Gain financial freedom by doing this

One of the hardest lessons to learn about investing is this: to win, you need to learn how to lose.

These past several days the market has been going down, and I was tempted to sell. Maybe you were too. I get it; losing is scary. It’s tempting to sell your investments, especially your stocks, when they are plummeting.

But that’s exactly the wrong thing to do. Sure, there are some positions you might need to get out of, the losers that have little chance of winning. But I’m not talking about those.

I’m talking about the investments you’ve researched and formed a conviction around, the great companies that you hold in your portfolio. Those are the ones you shouldn’t sell. I know. I’ve been there.

In February or March of last year, when people thought that the coronavirus was going to create a zombie apocalypse, I sold most of my Shopify position in one of my accounts. It was a big position for me. And that was a huge mistake. If I had held on, it would have been a monster gain. It would have been something someone could have retired on. But I didn’t hold on.

I wasn’t willing to lose, so I lost.

See, when the market is going down, you have to be willing to take paper losses. Those are the ones you get before you actually sell your stock to actualize your loss. Not actualizing your losses leads to a path of winning.

And, the truth is, the higher your account goes, the scarier it gets. It sounds backward, but it’s not. That’s because you have more to lose. Your account balance might be higher than it has ever been, but that’s when you’re in the most danger. Maybe your account crossed some threshold, six figures, seven figures, or whatever, and when a week like this week happens, it’s all the more tempting to sell to keep what you have left. But don’t.

The best gains aren’t made in a day. They are made in a year, five years, a decade. Hold onto the companies that are growing and innovating and dominating their industry. Don’t sell them. Add to your positions when days like these come along. And you’ll be amazed at what will happen.

You’ll gain financial freedom.

You’ll win.


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A secret to winning

We all want to win in our relationships, investments, love. But winning is often counterintuitive. And we can sum it up like this.

To win, you must be willing to lose.

You see, in relationships, we want to be right or argue our point or make people see our way, our hurts, our pain, our truths. But if you’ve been around the block and have some experience, you know that doesn’t work. In fact, it only poisons relationships. Making people see what you see isn’t a way to create intimacy. To go deeper with people, you have to lose that need to be known first and, instead, try to understand others before being understood, empathize with them, feel their pain. When you do that, you will likely deepen your relationships. Of course, you want to find people where this “losing” is mutual. They are willing to “lose” for you and you for them. But sometimes, it takes someone to initiate it. And if you do, you will not find yourself without friends and loved ones.

Who doesn’t want more money? Of course, we all do. I’m just keeping it real here. But, what we aren’t real about is how to win in this area. In investing, winning is also about losing. Maybe you’ve lost money trying to invest, and you don’t want to touch the stock market. But I think there’s a reason for that. It’s the fact that you’re trying too hard to win. I know that sounds confusing. But let me explain. When I lost money in the market, often it happened because I was too afraid to lose money: anytime my stock or investment started losing money, I would sell. Then that investment would recover and appreciate, and I would feel terrible because I felt like I was missing out. So then I would buy back into that stock when the price was higher. Then it would go down again, and I would sell again because I was losing money. And that cycle kept happening. In short, I would try so hard to win that, at any moment when I was losing, I would try to save myself by getting out of the market out of fear of losing more money. Maybe you can relate. After reading books and reflecting on my countless mistakes, I realized that I needed to just buy and hold. But to do that, I had to get my head right. I had to be willing to lose my money, all of it if necessary, if I had a high conviction about a company. That’s when I started making money. To make money, you have to be willing to lose it.

Love is complex. And I don’t want to say that to make romantic relationships work, you just have to lose, because that’s not necessarily true. But it does help. I’ve seen it in my marriage. When I’m willing to die to myself for my wife, our relationship goes better. And, when I say “die to myself,” what I mean is that I’m willing to set my agenda, preferences, desires, etc. aside and let hers be higher, more important. That’s losing. And if you do that, you will win. Your love will grow. Now, I don’t mean for you to get abused. No, marriage or romantic relationship is a two-way street. So you need to tell the other person to treat you better if they are treating you like crap. But often, to engender love, love will feel like a one-way street. And you might be the roadkill sometimes. But your relationship will likely flourish.

And, in general, too many of us care too much. We live like we have something to lose. We strive to upgrade our cars, houses, jobs. And we are terrified of getting them taken away from us. But what we don’t see is that this race robs us of joy. When we care so much about our stuff and titles and money, keeping up with the Jones, we just end up living poorer lives. We lose.

It’s when we stop caring so much that we begin to live more richly. When we stop trying to make another buck, sacrificing time with loved ones, and start making sure they feel loved, we are richer. I mean, have you ever seen someone who seems to live so effortlessly, who doesn’t seem to have a care in the world? I don’t mean that they are careless. They just are not that burdened. They may not be the wealthiest person, but they have something money can’t buy. They are free. I’m not saying we should all become homeless people. But we all burden ourselves with things that just don’t matter that much. If that’s you, stop worrying about winning. In fact, be more willing to lose.

If you do, you’ll become a real winner.


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To be rich, this is the kind of hustle we all need

Often it’s not how much money you make but what you do with it that counts.

I heard this story about this Chinese woman selling these little buns, for like fifty cents or something like that, in New York City’s Chinatown many years ago. And after maybe decades of working, she bought a building in Chinatown with her earnings. Then from there, she bought others.

You see, she didn’t make much, but she made the little that she had count. Day by day, she saved every cent to maximize her efforts to reach her future goals. She didn’t let her small income hinder her from dreaming big dreams. No, she did what she had to in the short term to enrich her long term vision.

She didn’t spend her money on nice clothes, a nice house, eating out, a Lexus. No, she saved. And, she slaved away rolling those buns before dawn, then spent the rest of the day standing on her feet selling her goods and wheeling her cart back and forth to her corner. And after she saved enough money, she invested and bought an asset that could earn her income. That’s hustle.

But it’s not just any kind of hustle. It’s immigrant hustle. It’s starting small, with virtually nothing but some buns and cart, and ending up NYC landlord rich. It’s knowing that you can compound a life’s worth of work and see incredible gains if you persist and manage your resources smartly.

She knew that even though she didn’t make a lot of money, she could save and not spend. And, this is important—over time, years, even decades, she could invest. She would accumulate assets that would make her rich. That’s the equation that makes the rich rich: saving + investing.

You see, you don’t get rich by living richly. No, you do it by living poorly and investing like the rich. That’s how fortunes are made: little by little until you have more than you can count. Fortune favors the patient and diligent. You don’t have to be an immigrant to practice immigrant hustle, nah. Anyone can do that.

Most of you have a greater advantage than this woman. Imagine what you could do if you heeded her example.

Yeah, you’d be rich.


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Politics and investing

No matter who’s party is in the White House, the market is in the black.

The stock market has been volatile these past several days leading up to the election. And it’s easy to want to sell our investments with a click of a button and jump in a bunker and hunker down.

I get it. I was there last week.

But that doesn’t work.

You see the market has been going up for almost a century. Yes, it goes down here or there, think 2008-2009, or this past March, or last week or so. But, usually, it goes up.

That means we need to take the longview when we invest: Check out this chart.

Source: Bloomberg

And that’s true, no matter who wins the election. The blue lines mean a Democrat was president, the red, you guessed it, Republican. So whoever plops themselves behind the desk in the Oval office, if you stay invested, you will likely get wealthier. It’s not optimism. It’s just reality.

So don’t liquidate your retirement fund or portfolio.

Instead, vote.


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Use your mind to change your brain: changing your temperament

We all have aspects of ourselves, our temperament, that we wish we could change.

Me—I’ve had a temper all of my life. It can get ugly. But that’s not the most interesting part. What is is that it has changed, improved as I’ve aged. I get angry less and with less intensity. I ultimately attribute that improvement to Divine Grace, but there was also work that I did to bring it about.

Maybe you don’t have a temper, but maybe you’re too pessimistic or fearful or anxious. And it’s easy to think that we’re doomed to stay that way for life. But you’re not.

We can change our temperaments.

What is temperament?

“Temperament” is rooted in a Latin word that means “correct mixture”. The idea is that each person has a mix, like a margarita. And your internal mixture is how your mind has been arranged, or your disposition, which is the way you are inclined to go, act, do, think. And it’s inherent. That means you’re born with a certain concoction that affects the way you act in life. It’s like your preloaded software. We all have our own OS.

But that doesn’t mean it’s not upgradable, or there aren’t bug fixes. Temperament needn’t be like our eye color and height and cheekbone structure.

Temperament is malleable. It may not be completely changeable. But it’s not set in stone. We’re more like clay. Our raw material will always be clay, but it can be shaped. We know this because our brains are constantly shifting and learning.

Neuroplasticity at work

That’s called neuroplasticity.

It’s a fancy word for saying that our brains are constantly changing. And according to neuroscientists, they can be changed. In short, your mind can change your brain. That means your thinking can actually play a role in molding your brain. We can teach ourselves how to be better.

And we do that by reflecting and writing. If we reflect on our lives and the hurtful things that have happened to us or the stories that are shaping us or the quiet ideas that direct our thoughts, and study them to understand what they are doing to us, we can make breakthroughs. And writing those thoughts and reflections down helps us process what is driving us and our thinking, and what we realize will help us change and upgrade our software.

My story of shaping my temperament

For example, my wife and I used to have brutal fights. And my temper would flare like a wildfire. And there were even times when I tried to walk out of our marriage. After several of those episodes, I started wondering if I was the problem. I reflected on my early twenties and how I was engaged to a different girl who broke our engagement. And I saw how that broke me. I didn’t know it at the time, nor for years afterward, that that break up created a deep, deep fear of rejection in me. Years later, when I got angry at my wife and tried to leave her, it wasn’t totally about her and our fight. That anger was rooted in that broken engagement and in the deep-seated fear it had caused. So my temper in this situation wasn’t about anger but a fear of being left again. And taking the time to understand that fear of rejection revolutionized my marriage, and me. And I learned to trust my wife, and I stopped trying to leave her.

The power of learning

See, learning is one of the most powerful things you can do to change your temperament. Too often, we avoid the painful parts of our past, which only makes us less capable of changing positively in the present. But when we look into the darker corners of our story, we will discover new insights into ourselves and why we are so angry or hurt or nervous or anxious. And they don’t all have to be dark. They just have to be stories and ideas that drive us. Once we understand them, we can reframe our minds and teach ourselves to think differently.

Maybe you’re really anxious right now. You should consider asking yourself what is causing you to be that way. Yes, there are external factors, of course. But there are also internal ones that are driving your anxiety, too. Maybe it was an event or relationship or family story that is affecting you. The point is to take the time to reflect and write about them, and you will make discoveries that will reframe your thinking and adjust your temperament.

Changing our temperament has incredible benefits. It not only improves our relationships but can also help you at work, in parenting, meeting new people, adapting to change, and even investing.

Temperament and investing

Warren Buffet says that investing isn’t about being the smartest person, but about temperament. “You don’t need tons of IQ in this business,” Buffet said. “I mean, you have to have enough IQ to get from here to downtown Omaha…You need a stable personality. You need a temperament that neither derives great pleasure from being with the crowd or against the crowd because this is not a business where you take polls. It’s a business where you think.” Source

Having the right temperament is the main differentiating factor between good investors and bad ones. Having a good temperament is good business. It’s an edge.

It’s also an edge in life. And knowing that we can mold our temperament is one of the greatest edges we can have.

I’m not going to lie to you. This isn’t easy; it’s really hard.

But it’s worth it.

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A new world: the Metaverse

Imagine living in a world where technology is so pervasive that it’s intertwined in everyday interactions and experiences, and and it is so immersive it feels as real as the room you’re in right now. It’s not on a screen, but surrounds you.

That phenomenon has a name: it’s called the Metaverse. And I recently heard about it on a podcast. It was astonishing.

Listening to the interviewee, Matt Ball, talk felt like tuning into an evolved futuristic human sending a message back in time to tell us present-day people what his world is like. His words drew me into the future and I was awash with images of sci-fi world-like predictions and it felt like walking on the Starship Enterprise or something like that.

The Metaverse is not just virtual reality. It’s more than that. It’s various worlds and digital realities that will exist simultaneously, where people will be able to navigate and experience fluidly. It’s virtual reality (which replaces your vision with a whole different world) and augmented reality (which adds to your vision in this world, like using Google glasses and seeing signs that aren’t in real life but can be seen with the glasses) mixed with other tech that likely doesn’t exist yet.

But most of all the Metaverse is a simulation.

It’s not real but it feels like it is, but in a way it is…real.

The technology appears to be decades away. But there are people trying to pull it forward, closer to the present. Pulling tomorrow toward today.

Tim Sweeney, the CEO of Epic Games, is at the forefront. His company owns and has nurtured the best simulation engine in the world called Unreal Engine. Many of the biggest games and movies run on it. Epic also owns one of the biggest games ever, Fortnite, which also runs on Unreal. And he offers it and many other services for content creators at a nominal fee, almost at cost, so that he can empower creators and the audience to improve the simulation experience and continue to innovate. Sure, that doesn’t create immediate value for his shareholders, but he’s trying to create the next big thing. And the innovation he’s nurturing, he believes, will drag the future closer to the present, actualizing the Metaverse sooner.

By the way, if you want to invest in Epic you can do it through buying Tencent stock. This company also developed Wechat, the largest messaging app in China, that also has a ton of others features like paying for your utilities, business profiles, e-commerce, etc. It’s like WhatsApp on steroids. And Tencent has a 40% share on Epic, a privately held company, which means its stock can’t be bought on something like the New York Stock Exchange. But, if you bought Tencent, you would own a chunk of Epic. You should know Tencent is a Chinese company. So there is that added risk. And I’ll disclose that I bought and am holding their stock even before listening to that podcast.

You should also know that I’m not a financial advisor and this blog post isn’t advice. Consult a professional before you start plunking money down, or, at least, do some serious research. And, besides, the market could tank at any moment, since, you know, our economy is in the crapper, and we’re in a pandemic.

And I don’t want to fool you. I don’t know if I understand all of this entirely. But it fascinates me. And I wanted to share it with you because I had never heard about this before and it felt like it would be a welcomed distraction for you. And maybe, like me, you’ll find it otherworldly interesting.

Here are a couple articles about the Metaverse that you might find illuminating.

  1. From the Post.
  2. From Matt Ball.

See you in the Metaverse.

Lots of love,
John