Author: Jay Mooreland

We all want desirable outcomes – those outcomes that bring us happiness, peace, and prosperity. Because we desire such outcomes, we may go into situations having high expectations. But it may be more beneficial to temper our expectations if we want to experience greater contentment in life.

Disappointment & Contentment

Disappointment occurs when a situation or outcome is worse than we expected. By intentionally setting expectations low, such as expecting long lines at the airport and flight delays, we decrease the likelihood of becoming disappointed or angry when “life happens.”

Contentment, on the other hand, results from situations our outcomes that exceed our expectations. When we lower our expectations, we put ourselves in a position to be pleasantly surprised more often, such as when we breeze through security and our flight arrives a few minutes early.

When we set expectations for something, we should consider how much control we have over the situation. If we have a great deal of control, we may feel confident setting high expectations for ourselves. But when things are out of our control, we should consider keeping our expectations low.

Investment Expectations

Most investors want to achieve high rates of return with little fluctuation in value. Assuming a given (and acceptable) level of risk, the higher the return, the better. But we should be careful to keep our investment hopes and desires separate from our investment expectations.

When we temper our investment expectations, we are in a better position to handle market surprises. Every year the market surprises us. Tempered expectations empower us to enjoy the positive surprises and put us in a healthy mindset to handle and adapt to the negative surprises.

I have found that the best expectations for investors are a combination of realistic optimism for the long term coupled with the expectation that, in the short-term, markets may not make sense and often fluctuate considerably.

– Scott

Investing may be simple in principle, but it isn’t easy in practice. Markets and economies are fraught with uncertainty, constantly changing news and markets, and how great some other investment is performing. Warren Buffett is one of the most successful investors of all time. From time to time he shares sage advice that every investor can benefit from.

Buffett’s Advice

I want to share two things that Warren Buffett said in the latest Berkshire Hathaway shareholder meeting. You will see that his counsel is not novel, nothing earth shattering. It is valuable because it helps us think about what really matters in investing and the approach we may want to take for our investment decisions.

“What gives you opportunities is other people doing dumb things… there’s been a great increase in the number of people doing dumb things.”

What kind of dumb things might investors do? In my experience, it almost always has to do with making hasty, emotional decisions. These decisions are often made in response to sensational news headlines, bold predictions, and/or recent market performance.

“The world is overwhelmingly short-term focused.”

Buffett doesn’t pay attention to short-term events, and he seeks to take advantage of those that do. These two comments provide insight to how Buffett has become such a successful investor. There is no talk of algorithms, trends, or fancy methodology. His statements are refreshingly simple.

Profiting From Mistakes

Investors often focus on how well a security will perform and work out in our favor. We seldom ask ourselves how a decision might be “dumb” or how much it could cost us, but that can be very helpful. Everyone makes mistakes. As investors, we can improve our game by minimizing our own mistakes while taking advantage of others’ mistakes.

Buffett’s advice really boils down to becoming a long-term focused investor. That means we do not allow the daily noise to distract us from our long-term view and investment strategy. Simple in principle, difficult in practice – yet potentially very rewarding.

– Scott

 
Source: 2023 Berkshire Hathaway Shareholder Meeting