Visit Ground Zero: Kill All You Ever Knew About Investing!
January 20, 2009 by Vagabond Investors · 3 Comments
There is a story about Einstein and his assistant. Einstein gave a test to his science class. As he was collecting test papers his assistant came to him. “Dr. Einstein, wasn’t that the same test you gave to the class last year?” he asked. “Yes, indeed” said Einstein. Puzzled and confused the assistant asked, “But Dr. Einstein, how can that be?” Einstein laid back in his chair and smiled as he replied: “Because the answers have changed.”
That’s the point. The answers have changed. Answers are changing all the time. This is just a fact of life to every investor. Our life is different from what it was five years ago. So is everything else.
As the world is changing, we need go back to the basics. Now is the time to revisit everything we thought we knew about money and investing. Basic financial education has never been so important to us than it is right now. We have to dispose our old paradigms and crystallize our thinking. The following are the areas I am currently working on:
1. How do we make money?
2. How do we budget money?
3. How do we allocate money?
4. How do we leverage our money, time, systems and knowledge?
5. How do we protect our wealth?
6. How, when and under what circumstances do we exit?
7. What asset classes are likely to gain most in the upcoming years?
8. How may we serve more people with less effort?
There are a lot of people who are expecting us to deliver our views about the things I outlined above (which I will do to support your education). The problem is that these people have what is called the quick fix mentality. They want the quick fix. Quick weight-loss, quick buck, quick lunch. These people would want to go to heaven if it didn’t require dying.
The truth is that quick fixes never work. Only extensive working on anything produces a significant result. We have to commit to learning.
That doesn’t mean it has to be difficult. It can be super simple. It can be the easiest thing there is. Drinking water is easy and yet most of us don’t drink enough water. Raising financial education is like drinking water. It has to be over and over again. Like fluids in the body that eventually come out, out-dated financial education has to be disposed. Take everything you knew about money and investing and mentally destroy it. Kill it. Let the toilet swallow it. Why? You guessed it! The answers are changing.
Becoming financially independent has never been easier in the history of mankind. Some people think that the depression will last forever and that all hope is lost. Don’t you believe it. The sun will shine again. It’s not what happens to us but how we respond.
So, let’s get back to the basics. Resolve now to take time to re-educate yourself and answer at least the questions I outlined above. This work will pay in huge dividends. Forget what you thought you knew about the world. Test assumptions. Re-educate yourself as soon as possible. That is, of course, if you wish to become financially independent. In today’s world, that is not optional. Don’t expect anyone else (the government included) to support you.
Take the time. Put it in your calendar. If you’re still just looking for another quick-fix, you’re better buying instant coffee than investing.
See you on the next wave to wealth!
Jaakko
Lessons In Wealth #1: Accept Responsibility
January 12, 2009 by Vagabond Investors · 1 Comment
Everybody faces problems, big problems. That is a given constant and nobody can escape it. The most important thing that separates the rich from the rest of the population is their attitude towards life.
The rich firmly believe that they create their life. They believe that it’s not what happens but how we respond that matters. We can’t control all the things that happen to us, but we have absolute control over our response to what happens.
The poor believe that life happens to them. They believe that the external world dominates what we can do. This difference in attitude determines how we handle the inevitable problems of life.
When the waves come, we can choose to take responsibility or play victim. No one of us really is a victim. It is a role we have to choose. We need to understand that there is no such thing as a wealthy victim. Fulfilling, sustained and life-supporting wealth didn’t just happen. Life doesn’t just happen to us. We are participators and thus co-creators of our destinies.
How do we know if we are playing victim? It’s easy and simple. Let’s just take a look at our lives and see if we can find any clues of victim behavior. Consider the following.
1. Blame
Poor people tend to blame other people and circumstances that they are no rich yet. These same people really believe that the lottery tickets will solve their money problems some day. Probably they won’t. Statistically most of the lottery winners back in the start square or in worse situation than before the lottery win in five years. Now that’s something to think about.
The first step is to stop blaming and taking responsibility on everything that happens in our lives. If we are honest, we have contributed somehow to the problem. It’s not that we chose to blow things, but we were part of the process. Let’s accept it.
2. Justifying
The second typical victim behavior is justifying and rationalizing the situation. One common justification is that money is really not that important for me after all. Really? Is it not? Let’s face it right now. Money is unbelievably important in areas in where it works and totally useless in areas in the areas in which it doesn’t. When we need money, there simply aren’t that many substitutes.
Let’s think about our loved ones. What if we choose to believe that they’re not important to us? “Well he/she is not really that important. I don’t really need a spouse anyway.” Chances are they would not stay around for much longer.
Whether we like it or not, the same is true with money. If we believe that money is not important to us, we probably won’t see much of it. The rich people admit and accept that money is important. They treat it as something important. They believe and behave accordingly.
3. Complaining
Complaining is passive aggression. We can complain as much as we want but its effect on solving our problems is exactly zero. It’s a waste of valuable life energy. In our interpretation of the world, whatever we focus on grows. What’s wrong is always available and so is what’s right. Which one we choose to focus on determines what we call our life. We are living magnets and we attract what we think most of the time.
The fact is that we can always choose between victim and victor behavior. To some extent, we are all choosing to be victims and victors. The key is to make a conscious choice to take the road of victors, that is, take responsibility.
We can always accept the situation as it is and take responsibility. We can either change the problem itself or change our perception of it. We can do something differently to solve the problem or at least we can try to find something we can learn from it. Blaming, justifying and complaining just won’t work.
Remember, we create our wealth and non-wealth through our attitudes, thoughts and actions. It’s not what happens but how we respond. As the saying goes, circumstances do not make a man, they reveal him. The choice is ours.
It always has been.
Matias
