Thought that this article could be pertinent to our discussion...
New millionaires use Zen psychology
By Dr. Paul B. Farrell, CBS MarketWatch Last Update: 1:27 AM ET Sep 24, 1999
cbs.marketwatch.com e=blq/yhoo&dist=yhoo
LOS ANGELES (CBS.MW) -- Life is frustrating, and we don't need to read Buddha's Four Noble Truths to figure that out. Frustrated investors, overloaded by information in print, television and the web, search far and wide for "The Answer" from so-called experts.
Eventually, still frustrated, you come back to the stark reality that you cannot rely on the so-called experts, new technologies, government or other external authorities. You're stuck. Zen Psychology says you are the sole authority. You are in charge of your life and your portfolio.
You are the only expert you can count on. Remember Peter Lynch's peptalk? "Twenty years in this business convinces me that any normal person using the customary 3% of the brain can pick stocks just as well, if not better, than the average Wall Street expert."
Fortunately, a new science of behavioral finance is emerging to help investors deal with the emotional issues following in the wake of the in information technology revolution.
The roots of this new discipline go back to works like: Anthony Robbins, "Awaken The Giant Within," Martin Pring, "Investment Psychology Explained," Mark Douglas, "The Disciplined Trader," Koppel & Abell, "The Inner Game of Trading" and Jack Schwager "The New Market Wizards."
You are on a road less traveled
The psychologist, Scott Peck, wrote about life‚s frustrations in his classic, "The Road Less Traveled," back in 1978. Dr. Peck opened his book paraphrasing Buddha‚s Fourth Noble Truth:
"Life is difficult. This is a great truth, one of the greatest truths. It is a great truth because once you see this truth, we transcend it. Once we truly see that life is difficult - once we truly understand and accept it - then life is no longer difficult. Because once it is accepted, the fact that life is difficult no longer matters." This is especially true for today's mutual fund investors.
Awaken the giant within you
Motivational speaker Anthony Robbins, author of "Awaken The Giant Within" and "Unlimited Power," popularized "coaching" and mentoring about a decade ago.
Coaches can help you get a mental edge whether you want to improve your game in tennis, golf, or investing. Coaches became popular in the 90's with Wall Street‚s pros. Back in 1994, in the web's infancy, Futures magazine ran an article, "Mind Games," about how "many traders are now turning to psychological Œcoaches,‚ eager to find an edge on the unknown they can control - their own behavior."
As the playing field is leveled for investors and trading professionals alike, technocrats are rapidly losing their competitive edge. Soon everyone will have the same technological edge in the financial world. "Inner space" has become the new frontier. As a result, the keys to financial success are rapidly shifting from the left-brain to the right-brain - from 80 percent technology and rational solutions, to 80 percent mind games, intuition, mental discipline and the techniques of mass psychological "warfare."
In the future, financial success will demand a highly disciplined training in the new psycho/spiritual technologies in order to activate "the giant within you," your super-charged inner winner.
The killer instinct of a samurai warrior
Writing in "Investment Psychology Explained," investment advisor, Martin Pring says that "one of the most important requirements for successful investing is the ability to achieve total objectivity."
Of course, you need to know how to use your weapons, all the new technologies. But the key to successful investing today requires that you become totally objective psychologically - fearless, unafraid of "death" (that is, willing to lose money as part of the battle).
What's the "killer instinct?" In "The Inner Game of Trading," Koppel and Abell quote one trader. It's "the day-to-day combat that juices me." The thrill of competition turns on Wall Street‚s pros. They thrive on the challenge of winning against a powerful adversary. That's the killer instinct, an inner drive to win the game.
But the big question still remains as we move into an era where Wall Street and Main Street are competing on a level playing field -- If the rules of combat are known by all these warriors and all have access to the same weapons (market tools), why then are there so few successful professional money managers and traders? And why, for example, is it that the vast majority of these so-called investment experts can't consistently beat their market indexes?
Again, the answer is psychological, not technical. As Koppel and Abell put it, "Successful trading...comes down to this: Overcoming your personal psychological barriers and conditioning yourself to produce feelings of self-trust, high self-esteem, unshakable conviction, and confidence which will naturally lead to good judgment and winning trades based on a proven methodology. But how do you do it! Patience." In other words, self-discipline.
Our short-term 'quick-fix' culture
Now apply this to your building a portfolio of mutual funds. First, let‚s review a central theme here. Today‚s mutual fund investors must, of necessity, be long-term thinkers. We consistently remind mutual fund investors to stick to their portfolio‚s long-term asset allocations.
Unfortunately, that's becoming tougher by the day as investors are confronted with ever increasing pressures from Wall Street and the media to buy or sell the latest hot fund of the week -- Asia and emerging nations, or the latest hot technology and Internet funds, like Amerindo Technology (ATCHX), The Internet Fund (WWWFX), Munder NetNet (MNNAX), and WWW Internet Fund (WWIFX).
Instead, ignore this "hot-fund-of-the-week" noise and concentrate on building a portfolio of solid long-term performers like these large-cap winners -- all of which have been around for 15 years or longer. Together the fifteen largest funds represent over ten percent of the total mutual fund assets in America. And they are big for a reason, they perform and they are reliable. Investors trust them and because investors trust them investors put lots of money in their hands:
LARGEST FUNDS (15 yrs or older) Ticker net assets 1-yr rtn% 10-yr rtn% Fidelity Magellan FMAGX 97.6 B 31.6 17.8 Vanguard 500 Index VFINX 92.6 B 27.0 17.3 Washington Mutual Investors AWSHX 58.6 B 19.3 15.8 Investment Company of America AIVSX 54.6 B 25.3 15.6 Fidelity Contrafund FCNTX 43.6 B 27.3 21.3 American Century Ultra TWCUX 34.9 B 24.2 20.8 Janus Fund JANSX 32.3 B 40.6 18.0 Vanguard Wellington VWELX 27.2 B 14.3 13.0 Fidelity Puritan FPURX 26.5 B 12.1 13.0 New Perspective Fund ANWPX 25.3 B 30.9 15.3 Fidelity Equity-Income FEQIX 25.3 B 21.8 14.5 EuroPacific Growth AEPGX 24.0 B 29.9 13.8 Income Fund of America AMECX 23.4 B 10.1 12.2 Putnam Growth & Income A PGRWX 23.2 B 19.4 14.9 Growth Fund of America AGTHX 20.6 B 41.4 16.7
There are powerful forces on Wall Street that are working against investors using a sound long-term strategy.
- The press and news media (sell, sell, sell newspapers!) - Brokers (churns portfolios for commissions and fees) - Money managers (gotta bring in new money) - Fund trackers (hot performance attracts customers) - Financial advisors (attracts new business today) - Software vendors (sells more products) - Advertisers (makes us money)
This massive "society of short-term thinkers" operates in direct opposition to the principles and strategies of the new breed of do-it-yourself investors. No wonder today‚s fund investors are trudging the road less traveled, and that road is not Wall Street, it's Main Street on the World Wide Web, where everyone's welcome.
If you meet the Buddha on CNBC, 'kill 'em!'
Zen Psychology is simple, but it's not easy, certainly not in today's world. You must learn (and re-learn daily) how to stay centered in yourself, focused on your long-term goals, taking totally responsibility for your financial future.
And yet you are forced to stay centered in a loud cacophonous world that is relentlessly screaming that you had better take this or that short-term action now, today, immediately. Moreover, the pressure to act on quick-fix solutions comes at you from a steady parade of so-called "experts" who want you to believe they know better than you, and they are your authority -- not you. Hey, you don't even need Buddha, Jung, Peck and other spiritual "experts" to tell you "life is difficult," you're experiencing it first-hand every day.
Paraphrasing a ancient Zen truth -- If you meet the Buddha on Wall Street or CNBC, 'kill him!' Get it? The only Buddha is the one within you. The Kingdom is within. The secret power is within you. As Meister Eckhart said, "What you are looking for you are looking with." That's how simple Zen Psychology is. |
