031 - Premortem vs Postmortem

Wang Yang Ming said “to know and not to do is not to know.”

As much as I wish it didn’t resonate with me, it really does. I’ve read and listened to tons of advice to develop checklists and pay attention to psychology-driven errors. I air quotes “know” better, but I didn’t follow the advice, so it turns out I didn’t know better at all.

I’m working hard on developing an important skill: the ability to deconstruct a failure before it happens. I’m trying to move from postmortem to premortem. A postmortem is an after-action review where mistakes and successes are deconstructed. A premortem is the same analysis shifted forward in time and focused on the variables that cause mistakes.

Charlie Munger says that the best type of learning is “vicarious,” meaning that you learn from the example of others. You see your friend burn his hand on the stove, and you decide not to touch it for yourself to see if it’s hot. This type of learning is great, and I think it can prevent a lot of unnecessary suffering.

But I think a lot of learning comes from experience. Howard Marks likes to say that “experience is what you get when you don’t get what you want.” Another phrase I like is “he who suffers remembers.”

In that light—postmortem learning definitely isn’t preferable, but once mistakes become available for you to deconstruct, they can be a great resource. On Twitter, Ian Cassel recently mentioned that a well-constructed active investment strategy needs to be molded and shaped to you as an individual. It’s similar to what people say about Jiu Jitsu having a certain sense of justice—you’ll often find yourself in the positions you need to work on most. Rubbing your face in real-life mistakes through postmortem analysis is a fantastic way to address key flaws and drive inflection points in your learning.

I’m just finished a postmortem of a miserable experience I had investing in Tailored Brands (which, as of July 8th, looks to be on the verge of bankruptcy after a missed bond interest payment). You’ll be able to see that analysis online at www.strategychainpodcast.com/postmortems.

The analysis centers on analytical fundamentals, execution methodology, and psychology & behavior. I summarize the experience, look at what went right, and discuss in detail what I did wrong.

The question of the week is short: how can I shift the distribution away from postmortem and toward premortem?

So that does it for this episode. I hope it unearths some threads to pull.

If you’re interested in show notes or supporting the podcast, check out strategychainpodcast.com. If you want to get in touch with me, you can find me on Twitter @strategychain.

So until next time—thank you.

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