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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I want you to be happy

Last week, I read about Jeff Bezos buying a three-floor penthouse apartment in Manhattan for eighty million dollars. And when I did, I felt something. 

What was it? 

Envy. 

Maybe you can relate? 

But it wasn’t the apartment, for me, no. 

What does one do with twelve bedrooms and seventeen thousand square feet? I haven’t a clue. 

I wanted (and am still tempted to want is) his ability to buy something like that. I envied his wealth. 

Because somewhere inside of me I think that that would make me happy. There’s a part of me that believes Jeff Bezos’s kind of money is the answer to all of my problems. 

But there’s one slight issue. 

It’s a lie. 

I know money can’t make me or you or us happy. Do you know how I know? 

Because every time I’ve ever added more to my little pile, I am happy for a moment; and then it transforms into wanting more, worry about getting more, feeling like I don’t have enough; and before I know it, I am wishing I had the money to afford an eighty million dollar apartment.

I’m not saying that having a lot of money, or even Jeff Bezos’s kind of money is bad. It’s not—at all. 

Being the richest man in the world certainly has its benefits: crazy big luxurious apartments, private jets, money to buy whatever you want. Those are nice perks. Having money is better than having no money, that’s for sure true. 

But believing you need that to be happy isn’t. 

Just because you have an easier life doesn’t mean you have a happy one. 

When I worked with millionaires and billionaires in private banking, every one of my clients had what would appear to many of us as incredible lives. They didn’t need to worry about money. Most of them had more than enough for several lifetimes. Some of them were pleasant and happy people, but others always seemed miserable. No matter what I did, how much they had in the bank, what good happened to them, they just couldn’t be happy. Some even stressed and worried about money. 

I guess that they reacted that way because they had envy, too. Millionaires, even billionaires, can want what others have. They can want more. 

Envy robs us, leaving us bankrupt. It makes the wealthy feel poor and the poor poorer. That’s what envy does. It blinds us to what we should be grateful for and focuses our attention on what so-and-so has, stealing our joy. 

I’m not saying that we shouldn’t work to make more money. We all need it. It’s good. The issue is wanting what others have and believing that it will make us happy.

Our unhappiness isn’t caused by what other people have or what we don’t have. It’s caused by us failing to see and appreciate what we already have. We don’t know how rich we already are. 

We have our lives; we have potential; we have time; we have today; we have loved ones and those whom we love. 

And I will enjoy all of the good things I have. 

Shouldn’t we all. If you have your daily bread, a roof over your head, a person you can call a friend, aren’t we rich? 

If we have enough money in the bank where we don’t need to worry about tomorrow, aren’t we wealthy?

We may want more, but we don’t need it to give us joy. 

I hope Mr. Bezos enjoys his palatial home in the sky. I’m happy for him. 

But I also hope we know that we don’t need to be him to be happy. 

Being us is more than enough.