STREET DOGS

Success breeds complacency. Complacency breeds failure. Only the paranoid survive. — Andrew Grove

You should be afraid of failure. I know ... I know. Everyone tells you to embrace failure, it’s a wonderful thing. But, let’s get real. Failure sucks.

The goal in investing is never, and that means never, ever, to fail. The goal is to succeed. I don’t care what the popular wisdom of the day is. Failure is not good. Failure is bad. The mistake everyone is making is in confusing risk with failure.

You can’t succeed with every investment and you certainly can’t succeed with every trade. But that’s not failure. That’s the nature of the game. They’re not the same thing. And you only want to take smart risks that offer reasonable potential return and, here’s the good part, offer the best chance of success … not failure.

We’re not talking about an irrational fear that paralyses. Or that prevents you from making good decisions … we’re not talking about running scared.

We’re talking about a healthy paranoia of failure that will push you to do whatever it takes to keep it from happening. That will make you put in the extra work. That will keep you on your toes. That will make things more interesting.

We’re talking about a trait investors can use to combat how deeply the odds are stacked against them.

Unfortunately, it tends to die once a goal is hit. Few things sap the paranoiac drive to do better than stable cash flow and big gains. Michael Moritz of Sequoia was once asked why his firm had thrived for 40 years. “We’ve always been afraid of going out of business,” was his answer.

That is an exceedingly rare response in a world where most people step back, see all they’ve achieved and assume they can breathe a sigh of relief.