Throwing Good Money After Bad

AKA 'In for a penny, in for a pound.'

AKA 'In for a dime, in for a dollar.'

AKA 'escalation of commitment.'

AKA 'sunk cost fallacy.'

If you can overcome it, you are well on your way to becoming one of the most successful people of all time.

Because to err is human. What really screws you up, is the mistakes you keep making. The ones you keep making because you make them.

There's an army adage I think that goes 'if it doesn't work, double it.' and this seems to be in a way our default intuition for success. You succeed through iterations, rather than adaptation.

The army says a lot of stuff I like, like 'if it's stupid and it works, it's not stupid.' there's an adage I can get right behind, but really, escalation of commitment is most probably fucking your life up.

My experience increasingly persuades me that success is actually made up of decisions, much more so than effort or skill or talent. Luck must always get it's due, genetics for example are pretty much luck on your part as are your circumstances and environment. But seeing as we can't control luck, lets just humbly acknowledge its role as the biggest contributor and focus on what can be controlled - decisions.

You are an investor, you categorically always have something to invest. You don't have to be rolling deep cash wise because you have time attention and energy in your pocket. Indeed time is the most precious resource you have because it gets spent whether you make a decision or not, where money can sit in a bank account for a long time before inflation and bank fees can erode it. You can sit on money, not time.

So having said that, I'm going to illustrate the principle in a conventional 'investment' sense, world of finance stuff and then translate it to the far more relevant to everybody type of investment - people.

So an investor buys a portfolio of shares and hangs onto them for a year. After a year they can sort their portfolio into piles - 'winners' and 'losers'. The winners pile consists of share that performed well, that is they appreciated in value, plus paid dividends to an extent where their current value exceeds the purchase price by a rate greater than inflation - you are wealthier with respect to these stocks. Your loser pile consists of stocks that either depreciated in value, failed to pay a dividend or simply didn't pay out or appreciate enough to make it worth your while investing in them.

What does this investor do? Well they're a rookie, an excited mom-or-pop from the millenial years of internet adoption/online brokerage. So they feel good about their winning stocks, which they sell and realise the profits and feel good about themselves. And they hang onto the losing stocks hoping that they will turn into winners by say - next year.

In other words, over time they crappify their portfolio, eating their profits and retaining their losers. The investors that over the long run end up wealthy do the exact reverse, they cut the losers from their portfolio and retain the winners. Under the simple premise that the best (but not guaranteed) predictor of future behavior is past behavior.

Now flip over the page and talk about people. It translates almost directly, your portfolio is actually just everybody you spend time with. Some of your friends will prove solid, reliable, encouraging, kind, generous, courageous, enthusiastic, energising, beautiful, honest and understanding.

Some of your friends will prove to be anxious, flakey, dishonest, stingy with time and attention, exhausting, cowardly, ugly, intolerant and stupid.

Seems like a no brainer right? What do you do? You of course neglect all the great and strong and true people in your life and set about spending time trying to change your loser friends into winners. You try and take all the greatness that resonates betwixt you and your winner friends and somehow transform your loser friends into who they could be.

But you already have who you want them to be. Just in the form of other people. This broad coverall example depressingly often describes the choices we make as to the singular person we spend the most time with - an intimate partner or best friend.

But in a scaled back sense, people will also bail on their reliable friends because they are so understanding and reward their anxious, needy or unprofessional friends because they wouldn't understand and feel worse for it.

Even in work, you'll spend far more time on a problem customer who wants to complain or get special treatment or whatever or refuses to deal with someone in accounts or whatever - because they demand our attention and we neglect the customers who seamlessly and frictionlessly generate profits for us.

Or you go home and talk about your asshole boss in the precious hours you have with somebody who actually adores you.

There's a paradox, and I'm aware that paradox is the easiest way for an idiot to sound profound, but what we want is often thwarted by us doing what we want. We want the mistakes in our life to not be mistakes, and instead of cutting our losses, we try the same mistake again hoping it will work out differently, ultimately costing us from getting to where we actually want to be.