect. The future is not ours to know. But it helps to know that being wrong is inevitable and normal, not some terrible tragedy, not some awful failing in reasoning, not even bad luck in most instances. Being wrong comes with the franchise of an activity whose outcome depends on an unknown future. The nature of uncertainty in the process makes being wrong inevitable because not only will you make mistakes, you can make the right decision and still lose money. So are you prepared for it? Survival is about planning for the inevitable losses in advance.

Following a few basic investing principles help with this.

Ben Graham introduced the idea of margin of safety decades ago as a way to embrace mistakes from the start. It’s as simple as leave room for error. He believed the possibility of being wrong should be factored into the price you pay for an investment. The idea is to pay a low enough price, so even if you’re wrong, you only lose a little. In general, survival is the only road to riches. Let me say that again: Survival is the only road to riches… The riskiest moment is when you’re right. That’s when you’re in the most trouble because you tend to overstay the good decisions.

When you combine it with diversification — spreading your money across multiple investments — if one turns out bad, it won’t be devastating.  That’s what diversification is for. It’s an explicit recognition of ignorance. And I view diversification not only as a survival strategy but as an aggressive strategy because the next windfall might come from a surprising place. You reap further benefits when you diversify. If some investments inevitably turn out worse than expected, the opposite could happen to others — some turn out better. In other words, you get unexpected opportunities. Not a bad consolation prize for survival.

Dan Mikulskis asks us on his blog realreturn.blog what really matters most in the volatile, uncertain and ambiguous environment of investing. Is it Better earnings models? More research? Using skilled managers? Access to deals? These things can and do matter, and fortunes have sure been made promoting these ideas. But for the majority of end investors, it’s often more fundamental (and basic) wisdom that has a bigger impact. There aren’t any secrets, some of the best advice is simple, but not easy.

Direct Attention: The world is noisy and our attention easily distracted to the wrong things, this can be bad. There’s always another macro forecast, a piece of economic data, a political event or an under-performing manager to take our attention. Most of this doesn’t matter in the big picture. Be intentional.

Measure what Matters: Returns, risk, and progress toward your objectives. Don’t get drawn into all the rest of the weeds too often. Be wary of measures turning into targets that aren’t fully aligned with your outcomes.

Accept Responsibility: The decisions you take will have an important impact on outcomes, but it takes a lot of work to rid decision of bias. Avoid the table-pounding guru with sweeping powers. Reward dissent, be accountable, divide & conquer, be truth-seeking, deploy diversity well. Warren Buffet says “The people who know the edge of their own competency are safe, those who don’t, aren’t”

Prepare for Uncertainty: The future will not evolve in nice straight lines as much as we might wish it to. You will lose money at some point and you will be unsure of what to do. Prepare in advance for these moments and manage your own future expectations. Pre-commit. Set yourself up to react confidently to both good and bad news. Peter Bernstein reminds us that the most important thing about risk is the ability to make decisions under uncertainty.