Fail fast, fail often. Applying this Lean startup mentality in the stock market

When talking about failure, I think the best place to learn from is in the startup scene. It is said that 95% of all startup fails. To reduce the chances of failure, a new paradigm was born and it is called the Lean startup methodology. In this paradigm, failure is embraced instead of shun away, because the more we fail, and the faster we fail, the higher our chance of success. Counterintuitive isn't it?

The Lean startup mentality is all about learning as fast and as cheaply as possible, so that we can build the right business before our money runs out. Yes, once we are out of cash, the business goes bankrupts. In learning we are bound to fail. Do you remember the days in school when we all have a big red cross on our answer? It is OK so long we learn from it. The key being learning from it.

So what a lean startup does is that when we just started and do not know anything, we try to use the least amount of money to build our product and test it. It can even be a drawing on a piece of paper. When we learn more and more, and understand the market better, we spend more and more money to build more realistic product as it has more chance of success.

So I think we can learn a bit or two from the Lean startup mentality.

Firstly, when we are new, don't go all in.
This is because we have the highest chance of failure. If we fail, that's it. Which is why, I do not just go all in, in 1 stocks. I use a portfolio approach and have stocks, bonds, ETFs, options and cash in Singapore, US and China market. This way, if I missed out crucial information in my analysis, I won't go bankrupt.

However, I choose to pick stocks, bonds, and even used options on top of using ETF and that accelerate my learning. Because I use a portfolio approach, I have many many position which gives me many many chance of failing and learning. Every position size is kept small, and the riskier it is the smaller the position gets.

Secondly, journal
On top of earning money, I also have goal of learning. Thus, journaling is very important. This allows me to look back and reflect what had I been thinking about, and what had I done wrong or right. We human have pathetic memories, so don't trust our brain to remember stuff, journal it instead. I mean can you even recall what you had for lunch last Tuesday?

So I do write chain journal post on positions I take in moo moo, so that I can look back at how bad I f**ked up

Lastly, reflect, learn and adjust.
The last step, is to look back at the journal, reflect on it and adjust our behaviour.

Lesson learnt: Apes together strong only when prices goes up So next time if there is a meme stock rally, ride it up and cut it quickly when there are signs of trouble. After this incident, I also have reduce my position size when trying to milk theta on risky stocks.

I got greedy, and continued taking risk in this stock. The stock price crash 94% in a second, ouch that hurts. But thankfully, I only take a very small position learning from my previous mistake and didn't lose that much.

Lesson learnt: Don't be greedy.

Hope that this reflection and strategies will be of help to you in your in investing journey invest safe!