“Success is a lousy teacher. It seduces smart people into thinking they can’t lose.” –Bill Gates
There’s a famous concept in sports known as the “disease of more.” It was originally coined by Pat Riley, the hall of fame coach who led six teams to NBA championships, including the famous Lakers dynasty.
Riley said that the disease of more explains why teams who win championships often lose the next year, not by other, better teams, but by forces from within the team itself.
The players, like most people, want more. At first, that “more” was winning the championship. But once players have that championship, their motivation can wane. As a result, what was once a cohesive group of hardworking players begins to fray. Egos get involved. Players feel entitled to ignore the small, unsexy tasks that actually win championships, believing that they’ve earned the right to not do it anymore. And as a result, what was the most talented team, ends up failing.
Just as Gates said, smart people get seduced into thinking that can’t lose. But then they do.
The bull market turned 3,453 days old this past Wednesday. It’s the longest period of uninterrupted gains in American history. The remarkable run began on March 9, 2009, in the ashes of the Great Recession and the scariest financial crisis since the 1930s.
With that as the background, I thought today’s essay should be about humility, especially expressing humility as you start to enjoy some levels of success in the market. Don’t get me wrong, confidence in your investing abilities is great. Overconfidence in them can be disastrous.
Overconfidence is an emotional bias in which people demonstrate unwarranted faith in their own intuitive reasoning, judgments, and/or cognitive abilities. Because an investor has picked a few stocks that have done well lately, he likely perceives his success as superior knowledge or skill.
The implications of overconfidence are the underestimation of risks and overestimation of expected returns in the market. In the currently advancing bull market, many investors can exhibit overconfidence as it feels easy to make money in this type of environment. But as Humphrey Neill said, “Don’t confuse brains with a bull market.”
When the profits pile up in a bull market, it’s easy to think your superb analytical skills are responsible. But the experienced investor knows the danger of hubris. He knows to give the bull market some of the credit. In other words, don’t overestimate your investment skill when some of your success is attributable to a rising market.
As Warren Buffett has taught us, you’re neither right nor wrong because the market is going in your favor. You’re right because your facts are right and your reasoning is right and because you’ve done your homework —and that’s the only thing that makes you right.
If you’ve ever watched Buffett for any length of time, you’ll notice how humble he is. He’s not afraid to admit when he’s wrong and regularly practices self-deprecating humor to keep his ego in check.
Humility is a very attractive quality. It means staying confident and poised while putting away arrogance and boastfulness as we achieve our goals. When the humble person accomplishes bigger goals and achieves more wealth, they can still maintain a modest attitude.
A humble character is a vital component for achieving success in all areas of life. It is an unspoken inner strength that doesn’t require the need for praise. It should not be mistaken for shyness or introversion.
The humble person appears cool and confident as they work to achieve, never boastful but good-naturedly moving forward. They feel so secure within themselves there is no need to brag.
Lest anyone think that I’m suggesting you not be proud of your accomplishments, I’m not. When you achieve success, the first thing you should do is thank yourself! You deserve it. You really do. Don’t ever minimize your accomplishments, no matter how small. You worked hard and you should celebrate.
What I’m talking about is staying hungry for success. Most very successful people tend to keep pushing themselves, even after a perceived victory. It’s the reason successful investors keep growing and building their wealth, even though they’re already millionaires and billionaires, This happens because they know this – once you stop putting in the same work that you did when you were craving success, you’ll no longer be prepared to keep winning.
When you win in life or in the market, you cannot ever win again if you don’t immediately go back to what it took to get you there — you must stay hungry. Success requires constant attention and the moment you stop hunting for it, it will escape you. You must approach the creation of success as a must-have obligation, a do-or-die mission.
Whether you’ve achieved something you consider a success or you’re stalling out on your way there, ask yourself this question – what did your attitude and work ethic look like when you were eager to succeed? How much effort did you put in during the early days on the journey to success? If you’re not willing to put in that same effort now, you’re not as likely to get the same results.
Financial freedom, like most goals, starts with passion. But this passion can only take a person so far. Eventually, the excitement starts to wane and motivation weakens. Many quit, defeated, or by settling for some small successes along the way.
But the successful ones forge on, fueled by a seemingly endless supply of mental strength and determination. They have a hunger – an unwavering force that drives them to defy the odds and continue when everything and everyone could not. They want it more than they want air. It gives them the power to conquer the fears, the failures, the setbacks and survive the months, years or even decades of unappreciated work until they finally get to where they are going.
Stay hungry my friends. Be happy for your success along the way, but don’t stop at the first sign of success. Be sure to go all the way. All the way to freedom.
Be free. Nothing else is worth it.
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