As you get older, you’ll notice how many people lie to you.
And it is SHOCKING.
Once you recognize these lies, you can never go back.
For example, let’s take this interview of a successful entrepreneur. In the media interview, a reporter asked him, “What advice would you give to someone who wants achieve your level of success?”
His answer is likely to be like this: “My #1 advice to people is to find their calling.”
It sounds logical, right? Something you can relate, and it sounds easy too!
Find your passion, find your calling, do what you love…
…but if you drill deeper, you’ll notice all the things he didn’t say:
- He never watches Netflix or Dim Sum and heck, he doesn’t even watch TV
- Every Saturday morning, he spends 3 hours in the office planning out his week
- He’s always thinking about work. In the shower, while buying groceries, and yes, while eating with his family
- He works 60+ hours/week
- He is on long-term medication for hypertension.
Now, why didn’t he say all of this stuff?
The truth is, most people don’t want to hear about the blood & sweat & tears he puts into working every single week. That sounds freaking hard! It’s much easier to drop a generic, politically correct remark that people can feel good about — even if it’s not the whole truth.
Most people want to hear success stories – the rags to riches type, like Jack Ma. They don’t want to hear the whole truth about what it takes to be successful.
When we start listening for these white lies, we hear it all around us, every single day:
- Fit mom of 3 kids: “Oh, I just walk a lot and watch what I eat.”
- The straight-A student: “I barely studied, it’s a miracle I even passed!”
- Pal who’s really good with women: “Just be yourself.”
Back to the entrepreneur story….
Now if you take his half-truths advice and execute it, you will be disappointed with your own results.
And you start to think he succeeded because he got the connections or he got financial backing from his parents or he was in the right place in the right time, or [insert your excuses here]
Enter the D to C principle
If you’re complaining about why I cannot emulate the same kind of success doing the (supposedly) the same thing as another successful person, regardless in your career/business/investing, the next thing that happens is you start to be dismissive.
Let me explain.
Being dismissive means you sit back and criticize.
- “Why does this company charge so much? They must be trying to rip people off.”
- “Why does she stay with him? Ugh, it’s so obvious he’s a jerk.”
- “She must have slept with the someone in the top management to get promoted so fast!”
- “He must have insider connections to have achieved X so easily”
Much easier right? Much harder to try to understand the underlying reasons why they did something.
Don’t you think nobody’s too good to learn. Ironically, it’s usually beginners who are arrogant enough to think they know it all, while successful people realize how little they know.
How this applies in investing
In my recent webinar for WarrenBuffettHQ.com (where I consult for clients 1 on 1 on how to get world-class investment returns FAST without doing any fundamental or technical analysis), someone said:
10% per year is like too low, nothing to shout about!
He did NOT ask – ‘For how many years?’
If you make such remark, any truly pro investor will laugh at you because you do NOT understand CAGR – Compounded Annual Growth Rate.
Here to illustrate:
Assume, from 2014 until 2016, your friend and you both started with 100k.
Your friend speculative stocks portfolio returned +30%, +30% and -30%
Whereas your consistent funds portfolio returned +10%, +10%, +10%
Now you go do the math.
>>> Fast forward 3 years,
Your friend are left with 118k in 2017, while your portfolio is at 133k.
CAGR wise, your friend is at 5.67% after 3 years, yours is at 10%
Who’s the winner here?
And maybe your ignorant friend had the audacity to say this in your face in Feb 2016 (before he lost 30% that year):
You are really a lousy investor. I am 3x better than you, see 30% return per year easily!”
What do you do?
You can either:
1) Laugh at his 30% loss in 2016
2) Walk away and ignore him because he really doesn’t know how to calculate
I pick Option 2 because no point arguing with an idiot.
Idiots will only bring you down to their level and beat you with experience
It is OK to be a newbie and be curious. True seasoned investors regardless of age, never think 10% CAGR is too low. But if you think you are too good for that and only remember your ‘wins’, my high school teacher had a term for that:
“Bodoh sombong” ~ people who don’t know what they don’t know and think they are so good to the extent they forget the basics.
You’re basically saying I’m smarter than Warren Buffett.
Warren Buffett’s returns from 1996 to 2016 is at 10+% CAGR, this further enhances this fact.
Of course, he got 30% – 50% annual returns in some years, but you never discount your loss.
So you still think you are too good for a 10% CAGR?
Put your ego aside and try this:
Ask ~ What do someone know that I don’t?
From being dismissive to being curious – move from D to C. Instead of dismissing things that contradicts with what we already knew, let’s actually try to say, hey, for 15 minutes, I’m going to try to understand that maybe these guys know something I don’t.
It is ok to feel dismissive upfront but as you go deeper, start being curious.
Because ~ look at this pie chart below:
Like for me, I started off with KLSE stocks investing, then move on to offshore stocks, then back to funds in the form of mutual funds & ETFs. If all funds and ETFs in the world are inferior to direct stocks investment in terms of returns, why would funds and ETF still exist? Are investors so dumb?
Turned out, you could really find an absolute gem among the stones. When you do, you’ll see entire worlds open up. At first I was dismissing funds, and then I said all right ~ I want to find something that is proven to consistently outperformed the market, minus the time & effort required in direct stocks investing. And that changed everything for me.