How do you get to be different financially? It begins with thinking different. “Well, yeah!”, some of you may be saying right about now.
But here’s the question…
If thinking different can make such a positive impact, why don’t more people spend more time doing it?
Researchers at Harvard Medical School offer one compelling answer. In their research, sixty-to-eighty percent of adults find the task of thinking different uncomfortable and some even find it exhausting. That’s right, when some adults have to connect the unconnected through different thinking, it wears them out.
Because most adults have lost the skills they once had to think different. They don’t just lose the skills automatically. Instead, most of us grew up in a world where thinking different was punished instead of praised (at home or school). But, it’s the different thinkers who normally succeed in life and that’s the topic of today’s essay.
Every piece of empirical data shows that individual investors under-perform the average returns of the stock market. And why is this? It’s simple – because they buy and sell at the wrong time. The data clearly shows that individual investors buy when their confidence is highest, which is when the market is also highest and they sell when their confidence is lowest, near market bottoms.
In the last two decades, we’ve seen this play-out several times – the dot com and real estate bubbles and the subsequent stock market collapse of each. Not only did individual investors lose their shirts during these collapses, they also missed out on the incredible gains afterwards by staying out of the market as it recovered.
These poor choices are the natural byproducts of human nature – greed and fear. Let’s face it, it’s extremely difficult to sit on your hands and do nothing in hot markets. And it’s even harder to jump in and invest when the market is down and all the news is doom and gloom. Nobody wants to be seen as “different” when investing. But that’s exactly what it takes to be successful in the markets.
As noted investor Sir John Templeton said: “It is impossible to produce a superior performance unless you do something different from the majority.” That is precisely what successful investors do. They do things different than the average investor.
Successful investors approach the market differently. They don’t chase recent performance. In fact they’ll invest even more when the market is down.
How To Get What Everyone Else Gets
Successful investors know not to listen to friends and co-workers with their “stock tips”. They know to do what everyone else is doing in the market is a sure way to get what everyone else gets – not much.
Take Warren Buffett and the dot com boom. Buffett was ridiculed for not participating in the tech stock buying craze in the late nineties. People called him old and out of touch. But Warren Buffett knew what most didn’t know. As a wise and experienced investor, Buffett knew better than to get caught up in hype. He was vindicated when the dot com bubble burst and most tech companies went out of business. He dared to think differently.
One of the biggest misconceptions about success is that hard work alone creates success. Yes, hard work is important, but the main thing that separates the successful and unsuccessful people is the ability to think differently. To have the courage to be different from everyone else.
Thinking differently is very important because it influences the actions you will take. And different thinking results in different actions which creates different results.
If you are working to be someone different financially and haven’t achieved the success you want yet, the answer may be that your pattern of thinking is just like everyone else’s way of thinking. Our pattern of thoughts is determined by the specific arrangement of our brain circuits. And these circuits are created when our brain adds or removes new neural connections based on our experiences, environment or culture. And for those circuits that are often used, they get stronger and stronger and less likely to change. In other words, the more you use a specific pattern of thoughts, the less likely you are to think differently. I talked a lot about this in last week’s essay.
Our thoughts are very much physical. We can’t simply change our pattern of thoughts just by thinking we want to change them. No, to think differently we need to disrupt our thoughts from time to time.
Disruptions are powerful new experiences that can destabilize and cause a paradigm shift in the pattern of your thinking. It’s important to destabilize your thinking once in a while to help your mind to boost awareness and let you see opportunity and new ways of thinking.
What’s a disruptor? It can be something like…
Attending a seminar on a topic that’s uncomfortable for you. We tend to avoid that things that make us uncomfortable. If you’re not comfortable with investing, consider attending a seminar to destabilize your current thinking around investing.
Reading a new book or essay. This is probably one of the best ways I know to jar the brain out of its patterns. Many people give up on reading after college and that’s a big mistake. When’s the last time you read 10 books in a row on building wealth? I can tell you that a marathon reading session like that will cause your brain to bend and get out of its comfort zone.
Meet with a mentor. This is a great way to challenge your brain’s status quo. A mentor can ask probing questions that spur new thoughts and ways of thinking.
Discussion with like-minded peers. Ben Franklin started a club called Junto which had the goal of mutual improvement. They met every Friday evening to discuss business, personal issues, philosophy, and morals. Maybe you should start your own financial mastermind group to welcome new money thinking into your life.
When different thinking doesn’t come naturally, try forcing new thoughts to surface unnaturally — by shaking things up randomly.
I have found that most people can actually do this reasonably well if they choose to put in the time and effort that’s required to think different. That’s what disruptive innovators do, day after day. Will you dare to think different? If you do, the difference will show up in your bank account.
Be free. Nothing else is worth it.
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Ready for more tips on how to achieve the free life? Check-out more articles from the blog archives below: