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Not losing money is a critical part of the stock investing process. Successful investors say it in different ways, but the point is always the same.
Warren Buffett has often said – “Rule No. 1: Never lose money. Rule No. 2: Never forget rule No. 1.”
But he has also said – “If you don’t make mistakes, you can’t make decisions.”
You see, the problem is not in making mistakes. The problem is in not knowing when you have made a mistake and thus not learning from it.
Unfortunately, openness to making mistakes and recognizing them is beyond most of us. Why is that?
Two reasons. The first, our society’s phobia for making mistakes, something that begins at school, where we learn to learn what we are taught rather than to resolve problems. We are fed with facts, and those who make the fewest mistakes are considered to be the smarter ones. So we learn that it is embarrassing to not know and to make mistakes. We feel bad when we find out we have made a mistake or do not know something.
[Read more…] about Stock Investing is a Humbling Game