Boy, that escalated quickly.
Much of what I write in these pages generates pushback – active vs passive, hedge fund performance and costs, folly of forecasts, etc. – but none pushes peoples’ button’s quite like challenging their favorite self-help gurus[i] and their aphorisms.
I am occassionally oblivious to social cues, and the response to A Millionaire Mindset Never Made Anyone Rich is typical of that blind spot. Between the social media activity, emails, and even columns from as far away as Australia,[ii] plenty of people let me know they disagreed with my views. Some were talking their book, others were defending an existing belief system. Still others simply wanted to share personal success stories to learn and grow.
Perhaps I did a poor job explaining the nuances of my argument in 635 words. I did not mention any gurus by name except Napoleon Hill, and he was discussed with approval. But I clearly touched a nerve, and so today we will attempt to provide some clarity on this issue.
In my column, I summed up my beef thusly:
“Consider, instead, the Cartesian pitch [“I think, therefor I am” as applied to self-help] being sold today. Just think it and it will happen. This stuff, along with crystals and horoscopes, joins a long list of things that have never been proven to have much value beyond a placebo effect.”
The point was simply engaging in wishful thinking alone is insufficient to get the job done. Given the horrific odds of winning the lottery, this is what state-run gambling is marketing with taglines such as “All you need is a dollar and a dream.” The mindset of visualizing yourself as wealthy or buying a lottery ticket is good for about 90 seconds of entertainment. Statistically speaking, neither the lottery nor visualizations are likely to make you wealthy. Apologies to those selling books or newsletters or lottery tickets arguing otherwise.
Before you email: I gave credit to the worthwhile suggestions made by some.[iii] There are advice books and columns that advocate readers do something beyond mere wishful thinking to better themselves.
Several emailers asked what the basis was for my opinion on what makes someone successful. I possess no expertise on the ultra-wealthy. I don’t study billionaires for a living. However, I have sat down for 2 hours at a time with lots of them: Mark Cuban, Ray Dalio, Howard Marks, Leon Cooperman, Jeff Gundlach, Bill Gross, Ed Thorp, Jeremy Grantham, Ken Fisher, Mario Gabelli, and too many near billionaires to mention.
This was the its entire conceit behind the creation of the Masters in Business in podcast 2013. Ask the sorts of questions that so rarely get asked of very successful people, especially on television. How did your philosophy develop? Who were your mentors? What mistakes have you made and what did you learn from them? The eclectic group of successful investors and business people shared this much in common: they were happy to pass on their learned experiences and wisdom. But they also shared other traits in common, despite very different personalities and varying approaches to making money. Here is what these billionaires believe:
1. Be Reality-based: Ray Dalio writes this explicitly in Principles; just about every member of this group discussed discerning aspects of reality that others have either missed or misunderstood. Howard Marks explains why you need to not only understand reality, but take it to a second level. Failing to understand the world as it is will prevent you from achieving success.
2. Work Hard: No inherited wealth here – all of the billionaires were self-made. They all discussed working long and hard, especially in the early days of their careers. Many of them out-worked, out-hustled and out-smarted their competitors to achieve their success.
3. Focus on Process: None of this group were outcome focused – they are all process oriented investors. Understanding probabilistic outcomes, learning from errors, failing well – these were each repeated frequently by this group.
4. Read widely: Another trait all of the group shared. They all read widely. Not just finance related books, but a huge assortment of history, biography, and philosophy. The billionaires all wanted to get smarter, learn more, and have a deeper understanding of the world.
5. Be Lucky: Of all the sentiments widely shared by this crew, the consistent recognizing of the role of serendipity in their lives was perhaps the most surprising to me. Every person mentioned in various ways how much random good fortune had come their way. They also were prepared to capitalize on what providence provided.
6. Be humble: Success in the market requires humility. At times, it can be humbling. But the humility of this group — despite all their success — was another unexpected surprise.
To reiterate, I am not anti-self help advice books. What I am is anti-wishful thinking. The virtue of being reality based, process oriented and hard-working reading widely and being humble are evident ways to work towards success in any fields.
Instead of the “millionaire mindset,” consider instead the “billionaire behavior” set. You will be glad you did.
A Millionaire Mindset Never Made Anyone Rich (April 6, 2018)
Should you invest like a billionaire? Probably not. (August 8, 2016)
[i] To channel Seinfeld, we should not call assistance from other people “Self-help.” It is simply “Help.” Self-help is marketing phrase created by book sellers.
[ii] For the record, I never wrote “Ignore self-help gurus!” I don’t know where Peter Switzer got that line from as its not in my column. The Sydney Morning Herald seemed to add that on its own. And to clarify this for the umpteenth time, writers don’t get to headline their columns – editors do.
[iii] “To be fair, there are some “millionaire mindset” suggestions that do have value: becoming goal-orientated; living within or below your means; using extra money to invest in yourself or the stock market, and so on. Never stop learning is also solid advice. Self-evaluation is a positive step. But unfortunately, these seem to be the exceptions to the rule of adopting a millionaire mindset.”