In hindsight, the years spent in finance make up some of the toughest but fondest moments in one’s career. The highs and lows combined with the meritocracy dissimilar to any other industry make it a love-hate relationship for most. After a year off and experiencing a different field like development, more than ever I am thankful for this profession, its people, and most importantly, its lessons and applicability to the hard knocks of life.
1. Risk is relative to price
The risk of loss, be it in investing or in life, is relative to the price or worth of a given decision. If you join the party based on fear of missing out or being alone, don’t be surprised when the music stops, you’re stuck with a huge bar tab and a hangover of bad decisions. If you are acutely aware of consequences beforehand (e.g. drunk driving = jail) then protect your downside with hedges (e.g. get a “DD” aka Designated Driver).
2. Diversify your portfolio
With a plethora of choices available but limited resources, “asset allocation” is probably one of the most important considerations in life management. Don’t put all your eggs into one basket – set yourself up so when life throws a curveball at you, you aren’t completely wiped off your feet. It’s never a healthy scenario if you let one external variable be responsible for most of your returns or happiness. Don’t let any one thing be your everything.
3. Timing can mean everything
It’s like going to Trader Joe’s on a Sunday at 5pm or meeting Romeo in a time of change. If you get involved at the wrong time it’ll likely be an overcrowded or overly burdening experience and your exit, a stressful long one.
4. Forget sunk costs
Things inevitably change but knowing what’s in versus out of our control is important. If something has fundamentally changed, the time or money spent previously should be rendered irrelevant. Limit your losses by moving on and making space for something better. When one door closes, another opens.
5. Limit making decisions based on emotions
Psychological pressures make people make bad decisions and throw good money/time/effort after bad. Angry, scared, or under the influence, we often say or do many things we regret down the road.
6. No one likes desperation
In a tough environment when things aren’t going one’s way, the propensity to make foolish decisions is high. Forced to go shopping or dread the thought of being single forever, effectively standards get dropped and weaker terms are accepted. Know thy worth and remember the fiduciary duty you owe to yourself.
7. The “homeruns” are often messy and misunderstood
Complex/hairy investments, situations, or people (literally) can easily turn off the competition. Personally, special situations like these are much more interesting and worth my time/resources. The good-looking girl or guy at the bar knows they’re a hot commodity…yawn.
8. Create a set of values or principles to stick by
It’s in moments of immense pressure where we really see one’s character. As crazy as it sounds, being ethical and staying grounded is not so easy. The human mind is conditioned to suppress unpleasant memories and forget past lessons. The whole “just one fry” thing is dangerous and more often than not you’ll eat the whole Big Mac meal, steering you off course and in the opposite direction of the (fit) person you want to be.
9. Surround yourself with the right people
More obvious in the professional setting than not, one bad pup can be like polio – spreading and creating a toxic environment for everyone. Regardless of your strength as an individual, you are not immune to a constant surrounding of bad influence. Choose to deal with smarter people that are not just brilliant but exemplars of wisdom.
10. Do your best, have fun and enjoy the ride
We win some and we lose some. What builds character is not avoiding mistakes – it’s how you choose to think and act afterwards. Call me an eternal bull but I do think there’s always something to be won from any experience, mistake or not, laying the framework to continually be better.
If we put these 10 things into practice everyday, sure, we may all be better off but things would also be, frankly put, boringly efficient. It’s this irrational yet predictable nature in all of us that create opportunities, establish common ground with others, and form a rollercoaster-like world so fun to ride.
(Final note: If you had a big question mark on the title, please read The Perks of Being a Wallflower – a great read for all ages.)