Being Prepared

On July 20, 1969, Neil Armstrong and Edwin Aldrin became the first men to walk on the moon. It’s been 50 years since then, and it remains one of the single greatest achievements of modern human history.

My father, who was nearing 20 then, had in fact transcribed the event as it was happening, while listening to Voice of America station on the radio.

Here is his transcript (click on the image below to download a clearer version my father copied from his original transcript on the day the astronauts landed back on Earth).

If you’re like me, you may feel if the event is happening right now, live in front of your eyes…

Now, while the transcript put me on moon for once, this astronomical body that orbits Earth and acts as our only permanent natural satellite, is really difficult to get to. Reaching there is, after all, 3.84 lakh km journey one side. That’s like going around the Earth at the Equator almost 10 times.

The farthest man had been into space before this was merely 2,000 km. So, the fact that mankind pulled it off at all in 1969 is incredible.

In fact, the enormity and the difficulty of the journey could be gauged from the fact that the astronauts knew that there was only 50% chance they would return safely to Earth. And not just the astronauts, even the US government had a strong apprehension that the three men will never return.

Several things could have failed and resulted in the deaths of the three astronauts. The spaceship could have exploded. The lunar module could have failed to dock, thus stranding the astronauts in space. In fact, the scientists were not even really sure if the surface of the moon was safe or not.

A lot of prior missions to the space, forget the moon, had ended up in disasters and many astronauts had died in the process. So, the success of Apollo 11 was not just about “…one small step for a man…” story. It was instead a reward mankind received after sacrificing some of the finest men and women.

Anyways, the preparation for the failure (and not just the success) of the moon mission was so well coordinated that the then President of the US, Richard Nixon had prepared an alternative speech which he never had to deliver (thankfully).

The speech is short. It was titled, “In Event of Moon Disaster” and it read –

Fate has ordained that the men who went to the moon to explore in peace will stay on the moon to rest in peace.

These brave men, Neil Armstrong and Edwin Aldrin, know that there is no hope for their recovery. But they also know that there is hope for mankind in their sacrifice.

These two men are laying down their lives in mankind’s most noble goal: the search for truth and understanding.

They will be mourned by their families and friends; they will be mourned by their nation; they will be mourned by the people of the world; they will be mourned by a Mother Earth that dared send two of her sons into the unknown.

In their exploration, they stirred the people of the world to feel as one; in their sacrifice, they bind more tightly the brotherhood of man.

In ancient days, men looked at stars and saw their heroes in the constellations. In modern times, we do much the same, but our heroes are epic men of flesh and blood.

Others will follow, and surely find their way home. Man’s search will not be denied. But these men were the first, and they will remain the foremost in our hearts.

For every human being who looks up at the moon in the nights to come will know that there is some corner of another world that is forever mankind.

There’s no doubt what NASA pulled off with the Apollo 11 mission was heroic, the stuff of legends.

The reality, however, was that everything was highly uncertain. The threat of death was extraordinarily high. Nobody knew what was going to happen. But we remember it the way we do because people were willing to take one of the greatest risks in human history.

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Investing is quite a humble task compared to what mankind has achieved in other spheres of life, including space travel. But the value of preparing for consequences, especially the bad ones, is as applicable here as to everywhere else.

The astronauts aboard Apollo 11 had a “50% chance of death” on their minds when they took off on their mission. In other words, they were prepared to die for the sake of their pursuit. Even President Nixon was prepared with his alternate speech in case the mission was to fail, and the astronauts were to die in space.

Now, “preparation” is not an alien concept for us. We understand the power of being prepared. In fact, when we master the art of preparation, we are not just focused on the details, outcome and possibilities. While these things are important, preparation means that we have armed ourselves with not only the necessary tools, resources and knowledge to get the job done but we are also prepared mentally and physically for the range of outcomes that it may entail.

In fact, when it comes to investing, one of the best checklists around – Charlie Munger’s Investing Principles Checklist – has “preparation” as one its key ingredients (apart from discipline, patience, and decisiveness).

However, sadly, when it comes to investing, despite knowing the importance of preparation – for the task on hand, and for the consequences – we undermine it often by, well, being unprepared.

Like, most of us are rarely prepared for large declines in the market values of our stocks. In fact, we are so unprepared that we often fail to understand what to do when such declines occur – to hold on to the notional losses, or to know our real mistakes and cut losses. We freeze in inaction and fail to clean up only to see our notional losses (from mistakes) become permanent.

What is more, in such times, when there are opportunities to build portfolios for the future, we again find ourselves unprepared or underprepared to know the right opportunities from the wrong ones. We rarely have prepared watchlists to act upon. Plus, poor decisions from the past that caused us mistakes – which we are not ready to accept anyways – keep us from making the right decisions in the present that subsequently makes us unprepared again for the future.

The cycle goes on, and we end up blaming others – stock prices, people, and situations – for our unpreparedness.

In one of his lectures published in Poor Charlie’s Almanack, Charlie Munger said this –

Our experience tends to confirm a long-held notion that being prepared, on a few occasions in a lifetime, to act promptly in scale, in doing some simple and logical thing, will often dramatically improve the financial results of the lifetime.

A few major opportunities, clearly recognizable as such, will usually come to one who continuously searches and waits, with a curious mind, loving diagnosis involving multiple variables.

And then all that is required is a willingness to bet heavily when the odds are extremely favourable, using resources available as a result of prudence and patience in the past.

What Charlie says here is that it pays to be prepared in your investing life – prepared not just for the risks that may be lurking around the corner, but also for opportunities that may appear anytime.

Ironically, we are often prepared for none, and that is what causes us grief during the market’s ups (when we keep sitting on the sidelines) and downs (when we are enjoying the madness of the party).

Roman Stoic philosopher Seneca wrote in Letters from a Stoic –

Everyone faces up more bravely to a thing for which he has long prepared himself, sufferings, even, being withstood if they have been trained for in advance. Those who are unprepared, on the other hand, are panic-stricken by the most insignificant happenings.

The astronauts aboard Apollo 11 would have never gotten a second chance if they had not survived the first one. In investing, we have an ample number of chances to make amends of our past mistakes. But even here, survival is the key to make such amends.

And only the one who prepares well, survives. In investing, moonshots, life, everywhere.

How well prepared are you?