Value offers us one form of money that can be useful in any situation. Value may or may not be legal tender and it may or may not be gold in a situation, but if we have value, we may be able to use the value to exchange for other value. We’ll look at value in the social context of an argument, debate or disagreement among peers and how we can use the value of staying within the situation to increase our other values, some of which may be financial. Don’t feel bad if you struggle with this, as it takes a lot of work to improve this area of life. We make mistakes here too, so we’re working on this just like many of you are as well.
Since we know that value comes from strong behavior, as we improve our behavior, we’ll be able to exchange value easier. We gain wealth from value when we talk to people we share disagreements. In general, most disagreements challenge us, so if we can’t handle a challenge, we’re weak and we’re in a situation where we’re not growing as people. Like Thomas Sowell communicates in the below video isolation will lead to poverty and backwardness. We don’t want this for ourselves. This means that we will sometimes meet people who communicate incorrect truths or statements and while we can correct them, we may not find it beneficial to do so. This tip involves the second situation – we disagree, but we have no interest in debating. How can we do this?
Do we want to be people with very strong and imposing views? No. People with very strong opinions, like the people who engage in witch hunts, often end up alienating many people around them. They don’t realize this at the time, but they slowly lose respect, friendships, and huge opportunity. They create their own isolation by being “better than everyone” and making it clear.
We are not better than anyone. We will never be better than anyone.
If we meet someone with a strong opinion, we should practice taking an assessment of the situation. The person’s behavior is communicating that their ideas trump people and relationships with people. Is that what we want? What value can we obtain from imposing our ideas on others, who may not accept these ideas? We can all agree and disagree, but being nasty to people when we disagree alienates us from others. One way to handle the disagreemnt is to say nothing. Listen to the person, take mental notes, and be friendly. When our chance comes to give our opinion, let’s give it with grace, so that we avoid being people with a strong view – “… That’s just my view. I’ve been wrong before, so take it with a grain of salt.” Ending (or leading) with humilty helps prevent us from coming off too strong to others. If we still feel like we came off too strong, we can either avoid sharing our views, or emphasize past mistakes with more frequency when giving a view.
Remember: we are not better than anyone and alienating others will directly reduce opportunities in life.
Listen. If the person expresses a view we don’t share, but we find interesting or that we consider may have some truth (challenging our comfort zone), let’s listen to them. We may learn new information. We may learn a new skill – such as learning to listen (a very rare skill). We may even connect dots we didn’t realize. Some of the “wrong” opinions I’ve heard at one time, have been true in other times, and all of them have taught me at least one other skill – from learning to communication style.
Since listening requires more discipline than talking, the inherent nature of listening builds value in the form of discipline. If someone expresses a view that we don’t share and we feel the urge to disagree, the nature of saying nothing is an act of discipline. Also, if we reflect on disagreement we’ve had in the past, how did expressing our view make us richer? Did it make us richer? Did it move us forward? Did we learn anything valuable? Did we become more disciplined? Most of the time, expressing a view is a waste. Still, most people will do it, so this gives us plenty of opportunities to listen and not speak.
Assess the situation. Suppose that we’re in a group of ten people and one person expresses a view that others do not share and an argument ensues. We immediately have a social experiment unfolding in front of us. Is it the view that causes the debate? The word choice? The way the view was conveyed? Consider how a simple situation, like negotiation, allows us to assess the same questions as well – is the person pushing back upset over the price only, or something else? We will face plenty of opportunities to speak and learning to assess social situations quietly helps us determine how we can best proceed when we’re in these situations.
Negotiation provides a great example of where learning to handle disagreements directly creates value – with financial value being a direct benefit, in some cases. In podcast 107, we’ll discuss the 2 negotiation tips that result in a 60-70% success rate with raises at companies, even during a recessionary period.
Most people will never assess a situation because this requires mental effort and it requires that we put aside our emotional bias. People love their emotions and their emotional reactions, as it these come easy with no effort. Anytime we feel our emotions arise, we should immediately pause and ask ourselves why we feel so stronly about something. We should not be people of emotions; as Sun Tzu warns, “Do not use arms because of your emotions.” Think. Assess. Reflect.
We can stay in your comfort zone. We can relax in our echo chamber. We can also challenge our self and grow our personal value. The best opportunities arise when we’re surrounded by people who may not share our values, as it makes you consider why we behave the way we do and challenges us to consider other approaches to our life. All of us have a long journey to perfect ourselves in this area, and it’s a journey that will enrich us beyond just financial wealth.
When we look at great leaders throughout history, Caesar Augustus (referred to as Octavius in this post) ranks as one of the top leaders in history. Born and raised during a challenging transition in the Roman Era, as Rome devolved from a republic to an empire and faced numerous civil wars and challenges, Octavius worked to fight the decline of the Roman Era, even though decline is inevitable after a period of prosperity. Octavius succeeded in his lifetime by preventing Rome’s decline and leading to a period called Pax Romana. Unlike Marcus Aurelius, Octavius helped return Rome to its glory for a significant period after his death (over 200 years), while Aurelius and his policies were responsible for the collapse of the Western Roman Empire.
1. Difficulty creates advantage. The Roman Empire existed only as part of the larger Roman Era. Rome grew from a small agricultural community of young outcasts to a kingdom (at first under the control of non-Roman leaders) to a later Republic. Octavius’ life saw the decline and end of the Republic – no system lasts forever. Octavius became the first emperor of the Roman Empire after the conflict grew between the former aristocracy and the general public. The aristocracy did not want to lose, while the general public grew tired of the aristocratic oppression. While the Roman Republic had offered a superior system for its time, no system lasts forever, and the transition from Republic to Empire resulted in civil war. Initially, Octavius battled aristocratic families from the Roman Republic before facing off against Mark Antony. While the times challenged Octavius – as he was the underdog in the conflict, it also helped him grow to become one of history’s most respected leaders.
Difficulty sucks, or it seems to suck, but it forces us to grow character that we wouldn’t grow on our own. We don’t succeed because we have advantages; it’s the lack of advantage that encourages us to press on beyond our capacity. Were you born in poverty? Good news – you have an advantage because you see what most people need that others from wealthier backgrounds can’t. Do you have a massive amount of student loans? Good, because when you pay them off quickly, your story will carry more power than a story about a person who had very little. The more you struggle, the more your story will connect and resonate with others. Your difficulty becomes your advantage.
2. Mentor with people better than yourself. Octavius learned many skills from Julius Caesar, one major lesson which came from Caesar’s death. Octavius started further ahead of most leaders in his time because he learned skills at a young age from a mentor. When we look at what he accomplished and how he was able to overcome major problems, consider the early impact of having a mentor who had also faced difficult challenges (Octavius succeeded further than Julius Caesar).
A conversation or answer from a wise man can be better than a book on the entire topic. In some cases, the answer is a better use of time. Consider that some people will spend 10 to 20 hours trying to answer a personal challenge in their life, when a discussion with a mentor might cost them less than 10 minutes. If they made median individual income, 10 hours alone researching a solution for their problem would have cost them more than $100. Most people do not consider their time this way, which is why many people waste decades of their life “learning” when it would have only taken a year or so. If you want to make your time go further, find and use mentors, as the cost may be less than the time you spend without them.
3. Your friends reflect an image of you. Octavius befriended and was fiercely loyal to one of the great generals in history – Marcus Agrippa. Agrippa didn’t just help Octavius in battle by defeating numerous enemies while being the underdog, he shared Octavius’ vision of Rome returning to its glory. Agrippa helped build numerous structures in Rome while he wasn’t fighting. In other words, unlike what we expect in a military industrial complex (“we need enemies!”), Agrippa wanted to contribute to Rome outside of empire expansion and battle victories. Roman infrastructure increased, which increased Roman’s standard of living, helping them be more satisfied with Octavius.
Let’s take an honest look at who we befriend: these people speak volumes about who we are. Octavius chose Agrippa who shared his vision and values while being loyal to him. Consider two opposite people: one person who values his time and one person who doesn’t value his time – how can these two different people accomplish things together when they don’t share the same values? This is especially true with close and intimate relationships, such as marriage. If one spouse is frugal while the other spouse is a spendthrift, we can expect to see a significant amount of conflict.
Remember, money reflects vision because money always follows character. How do your friends value their money? How does your significant other value his money? How do the people you’re closest to value their money?
4. Success requires the basics. Like the Chinese civilization, the early Roman Era emphasized marriage and family as a requirement for success. When Rome began its decline, it stepped away from the basic unit and Octavius was quick to return marriage and family to the front of Roman life by adjusting laws that encouraged both. Marriage and family give people a buy-in to the culture where they live. In the desire to see their children succeed, people work to make their culture succeed. Octavius understood this, as did the early Romans. We can even see this today when we compare married people with children to single people – married people are much more productive than single people, and the competition isn’t even close. Even the anti-marriage WaPo saw this with married men versus single men:
This translates into a substantial marriage premium for men. On average, young married men, aged 28-30, make $15,900 more than their single peers, and married men aged 44-46 make $18,800 more than their single peers.
That’s even after controlling for differences in education, race, ethnicity, regional unemployment, and scores on a test of general knowledge.
Marriage makes a bigger difference for success than education. Family also increases this financial premium. This highlights the brilliance of Octavius: while being strong and wise, he still grasped the value of the basics, which are easy to overlook as a society becomes more complex and successful. If productivity in a society is declining, the reason is obvious: the society has moved away from the basics.
We will never succeed in finance without the basics: these are basic for a reason. As we develop ourselves, we may engage in a self-delusion that the basics don’t matter, but they actually matter more, since we’re not fighting our own nature. A basic principle of financial success is discipline: just because we become billionaires doesn’t mean we can now act undisciplined – we must continue the basics of discipline throughout our life. Like Octavius understood, we must never think we are wiser than the basics. A fool becomes self-deluded with knowledge whereas a wise man humbly recognizes the values of the basics.
We find it ironic that Western academics praise Marcus Aurelius, even though he and his destructive policies contributed to the collapse of his empire and the rise of the Eastern Roman Empire. For an example, his hostility toward the Judeo-Christian religious tradition led to the migration of Judeo-Christians East, which later helped contribute to the rise of the Eastern Roman Empire (Byzantine). By contrast, Octavius faced more challenges than Aurelius and yet lead the Roman Empire to one of its greatest periods in the Roman Era. When people think of Roman’s greatness, they often imagine a period during or right after Octavius. Considering that the Roman Republic could have easily collapsed to never return, Octavius’ work made Rome one of the greatest eras in human history as far as lengthening the time the Roman Era lasted.
Competitive gymnastics may be one of the most difficult sports in the world while also coming with severe consequences if someone makes the wrong move. Gymnastics inherently involves out-performing the competition, meaning that as their competition evolves, they must evolve and 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. If you disrespect your money and your value, share everything you spend money to learn. If you respect your money, stay silent. The latter person will do better in money, even when it changes.
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. Our financial world can challenge us, especially when other related challenges affect our finances. Mentorships allow us to see the world in a way we wouldn’t have considered.
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. Monetizing your physical appearance may lead to opportunities that you have never experienced. 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.