Berkshire Hathaway’s annual meeting is being held today and the most popular section of the meeting is always the question and answer portion. Warren and Charlie field questions for hours covering a wide range of topics.
In these sessions, Buffett is often criticized for giving “generic” advice. Indeed, much of his advice smacks of mid-west colloquialisms and metaphors. For those wanting specific investing advice, it can be frustrating. But there’s a reason Buffett doesn’t give specific advice and I’m of the opinion that it’s this – he’s teaching us to teach ourselves.
Yes, we should learn from others but we should also be learning to keep our own counsel along the way. When we do, we gain an inner critical voice which the mind builds as it develops critical thinking abilities. To pay our dues in building wealth, it’s important for us to make our own mistakes, own up to them, take responsibility for them and learn from them.
And this is exactly how it was as we were growing up. As a person matures, the percentage of things that are already decided for them goes way down, and they must make up the difference. As the decision-maker, they are more accountable for the outcomes—good and bad. This level of accountability can be stressful for even the strongest thinkers, since most people have more experience forming opinions than they do making big decisions.
And because of this, many just quit making all but the most necessary of big decisions. They start to look around for others to “turn the big rocks over” for them in their life. It’s a convenient strategy. When something goes wrong, they can always blame the *%&^ idiot who told them what to do and when things go right, they can cleverly co-opt the idea and promote it as their brainchild.
But there are serious consequences for this, because it creates false beliefs about self-learning. Over time many people have built very strong false beliefs about their ability to self-learn, such as:
- There are things that I can’t learn on my own, so I need someone to explain it to me
- If I don’t understand something the first time, then it’s too hard for me to understand
- It’s always necessary to take a course or attend a session in order for me to acquire a new skill
Know this: These false beliefs will keep you away from learning things that you could have learned on your own. They also create a co-dependent, and oftentimes victim, mentality. It turns into learned helplessness. And it means that, in spite of what that person thinks they’re doing, the only thing they’ve really learned is… fear.
To be a successful investor, requires you to challenge these types of beliefs and test whether they are true or not, instead of being swept out by others who you think are more skilled than you.
Now, to be clear, I’m not suggesting a person take a Rambo, go-it-alone style of learning. Success almost always require the help and guidance of other people, received in the form of conversation, books, DVDs, CDs, and information online like this humble blog. But to thrive with investing, we must all become self-taught learners, whatever our formal training was or will be.
You see, all learning is bolstered by self-teaching. The artist takes a lesson once a week but will barely retain the teacher’s suggestions, or advance in any way with her painting, without individual practice that incorporates careful self-assessment and adjustments.
So, how does a person migrate to being a more of a “self-directed” learner? By doing this…
Getting comfortable with failure and conflict.
Going thru the paces to become a successful investor doesn’t just introduce the possibility of conflict—it guarantees it. Every investment decision comes with its own challenges and blind spots. It is inevitable that some of your ideas will not work out. So early on, learn not to shy away from conflict. The more practice you get navigating these healthy kinds of conflict, the less enervating you’ll find it and the more you’ll build your big decision making muscles.
It’s easy to say “that would make a great investment”. It’s way more difficult to answer “should I make that investment?” You see, ideas and opinions are nice, but success moves on decisions. Yes, you need to think ideas through but yes, you also need to make decisions rather than pass the buck.
Practicing this will nudge you just past your current level of comfort. It’s analyzing exactly what you want to learn and pushing yourself until you master that concept, which may be challenging for you. Many avoid this type of deliberate practice at first because it’s hard, scary, and time-consuming. But once you’ve tasted the fruit of its process—true mastery of a subject—then you can really appreciate its value.
I see too many people investing $500, or $5,000 or $50,000 into the market with just $5 worth of investing education. That’s recipe for investment failure friends. Or worse, they outsource the big investment decisions to a financial advisor. Look, I have many friends that are financial advisors, and they’re fine people, but a financial advisor cannot cure financial illiteracy. If you don’t know enough to discern whether the financial advisor is giving you good advice or not, what exactly are you accomplishing?
You see, what’s holds most back from investing success is neither intelligence nor technique. It’s insecurity. Feelings of inadequacy stop them. Many people who have investing ambitions have a terrible fear that although they’re good, they’re not good enough or smart enough. It can be debilitating.
It ties back to the notion of cultivating a growth mindset; people with such a mindset don’t worry about how smart they are. What matters is their openness toward developing their skills and talents. Rather than focusing on being right (ego mindset), they want to “get it right”.
The truth of the matter is every successful person (whether they dropped out of high school or got a couple PhD’s) took their education and their learning into their own hands. I’m so glad Buffett didn’t give specific investment when I was just starting to build my investment knowledge. Had he, I would have just learned one thing – to go to him for fish. As it was, I learned how to be a fisherman. I hope he continues to offer “vague” investing advice, as it forces the inspired investor to learn more on their own.
Our time is priceless and our money comes in at a close second. For every dollar and every hour you’re investing, be sure you’re getting a return. That includes the skills you require. If more people scrutinized their investment in knowledge like they do the shiny, expensive trinkets they buy, I bet we’d have a lot fewer folks walking around looking for jobs with theory-filled diplomas and a mountain of debt. Learn to learn. Become not only a student of investing, but also your own professor.
Be free. Nothing else is worth it.
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P.S.S. What’s this got to do with you? If you don’t take action, absolutely nothing. But remember this – most people fail to achieve what they want in life simply because they never start. If you’re ready to escape the rat race and live life on your terms, don’t wait. Start today.
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