Friday, November 4, 2011
First, I want to correct a mistake I made in my first post about traits. I called these traits I am describing, personality traits. Wrong. They are not personality traits, but rather, character traits. As a means of making the distinction between the two, think of many personality types sharing the same character traits. Every person has the capability of being courageous, or disciplined, even though we may find it hard at times. Which leads me to what I think of as the most important trait of all, for personal investors. Attitude. Yes, I know we all have attitude, but few of us cultivate it enough, or master it.
Take our attitude about money, for instance. If we fail to have an abundance of money in our possession, then we have either given most of it away, or we have a poor attitude about money. In any aspect of our life, if we think we can, or if we think we can't; we are correct. What do you tell yourself about money? Or, is it really you? I can still hear my mother reminding me that money doesn't grow on trees. How many times did I hear my parents say, "Just when we started to get ahead of our bills..."
I can teach people how to invest money in the stock markets, but their success has more to do with their attitude than it does about what they know. Do we see the stock market as a zero sum game, where our winning means somebody else has to lose? Do we know there is an abundance of wealth in this world, or do we see it as being limited to only a few lucky individuals? Do we think making money has to be difficult, and time consuming, or do we see making money as an exchange of value? In every case, what we believe makes us right!
Even if we manage to amass a significant amount of money, it will soon disappear if we have the wrong attitude. Studies have shown that lottery winners and their money are soon parted when they have a poor attitude regarding money. That is why I find it important to designate a portion of what I make to charity. I am grateful for the opportunity to do so. One of the best things about gratitude is it forces us to think about what we are grateful for, as opposed to the things we don't want, and don't like. I also get to share the fruits of my success with others less fortunate - others who may not have the capital to invest, or a good strategy for doing so.
Do's & Don'ts
To be honest, attitude is something I struggle with in writing this blog. We are all being manipulated by the humongous advertising budgets of the financial services industry. Most people believe nobody can time the markets because the "experts" don't want us to think otherwise. They will promote the ideas of any academic or "expert" who says so. Even though we can achieve a better return from Exchange Traded Funds (ETF's), their solution is to invest in Mutual Funds. Guess why?!? In the face of all of the misinformation designed to mislead and confuse, I find it very difficult to ignore the things that people should not be doing and focus, instead, on only those things we should be doing. (See, more proof that their plan works!)
Fear begets fear, just as love has the power to change everything in our lives. We can choose one, or the other. No person can be fearful and loving at the same time. We can go from one to the other in a hurry, but we cannot hold onto both emotions at the same time. Fear is the enemy in investing as surely as it is the enemy in life. Positive things are always, always, the result of thinking about and believing in positive things. Mother Teresa was known to have said she would never attend an anti-war rally. However, she would be happy to be invited to a peace rally!
The change in attitude is sometimes really very subtle, as in the previous example. To believe we can achieve one result while thinking about a different one, is impossible. I admit, it is one of the things I could be better at. Not only do I believe it would make me a better personal investor, I believe it would also make me an even better person.
Do you have the attitude for success?