Dealing with Regret

Imagine you're standing at the edge of a wide, fast river with a fishing net. The river is full of fish - thousands of them, all shapes and sizes, streaming past you all day long. You dip your net in, you pull it out, and each time you catch a few. Some are tiny. Most are ordinary. And every now and then, if you're patient and a little lucky, you scoop up a big, fat fish that fills half your basket by itself.

Here is the thing nobody warns you about that river: no matter how good you get, most of the fish will swim right past your net and get away. That's not because you're clumsy. It's simply because there are far more fish than any net can hold, and you can only be standing in one spot, holding one net, at one time. The river is enormous and your net is small. Missing fish isn't a mistake you're making - it's just the shape of the river.

Now imagine you catch a decent basket of fish, walk home, and feel good. But on the way, someone tells you, "Oh, you should have seen the giant fish that swam past right after you left - the biggest anyone's ever seen." And suddenly your good basket feels like nothing. All you can think about is the monster that got away. That sour, aching feeling - I could have had it, and I didn't - is called regret.

This whole chapter is about that feeling, because in investing you will feel it again and again. You will pass on a company, or sell it, and then watch it climb to the sky without you. It happens to everybody - including some of the most famous investors who ever lived, people who had early chances to own giant winners and let them slip through their fingers. The lesson isn't "learn to never miss a fish." Nobody can do that. The lesson is that missing some huge winners is a normal, unavoidable part of the game - so the real skill is not letting the ache of what you didn't own bully you into silly decisions next time.

You might wonder why we'd spend a whole chapter on a feeling. Feelings come and go. Why does this one deserve so much attention?

Because regret doesn't just sit quietly in your chest. It reaches out and grabs the steering wheel. It changes what you do next - and usually for the worse.

Think about the fisherman again. If he lets the story of the giant fish eat at him, what does he do the next day? He doesn't fish carefully and patiently the way he used to. Instead he becomes reckless. He wades far out into the dangerous, deep part of the river where the current is strong, because that's where he imagines the monsters must live. He grabs at every shadow. He stops checking whether a fish is even worth catching - he just wants to catch something big, right now, so he never has to feel that sting again. And out there in the deep water, off-balance and grabbing wildly, he's far more likely to drop his whole basket, or worse, get swept off his feet.

That's exactly what regret does to an investor. The pain of a winner you missed pushes you to do dangerous things to make the feeling stop:

• You chase the next exciting story at any price, buying without checking, just so you won't "miss out again."
• You hold on to a losing company far too long, telling yourself, "Last time I sold too early and regretted it, so this time I'll be patient" - even though this company is genuinely broken.
• You change your careful rules in the middle of the game, because your careful rules are the ones that "made you miss" the winner.

Notice the cruel trick here. The missed winner didn't actually cost you any money - you never owned it, so your rupees are exactly where they were. But the regret about it can go on to cost you a great deal of real money, by pushing you into a reckless buy that you never would have made with a calm head. The first loss was imaginary. The second one is real. Regret is the bridge that turns an imaginary loss into a real one, and that's why a wise investor learns to handle it before it handles them.

Before we go further, here's something that should make you feel a lot better about all this.

The investors you might think of as legends - the ones who became famous and rich by picking companies - did not catch every winner. Not even close. It is an ordinary, well-known part of market history that people who were early to companies which later became household giants often sold their small stakes for a quick profit, or looked hard at the company and decided to pass entirely. They held a future monster in their net, and they threw it back. Then they watched it grow ten, fifty, a hundred times without them. This isn't a story about a few clumsy amateurs. It's the normal biography of almost every great investor who ever lived.

Read that again, because it's genuinely freeing: the best in the world miss giant winners all the time. If catching every winner were the test of skill, there would be no skilled investors, because nobody passes that test. Which means it can't be the test. The people who did well over long careers were not the ones who never missed. They were the ones who missed gracefully - who let the ones that got away swim off, kept fishing calmly, and were still standing in the river, net ready, when the next giant came along.

So the next time you miss a winner and feel that hot flush of "how could I be so stupid," remember: you're in the finest possible company. The stupidity isn't in missing the fish. Everyone misses fish. The only real stupidity would be to let that miss talk you into doing something reckless. Missing is universal and harmless. It's what regret makes you do next that separates the calm from the ruined.

To make peace with missing winners, you first have to understand a strange and important fact about how investing actually works. It's the fact that makes missing winners feel unbearable - and also the fact that, once you truly get it, sets you free.

Here it is: over a long life of investing, almost all of your gains come from a tiny handful of companies. Not from spreading your success evenly across everything you own. From two or three giants that grow enormously, while most of the rest do very little.

Let's say you own ten companies over many years. If you actually tracked them, you'd usually find something like this. Four of them roughly go nowhere - they wobble up and down and end up about where they started. Three lose you a bit of money. Two do nicely, maybe doubling. And one - just one - turns into a monster, growing ten or twenty times over. And here's the shock: that single monster might make you more money than the other nine put together. The whole basket was really carried by one big fish.

Now - sit with what this means. If your entire result depends on catching a few giant fish, then every giant fish that got away feels like it cost you everything. That's why missed winners hurt so much more than they should. Your brain whispers, "That one could have been the one - the fish that would have carried your whole basket." And sometimes that whisper is even true.

But look closer, because the same fact that makes the pain so sharp also holds the cure. If it takes only a few big winners to carry the whole thing, then you don't need to catch all of them. You don't even need to catch most of them. You just need to hold on to the ones you do catch, and stay in the game long enough for a few giants to swim into your net. Because a small number of huge winners produce nearly all of your lifetime gains, missing plenty of them is perfectly survivable - what matters is keeping the ones you catch, not mourning the ones you don't. The river will keep making giant fish for the rest of your life. You only have to catch a handful, ever. Missing the rest isn't failure. It's just Tuesday.

Let's put real rupees on the table and watch how regret is born, and how it does its damage. illustrative

Meet Arjun. A few years ago he studied a small, well-run company that made electronic parts. He liked it, understood it, and bought 1,000 shares at ₹120 each - a total of ₹1,20,000 of his savings. This was a good decision. He'd done his homework.

Over the next year the shares climbed to ₹200. Arjun felt clever and a little nervous. A gain is a gain, he thought, and what if it falls back? So he sold all 1,000 shares for ₹2,00,000, pocketing an ₹80,000 profit. He felt great - for a while.

Then the company kept growing. And growing. Two years later, those same shares were worth ₹900 each. The 1,000 shares Arjun had sold for ₹2,00,000 were now worth ₹9,00,000. He had walked away from ₹7,00,000. That electronic-parts company was turning into one of the giant fish - the kind that carries a whole basket - and he had scooped it into his net and then, for a small quick profit, tossed it back into the river.

The regret was enormous. Every time he saw the share price, it was like a fresh slap. And here's where the real danger began - not with the sale, but with what the regret did to him next.

Burning with the feeling of "never again will I sell too early and miss a monster," Arjun heard about a hyped new company that everyone in his group chat was shouting about. It had a thrilling story and a share price already rocketing. He didn't study it. He didn't understand what it even did. He just thought, this could be my next ₹900 stock, and I am NOT missing it this time. He put ₹1,50,000 into it at a wild price.

That company had no real profits and far too much borrowing. Within a year it collapsed, and Arjun's ₹1,50,000 became about ₹30,000. He'd lost ₹1,20,000 of actual, real money - chasing the ghost of a winner he'd missed. Notice the chain carefully: the missed winner cost him nothing real (he'd still made an ₹80,000 profit on it). It was the regret about that missed winner that cost him ₹1,20,000, by shoving him into a reckless bet he never would have touched with a calm mind.

The first story was about selling a winner too soon. But regret has another flavour that's just as sharp - the winner you looked at, and passed on. Let's watch it, because the ache is the same and the danger is the same. illustrative

Meet Haridya, a careful investor. Two years ago a friend told her about a company that made a popular food-delivery app. Haridya looked at it honestly. It was losing money every year, it was priced sky-high, and she genuinely couldn't tell how it would ever earn a solid profit. By her own sensible rules, it belonged in the reject pile. So she said no, and kept her ₹2,00,000 safely in things she understood.

Over the next two years, that food-delivery company became wildly popular and its shares tripled. Haridya watched from the sidelines as the thing she'd rejected turned into a story everyone was celebrating. The regret crept in: I saw it. It was right in front of me. And I said no.

Now, here's the important question - and it's the whole point of this chapter. Did Haridya make a bad decision?

No. She made a good decision that happened to have an unlucky result. At the moment she looked, the company was losing money, was priced for perfection, and its future was genuinely unknowable - even to the people who bought it. It rose, this time. But nine other companies just like it, priced just as insanely, quietly collapsed over those same two years, and you never hear about those, so it's easy to forget they exist. Haridya's careful "no" protected her from a whole category of companies that usually end badly. This one didn't. That's the river being the river.

If Haridya lets this regret rewrite her rules - if she decides, "My careful method made me miss it, so I'll stop being careful and start buying exciting money-losing stories" - then she's about to trade one good-but-unlucky outcome for a lifetime of bad-and-dangerous ones. The correct response to missing this fish is not to jump into the deep water. It's to say, calmly: I looked, I decided well with what I knew, it went up anyway, and that's fine. I'd make the same call again.

We've watched two people ache over fish that got away. Now let's watch the opposite - the quiet person who never gives us a regret story, because she just held on. This is the version nobody talks about, and it's the whole point. illustrative

Meet Aarohi. Years ago she bought ₹1,00,000 worth of a plain, well-run company that made paints and coatings - 500 shares at ₹200 each. It was a good, boring business she understood, and she bought it to keep, not to flip.

Over the years, the shares rose. At ₹300, a friend told her to take her profit before it fell back - the exact thought that had made Arjun sell. Aarohi checked the business: still growing, still honestly run, still earning more every year. Nothing had broken. So she held. At ₹500, the same friend, the same nerves, the same temptation. She checked again: business still winning. She held. Slowly, over many years, those shares climbed to ₹2,000. Her ₹1,00,000 had quietly become ₹10,00,000. That single boring paint company had turned into the giant fish that carried her whole basket.

Now here's what matters. Over those same years, Aarohi also owned nine other companies. Four went roughly nowhere. Three lost her a little. Two did fine. If you looked only at those nine, you'd think she was a middling investor. But the one she held - the paint company - made her more money than all nine others put together, and more than made up for every loser. She didn't get rich by being right about everything. She got rich by being roughly right once and then having the patience to not throw the fish back.

Notice she made no regret story. There was no dramatic winner she missed to torture herself about, because she wasn't trying to catch every fish - she was trying to keep the good one already in her net. That's the calm, unglamorous truth behind almost every great long-term result: not a genius who caught them all, but a patient person who caught a few, held on, and let a giant do its slow work. The whole game is often won by refusing to sell the one great business you already own for a small quick profit - because that single winner, left alone, can outrun everything else you do.

Haridya's story points to the single most powerful idea for making peace with regret. It's the idea that separates people who stay calm and get better from people who get whipped around by every winner they miss. Here it is.

A good decision and a good outcome are not the same thing.

In a game with a lot of luck in it - and investing is exactly such a game - a smart choice can turn out badly, and a foolish choice can turn out well, just because of how the dice happened to roll that time. So if you judge your choices only by how they ended, you'll learn all the wrong lessons. You'll punish yourself for good decisions that got unlucky, and reward yourself for reckless ones that got lucky - and both of those teach you to become a worse investor.

The right way to judge a decision is to ask: given what I could actually know at the time, did I choose sensibly? Not: did it work out? The ending is only one roll of the dice. The process is the thing you can actually control and repeat.

Think of it as a simple grid with two questions: was the decision good or bad, and was the result good or bad? That makes four boxes.

Two of these boxes are honest and easy. If you decide well and it works out - lovely, you earned it, do it again. If you decide badly and it goes wrong - fair enough, learn the lesson.

It's the two crossed boxes, the dashed ones, that mess with your head. Haridya lives in the top-right box: she decided well (rejected a money-losing, sky-priced company) but got an unlucky result (it rose anyway). The wrong lesson would be to abandon her good process. The right lesson is: do exactly the same thing next time, because over many, many decisions that process keeps her safe. And Arjun's reckless second buy lived, for one terrifying moment, in the bottom-left box's shadow - he wanted a bad decision (buying a hyped thing he didn't understand) to get lucky. Sometimes it does, for a while, which is the cruellest trap of all, because a lucky bad decision teaches you to make more of them.

Let's make this fully concrete with two people making the same decision. illustrative Rohan and Aayra each have ₹1,00,000, and each is offered the same choice: put it in a sensible, boring index of India's largest companies, or gamble it all on a single thrilling penny stock a stranger tipped them. Rohan puts his in the boring index. Aayra gambles on the penny stock. This year, by pure chance, the penny stock triples and Aayra turns ₹1,00,000 into ₹3,00,000, while Rohan's boring index rises a calm 12%. If you judge only by the ending, Aayra looks like a genius and Rohan looks like a fool, and Rohan feels a stab of regret. But both faced the same unknown future when they chose, and Aayra's choice - betting everything on a single tip she couldn't check - was a terrible one that simply got lucky this time. Do it a hundred times and it wipes her out. Rohan made the far better decision; the dice just didn't reward it this round. In a game full of luck, one result barely tells you whether the choice was wise - so rate your decisions by whether the reasoning was sound with what you knew, not by the single ending you happened to get. If Rohan lets regret convince him that Aayra had the better idea, he's learned precisely the wrong thing, and next year he'll be the one gambling on a stranger's tip.

The slip is almost never "I decided to be reckless on purpose." Nobody wakes up planning to gamble away their savings. The slip is quieter and sneakier: it's letting the memory of a missed winner set the price on your next decision.

Here's the exact shape of it. You miss a winner. It stings. And now, without noticing, that sting starts secretly running your choices. The next exciting company comes along, and a calm investor would ask, "Is this a good business at a fair price that I understand?" But you don't ask that. You ask, "What if this is the next one I'll regret missing?" - and on the strength of that fear alone, you buy. You've stopped deciding based on the company in front of you, and started deciding based on a company from your past that you'll never get back. That's the trap, and it's how sensible people end up making the recklessest buys of their lives.

Now the honest part, because "make peace with regret" can be twisted into something lazy if you're not careful.

The first way it misleads: making peace with regret does not mean refusing to learn from it. There's a difference between the healthy version - "I decided well, it got unlucky, I'd do it again" - and a lazy version - "I never look back at my misses at all, so I never notice when my process is actually broken." Sometimes you miss a winner because of good rules doing their job (Haridya). But sometimes you miss it because of a silly reason: you were too lazy to study it, or you rejected it for a foolish reason like an unfamiliar name. Those misses are worth examining, because they reveal a real flaw you can fix. So feel the regret briefly, then ask the honest question: was my decision actually sound, or did I just decide badly? Fix the second kind. Forgive the first kind. Don't lump them together and ignore both.

The second way it misleads: remember that a single outcome is only noise, but a long pattern of outcomes is a real signal. If you make one careful decision and it gets an unlucky result, that tells you almost nothing - ignore it. But if you make the same kind of careful-looking decision fifty times and it keeps ending badly, that's no longer bad luck; that's evidence your process has a hole in it. "Judge the process, not the outcome" is about one result, not about every result forever. Over many decisions, the outcomes are exactly how you check whether your process is any good. So don't use "it was just unlucky" as a shield to avoid ever admitting a method is broken.

And the third, quietest caution: making peace with regret is about the winners you missed - the ones you never owned or already sold. It is not permission to hold a genuinely broken company forever just because you're scared of a repeat of selling too early. Those are different situations. Arjun sold a good, growing business too soon; that's a real "let winners run" lesson. But someone else might cling to a company that's actually falling apart - drowning in debt, losing customers, run by people who lie - telling themselves, "I won't sell too early this time." That's not patience; that's regret from a past mistake causing a brand-new one. Hold a winner because the business is still winning. Sell a loser because the business has truly broken. Never let a memory decide either one.