Dont_confuse_brains_with_a_bull_market-2
00:00:00.000 | Hello everybody, it's Sam from Financial Samurai and in this episode I want to talk about a couple things
00:00:04.640 | One the ultimate source of financial security your strong mind and two never to confuse
00:00:12.020 | Brains with a bull market. I remember back in college interviewing for this Anderson consulting guy
00:00:18.400 | The consulting companies were the most coveted jobs out of the College of William and Mary
00:00:23.600 | And I got rejected from all of them and the guy was clearly not impressed with me
00:00:29.280 | Because I was telling him about my interest in investing in the stock market and so forth and he said sam
00:00:34.560 | Don't confuse brains with a bull market
00:00:37.680 | Bulls make money bears make money pigs get slaughtered. So that was the end of the interview and I was like, well, okay
00:00:44.960 | I guess i'm not getting a job at enter consulting which ended up going bust
00:00:48.560 | And the story really reminds me of right now. I mean investors are making money hand over fist
00:00:55.680 | We're coming up with investment ideas and they're actually working
00:00:59.200 | For example the lifetime group stock idea about health and fitness gym stocks being the last reopening trade
00:01:07.280 | It's done. Well
00:01:09.280 | It's done well along with planet fitness and a bunch of other old school fitness companies
00:01:13.280 | And now i'm thinking to myself man. Am I an investing genius? I wrote out a thesis
00:01:18.640 | I recorded a podcast about health and fitness stocks and now the stock is up 25 percent in
00:01:25.840 | One or two weeks man. Maybe I should go get a job as a money manager
00:01:30.080 | And then again, I think to myself well don't confuse brains with a bull market
00:01:35.520 | It's impossible to consistently outperform the market
00:01:39.360 | The ideas you think are because of your connecting the dots
00:01:43.760 | Might just be because the overall market has a tremendous amount of liquidity
00:01:48.260 | And things just go up because money is trying to find
00:01:52.720 | More profitable investments in a low interest rate environment. So if you're starting to feel a little giddy a little
00:01:58.720 | Overconfident that you're just such a great trader
00:02:02.480 | Just start looking back at history
00:02:05.280 | Look back to the dot-com bubble in 2000 when the nasdaq
00:02:09.140 | Basically imploded by about 65 over the course of two years the sp500
00:02:13.940 | Imploded by about 40 something percent over the course of two years
00:02:18.240 | Then of course the global financial crisis in 2008 and 9 and it wasn't until about 2012
00:02:24.980 | When stocks regained their pre-crisis highs and then started marching upwards. So if you've only been investing since
00:02:33.200 | about 2009
00:02:35.520 | You've only seen really good good good times. There's only one year
00:02:40.080 | I think it was 2018 where the markets were down about five or six percent
00:02:43.200 | Which is not that big of a deal after such a tremendous increase
00:02:46.960 | So really be careful about thinking that you can outperform the market consistently over the long term
00:02:52.560 | Because you probably can't and if you look at the data over the past 10 years
00:02:57.040 | institutional fund managers
00:02:59.600 | In other words people who are financial analysts and money managers
00:03:02.560 | Who do this for a living?
00:03:04.800 | They most of them for the equity side haven't been able to outperform their respective indices
00:03:09.840 | So about 80 percent have not outperformed their respective indices. So those are bad odds
00:03:16.640 | So for you and me to think that we can outperform when you know, we've got young kids to raise at home
00:03:22.160 | We've got other types of jobs other types of interests. We don't spend, you know all day watching the markets listening to earnings conference calls
00:03:30.080 | Watching the federal reserve talk about interest rates and bond tapering and so forth. It's going to be really hard
00:03:37.040 | I think we can get lucky for you know, several years several positions
00:03:41.840 | But long-term sustainability is very very difficult and you might be wondering what am I going to do with my lifetime fitness investment?
00:03:48.560 | I invested about thirty thousand dollars in it and twenty thousand dollars in another company called metafast. I'm just gonna ride it
00:03:55.040 | I'm gonna ride it because I think the trend is our friend through the first half of 2022
00:04:00.000 | I think we're gonna see the biggest year of people trying to get back in shape
00:04:04.560 | Live a yellow lifestyle spend their money. I think it's going to be great
00:04:09.980 | 2022
00:04:11.020 | So i'm just going to ride the momentum and see what happens and this investment
00:04:14.320 | And investing in general brings me to my other point a main point and that is the desire for financial security
00:04:21.680 | When we are investing and saving and working hard
00:04:25.980 | We ultimately desire financial security so we don't have to think about money so much
00:04:31.740 | I mean thinking about whether we made the right investment whether you're going to get laid off during the next round of layoffs
00:04:39.580 | Whether we chose the right partner because they've got terrible credit score and they just spend while you're the saver
00:04:45.900 | You know
00:04:46.380 | These are all things that uh hurt financial security that messes with your mind and it just kind of keeps you
00:04:52.300 | a little bit anxious and in a positive way this anxiety is good for you because it is the
00:04:58.060 | Counterbalancing mechanism for you to not slack off so much to not
00:05:02.940 | Spend all your money you need some of that stress and anxiety to keep you focused
00:05:08.380 | Especially if you're a parent, you know, if you're a parent the stakes go up
00:05:12.300 | You're not only taking care of yourself and your spouse and your partner
00:05:16.300 | Hopefully but your children and your children are the most precious assets in the world and you would do anything
00:05:23.340 | To love and care for and protect your children and I believe most of us are irrational over the long term
00:05:30.700 | So if you desire money, you're going to save more money and if you've had hardships growing up
00:05:37.260 | You're probably going to save more money and I do believe your upbringing does help determine
00:05:42.940 | Your outlook on money how you view money. Is it a healthy relationship?
00:05:47.600 | Or is it an unhealthy relationship?
00:05:50.220 | And so when I talked about perpetual failure in a previous post
00:05:53.660 | As the reason why I continue to save and invest over 50 percent of any investment income and online income I make
00:06:00.220 | It's because growing up. I saw a lot of poverty in malaysia in china and in india
00:06:07.020 | And it really kind of affected the way I saw life and when I was working at mcdonald's for four dollars an hour and constantly
00:06:13.820 | Getting yelled at by the overzealous manager. I just remember thinking myself. There's no way I want to be stuck
00:06:20.620 | Slaving away in front of a hot stove for six hours a day
00:06:24.060 | Making four dollars an hour. I mean, that's that's terrible. I mean it brings and builds character
00:06:30.300 | And it makes you appreciate what you have but over the long term. It's a really tough way to live
00:06:35.180 | So i've come to realize that it really is your strong mind
00:06:39.660 | Your investing acumen
00:06:42.300 | Your knowledge your education that really is going to provide you some type of financial security
00:06:47.680 | Just think about a scenario where you lose 90 of your net worth
00:06:51.500 | You also lose your job. Thanks to a recession and then for good measure
00:06:55.500 | You also break your leg, which you require to do your job
00:06:58.300 | Are you screwed? Well, most people would say yes
00:07:03.020 | But are you really are you really when I used to play a lot of texas no limit hold'em
00:07:08.060 | There would be a time where i'd get some bad beats, right?
00:07:11.020 | So bad beats are when you're favored your odds are favored to win
00:07:13.900 | But your opponent spikes something on the river and takes all your money
00:07:17.740 | And it was really disheartening
00:07:20.540 | However, I would always tell myself a chip and a chair is all I need to come back
00:07:25.260 | And that's a common saying in the poker world. You can run bad, but a chip and a chair
00:07:29.820 | That's all you need and you can fight your way back
00:07:32.940 | If all goes to hell we still have our minds
00:07:35.260 | Our mind is our last resource of financial security because we can always find ways to make money
00:07:41.180 | And with this type of attitude, I sometimes did come back and I think you've got to believe
00:07:47.100 | That your mind will help you in the darkest of hours
00:07:51.100 | And so I thought about what would I do if I lost a lot of my net worth?
00:07:55.900 | And I had to take care of my family
00:07:57.980 | Well, I think the number one thing I would do would be to try to think about investment ideas that could help pay for
00:08:05.100 | Our living expenses, of course, I would go through my budget cut costs and find ways to make more money through active income
00:08:12.940 | But I would look for investment ideas like LTH the lifetime fitness group, which now is enough
00:08:18.460 | To pay for a month's worth of living expenses
00:08:21.340 | But the reality is I know it's not sustainable
00:08:24.540 | So in addition to all of us trying to build a strong
00:08:27.820 | investing mind
00:08:29.980 | I think it's probably more important to develop an
00:08:32.460 | Entrepreneurial mind really good entrepreneurial acumen
00:08:36.540 | So in other words when you've lost your job and your net worth is down in the dumps
00:08:40.460 | Will you have the entrepreneurial mind to make money on your own?
00:08:45.580 | This is super important with entrepreneurship. There's a much stronger correlation with effort and reward
00:08:52.380 | For example here in the personal finance world. There are plenty of writers and podcasters who have no financial background
00:08:59.420 | And you would think well, how is that possible that they can grow and make money online?
00:09:04.060 | It's possible because they have a very strong entrepreneurial mind
00:09:08.460 | They know how to market. They know how to grow a brand. They know how to convince the search engines. They've got great product
00:09:15.100 | And that is just the way it is
00:09:17.340 | That's capitalism and that is a wild wild west open forum where anybody can compete. That's the beauty of technology on the internet
00:09:25.100 | Now with good investing acumen the correlation with investing success is not as strong
00:09:30.780 | You might know all there is to know about analyzing a cash flow statement
00:09:34.380 | However, if you can't properly predict what other people are thinking after the results
00:09:39.260 | Well, you can still lose so be very careful about getting lulled into only making money from a day job
00:09:47.740 | Your day job is like a warm cocoon
00:09:50.320 | Paying you the benefits paying you a nice salary every two weeks. It's great
00:09:55.580 | I remember that time and it just lulls you into a little bit of complacency where you're not
00:10:00.860 | Bothering to try to make more money outside of work
00:10:04.460 | But I really think you should try you should try because there's nothing better than making a dollar
00:10:10.300 | With your own creativity and hard work. It's really interesting compared to making a dollar
00:10:15.660 | For a company it's just night and day. I think the value
00:10:18.940 | That you get out of making your own dollar is like
00:10:22.380 | I don't know five times more five times greater because if you didn't do anything nothing would happen
00:10:27.260 | But at your day job if you decide to slack off, you know half the day or the whole week
00:10:31.980 | You're still going to get paid and the company's probably still going to make money. So once you have that confidence
00:10:36.800 | To make your own money
00:10:39.340 | You're going to feel a lot more financially secure and to build a strong financial mind
00:10:43.900 | It just takes practice and it takes studying
00:10:46.380 | listening to podcasts reading articles
00:10:49.580 | watching videos
00:10:51.820 | You will learn and the more you learn the more confident you will feel
00:10:56.220 | and better yet
00:10:58.380 | The greater the ability for you to make money by taking action and you can tell who has a weak mind
00:11:04.380 | Just spend any amount of time on social media twitter in particular
00:11:08.300 | If you have a weak mind you tend to get agitated more easily
00:11:11.660 | You start getting into useless online arguments because someone doesn't believe the way you believe you try to convince them
00:11:18.220 | Otherwise when there's no amount of effort you can put in to convince someone otherwise
00:11:23.260 | But if you have a strong mind, you're more open to seeing the other side
00:11:27.260 | There is no way of knowing everything you've got to be humble when it comes to investing
00:11:33.020 | And when it comes to trying to build your wealth because there will be landmines that you will step on
00:11:37.580 | That you will have no idea about you will have not seen them
00:11:41.180 | Therefore the logical thing to do is learn from others who've experienced what you might one day experience
00:11:47.260 | In other words a strong mind is also an open mind
00:11:52.140 | So let's keep on learning and sharing our experiences
00:11:54.880 | Even if whatever I write or say doesn't fully agree with you. Just think maybe
00:12:00.700 | I have a perspective that you do not have and embrace that and i'm going to do the same
00:12:05.180 | Whenever I read something that's critical a little bit nasty or just totally out in left field
00:12:10.940 | I like to think well, maybe they have a point i'm missing
00:12:15.180 | Even if you receive tough love embrace it so you can try and get stronger
00:12:20.220 | It's nice to know that if all else fails we can always fight our way back
00:12:25.500 | And that is I think the secret to feeling more financially secure
00:12:30.540 | Thanks so much everyone for listening. If you enjoyed this episode, I'd love a positive review
00:12:34.860 | Shout out to Stephen M
00:12:37.420 | Bamma trader JT for leaving those five-star reviews. I really appreciate it helps keep us going and it helps make things fun
00:12:44.060 | I'm going to continue to do some writing and some recording on reflecting on this year and over the past 520 years
00:12:51.340 | I think it's good to reflect folks and to really try to appreciate how far we've come and what we have
00:12:58.460 | Also, i'll be finishing up the first
00:13:00.700 | Draft of the finished manuscript of my book this month
00:13:05.020 | And by the end of the year, it should be all tidied and squared away
00:13:08.540 | And the book is going to come out june 2022
00:13:10.800 | And it's going to be about making better decisions with some of life's most important decisions
00:13:16.860 | So i'm excited to share the book with you guys
00:13:19.180 | And have you guys read it share it like it and so forth. Take care everyone. Talk to you later