Don’t Let Perfection Be the Enemy of (Financial) Progress

A Life Lesson (for the Reluctant Investor)

“I’m a perfectionist.” Great! Well, you have four hairs out of place, your car is parked at an angle, and the pillow on your bed is 3 inches off-center.

What even is a perfectionist? Surely no human is ignorant enough to truly believe that they themselves are perfect in any sense of the word. When you think about it, it’s a pretty explicit term. “Perfect.” Without flaw. Everybody has flaws, so stop trying to be perfect.

Perfection should always be something to strive for, but you should never hold yourself back because you’re afraid of or intimidated by “perfection.”

Just like humans, no opportunity on this Earth is perfect. The perfect school, the perfect job, the perfect life partner. They don’t exist. Every situation has positives and negatives. It’s easy as humans to overlook immense benefits for fear of missing out on the elusive “perfection.” That’s not the perfect school. This isn’t the perfect house. Now’s not the perfect time. But why should that stop you from taking advantage of an opportunity? Nothing’s perfect, but there are countless positive situations and opportunities. Nobody can lead the perfect life, but you can lead a damn good one if you don’t let perfection be the enemy of progress.

The world we live in today moves faster than ever. Don’t sit idly by for the perfect time to seize an opportunity. The best opportunity of your life may just pass you by and disappear before you even know which way it went.

It’s not the perfect company, but you could do great things in that role, so go do it. That person’s not what you thought of as your perfect partner, but you enjoy spending time with them, so go on a few dates and see how it goes. It’s not the perfect time to invest in stocks, but now seems like a promising opportunity, so send in some buy orders.

Ah, yes, (Part 2 — Musings of an Aspirational Investor)

For those that know me well, you’ve probably seen this coming since you read the title. As I continue, I will frame perfectionism within the world of personal finance. Given the events in financial markets between February and June 2020, there will be plenty to talk about in this space.

Fair warning: I will probably geek out and get a bit technical with some stock market terms. If you are unfamiliar with the lingo, feel free to use it as a learning opportunity (à la Google) or pretend Part 2 here doesn’t exist. The choice is yours. Now that you’ve been warned…

I am a young investor with a constant struggle between knowing everything and knowing nothing. I’ve read the likes of Warren Buffet, Benjamin Graham, and Peter Lynch. I’ve done endless hours of personal research and education about stocks, investing, markets, etc. I’ve taken college classes dedicated to economics and financial markets. How could there be anything out there that I don’t know already?

As much as I try to fight it, it’s human nature (especially that of a young adult) to have supreme confidence in one’s own knowledge (@ Mom). It’s a constant battle to remind myself that I’m young and inexperienced. Any time an amazing investment opportunity shows up on my radar, I have to ask myself what I’m missing that an experienced investor would see.

Lucky for me, Mr. Market is a great teacher. (bonus points if you know the origin story of “Mr. Market”) His most recent lesson that I attended began on February 19, 2020, the date when the S&P 500 level notched its all-time high (as of writing on June 20, 2020). Until then, the stock market had been rising steadily since I graduated… from elementary school.

What followed was the quickest stock market fall on record. The S&P 500 index lost about a third of its value by the time it reached its low on March 23, 2020. At that point, my thoughts were thus: things were grim anywhere you looked in the world, economic expectations were catastrophic, and there was no way stocks could be going up anytime soon. Of course, hindsight has proven the accuracy of these views somewhere between questionable and perfectly wrong. Well, not quite perfectly, but almost.

As you can probably infer by now, I was hesitant to buy stocks at a time when the outlook was horrendous. Mr. Market taught this lesson well. The fact that I missed out on potential 30–50% returns in the three months since has really ingrained the material into my brain. The market low is never a good time to buy until you look back and realize you missed out on a perfect opportunity.

Mr. Market has taught me the hard way that there is never a perfect opportunity to buy stocks. I thought about buying, but decided to wait until the market came down a little more so I could scoop up some bargains at lower prices. I was waiting for some of my favorite stocks to come down to the perfect price.

What I know in hindsight is that the perfect price or opportunity will never come. Because I am a human (and an optimist), I will always want to wait for the stock to drop just a bit more so I can get a higher return on the climb back up. Unfortunately, it’s impossible to recognize that perfect opportunity until it’s too late.

So don’t wait for the perfect time to buy stocks. My investing style leans toward undervalued companies. But I don’t have to find the most undervalued company. I can purchase a company at a good or great value, even though it could be a little bit better. I don’t have to put all my money in at the very bottom of the market. As long as I stay disciplined and continue to invest money where I see value, I will not be perfect, but I will come out ahead.

Where we sit now (June 20, 2020), the S&P 500 has rebounded to roughly 10% below its all-time high. So much has happened in the stock market (and the world) in the last four months. So many lessons have been learned. But don’t worry, class is still in session. Mr. Market is still up there teaching. To be clear, I don’t think we’ve seen the end of market vicissitudes caused by the COVID-19 pandemic. If you take a seat and pay attention, Mr. Market may just be kind enough to summarize the lesson or even teach it again, bigger and better than before.

*Editor’s note: Please excuse any errors. This article aims to achieve perfection but may only hope for excellence.