172. Be more wary of your Good Ideas than the Bad ones
“You can get in way more trouble with a good idea than a bad idea, because you forget that the good idea has limits.” ― Ben Graham
Can a good idea be worse than a bad idea? Yes, it can be.
It is a good idea to balance your life but too much balance will mean you will not be able make meaningful progress in any one area. Let us say that you would like to work from 10AM to 7PM every day and the remaining time is strictly for your personal priorities. On a certain day, your child or spouse or parent or friend falls sick and needs tending to. Because you were strict in not extending beyond 7PM even in case of work emergencies, would it be OK that you leave work early to take care of your loved one?
In pursuit of work life balance, many end up with neither satisfying personal life nor invigorating career life. Too much balance may in fact make life bland and even listless.
It is a good idea to provide for your children but you may make them fragile by caring too much. Sponsoring children’s college education is a case in point. Even if you can afford it, would providing easy access to financial support be a good thing for your child’s future? Letting go of great educational opportunities just because you do not want to provide financial support may not make sense too.
It is a good idea to eat less carbohydrates but not eating enough carbs and overloading on proteins can’t be good.
Many companies take on debt to launch new projects. There are typically two main advantages with debt — 1. Debt is the cheapest source of capital for organizations 2. Interest on debt is usually tax free, this further reduces the weighted average cost of capital. This makes it a good idea to take on debt. On the flip side, if one optimized the cost of capital by taking on the maximum amount of debt that lenders are willing to lend, all it takes is a whiff of bad business conditions for the organization to fall apart.
Vacations are good because they give us time to rest, recuperate and recharge. Clearly, more vacations are better than fewer vacations. But what if it is permanent vacation, like early retirement after financial independence. What do you recuperate from? Would vacations continue to hold their promise if they become too often?
Good ideas may keep you from going after greatness.
For most middle-class families, putting their children through college leading to a good job, is a ticket to materially upgrade their financial disposition. No doubt this path has improved so many lives worldwide. This is a good idea because this path affords a good likelihood of success. But this path could also wreck the dreams of potential leaders. By following the “good” idea, they may end up spending their life maneuvering artificial obstacle mazes in corporate labyrinths. Because of the strong validation of such good ideas, many will not be able to build courage to break away into following their own natural inclinations.
Volatility is scary and hard to deal with. It is a good idea to seek steady state and reduce volatility, We seek reliability in our employees, team members, bosses, spouses, children etc. But what about in our investments? With their steady returns, fixed income instruments offer reliability but it is the volatile equity instruments that offer you opportunities to create wealth.
Bottomline
Good ideas are good until they aren’t. Sometimes, good ideas tend to get overdone to the point that they start to negatively impact the intended outcome.
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