Safe Investing means overcoming your fears and turning downturns into opportunity. Become unshakeable and start truly winning.
This is Unshakeable Part 3
What follows are the direct lessons I learned from Tony Robbins’ book Unshakeable. I highly recommend you get yourself a copy. It’s totally worth the investment. Get Unshakeable here.
In Part 1, we looked at how to become unshakeable, in both life and investing. The secret is to know the facts. If you know the facts and the potential problems, then you can prepare. By being psychologically, physically, mentally and financially prepared, you can face any problem from a position of strength.
In Part 2, we learnt that to be successful in life and investing is to know the rules and the principles of the game. Our focus was on investing, but it’s the same for life. If you know the core principles of how to win, or you learn them by following successful people, and you apply them, then you will have a great chance of success.
In Part 3, it’s time to become truly unshakeable and put it in to practice. It’s time to overcome the fear and turn crisis into opportunity. Become unshakeable and start truly winning.
Safe Investing: Avoiding Fear and Mistakes
Safe Investing – How to Beat Fear
It is possible to beat fear and to overcome adversity. The secret is to navigate the bad times by looking to the future and seeing how to use these situations to propel you into a better future.
The book’s focus is on how to overcome fear in the stock market, but it can relate to other areas.
In the book, Peter Mallouk, who contributed a section in the book, shows that the bad times are actually the best time for investors. When stock prices are plummeting and people are running away in fear, that’s when you can get the best deals.
As Warren Buffet’s classic rule states: “… be fearful when others are greedy, and be greedy when others are fearful.” (Warren Buffet) (Robbins P.121)
Surviving downfalls is all about being prepared; being prepared financially and emotionally.
You need to prepare emotionally. When the sky is falling, the instinct will be to sell, cut your loses and limit your damages. That is the wrong reaction. You need to know that the downfall will turn around. Cutting and running, means locking in a loss. The proper response is to stay strong and ride it out.
You need to be prepared financially. The better response to riding out the downfall, is to be prepared. Have the asset allocation that allows you room to move. By having a range of assets such as bonds, stocks, real estate, gold, funds and so on, you can be in a position to maneuver.
Safe Investing through Asset Allocation
The right asset allocation will mean you have assets that move in different directions. For example, when stocks fall, bonds usually go up. So when the stock market is falling, instead of freaking out and dropping your investments. You can simply sell your bonds, which have gone up in value, and buy more stocks, which are on sale as fearful investors are running away scared.
There is a lot to cover in this chapter, and I can’t say that I am a master of this concept. I’m not advising you to do this, I’m just contemplating this as a lesson for my own investing and if you see the wisdom in it too then that’s great.
However, I do feel I need to explore it further. I will, in time, read the extended version in Money, Master the Game. But I see the advantage of this as a basic game plan. By having diversity, you have room to move and a way to react.
Safe Investing – Avoid Mistakes:
Being Unshakeable doesn’t mean just being confident. It’s not blind confidence that makes people winners. Being unshakeable means having the knowledge and being prepared to react with confidence. In order to act intelligently and with confidence, it’s important to know the big mistakes you need to avoid (The following are Tony’s headings.)
Safe Investing Mistake 1:
Seeking confirmation of your beliefs.
The worst mistake investors can make is looking for information to confirm their beliefs. If you already believe in something, you will be able to find others who agree. Even so called experts who will have the same opinion about things. Seeking confirmation will convince you of an idea. It doesn’t mean the idea is good.
The best investors, on the other hand, welcome opinions that contradict their own. They ask better questions and find qualified people who disagree with them. By knowing both sides of the argument, you can make the best decision for you and be prepared in case you are wrong.
Safe Investing Mistake 2:
Mistake Recent Events for Ongoing Trends.
Most investors buy the wrong thing at exactly the wrong time. Don’t be a reactionary investor. Build your asset allocation and maintain it. Don’t rashly buy and sell based on trends and the latest good advice. Work out your strategy for asset allocation and simply re-balance as the market changes.
When you have a clear goal of what you want from your investments and you have clear reasons for the investments you’ve chosen, then you shouldn’t react wildly to the market. If you choose wisely, and develop the right allocation, then it should be a simple matter of adjusting your allocation to match the market.
Effectively this means buy low, under-priced assets, and sell high, over priced assets. No need to worry about all the noise.
Safe Investing Mistake 3
Get Real: Overestimating our abilities and our knowledge is a recipe for disaster.
Get real, get honest. You don’t know everything. Invest in what you know. Study what you can learn and stick to it. If you don’t understand something, don’t blindly try it out. Do what you know and remember the first rule is not to lose money.
Safe Investing Mistake 4
Greed, gambling, and the quest for home runs.
It’s tempting to look for the big wins. We all want to get rich quick. But on average victory goes to the steady survivors. Play smart and play long and in the end you will win.
Safe Investing Mistake 5
Staying home. It’s a big world out there.
Great advice for investing and also for life. You should stick to what you know, but that doesn’t mean you have to limit yourself to one place. You can find the same area of investing, or work, or whatever, all over the world. By spreading out you diversify and you get to learn from new contexts and new experiences. Expand your horizons and see what’s out there.
Safe Investing Mistake 6
Negativity and loss aversion.
Your brain wants to be fearful in times of turmoil. It’s natural. Your brain knows when things are dangerous and it wants to protect you. That’s great! But don’t automatically listen to it. Be aware of the danger, but react logically based on the lessons you’ve learned. Preparation is key. If you are prepared and you’ve mastered your response, then you can respond logically and take advantage when others are running for the hills.
For our own investing adventure, Unshakeable has been an incredibly valuable source of knowledge and inspiration.
Based on the insights in the book, we are currently working to build our own money machine. We have started small but we are gradually developing our portfolio.
Last year we started by pouring every dollar we could save into the market. We bought safe, long term stocks. We rode out a turbulent start to the year, learning a lot about the fear and mistakes of stock market investing.
Now, following these lessons, we’re working on diversifying. We have seen good results in the local real estate markets and we’re starting to save and look at possibly adding a piece of real estate to the mix.
We’re not sure yet, so I will be starting a study of real estate soon, to see what I can learn about it before we consider it further.
Beat Fear and Avoid the Mistakes and you can become truly Unshakeable.
Next week will be our final installment of the Unshakeable series.
One more big thank you to Tony – I recommend all of you listen to what he has to say and get his books. He’s a truly inspired and inspiring teacher!
If you missed Part 1 or Part 2, follow the links:
Once again, thank you for allowing me to share and I hope you continue to keep striving for success.