How Can We Get Better at Long-Term Things?
When we shoot a basketball, we get an immediate feedback on our shot. The ball either enters the hoop, or it doesn’t. With an immediate feedback, it is easy to know whether we’re doing something right or wrong. But when it comes to other matters such as farming and friendships, things that stretches out from months to years, it isn’t as straightforward to know if we’re progressing well. For most parts, we do not know if our actions worked. We do not know which of our actions worked too. We may choose the right plot of land, but it can be difficult to figure out the optimal conditions to nurture pear trees, especially when it requires 4 to 6 years to fruit. We may be at the right place at the right time in meeting our special someone, but with all the things we have done (and not done) in the relationship, it can be tough to pinpoint various moments when our brainwaves were in sync.
Investing is another subject matter where the gap between action and feedback is considerably long which makes it hard to improve our skills.
It requires 4 to 6 years to know how well we’ve done in growing our 1st plot of pear trees and a couple more decades in getting better at it. It requires 5 to 10 years of being together with someone, be it your bestfriends or your lifelong partner, to go through different life stages to firmly evaluate they’re the ones for you. It requires an economic crisis to know whether an asset can handle the lowest of low. It happens between 4 to 6 years in Crypto world and 8 to 12 years for the traditional market. These subject matters naturally require a truckload of time, hence it is important that we exercise patience. Along with the scarcity of opportunity costs, the learning curve is steep as we’re constantly fed a steady stream of noise masquerading as feedback.
It is hard to differentiate if the outcome is a direct feedback of our action or simply the natural volatility of things unrelated to our decisions.
All of us can be patient when things are going well. It is when all hell breaks loose that we start to question if our patience is worth it. I believe the ability to be patient correlates with our ability to absorb loss. There will be moments when things are bad. There could be an unforeseen air pollution resulting in poor growth for our pear trees. What if our bestfriend whom we’ve been together for what seemed like forever suddenly has a job opportunity which requires him to be overseas for the next 5 years? One day, we’ll wake up to news of recession, panics and pullbacks which impacts our financial decisions, and the list of things going bad goes on. We know for a fact that these situations might happen, and that is why we require a margin of safety or loosely put; a room for error. We need to account for various scenarios whereby we can live happily and be patient with a range of outcomes. The higher we set our margin of safety, the lesser chance we have in giving up this game of patience.
Being able to handle 90% of your Crypto investment crashing is the short-term loss of the cost of admission of long-term gains. The volatility is what makes 2x, 10x, 100x profits possible.
We can learn a thing or two from the marshmallow test. It is a famous study on delayed gratification. If the kid has the willpower to forgo eating one marshmallow for 10 minutes, he’ll receive 1 more. It has been widely known that people who can look ahead make better decisions than those who focus on the short run. However, it is imperative to highlight that this study isn’t about who has a stronger willpower, but who can better distract themselves momentarily. Most of the kids who were able to wait and receive more marshmallows didn’t just stare at the marshmallow and wait patiently. They did other stuff to distract themselves. They sang a song, played with what were in their pockets and daydreamed of incredible stories in their mind. They pulled through the short run and made it to the long run by diverting their attention elsewhere.
We often equate putting in more effort resulting in more success, but there are times when we just need to let time do its thing.
Since we know that the feedback of these long-term subject matters isn’t immediate, we can better practise patience by understanding that most things in life are cyclical. There will be a continuous chain of accident, miscalculation, regret, unintended consequences and misinformation. However, things almost always get better in the long run for us. Nothing awesome or terrible is likely to stay that way for an extended period of time. Sure, there are ups and downs. But as we get better at being patient, we tend to minimize our losses which increases the chances of more upsides. It is immensely hard to distinguish between “I was wrong” and “The odds were in our favour, but it just didn’t work out.”
When the feedback isn’t immediate coupled with a ton of events happening inbetween, we can’t accurately identify a mistake which makes learning from a mistake difficult.
Maybe our decisions were wrong from the start. We could have chosen the wrong plot of land to begin with, and it doesn’t matter if any of our decisions from thereon are right. Or, we could have made excellent decisions from start till end putting the odds in our favour, but unfortunately stumbled upon a rare accident happening at the final sprint. The nature of the patience game is that sometimes we can make great decisions whose unfortunate outcomes dampen our confidence to try again. It is not easy to tell ourselves that we’ll learn from this and start all over again with a fresh timeline of half a decade. But perhaps it’ll be easier if we view it from a perspective that we’re already anticipating loss in the short term for potential exponential gains in the long term. Let’s not be surprised that there will be disappointments, setbacks and pandemics along the way. If we don’t expect these surprises, they might just shake our beliefs in a way that leave us paranoid and pessimistic. We stop being patient and start making rash decisions like gobbling up the next marshmallow thrown at us.
