Difficult Decisions

Difficult Decisions - people often talk about having to make difficult decisions. Should I leave the security of this job for something more satisfying, should leave an unsatisfying relationships.

However when you start to think about it, in technical terms these decisions are generally not actually that difficult. The information is probably more qualitative than quantitative, but it is well established, you generally have time to gather more information if it would be helpful. Generally it is a case of deciding between a very small number options, options which are disimilar enough to make it difficult to make meaningful comparisons.

However we make these sorts of decisions all the time, every day. Often what characterises Difficult Decisions is that they seem to be optional decisions, there is the default option to continue as you are, and the decision to do something different. Accordingly the decision is not a fork in the road, it is a choice of carrying on along the well established motorway that you are on, or to consider the little known and poorly signposted alternative route, that sounds like it may be appealing, but you cannot see far down that road, it twists and turns, and although it sounds appealing, you really have no way of knowing where it will lead.

What makes these decisions difficult is not that they are technically difficult. They are not actually that technically complicated.
They are assymetrical - you understand one option far better than you understand the other.
They are not time pressured - you can continue as you are, in effect make no decision.
They involve you in doing things you are uncomfortable with.

That is at the root of the issue, when we are talking about Difficult Decisions we are instead talking about unpalatable choices. There is always the default, the do nothing option.

But we are decision making creatures. When we are too lazy, or scared, or complacent to make decisions then, in a way we cease to be. We become part of the generalised mass, neither good nor bad, just drifting along.

Life is too short to drift by failing to make any decisions. There are worse things than failing, there is failing to try.

Part of what I like about investing in shares is that it forces you to make decisions, it keeps you in the habit of making decisions. You have to decide on a strategy, to refine and review your strategy, every month I decide on what to invest my money in. Investing in shares you just have to accept that you cannot have perfect knowledge. You are balancing risk and reward, the greater the uncertainty the higher the potential reward, you can consider other's expertise, but in the end you have to follow you own judgement. You need to accept that you will never make the optimal decisions all the time. Share investing just does not work like that. If you had perfect knowledge then you would just invest all your money in the most profitable share for the next year, and sell it all when it reached its peak. No one does that, no one can. Almost by definition every investing decision is less than optimal. You are accepting failing, accepting that you will lose money, others will have done better than you. I suspect that Game Theory has something sage to say on this sort of thing.

It is good for the soul engaging in the challenge of investing, teaching yourself through your results, the expertise of others, introspection. What has gone well, what has gone badly, what should I do more of, what should I do less of.

We are born to learn, to try and fail, pick ourselves up again. That is to be alive.