Hi friends,

Welcome to my 3rd monthly email, in this segment called “Michael’s Monthly Musings”. If you missed my earlier monthly newsletters, please refer here.

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I’m thankful for all the friends, family, and readers of this newsletter for the support and replies via email I got from my last newsletter. We’re nearly at 100 email readers (still)! Feel free to share this with friends who may find this interesting or may want to meet/know me.

Again I wanted to share about something this month that has been on my mind.

🧑‍🏫 Coping with failure

What is failure?

A simple dictionary definition will say "state or condition of not meeting a desirable or intended objective". Put simply, I think it is when your reality does not meet your expectations in a negative way.

I want to share a personal story.

I failed the selective school exam back in year 6, when I sat for it in 2008. I had a lot of eager optimism thinking that I aced that exam and thinking I was going straight to North Sydney Boys back then. That didn't happen. I barely scored ~210/300 (it's crazy I still remember my score... Tells you how deeply I felt this failure even to this day).

I was a wreck in the next few years after that (a chunky period that involved low self-esteem, mental depression, etc). But it was probably the most formative period of time for me.

What was interesting, however, was that as I reflect back more than a decade later, I think that failure had allowed me to be "desensitised" in a lot of ways whenever I saw another big failure. And I've made plenty of "failures" whether in relationships, academics, job applications, etc.

Failing is ok. I'm reminded of the kdrama "It's ok to not be ok". Healthily coping with failure is more important from my experience.

For example, in investing in the stock markets, I've made many supposedly bad stock picks (e.g. iSelect) and also sold many stocks too soon (e.g. Afterpay). So I've made a lot of blunders. And I think the market has been a humbling teacher to me. But it hasn't been the only humbling teacher.

More importantly, it helps to be Christian in my experience. I know that whatever successes/failures I've had in this life I cannot take with me when I die. It's taken me ~25 years to get to this position. And although I struggle with this tension of success/failure every day, I've come to appreciate both outcomes more and more with age.

Often, the mental model I adopt when I experience failure is to ask myself, "what is the absolute worst that happens from here?" When I logically think about most of my failures over my life, I think we come to realise that we often over-estimate our failures in the grand scheme. In most cases, failure is not fatal nor is it final.

I recall it was Bill Gates (the founder of Microsoft), who says that people underestimate the long term, but overestimate the short term. In the CFA (Chartered Financial Analyst) program, I think the word closely related to Gates’ comment was the idea of "recency bias".

I think many high achievers can fall into the trap of reading too much into failure. The danger is that many of us tie failure to our sense of "self-worth" or "self-esteem". I definitely experienced that much more when I was younger. And I don't mean to say that anybody who thinks this way is just a big egotistic... I think for a lot of us, we inadvertently believe we need to live up to expectations that others may have of us because they perceive us a certain way (or maybe we perceive ourselves this way).

That said, I know some friends who live by the mantra, that "If you aren't failing, you aren't taking big enough risks". This is a much more entrepreneurial way of thinking. I agree with that to some extent. I guess the risk with thinking that way is that we begin to describe failure as if it is some absolute thing when frankly I think it is all relative. In other words, failure is in the eye of the beholder. People have different risk tolerances and return objectives when I think about this from an investment lens. And it's no different with how much success people want, or how little failure people can tolerate.

When dealing with failure, one of the commonly cited texts is Ray Dalio's book on Principles. Ray Dalio is the founder of Bridgewater, which is one of the largest hedge funds globally by fund size. I would encourage people to give his book a read, or you can watch his 30 min video summary here. Ray cites a simple 5 step process for dealing with problems. I overlay that with my favourite Bible verse from Romans 5:3-4, which says:

"Not only so, but we also glory in our sufferings because we know that suffering produces perseverance; perseverance, character; and character, hope."

See the diagram attached in the banner of my email, for how I visualise these 2 processes I’ve mentioned above.

This Christian way of thinking about failure is the way I subscribe mostly when I think about failure now. Failure is "connected" to success. It is a necessary evil I suppose.

In much the same way that the Bible teaches us to hope for Jesus because we experience and know what suffering is like, how can you really appreciate success if you haven't felt failure? That provides a much more holistic way of thinking which I encourage my readers to adopt if they have not thought of failure in this way. To respect failure for what it is.

In many ways, failure is an inevitable part of life for all of us and nobody is perfect. It's also exhausting to BE PERFECT.

As a Christian however (and without trying to Bible bash anybody - I am merely trying to share what helps me personally with coping with failure), we know nobody is perfect, and we believe only Jesus is perfect. Thinking this way has personally been very liberating for me. It means I can stop thinking like a perfectionist. Whilst I may still occasionally compare myself to others still, I am constantly reminded not to and I think I have much more self-discipline here than my younger self in that regard.

I still struggle to make the best decisions myself on a day to day basis. However, I hope this ramble on coping with failure encourages my readers to ask themselves the question. How do I cope with failure? I would love to hear how you readers cope with failure if you have any thoughts to share via email reply!

👍 To conclude for now…

Please do hit <reply> to this email if you have anything to add / any questions. I quite enjoy replying to comments/emails as a source of procrastination. Please share this email with others if you found it value-adding.

Have a great next month!

Michael

🙏 Some of my favourite memories from Mar 2022

• First time going to Five Dock/Haberfield area and doing the bay run (or walk rather since I'm a fatty!)! I would definitely recommend the Haberfield Rowers Club and Restaurant for lunch on a sunny day with water views.

• Caught up for quarterly catch up call with my mentor, Albert. Always a lot of wisdom. Found his observation about nickel price going up, but nickel stocks NOT going up recently, as a very insightful pick up.

• Judged the finals of the Emerging Markets Network Stock Pitch Competition, thoroughly impressed by the pitch to short Vodafone Idea from the Singapore team. Learnt a lot about the Indian telco space that night too! Who would've thought learning about telcos could be sexy again....

• Friend getting married and having the privilege to be one of his groomsmen. Known him since senior years of high school. Wishing you all the best James, and looking forward to catching up again soon. Congrats on the marriage!

• First time going to Clarke's Point Reserve on a spontaneous inner city road trip. Always wondered where that NYE fireworks viewpoint was and finally see it. Would totally recommend the Deckhouse restaurant (would've been better if it wasn't for a gloomy day!).

• Delivered my "Christian Wisdom in Personal Finance" seminar at my own church, which was a great way to explain more of my role as the Head of the Investment Committee at MBC, but also share some of my thinking as it relates to being a Christian and dealing with money.

• Watched The Batman, and thought it was a 7/10. I still think Christian Bale > Rob Pattinson.

• Judged the finals for the UNSW I4C charity case competition with a colleague who graciously gave up his family time to judge. The quality of the presos were great and it was great to see UNSW I4C continue to thrive with new members/participants.

• Not technically in Mar 2022 (but rather yesterday), had the opportunity to introduce myself to the 40+ students from different universities all involved in ASAM (Australian Student Asset Management) society, and got the opportunity to meet lots of great, intelligent, and driven students all in different sector teams. I only managed to get through 4/7 teams in my first sitting! Hope to continue mentoring the Investment Committee there and ad hoc guiding the sector teams where I have capacity.

• Got a Nintendo Switch for "research" purposes... I love Mario Kart! Any recommendations for the Switch? I'm all ears.

🚀 Some upcoming things over Apr 2022 I'd love to share with my readers

• Expect to be judging for the UNSW I4C Trainee Analyst stock pitch competition for the end of T1 in late April - hope to see some UNSW I4C members I know there, and to see what they've learnt in the term.

• Hoping to go on a short trip with some high school friends to the Central Coast during the Anzac Day long weekend! Airbnbs are limited so not confirmed but we're still planning...

• Was intending to watch Morbius (released on 1 Apr), but heard the vampire film has been a flop in the box office currently (Sony’s estimates were for like Venom 2, so call it $300-400m in the box office globally - but appears to be much less - typically to breakeven your BO sales need to be 2x your production costs as a random side note) and so I'm still deciding whether I want to watch it or wait until it's "streamable"