Gymnastics may be one of the most difficult sports in the world while also coming with severe consequences if someone makes the wrong move. Gymnasts can’t just be good: they have to impress judges by being a step ahead of their competition when trying to win awards. This means they can’t just be good – they must be exceptional. Some of us argue that Kōhei Uchimura of Japan is history’s greatest gymnast, as the winner of 15 gold metals, 10 silver metals, and 5 bronze metals. In addition, Kōhei Uchimura competes in Japan as well, which is one of the top countries in the world with gymnasts along with Russia and China.
1. Measure success by results. Winning awards in gymnastics means beating competition; this is reality. If we’re gymnasts, we cannot be “as good as” our competition – we have to be better, or we lose. Americans may be triggered by loss, but the rest of the world understands loss is part of life. Kōhei Uchimura uses moves that outdoes his competition and impresses judges. He trains for these moves and he constantly works to improves. If he only did the same as his competition, it would mean little. Kōhei Uchimura understands capitalism: one must be the best and one can only be the best by defeating the best. We are not all equal and we never will be. As the Soviet Union discovered the difficult way, by enforcing equality on everyone, society stops producing and eventually collapses. The same would happen if you awarded every gymnast with a gold metal. Not only would a gold medal lose meaning, you’d stop seeing new artistic moves and human feats.
One example of this in practice is with information: regression to the mean means that some information should never be shared with others. We should only share some information selectively and only after pre-qualifying our audience, while never sharing other information. People think that sharing information is good because of Google, yet Google has actually amplified regression to the mean and increased the payout of some information that most people are not aware of. If you know some special information, you know that you cannot find them on the internet. That information now has tons of value. Despite what many people think, there is more information no longer being passed around on the internet and this is growing. Piracy is one reason why we’re seeing this new trend (piracy really enforces regression to the mean), but the other reason is that some intelligent people are beginning to realize the effects of “abundant information” – and none of these effects are good. In fact, as I teach on one course about security, in some case revealing information you learn may expose you to the type of people who will steal everything. Learn and stay silent and realize that a price is another man’s obstacle, not your obstacle.
2. Learn from a mentor. Kōhei Uchimura’s parents both engaged in gymnastics, giving him an early edge since he started training at age 3. That alone would not have been enough. Kōhei Uchimura also trained with a mentor, Naoya Tsukahara, in his teens, which helped him learn additional skills that he would later use. In health and fitness, we often run into ruts and mentors can help us see past the rut, or help us learn techniques that strengthen us, or allow us to build additional skills. Mentors don’t just help us save time, mentors show us living examples of people who have moved past these obstacles.
Find a mentor and show yourself worthy of them. Do not waste their time by asking pointless questions. Only seek mentors when you’re stuck and always be ready to exchange something of value. In Kōhei Uchimura, it may have been spotting or assisting with moves, in our case, it may mean paying money for assistance.
3. We are what we practice. Kōhei Uchimura practices moves daily and eats in a manner that matches his need. Both show that he practices in a manner which increases his results and his skills come from this practice. Kōhei Uchimura refuses to practice on a full stomach, so he eats once a day. This helps him, so he uses it instead of following a standard pattern of eating throughout the day. Kōhei Uchimura practices moves that others can’t do, or struggle with doing, as these increase his odds of winning awards. Since gymnastics is a competitive sport, one must be better, not equal. Kōhei Uchimura does these daily. What do we do daily?
We are what we consistently do. We are nothing more and nothing less. If we want to be something, how is that reflected in what we’re doing today? No one falls into success – they work at success.
4. Discipline creates wealth – even wealth others never grasp. Many people consider gymnasts to be some of the most attractive people alive, and this shows us a form of personal currency that opens doors. Gymnasts can earn sponsorships, they can earn medals from winning, and they can even win awards with financial payouts. But they can also win awards in life that most people don’t win on a daily basis, such as benefits socially. Kōhei Uchimura is no exception: he understands his place and uses his understanding to make more than just financial benefits.
If you are physically attrative, you have access to a rare form of financial capital. Use it. If someone tries to demonize you about this, consider that no one says a scientist is evil because he uses his financial capital (brain power), or a plumber is evil because he uses his financial capital (kinesthetic power). We all have advantages in life, and as we work and leverage our advantages, we should use these to increase our living standards. Physical beauty is a form of capital in the same manner that intelligence is a form of capital and neither is inherently good nor evil.
Some people believe that they have what they are born with and cannot improve (fatalism). Stay away from them. Some people believe that others have more than they have and that they should take from the people who have more to create equality (socialism). Stay away from them. Others recognize the truth: we are what we consistently practice and exceptional results go to the people who continue to practice exceptionally and life will never be fair to everyone. We can either live in this truth and reduce our pain, or we accept a fake reality that will create a lot of pain in the future. Kōhei Uchimura shows us that we should consistently practice, improve, aim higher than others, and be ready for the moments that we have to show our skill.
Erich Hartmann tops the list of the greatest fighter pilots of all time with 352 victories in the air and during a time in which weapons and aircraft were unreliable. Erich’s fighting style and vision shows us techniques that we can use with money regardless of whether we agree with all of his views – like Genghis Khan, we can learn many virtues from him. Like Alexander Suvorov going undefeated in all his battles throughout his life, Erich never lost a dogfight – the only time he had to emergency land was when debris from other planes hit his plane.
1. Temerity creates accuracy. Erich’s fighting strategy involved closing on his enemies quickly where there was little distance between him and his enemy, then shooting down the enemy plane. Since the distance was close, his enemies couldn’t adjust or dodge his fire in time, giving Erich the kill easily. This required significant temerity since the enemies’ planes would throw debris at Erich, which resulted in him being forced to land on occasion. But Erich knew this that even with this risk – which could have killed him – the close distance made him more accurate.
With money, many people avoid taking risks to avoid loss, while guaranteeing that they lose by missing opportunities. Part of personal finance involves risk – we simply can’t avoid it. Avoiding risk not only hurts us with money, there’s a growing body of evidence that it may negatively impact us biologically by reducing testosterone levels and having other effects on our psychology. When we consider taking risks, like Erich, we should take risks that have big payoffs not small. If we lose on our risk, we at least lost because of a possible large opportunity; a small opportunity for a risk is unbalanced and a sign of weakness. This would be like Erich closing in on his target to scare them off, not shoot them down – why take the risk of getting that close to an enemy not to down him?
2. We are our vision.. Whether we like it or not, we are our vision. All personal finance starts here, even if we try to run from our own vision or procrastinate from our own vision. When Erich was captured by the Soviet Union, the Soviets tried all kinds of tactics to turn him into a communist. He refused. In fact, at one point he accepted that he would die before turning and the Soviets finally gave up and allowed him to live. Even though Erich was captured at 23 and had a low probability of survival – considering his captors were Soviets – he lived into his 70s. Erich stuck to his vision, while many people around him capitulated hoping to save themselves or to reduce their pain.
I see people change their vision all the time when they face persuasion, which ends up causing them to lose energy as they try to make a switch. A great example here is marriage: many minimalists “give up” when they marry someone who isn’t a minimalist. Rather than filter out people who aren’t minimalists, they try to make something work with someone who is incompatible with them financially. Given that finance is one of the major causes for divorce, this is reckless as it increases the probability of stress and divorce. We are our vision. If we change our vision to suit other things in our lives, what are we saying about ourselves?
How committed we are to our vision shows when events don’t go our way, or when prosperity tries to distract us. Both adversity and prosperity are distractions: only our vision matters.
3. We are never too young to be on top. Erich was born in 1922 and became the top ace in the period of 1939-1945. This means that at his oldest as an ace, he was 23. In order to become the top ace consider that he:
Erich knew what he wanted to do (vision) and he lived his life with that sole purpose. Even before becoming the top fighter pilot of all time, he was a flight instructor at age 14. Also, stop and consider that the top ace of all time never exceeded 23 years of age at his peak (since the war ended and he was captured by the Soviet Union, it was not for lack of trying).
When it comes to money, people love to make excuses why they’re not successful – “I need a degree” or “I need to live in the right city.” Erich couldn’t change his age when he joined the war and anyone could have laughed him out of the room as a “kid” because he was young. Yet, the “kid” ended up becoming the top ace of all time. He didn’t let his age hold him back and he faced all kinds of mockery about his age (other pilots mocked his age). So we don’t have something we feel that we need? Let’s be the first person to get past that hurdle so that we can tell a great story.
4. Challenging times build the greatest people. Erich was born during the Great Depression, which I like to call the Great Opportunity, as more people born and raised during that era became successful than at any other time. The most challenging times are the greatest times for growth; be glad every time you face a challenging moment, as you will grow as a person and build character. Like most people change their vision to suit their needs (weakness), some people change their “personality” to suit their needs because they lack character and vision. Even through the Great Depression, Erich did not – he wanted to fly from an early age.
Good times can distract us and bad times can derail us. We will never automatically rise to challenging occasions when we face them; we must constantly practice these so that we’re ready. Still, when we face these moments, we should remind ourselves that challenging times offer the most potential for growth.
Erich Hartmann was the greatest fighter pilot of all time and it’s unlikely we’ll see someone as great as him, given that technology has made it much easier to shoot down planes, but also means it’s less of a challenge. We can take the meat of Erich’s life while spitting out the bones and learn that our vision overcomes all excuses, that we should be strengthened in challenging times, and that we should always consider the bold action with a large payoff over the moderate action with a small payoff.
Harry Dent recently predicted that gold will head to $700 during 2018. With the yellow metal hovering near $1270 at the moment and a year high slightly above $1300, a $700-$800 price would be an approximate 40% drop in price. It should be of note that Dent has predicted other crashes that never came to fruition, relative to how one measures a crash. Harry Dent and Jim Rickards also have debated whether inflation or deflation is ahead and why.
Harry Dent sees gold heading to $700 for 3 reasons:
While interesting, deflation has seldom been negative for gold. If we see deflation next year, this could be positive for gold.
Let’s assume Harry Dent is correct and gold is headed for a correction because countries will be forced to sell gold, not just individuals. While some countries in Europe may be forced to liquidate gold holdings, other countries will also be willing to pick up those purchases. For an example, Russia is on pace to pass China’s gold holdings this year and with a growing economy again, Russia has more funds available to buy gold. Turkey also recently liquidated some gold in a commodity swap and may need to pick up more gold. Finally, China’s interest in gold is always present, but the Chinese tend to only buy at lower prices – at this present time, they’re more interested in buying rare Earth elements.
If we see a market correction due to deflation, it’s unlikely gold will hit $700. If it does, we’ll see countries in the East that pick up more gold at those lower prices, so I don’t expect $700 gold to remain for a long period of time – if it ever reaches that price.
After the recent passing of Vladimir Voevodsky, we are all reminded of the importance of people who impact us in ways we may not realize and consider what lessons we can learn from them in personal finance. Sir Isaac Newton is known for mathematics, physics, astronomy, theology, and other disciplines. He’s considered by man to be the father of calculus and a host of other ideas in physics and his work extended to the British financial system – spotting counterfeiters. Sir Isaac Newton accomplishments came through many of his skills that we can apply to personal finance while enriching our life in related areas.
1. Only results create expertise. We live in a world where expertise is determined by credentials or cronyism. Sir Isaac Newton proved that expertise could only be achieved through results, even if someone was not deeply knowledgeable in the field or even if someone did not know the right people. As a simple example of Sir Isaac Newton’s brilliance, he lived in a time where people actually thought that Jesus Christ would return in that timeframe. We can all laugh at this, but imagine living in a world where 99% of people around you actually think that Jesus will return in the next 40 years. Sir Isaac Newton investigated this claim for himself by reading The Bible and concluded Jesus would not return before the year 2060 (he later revised this date). He pointed out that this date wasn’t to specify the time when the event would happen, but that the event couldn’t happen before that time. Obviously, Newton was right – Jesus didn’t come back during the 1600s-1700s.
Sir Isaac Newton’s expertise for his time came from his ability to get results. He was right for his time in that his predictions yielded results for his time (imagine all the wasted time expecting Jesus to return in those days). None of us can know what will happen after we die, so it’s pure luck if we’re right for a future time. To be right in our time, let’s measure ourselves by results, not knowledge or action, as actions and knowledge may not equate with results. When it comes to money, what is our financial vision? What are we trying to accomplish? Anything that moves us closer to our vision is a successful result; anything else is a distraction.
2. Be curious. Sir Isaac Newton helped England stop counterfeiters, who were common in his time. This is one of many skills Sir Isaac Newton had that surprises most people, yet many of his underlying skills in mathematics and physics helped him in other areas – curiousity being a major skill of Sir Isaac Newton. He found ways of interviewing people and researching the problem before proposing and working on solutions for the problem. Without an understanding of the problem, can we solve it? Sir Isaac Newton believed that we must understand the problem and that curiosity is the best way to learn.
Ask questions that deepen your understanding of a problem so that you can perfect the solution. Think about your financial problems: what is the reason for the problem and what is the underlying reason for that? For instance, suppose that you tend to spend money when you’re unhappy (emotional spending); how can you train yourself to either be less emotional about situation, or how can you train yourself to do something productive when you’re emotional, instead of spending? As you identify the problem and deepen your understanding of it, you can quickly identify solutions for the problem.
3. Relate to other people on their level. One of my favorite stories of Sir Isaac Newton involves the apple and gravity (the funnier version is that an apple hit Sir Isaac Newton on the head). Academics debate whether this ever happened and completely miss the point of the story – Sir Isaac Newton told the story of the apple because it visually relates gravity to people. While Sir Isaac Newton is generally not considered an extrovert, his understanding of relating knowledge to people on their level demonstrates that he had more social skills than people give him credit for. It’s easy to imagine an apple falling down; it’s next to impossible to imagine stars, planets and galaxies held together by gravity and its pull. Sir Isaac Newton could have used all kinds of stories, but the apple story – whether true or not – related to people on their level and helped people grasp the basics of gravity.
Find what people relate to and tell stories that relate to people. Whether a story is true or not misses the point (except in some situations); when people understand the message of a story, you’re relating to them on their level. Part of financial success involves interacting with others: whether it’s a spouse, child, or financial advisor – if people don’t relate to you and you’re not relating to them, your situation becomes more difficult. Imagine a financial advisor who does not relate to your goals – you may receive bad advice, or may miss out on good advice. All of us have different levels of engagement – no one way is superior to others.
We should also consider this when communicating our vision to ourselves – we should relate to our vision and how we communicate it. If we relate to visual images, then we should remind ourselves of our vision visually; if we’re audible people, audibly. We won’t succeed by ignoring how we and others relate to communication.
4. Little actions over time yield big results. When we look at each of Sir Isaac Newton’s individual actions, none on their own seem that big. Yet, Sir Isaac Newton is one of the most important people who ever lived and he had significant accomplishments. He proved that small steps yield big results over time. The smallest action of your day contributes to your success, as much as the biggest decision of your day.
With money, small victories build strong habits and those habits become more valuable in bigger actions. For instance, following and automating your budget may feel like a small action, especially when you’re 18 and only make $35K a year. But as you age and make more money, the habit of following and automating your budget means that you can input any income level and follow your own rules. You’re learning discipline at any income level and that carries bigger results as your income grows. Small steps on their own seem very small; aggregated they appear as huge accomplishments.
We should measure our actions by results while being curious about our failures and how we can grow from them. Meandering from our vision may feel good for a season, but it is lost time and lost results and even small actions toward our vision over time result in large accomplishments. Finally, part of our financial life involves other people, from spouses to childre to others, and relating to others on their level will help us and the people around us.