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Mistakes Of Omission Versus Mistakes Of Commission: Using Warren Buffett’s Investment Concepts To Avoid Regret

October 4, 2018 by Jason Fieber 10 Comments

Warren Buffett has often talked of how his mistakes of omission have actually been far greater (in terms of the cost to Berkshire Hathaway shareholders) than his mistakes of commission over the years.

Breaking it down, a mistake of omission is when you fail to act on good information. You don’t do something you should have done.

A mistake of commission is the opposite. You act on information. You do something you shouldn’t have done. You do something wrong.

A mistake of commission is easy to point to and see an error, especially in terms of investing. You can point to a bad investment and actually calculate the loss.

However, a mistake of omission is much more difficult to point to, especially in terms of investing. That’s because there’s no investment loss, since there was never an investment in the first place.

To clear things up, Buffett points to a number of investments he didn’t make – like a Dallas-Fort Worth NBC station for $35 million – to be worse mistakes in terms what he know he could have made off of them, than the bad investments he did make and what the calculations come to when he looks at actual losses.

I certainly have my own mistakes of both omission and commission on the investing side of life, but I actually want to discuss this dynamic in a very different sense today.

I believe when we’re one day old and dying, looking back on our lives, we’ll come to see our mistakes of omission as far bigger regrets than our mistakes of commission. 

And I think recognizing this while we’re still young enough to act on it and correct that behavior is invaluable.

Mentally Moving Through Time

If this is an eventuality, or at least has a high likelihood of coming to pass, we should do what we can to identify this behavior and correct it in real-time, before the current moment passes and becomes the past.

We should try to see our lives as a much older version of ourselves would, then aim to behave and correct mistakes as that older version would love to (if they could travel back in time).

One of my favorite things to do is imagine my life from today until my death. I then discount that time back to today, sum up my moments, and try to make the best of it all. Said another way, I try to reverse engineer my way to an eventuality that I deem to be more than satisfactory.

My mind thinks in the very long term. I have a rough idea of what I’d like to be doing when I’m 40, 50, 60, 70, and even 80.

But if I want those future timelines to line up at least somewhat accurately, I have to make the right moves today.

This is a concept I’ve talked about when I’ve shared how I actually saw a future version of myself that was financially independent.

Well, I use this trick all the time, except I now use it for purposes other than to simply see myself financially independent (because I’ve already become one with that future me who I knew was already financially independent).

I now try to move my mind into the future to see what else the future version of myself is up to, and then I reverse engineer my way there to make it so.

When I do this mental exercise, I’ve come to the conclusion that the future me will actually not have any regrets in terms of mistakes of commission.

Mistakes Of Commission

And that’s because we learn and grow from the mistakes we make. We’re not perfect beings. We’re not celestial. We’re not machines. We do not have omniscience.

In the end, we’re the sum of all of our moments, memories, and experiences. That is life, my friends.

A big part of that sum is, of course, the mistakes we make and learn from. We cannot take action without making mistakes. There are good odds of failure in most endeavors we choose to take on in life. To regret mistakes of commission would be to regret life itself, in my opinion.

I wouldn’t be the me I am today if it weren’t for the mistakes of commission I’ve made. If I were to be unhappy with the mistakes I’ve made, through regret, I would thus be unhappy with the person I am today. And since I’m not unhappy with who I am, I have to accept the bad with the good.

It’s a yin and a yang that requires a balanced outlook and disposition toward mistakes. We cannot have victories without losses, nor can we take action toward victories without accepting a high degree of likelihood that a loss will occur.

Furthermore, to see mistakes as failures is wrong. Success cannot happen without making mistakes along the way, and so to see mistakes as failures means you fail before you even begin. That’s true failure, which happens without making a mistake.

Of course, it’s better to learn from the mistakes of others than to learn from our own mistakes.

I’d much rather see someone else do something dumb and learn not to do that, than to do something dumb myself and get burned. But human nature is such that we sometimes have to feel the burn for ourselves so that we know to avoid the heat in the future. To not accept this, and to not accept mistakes of commission, is to not accept my own humanity.

In essence, what I’m saying here is, I don’t actually look back on any of my mistakes of commission with a sense of regret, for to pick and choose is impossible – we must take the whole of actions and reactions, and the learning that occurs through being human and making mistakes along the way.

I cannot regret actions I’ve made without regretting who I am, for they’re one and the same. I am the sum of my actions (and mistakes).

However, I think if regret is possible to have one day, way down the line, it’s in the mistakes of omission we make.

Mistakes Of Omission

These are the things we don’t do, that we should have done.

Why don’t we do these things? 

Well, the most obvious answer is fear.

We fear repercussions. We fear making mistakes. We fear reaction to our actions. We fear change. We fear upsetting the status quo, our families, or our friends. We fear not meeting expectations. We fear being judged.

We fear for the sake of fearing, instead of fearing fear itself.

We continue with the status quo.

This is often out of fear, but I also believe it’s also greatly out of consideration of money. An object in motion stays in motion. And people tend to continue doing what they do without thoughtfulness or introspection, which is a huge mistake. People try to live up to expectations that others place upon them, instead of being true to who they really are.

Once you solve the money angle, which is obviously a huge part of what FIRE is all about, you’re then free to conquer your inner fears and be the real you.

This combination of tackling money and fear, in my opinion, can help us avoid mistakes of omission.

My most recent example of mentally moving through time and seeing the oncoming regret of a mistake of omission (and doing my best to avoid it), is my indefinite move abroad in order to become a dividend expat.

Even though financial independence largely equals geographic independence, actually up and moving halfway across the world is far easier said than done. And that’s true even for a thoughtful guy like myself who embraces change and likes having an edge.

But as I sat and weighed out the pros and cons of living abroad, which required changing my entire thought process on what constitutes home, I started to see a big word flash inside my mind: REGRET.

I knew that if I stayed in the US – this would be against the conclusion of my own thought process change, which meant I’d be caving into fear – I’d be an old man one day, asking myself one basic question:

What if?

What if I had gone? What if I had experienced a totally new culture? What if I had went down that road much less traveled? What if my entire life ended up differently? What if I had just given the idea a shot?

But now I don’t have to await that old, bitter man who’s full of regret due to a big mistake of omission. I have my answers.

And they’re pretty great answers.

I’ve experienced reverse culture shock, what it means to be truly free, amazing food, awesome adventures, weight loss, and a totally new perspective on life, people, money, freedom, and happiness. I’m a changed person, for the better. And a best-selling book even came out of it!

Sure, you could ask those same questions on the other side of the fence, with a future version of myself wondering what if I had stayed in the US.

But that timeline is very easy to imagine, since all I had to was extrapolate out my current situation, more or less, into the future.

It’s not hard to imagine the future when you’re simply sticking with you already know. Wondering what might happen, for instance, if you stay in the small town you’ve known all your life doesn’t require a mental leap. There’s no mental leap because there’s no physical leap.

And instead of not doing something you should have done, you’re just not doing anything at all. So there’s no mistake of omission to point to and potentially regret.

Conclusion

Regret is something I’m actively aiming to avoid in my life.

And I do this, in part, by reverse engineering my way toward a life that I can actually see once I mentally travel through time. I see plain as day the me I know I can, should, and will be over the course of the passing of time.

But if there’s one thing I’ve learned when practicing this, it’s that there’s a much older version of myself out there that has come to see mistakes of omission, not mistakes of commission, as the true harbinger of regret.

Bronnie Ware, who for many years worked in palliative care, shared the #1 regret from the dying:

I wish I’d had the courage to live a life true to myself, not the life others expected of me.

As such, when faced with big choices in the future, I will always keep this in mind so as to avoid mistakes of omission. I may end up making mistakes of commission with this mindset (that I otherwise wouldn’t have made through inaction), but I’ve not yet come to regret one single mistake of commission.

When seeing life this way, you can’t help but win (even when you lose, which you most certainly will). It’s a true win-win!

What do you think? Is this a good way to look at, and avoid, regret? Do you mentally travel through time so as to reverse engineer your entire life? 

Thanks for reading.

Image courtesy of: Stuart Miles at FreeDigitalPhotos.net.

P.S. If you’re interested in avoiding mistakes of omission, which is a far easier thing to do when you’re financially independent and can do almost anything you want, check out some fantastic resources that I personally used on my way to becoming free at 33!

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Filed Under: Happiness

About Jason Fieber

Jason Fieber became financially free at 33 years old by using dividend growth investing to his advantage. Jason has authored two best-selling books: The Dividend Mantra Way and 5 Steps To Retire In 5 Years (also available in paperback).

 

Jason recommends Personal Capital for portfolio management, Mint for budgeting, Schwab for the brokerage account, and Morningstar, Daily Trade Alert, and Motley Fool for stock ideas. This blog is hosted by Bluehost. If you'd like to start your own blog, Jason offers free coaching when you use our Bluehost affiliate link.

 

Jason's writing and/or story has been featured across international media like USA Today, Business Insider, and CNBC.

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Reader Interactions

Comments

  1. Ben says

    October 4, 2018 at 10:53 am

    Hi Jason,

    Nice post which reflects all the full perspective of regret. Action is better than non-action.

    Ben

    Reply
    • Jason Fieber says

      October 4, 2018 at 12:48 pm

      Ben,

      Glad you enjoyed it!

      Cheers.

      Reply
  2. 1mil 2freedom says

    October 4, 2018 at 11:02 am

    As I get older I feel like a big part of maturing is coming to be able to look at ourselves and our lives more objectively. Things have happened to us, and things will continue to happen to us. We have acted, and we will continue to act.

    Learning to derive joy or peace from within rather than without is an import part of any life, not least a FIRE life that, by necessity, must draw less than its fair share of pleasure from goods and paid-for experiences.

    I may not be totally there yet, but I don’t know if anyone can be totally there. But I’m working on it.

    Reply
    • Jason Fieber says

      October 4, 2018 at 12:52 pm

      1mil,

      Right. We have acted. And we will continue to act. Being held back by past actions ignores the fact that those past actions have turned you into the sum you are today. Unless you hate that sum (hate yourself), it’s hard to have regret.

      It’s certainly possible to have regret due to mistakes of commission (especially if you hurt someone), but it’s impossible to fully account for the infinite number of other outcomes that could have been had if you would have acted differently. No decision exists in a vacuum. Change one thing, change everything.

      Best regards.

      Reply
  3. MICHAEL says

    October 4, 2018 at 11:55 am

    Good day Jason
    these are some really good questions you ask. I know I have my own regrets. but those paths are long over grown with weeds now. I can only go forward and try to limit any regrets. Fear of change and the future can hold us back you are correct on that. I am focusing on things that truly matter to me. My happiness, my family, and my health. Thanks for a thought provoking article.
    Cheers

    Reply
    • Jason Fieber says

      October 4, 2018 at 12:53 pm

      Michael,

      If you can focus on the things that truly matter to you, you’re home free! 🙂

      Cheers.

      Reply
  4. Juli @ Written Word Nerd says

    October 4, 2018 at 12:19 pm

    I think this is a wonderful way to look at things!

    I’ve been focusing a lot lately on interpreting my failures (of commission) as dispassionately as possible — forcing myself to view them merely as data to help me with future choices and life-navigation, rather than allowing myself to see them as evidence of some kind of moral, personal, or intellectual flaw. It really does take a lot of the pressure off of making decisions and some of the sting out of dealing with any unpleasant outcomes.

    Regarding traveling through time, I love the idea of aiming “to behave and correct mistakes as that older version would love to (if they could travel back in time).” It’s a great question to ask!

    The only time travel I have done (and it was a pretty powerful exercise) was inspired by a Four Pillar Freedom post, and it was to imagine yourself ten years older than you are now, and write a letter to your current day self. What advice would you give? What encouragement would you share? How would you speak to your self? At first, I thought the exercise kind of hokey… but I did it, and I received all kinds of insights — things I should be focusing on, comfort over past mistakes, what was really important to me, and excitement to create this beautiful future I was picturing my ten-years-forward-self living. It was amazing!

    Reply
    • Jason Fieber says

      October 4, 2018 at 1:03 pm

      Juli,

      Thanks for adding that!

      Absolutely. I also try to simply see it as “data”. It’s a very stoic way to look at things. We’re only human. Getting too wound up about past events/choices can negatively impact our ability to make clear-headed decisions in the future. Unless you despise who you’ve become (in which case you probably have regret and need to think about making some real changes in your life), it’s difficult to point back on prior choices and regret them. I’ve made choices that I can say were incorrect, with the benefit of hindsight. But it’s only through making those incorrect choices that I can grow and become better. You can’t have one without the other. You can’t have success without failure. And the latter makes the former that much sweeter when it arrives. 🙂

      In the end, though, it’s the mistakes of omission that we should focus on. It’s the things we don’t do that we will surely think long and hard on when we’re much older and looking back on our lives. Focusing too much on our mistakes of commission can limit putting ourselves out there in the future, which only compounds the problem (and probably leads to more mistakes of omission).

      I know for sure I’d be bumming right now if I were still back at my old job, living in the US, and doing what I was doing five years ago. Those mistakes of omission would have led to a lot of regret and limited my personal growth.

      Best wishes!

      Reply
  5. Bob says

    October 4, 2018 at 7:35 pm

    We never really know how much time we will get, I never thought I would out live my youngest son then on the other hand there are members of my family that lived over 100 years 🙂 My Great Great Grand mother lived to 103 ! She was born in 1866 ( baby boom after the civil war ) and lived till 1969. I remember her well.
    Looking at yourself into the future is wonderful in that it also gives you a goal ( s) something to keep moving forward for and I believe for most people actually adds years or decades to life.
    I did a “fun with numbers” run through the other day ( Im a number geek LOL ) and I believe that my great grandchildren would be billionaires in their life time provided they continue the seeds I have sown. So that’s long term vision.

    Bob

    Reply
    • Jason Fieber says

      October 5, 2018 at 1:41 am

      Bob,

      It’s really fantastic to try to basically think that future version of yourself into existence. You will your truth. Reality manifests in a direction of your choosing, to a certain degree. It could be based on numbers (it used to be that way for me until I figured it out), but I think it’s far more valuable to think in way bigger terms. Either way, mentally traveling through time has taught me it’ll be the mistakes of omission that I will actually end up regretting.

      Thanks for dropping by!

      Best regards.

      Reply

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Hi. I'm Jason Fieber. I achieved financial independence and retired in my early 30s by using dividend growth investing to my advantage. I cover stock analyses, market news, dividend updates, and the dividend growth investing strategy.

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