Dirk Cotton : Minimizing regret

[walkinwood]

I enjoyed this post by Dirk Cotton and thought I'd share it here.

The Retirement Café: Minimizing Regret

It is more about a philosophy than any specific action - and that is to act in a way that will minimize future regret. And to do so by imagining yourself in the future, living with a bad outcome based on the decision you're about to make. If you can say that you'd make the same decision again (given what you knew at the time), then its the right one to make.

I hope I explained that correctly. He's a much better writer than I am. Dirk is another blogger that's worth following in my humble opinion.

 

[dunkelblau]

I wonder if this may be why I can't seem to let go of OMY syndrome, I've got a pretty good work arrangement now, and while the income isn't necessary, who knows if it might help me or someone close to me in the future?

I think this "minimize regret" only works when all your unknowns are known or foreseeable because even though I can estimate what I'd give up by pulling the plug at work, I think there's no way to know what I miss out on by not taking the time to look hard for something better. Of course I could easily regret chasing waterfalls, as I have a relative who did exactly this-- and he actually doesn't regret it at all, but I think I probably would if it all happened to me.

Maybe this scheme is easier to apply for those starting their careers after finishing school, like in the decision to at least grab the company match on the 401k. To me the FI part is pretty one-sided but the RE isn't as clear.

 

[LOL!]

It's an OK article, but I thought it was going to be more about Regret than about making good decisions based on probability.

The book Decisive by Heath & Heath covers making good decisions across a broad spectrum of issues including investing in a much better way.

Behaviorial finance books cover Regret better. For instance, normal people seem to have an irrational fear of a poor outcome from a decision they might make. Some people will avoid decision making (analysis paralysis) even when a good decision-making process leads to a good enough decision (say based on probability and other things).

So how to get over this analysis paralysis and/or how to not worry about Regret is something that can be taught.

Anyways, thanks for sharing the article.

And sometimes in a basketball game, your teammates are passing the ball to you because you have the best chance of making the shot. They don't want you to avoid regret and pass the ball away.

 

[38Chevy454]

I didn’t read the article but it seems obvious to me that we always make decisions based on some measure of probability. Rarely do you have 100% of information, at least on bigger decisions. As an engineer I routinely made decisions based on a limited amount of data. The key is knowing when you have enough and therefore maximize the good result probability.

 

[Huston55]

I’m a big Dirk Cotton fan but, this article was just OK. He’s written many better posts.