Monday, 31 May 2021
Quote for the day
"In the long run, it's not just how much money you make that will determine your future prosperity. It's how much of that money you put to work by saving it and investing it." - Peter Lynch
Sunday, 30 May 2021
12 Simple Lessons to Learn From Warren Buffett
Here's a list of priceless lessons that one can learn from Warren Buffett. Every investor in stocks would do well to understand them and apply them.
1. Though there are good and bad companies, there is no such thing as good stock; there are only good stock prices, which come and go.
2. Stocks do well or poorly in future because the businesses behind them do well or poorly - nothing more, nothing less.
3. Market timing is a practical and emotional impossibility. Speculation may work once or twice but in the long run it generally leads to losses. Since you cannot predict the behavior of the markets, you must learn to predict and control your behavior.
4. An investor must guard himself against unjustified market fluctuations. He would, therefore, be spared of the mental anguish caused by other persons' mistakes of judgment if there were no daily market quotations available. Having built a portfolio, be patient - for years. Don't look at the stock ticker every day.
5. Risk is not in the stocks, it is in you. Risk is brewed from equal doses of Probabilities (realistically assess the probability of being right) and Consequences (how will you react to consequences of being wrong). In making decisions under uncertainty, consequences must dominate probabilities.
6. Asset allocation is not dependent on age, but on one's financial knowledge, experience and temperament. However, typically the asset allocation may vary between 75:25 and 25:75 with a general mean of 50:50. When markets are attractively valued, stocks should be increased and when they become overvalued, stocks should be decreased.
7. Stocks are highly volatile in the short run. Therefore an all-stocks portfolio is not recommended. If one is dependent on one's portfolio for regular income, one should guard against the unexpected and invest a suitable portion in bonds.
8. One has to have considerable willpower to avoid getting into the bull market and getting out in the bear market.
9. An average individual who put his money in mutual funds has fared better than an average person who invested directly in shares. It is normally prudent to choose funds that have done comparatively better in the past 3-7 years.
10. Be wary of any advice. Use your judgment.
11. In the end what matters isn't crossing the finishing line before others, but making sure that you do cross it.
12. The only indisputable truth that the past teaches us is that the future will always surprise us - always!
By Sanjay MataiArticle Source: http://EzineArticles.com
Quote for the day
"Don't be afraid of enemies who attack you. Be afraid of the friends who flatter you." - Dale Carnegie
Saturday, 29 May 2021
Three popular trading personality types
Three popular trading personality types are intuitive, data crunchers, and impulsive.
The data-oriented trader focuses on concrete evidence and is often very risk averse. Seeking out as much supporting data for a trading decision as possible. The trader who prefers to do extensive back-testing of a trading idea exemplifies data-cruncher type. Consider incorporating elements of data oriented trader personality into your trading style regardless of your natural inclinations. Make sure that you have adequate information (a reason) before executing a trade. Particularly important is to have and trade a detailed trading plan in which risk is minimized and entry and exit strategies are clearly specified. Most often however, the data-oriented trader may take things a little too far. Searching for "the perfect" set-up or other criteria, that just doesn't exit in the trading world. At some point, one must accept the fact that he or she is taking a chance and no amount of data analysis can change this fact.
The intuitive trader is the opposite of the data-oriented trader. Trading decisions are based upon hunches and impressions rather than on clearly defined data. There's a difference between being an intuitive trader who develops this style over time and one who is naturally intuitive. The experienced intuitive trader, bases decisions on data and specific market information. A seasoned trader, analyzes the data quickly and efficiently. It happens so quickly that it seems like it occurs intuitively, but it is actually based on solid information. Ideally, all traders should gain extensive experience to the point where sound decisions are made with an intuitive feel.
A third trader personality type is the impulsive trader (gambler). This is the most dangerous style. The impulsive trader allows his or her decisions to adversely influence trading decisions. Rather than looking at information logically and analytically, information is discounted completely. The impulsive trader seeks out risk and enjoys taking risky, exciting trades. Impulsive traders can often make huge profits one day and see large draw downs the next. Your personality can have a huge influence on your trading performance. Identify your assets and liabilities, and work around your personality when it is necessary.
The intuitive trader is the opposite of the data-oriented trader. Trading decisions are based upon hunches and impressions rather than on clearly defined data. There's a difference between being an intuitive trader who develops this style over time and one who is naturally intuitive. The experienced intuitive trader, bases decisions on data and specific market information. A seasoned trader, analyzes the data quickly and efficiently. It happens so quickly that it seems like it occurs intuitively, but it is actually based on solid information. Ideally, all traders should gain extensive experience to the point where sound decisions are made with an intuitive feel.
A third trader personality type is the impulsive trader (gambler). This is the most dangerous style. The impulsive trader allows his or her decisions to adversely influence trading decisions. Rather than looking at information logically and analytically, information is discounted completely. The impulsive trader seeks out risk and enjoys taking risky, exciting trades. Impulsive traders can often make huge profits one day and see large draw downs the next. Your personality can have a huge influence on your trading performance. Identify your assets and liabilities, and work around your personality when it is necessary.
Source Extracted article from http://www.prudenttrader.com
Quote for the day
"A man can fail many times, but he isn't a failure until he begins to blame somebody else.
" - John Burroughs
" - John Burroughs
Friday, 28 May 2021
Quote for the day
"Trust is the easiest thing in the world to lose, and the hardest thing in the world to get back." - R. M. Williams
Thursday, 27 May 2021
Wednesday, 26 May 2021
Invest like a Buddhist monk?
Found this article in http://www.gurufocus.com/
By Jonathan Herson
By Jonathan Herson
Invest like a Buddhist monk? Are you sure this is the right title? Maybe it’s the wrong GuruFocus.com.
Nope, this is definitely the right title, the right topic, and the right website. You may be wondering how I came up with such a concept.
The key word is latticework. As Charlie Munger likes to say, “To the man with a hammer every problems looks like the head of a nail.” For years I was that man with a hammer. I would be stuck with one lens for each subject, closed to any other points of view.
But after studying successful investors and Buddhism for many years my perspective began to change. I noticed that a lot of the characteristics that showed up in successful investors also showed up in Buddhist philosophy. By looking through the lens of Buddhism on stock investing, I was not only able to dramatically improve my investment results, but my life as well.
So lets get this latticework started with a brief background of Buddhism.
Brief Background on Buddhism
In 623 BC on the border between India and Nepal a prince named Siddhartha Guatama was born. Siddhartha’s father King Shuddodana consulted Asita, a well-known sooth-sayer, concerning the future of his newborn son. Asita proclaimed that he would be one of two things: He could become a great king, even an emperor. Or he could become a great sage and savior of humanity. The king, eager that his son should become a king like himself, was determined to shield the child from anything that might result in him taking up the religious life. And so Siddhartha was kept in one or another of their three palaces, and was prevented from experiencing much of what ordinary folk might consider quite commonplace. He was not permitted to see the elderly, the sickly, the dead, or anyone who had dedicated themselves to spiritual practices. Only beauty and health surrounded Siddhartha.
As Siddhartha continued living in the luxury of his palaces, he grew increasing restless and curious about the world beyond the palace walls. He finally demanded that he be permitted to see his people and his lands. The king carefully arranged that Siddhartha should still not see the kind of suffering that he feared would lead him to a religious life, and decried that only young and healthy people should greet the prince.
As he was lead through the capital Kapilavatthu, he chanced to see a couple of old men who had accidentally wandered near the parade route. Amazed and confused, he chased after them to find out what they were. Then he came across some people who were severely ill. Finally, he came across a funeral ceremony by the side of a river, and for the first time in his life, saw death. He asked his friend and squire Chandaka the meaning of all these things, who informed him of the simple truths that Siddhartha should have known all along: That all of us get old, sick, and eventually die.
At age 29, Siddhartha came to realize that he could not be happy living as he had been. He had discovered suffering, and wanted more than anything to discover how one might overcome it.
After going from one guru to the next, and pushing his body to its absolute limits (self starvation), he decided that there had to be another way.
While sitting under the Bodhi tree and searching for the answers to human suffering, Siddhartha became the enlightened one. He had discovered the Middle Way, which is the Nirvana-bound path of moderation away from the extremes of sensual indulgence and self-mortification. He began to practice wisdom, morality and mental cultivation (Boeree 1).
So what does all of this have to do with being a successful investor?
Lets go through the four common themes of Buddhism and how they relate to successful investing.
Rationality
Thinking clearly
Empiricism
The Buddha found his way through his own direct experience
Pragmatism
“Strictly speaking in Buddhism scriptural authority cannot outweigh an understanding based on reason and experience” – Dalai Lama
Skepticism
The Buddha told his followers not to just believe him
They should test out his beliefs and see if they actually work
Successful Investing
Rationality
“Be fearful when others are greedy and greedy when others are fearful” - Warren Buffett
Do not let your emotions get control of you-invest with reason and logic
Empirical
* Peter Lynch unlearning the theories he learned at Wharton, and relearning how to invest though his own direct experience
* Most of the great investors (Buffett, Lynch, Soros) have borrowed their ideas from others, but before accepting them they tested them out. They learned how to invest mainly through their own direct experience
Pragmatism
“Ben's Mr. Market allegory may seem out-of-date in today's investment world, in which most professionals and academicians talk of efficient markets, dynamic hedging and betas. Their interest in such matters is understandable, since techniques shrouded in mystery clearly have value to the purveyor of investment advice. After all, what witch doctor has ever achieved fame and fortune by simply advising 'Take two aspirins?” – Warren Buffett
Skepticism
“Ships will sail around the world but the Flat Earth Society will flourish” – Warren Buffett
As you can see both Buddhism and successful investing have much in common.
My latticework really started to come together after I read the Kalama Sutra (a sermon given by the Buddha to his followers). After reading it, it seemed like I was reading a Berkshire Hathaway Annual Report!!! Whether he knows it or not, Mr. Buffett’s philosophy is very similar to that of a Buddhist monk (the bold wording comes from the Kalama Sutra):
Don't believe in anything simply because you heard.
“You have to think for yourself. It always amazes me how high- IQ people mindlessly imitate. I never get good ideas talking to other people.” – Warren Buffett
Do not believe in traditions because they have been handed down for many generations.
“After all, if you are in the shipping business, it’s helpful to have all your potential competitors be taught that the earth is flat,” comments Buffett about the current state of college financial training.
Do not believe in anything because it is spoken and rumored by many.
“ A public opinion poll is no substitute for thought” – Buffett
Do not believe in anything simply because it is found written in your religious books.
“If EMT were true I would be a bum on the street” – Buffett
Do not believe in anything merely on the authority of your teachers and elders.
“Forecasts usually tell us more of the forecaster than of the forecast.” –Buffett
But after observation and analysis, when you find that anything agrees with reason and is conducive to the good and benefit of one and all then accept it and live up to it.
“ When proper temperament joins up with the proper intellectual framework, then you get rational behavior.” – Buffett
To sum things up, don’t be afraid to combine topics which may seem unrelated. The man with a hammer syndrome is hard to overcome, but is entirely possible to conquer. In my continuing series, I am going to show you how thinking like a Buddhist monk will make you a better investor.
Works Cited: Boeree, George C. The Life of Siddhartha Gautama. 1999. Shippensbury University Website. Retrieved 4/19/2008: http://webspace.ship.edu/cgboer/siddhartha.html.
Nope, this is definitely the right title, the right topic, and the right website. You may be wondering how I came up with such a concept.
The key word is latticework. As Charlie Munger likes to say, “To the man with a hammer every problems looks like the head of a nail.” For years I was that man with a hammer. I would be stuck with one lens for each subject, closed to any other points of view.
But after studying successful investors and Buddhism for many years my perspective began to change. I noticed that a lot of the characteristics that showed up in successful investors also showed up in Buddhist philosophy. By looking through the lens of Buddhism on stock investing, I was not only able to dramatically improve my investment results, but my life as well.
So lets get this latticework started with a brief background of Buddhism.
Brief Background on Buddhism
In 623 BC on the border between India and Nepal a prince named Siddhartha Guatama was born. Siddhartha’s father King Shuddodana consulted Asita, a well-known sooth-sayer, concerning the future of his newborn son. Asita proclaimed that he would be one of two things: He could become a great king, even an emperor. Or he could become a great sage and savior of humanity. The king, eager that his son should become a king like himself, was determined to shield the child from anything that might result in him taking up the religious life. And so Siddhartha was kept in one or another of their three palaces, and was prevented from experiencing much of what ordinary folk might consider quite commonplace. He was not permitted to see the elderly, the sickly, the dead, or anyone who had dedicated themselves to spiritual practices. Only beauty and health surrounded Siddhartha.
As Siddhartha continued living in the luxury of his palaces, he grew increasing restless and curious about the world beyond the palace walls. He finally demanded that he be permitted to see his people and his lands. The king carefully arranged that Siddhartha should still not see the kind of suffering that he feared would lead him to a religious life, and decried that only young and healthy people should greet the prince.
As he was lead through the capital Kapilavatthu, he chanced to see a couple of old men who had accidentally wandered near the parade route. Amazed and confused, he chased after them to find out what they were. Then he came across some people who were severely ill. Finally, he came across a funeral ceremony by the side of a river, and for the first time in his life, saw death. He asked his friend and squire Chandaka the meaning of all these things, who informed him of the simple truths that Siddhartha should have known all along: That all of us get old, sick, and eventually die.
At age 29, Siddhartha came to realize that he could not be happy living as he had been. He had discovered suffering, and wanted more than anything to discover how one might overcome it.
After going from one guru to the next, and pushing his body to its absolute limits (self starvation), he decided that there had to be another way.
While sitting under the Bodhi tree and searching for the answers to human suffering, Siddhartha became the enlightened one. He had discovered the Middle Way, which is the Nirvana-bound path of moderation away from the extremes of sensual indulgence and self-mortification. He began to practice wisdom, morality and mental cultivation (Boeree 1).
So what does all of this have to do with being a successful investor?
Lets go through the four common themes of Buddhism and how they relate to successful investing.
Rationality
Thinking clearly
Empiricism
The Buddha found his way through his own direct experience
Pragmatism
“Strictly speaking in Buddhism scriptural authority cannot outweigh an understanding based on reason and experience” – Dalai Lama
Skepticism
The Buddha told his followers not to just believe him
They should test out his beliefs and see if they actually work
Successful Investing
Rationality
“Be fearful when others are greedy and greedy when others are fearful” - Warren Buffett
Do not let your emotions get control of you-invest with reason and logic
Empirical
* Peter Lynch unlearning the theories he learned at Wharton, and relearning how to invest though his own direct experience
* Most of the great investors (Buffett, Lynch, Soros) have borrowed their ideas from others, but before accepting them they tested them out. They learned how to invest mainly through their own direct experience
Pragmatism
“Ben's Mr. Market allegory may seem out-of-date in today's investment world, in which most professionals and academicians talk of efficient markets, dynamic hedging and betas. Their interest in such matters is understandable, since techniques shrouded in mystery clearly have value to the purveyor of investment advice. After all, what witch doctor has ever achieved fame and fortune by simply advising 'Take two aspirins?” – Warren Buffett
Skepticism
“Ships will sail around the world but the Flat Earth Society will flourish” – Warren Buffett
As you can see both Buddhism and successful investing have much in common.
My latticework really started to come together after I read the Kalama Sutra (a sermon given by the Buddha to his followers). After reading it, it seemed like I was reading a Berkshire Hathaway Annual Report!!! Whether he knows it or not, Mr. Buffett’s philosophy is very similar to that of a Buddhist monk (the bold wording comes from the Kalama Sutra):
Don't believe in anything simply because you heard.
“You have to think for yourself. It always amazes me how high- IQ people mindlessly imitate. I never get good ideas talking to other people.” – Warren Buffett
Do not believe in traditions because they have been handed down for many generations.
“After all, if you are in the shipping business, it’s helpful to have all your potential competitors be taught that the earth is flat,” comments Buffett about the current state of college financial training.
Do not believe in anything because it is spoken and rumored by many.
“ A public opinion poll is no substitute for thought” – Buffett
Do not believe in anything simply because it is found written in your religious books.
“If EMT were true I would be a bum on the street” – Buffett
Do not believe in anything merely on the authority of your teachers and elders.
“Forecasts usually tell us more of the forecaster than of the forecast.” –Buffett
But after observation and analysis, when you find that anything agrees with reason and is conducive to the good and benefit of one and all then accept it and live up to it.
“ When proper temperament joins up with the proper intellectual framework, then you get rational behavior.” – Buffett
To sum things up, don’t be afraid to combine topics which may seem unrelated. The man with a hammer syndrome is hard to overcome, but is entirely possible to conquer. In my continuing series, I am going to show you how thinking like a Buddhist monk will make you a better investor.
Works Cited: Boeree, George C. The Life of Siddhartha Gautama. 1999. Shippensbury University Website. Retrieved 4/19/2008: http://webspace.ship.edu/cgboer/siddhartha.html.
Quote for the day
"Remember, conflict doesn’t always mean we have to fight against something and tear it apart.... Conflict can also mean we’re fighting for something to make it even better and stronger than it’s ever been." - Lysa TerKeurst
Tuesday, 25 May 2021
Quote for the day
"Corruption, embezzlement, fraud, these are all characteristics which exist everywhere. It is regrettably the way human nature functions, whether we like it or not. What successful economies do is keep it to a minimum. No one has ever eliminated any of that stuff." - Alan Greenspan
Monday, 24 May 2021
Quote for the day
"A typical Ponzi scheme involves taking money from investors, then paying them off with money taken from new investors, rather than paying them from actual earnings." - Amy Goodman
Sunday, 23 May 2021
The 9 Types of Fear
By John Pruna
(www.trentshelton.com)
The great stoic philosopher Seneca once said, "We suffer more in our imagination than we do in reality."
He was referring to one simple thing. "FEAR."
False Evidence Appearing Real.The Self-inflicted emotion that has the power to control our lives and cripple our futures.
The truth is fear has plagued the human condition since inception, and it will continue to do so. No one is immune to this disease regardless of your genetics, background, or social status.
The real question lies in how long you will allow yourself to suffer from the death grip of fear? To be more specific, what fears are suffocating your potential and stealing your genius?
This article is about giving that fear a face. Understanding it's root. Marginalizing its power, and using fear to serve your life, not strangle it.
It's time to manipulate your relationship with fear. It's time you dance with your fears. Play with them. Spar with them. Even laugh at them from time to time. After all, in the grand scheme of life, they can even be a bit comical.
The more you test your fears, the more you understand that the majority of them are foolish. It's harsh but true.
After all, doesn't it sound a bit crazy to not express your gifts, because you are afraid that someone might criticize you? With words. Not actual weapons, just words.
Now, I am not about to act like I haven't suffered from the fear of humiliation. It's quite the opposite. It's taken me years to get over this fear. I still battle it to this day.
But in hindsight, I feel pretty ashamed that I used to not post things on Social media, because I was afraid of a little hate.
I mean what was really going to happen?
NO. That is not what was going to happen. And it won't happen to you either. You can't let fear control your life unless you give it permission. Sadly, I had to learn that the hard way and refuse to learn that lesson again.
There were many moments when I let my imagination run so wild, that I thought that my world was going to crumble. Stacking these imaginary scenarios that destroyed my internal peace. I was creating a narrative that ended in peril. Those thoughts were delaying a life of success and fulfillment. I was designing a future of cowardice and mediocrity. And it all started with letting my fears run loose.
As you attempt to solve the puzzle of life there is usually one piece that is glaringly missing. Attacking your fears. Only you can place that final piece in that gaping hole to solve the puzzle of fulfillment.
Are you willing to take that walk? Making fear your compass. Choosing to walk through the bonfire of fear. Knowing that you get burned by the public, fall flat on your face, or even abandoned by the people you care about.
But success is always on the other side of fear. You can't go around, only through. Once you cross that threshold, the only thing left behind is the debris of your former self.
Fear is a master of seduction. It will charm you into thinking that you are doing perfectly fine when you are actually running from the things you need to do most.
You unconsciously suppress your deepest desires. Putting your dreams on hold because fear persuaded you into thinking that this is all that your life could become.
Don't believe the lie.
We are so amazing at masking our fears with the hardshell of ego and distraction. Manipulating ourselves like a cute young toddler fools their grandma into giving them anything they want.
We make excuses on why we can't do things, knowing that if the stakes really meant that much to us, we would get it done.
"In the end, the easiest person to fool is yourself. And fear is what makes you the fool."
As you skim through the 9 types of fear, I took the liberty to write a couple of mental cues on how to slay those fears. It is a slightly different perspective on how to approach these internal enemies.
The 9 Types of FEAR
1. Fear of failure
If you look throughout history, almost every high performer has failed more than they succeeded. They just have the uncanny ability to learn from their mistakes and adapt to new circumstances.
"Fail fast. Learn faster. Get better. That is the name of the game."
You have to fail your way to success. Failure is feedback. It forces you to make adjustments. Ultimately, taking you closer to your goal.
More importantly, you miss 100% of the shots that you don't take. We are all playing the game of life, you might as well shoot your shot instead of riding the pine. Criticizing others from the sideline.
2. Fear of rejection and humiliation
In your 20's, you care about what everyone thinks.
In your 30's you care about what your friends think.
In your 40's you stop caring about what anyone thinks.
In your 50's you realize that no one was thinking of you at all.
The most crippling words to a person's future is "What will they think about me?" That statement has forced people to live at only 60% of their capacity. Never let those 6 words own your life.
You will never meet a successful person who hasn't risked some form of humiliation, criticism, or hate.
As Jeff Bezos said, "If you aren't ready to be criticized or humiliated, then you can forget about doing anything interesting in this world."
3. Fear of commitment
Commitment breeds clarity. It breeds focus. Once you go "All in" on something or someone, the right outcomes will eventually shine through. And you can live with those results because you did everything you could to make it work.
Commitment is directly aligned with vulnerability. To me, you can't be completely happy unless you allow yourself to be vulnerable. Unless you put yourself in a position to be hurt. Joy and pain are just part of the game. You win some and you lose some. But make sure you never tie your self-worth to anything or anyone outside of yourself.
4. Fear of Change
People look at you and say 'you CHANGED' as if you worked that hard to stay the SAME. - Jay Z
There are 3 things that are guaranteed in life, death, taxes, and change.
A life without change is a life not lived. We were born to be challenged. To evolve as species. Neither of those things would happen if we didn't put ourselves in uncomfortable situations. Growth happens outside of your comfort zone. You should try living there more often.
If you want a different life, you need to do different things, and become a different person.
5. Fear of being alone
Solitude and Self-reliance breed strength. The strongest people are very comfortable with being completely alone.
In fact, few things more empowering than achieving something all on your own. Don't get me wrong, we all need help in this life, but there is a difference between asking for help when it's necessary and being codependent. You need to know the difference and most people don't.
Take full responsibility for where you are right now, and start changing your situation. Don't look for everyone to save you or guide you. Be your own angel. Be your own leader.
6. Fear of Pain
Pain equals power. To me, temporary pain leads me to long term power. I know for a fact that this pain will eventually fade. This too shall pass. And when it does, I will be better for it.
7. Fear of missing out
The only way to avoid the fear of missing out is to make sure that the activity you are missing it for is making you a better person.
Don't stress about missing a couple of parties if you know that you are building the life you deserve in the long term. Sometimes you have to pass up good opportunities for great ones.
8. Fear of the uncertain
If life was so predictable, where is the fun in that? There would be no spontaneity. There would be no surprises. There would be no moments where you could say, "I didn't see that coming. But I am glad it did." There would be no trigger events to lead you where you are supposed to be. What type of life is that?
Embrace all the chaos and uncertainty that life has to offer. Take it as it comes. Be like water. Let it flow. Let it crash. Let it pass. Just find a way to adapt.
9. Fear of Death
You should never fear death as long as you are doing everything you can to make your time on earth worthwhile. Keep serving others. Keep building your legacy. Lay your head on your pillow at night and know that you did your part. That you did the best you could in the last 24 hours. If you can embrace that type of mentality, death shouldn't scare you. Allowing life to pass you by, that should scare you to death.
One day, our time will come. And all we have to hang our hat on is our actions and your impact on the people around us. You won't get high marks for your intent. So, I suggest you start building a large volume of action and impact before your time is up.
Go to sleep with some peace that you left it all out on the floor.
Wrap up:
Never allow a self-injected dose of fear to tranquilize your faith and paralyze your genius.
Recognize that you hold the syringe that has the power to build or destroy you.
Ask yourself what you are injecting through that needle? What will course through your veins? Courage or Fear? What shot do you need to take to create your greatest life? Are you even aware of what fears are cripping your potential?
In the end, your life starts and stops based on how you manipulate your relationship with fear.
Control your fears. Don't let them control you.
He was referring to one simple thing. "FEAR."
False Evidence Appearing Real.The Self-inflicted emotion that has the power to control our lives and cripple our futures.
The truth is fear has plagued the human condition since inception, and it will continue to do so. No one is immune to this disease regardless of your genetics, background, or social status.
The real question lies in how long you will allow yourself to suffer from the death grip of fear? To be more specific, what fears are suffocating your potential and stealing your genius?
This article is about giving that fear a face. Understanding it's root. Marginalizing its power, and using fear to serve your life, not strangle it.
It's time to manipulate your relationship with fear. It's time you dance with your fears. Play with them. Spar with them. Even laugh at them from time to time. After all, in the grand scheme of life, they can even be a bit comical.
The more you test your fears, the more you understand that the majority of them are foolish. It's harsh but true.
After all, doesn't it sound a bit crazy to not express your gifts, because you are afraid that someone might criticize you? With words. Not actual weapons, just words.
Now, I am not about to act like I haven't suffered from the fear of humiliation. It's quite the opposite. It's taken me years to get over this fear. I still battle it to this day.
But in hindsight, I feel pretty ashamed that I used to not post things on Social media, because I was afraid of a little hate.
I mean what was really going to happen?
- Was I going to feel the physical pain from the arrows from these keyboard warriors?
- Was I going to be rushed to the ER for emergency surgery. A surgery that can alter the way I live my life?
- Was I going to die?
- Would my internal world fall apart simply because people didn't like my work?
NO. That is not what was going to happen. And it won't happen to you either. You can't let fear control your life unless you give it permission. Sadly, I had to learn that the hard way and refuse to learn that lesson again.
There were many moments when I let my imagination run so wild, that I thought that my world was going to crumble. Stacking these imaginary scenarios that destroyed my internal peace. I was creating a narrative that ended in peril. Those thoughts were delaying a life of success and fulfillment. I was designing a future of cowardice and mediocrity. And it all started with letting my fears run loose.
As you attempt to solve the puzzle of life there is usually one piece that is glaringly missing. Attacking your fears. Only you can place that final piece in that gaping hole to solve the puzzle of fulfillment.
Fear is what makes us heroic. You can't have courage without fear. You can't be heroic without being courageous.
Are you willing to take that walk? Making fear your compass. Choosing to walk through the bonfire of fear. Knowing that you get burned by the public, fall flat on your face, or even abandoned by the people you care about.
But success is always on the other side of fear. You can't go around, only through. Once you cross that threshold, the only thing left behind is the debris of your former self.
Fear is a master of seduction. It will charm you into thinking that you are doing perfectly fine when you are actually running from the things you need to do most.
You unconsciously suppress your deepest desires. Putting your dreams on hold because fear persuaded you into thinking that this is all that your life could become.
Don't believe the lie.
We are so amazing at masking our fears with the hardshell of ego and distraction. Manipulating ourselves like a cute young toddler fools their grandma into giving them anything they want.
We make excuses on why we can't do things, knowing that if the stakes really meant that much to us, we would get it done.
"In the end, the easiest person to fool is yourself. And fear is what makes you the fool."
As you skim through the 9 types of fear, I took the liberty to write a couple of mental cues on how to slay those fears. It is a slightly different perspective on how to approach these internal enemies.
The 9 Types of FEAR
1. Fear of failure
If you look throughout history, almost every high performer has failed more than they succeeded. They just have the uncanny ability to learn from their mistakes and adapt to new circumstances.
"Fail fast. Learn faster. Get better. That is the name of the game."
You have to fail your way to success. Failure is feedback. It forces you to make adjustments. Ultimately, taking you closer to your goal.
More importantly, you miss 100% of the shots that you don't take. We are all playing the game of life, you might as well shoot your shot instead of riding the pine. Criticizing others from the sideline.
2. Fear of rejection and humiliation
In your 20's, you care about what everyone thinks.
In your 30's you care about what your friends think.
In your 40's you stop caring about what anyone thinks.
In your 50's you realize that no one was thinking of you at all.
The most crippling words to a person's future is "What will they think about me?" That statement has forced people to live at only 60% of their capacity. Never let those 6 words own your life.
You will never meet a successful person who hasn't risked some form of humiliation, criticism, or hate.
As Jeff Bezos said, "If you aren't ready to be criticized or humiliated, then you can forget about doing anything interesting in this world."
3. Fear of commitment
Commitment breeds clarity. It breeds focus. Once you go "All in" on something or someone, the right outcomes will eventually shine through. And you can live with those results because you did everything you could to make it work.
Commitment is directly aligned with vulnerability. To me, you can't be completely happy unless you allow yourself to be vulnerable. Unless you put yourself in a position to be hurt. Joy and pain are just part of the game. You win some and you lose some. But make sure you never tie your self-worth to anything or anyone outside of yourself.
4. Fear of Change
People look at you and say 'you CHANGED' as if you worked that hard to stay the SAME. - Jay Z
There are 3 things that are guaranteed in life, death, taxes, and change.
A life without change is a life not lived. We were born to be challenged. To evolve as species. Neither of those things would happen if we didn't put ourselves in uncomfortable situations. Growth happens outside of your comfort zone. You should try living there more often.
If you want a different life, you need to do different things, and become a different person.
5. Fear of being alone
Solitude and Self-reliance breed strength. The strongest people are very comfortable with being completely alone.
In fact, few things more empowering than achieving something all on your own. Don't get me wrong, we all need help in this life, but there is a difference between asking for help when it's necessary and being codependent. You need to know the difference and most people don't.
Take full responsibility for where you are right now, and start changing your situation. Don't look for everyone to save you or guide you. Be your own angel. Be your own leader.
6. Fear of Pain
Pain equals power. To me, temporary pain leads me to long term power. I know for a fact that this pain will eventually fade. This too shall pass. And when it does, I will be better for it.
7. Fear of missing out
The only way to avoid the fear of missing out is to make sure that the activity you are missing it for is making you a better person.
Don't stress about missing a couple of parties if you know that you are building the life you deserve in the long term. Sometimes you have to pass up good opportunities for great ones.
8. Fear of the uncertain
If life was so predictable, where is the fun in that? There would be no spontaneity. There would be no surprises. There would be no moments where you could say, "I didn't see that coming. But I am glad it did." There would be no trigger events to lead you where you are supposed to be. What type of life is that?
Embrace all the chaos and uncertainty that life has to offer. Take it as it comes. Be like water. Let it flow. Let it crash. Let it pass. Just find a way to adapt.
9. Fear of Death
You should never fear death as long as you are doing everything you can to make your time on earth worthwhile. Keep serving others. Keep building your legacy. Lay your head on your pillow at night and know that you did your part. That you did the best you could in the last 24 hours. If you can embrace that type of mentality, death shouldn't scare you. Allowing life to pass you by, that should scare you to death.
One day, our time will come. And all we have to hang our hat on is our actions and your impact on the people around us. You won't get high marks for your intent. So, I suggest you start building a large volume of action and impact before your time is up.
Go to sleep with some peace that you left it all out on the floor.
Wrap up:
Never allow a self-injected dose of fear to tranquilize your faith and paralyze your genius.
Recognize that you hold the syringe that has the power to build or destroy you.
Ask yourself what you are injecting through that needle? What will course through your veins? Courage or Fear? What shot do you need to take to create your greatest life? Are you even aware of what fears are cripping your potential?
In the end, your life starts and stops based on how you manipulate your relationship with fear.
Control your fears. Don't let them control you.
Quote for the day
"One who fears failure limits his activities. Failure is only the opportunity to more intelligently begin again." - Henry Ford
Saturday, 22 May 2021
15 Lessons Rich Parents Teach Their Kids That the Poor Don’t
Here are the most common lesson rich parents teach their children that the poor fail to do!
Let’s take a look at the differences in parenting employed by the rich in order to make sure their kids get s better shot at success in the long term, shall we?
This is something we’ve been interested in for a while especially since, as time goes by, we’re considering having our own children and we most certainly wish to give them the right tools to get an advantage in life.
This article will benefit you no matter where you finds yourself in life, because you can still draw tremendous value from the lessons and advice the wealthy share with their kids.
So much to say that the right piece of advice provided early on or at the right time can make great differences in the long run.
As always, here’s the video version of this article in case you don’t feel like reading:
Here are 15 lessons rich parents teach their children that the poor don’t!
Number 1: Understanding how money works
Why am I being paid this much by my employer?
The poor never know what is a good purchase and a bad purchase.
After poor people earn money, they go ahead and spend it. That’s how you stay poor.
Let us explain in as simple terms as possible:
an ASSET = Makes you money,
while a LIABILITY = Costs you money
The problem here is, poor people never realize what counts as a liability. For example, both the car you drive to the grocery store and the house you live in are liabilities. They do not generate any revenue for you, but demand money to keep running. Same goes, for your new iPhone, fancy clothes your flat screen tv and everything else you purchased without thinking.
The rich focus all their time and money on acquiring more assets. Buying an apartment that generates rent, writing a book that generates revenue once it’s completed, purchasing a part of a business that’s doing ok and more.
“But Alux, most rich people have fancy cars and fancy houses? Isn’t that against what you’re saying?”
Yes, they do own luxuries, but please pay very close attention because this is extremely important:
Rich people never buy luxuries from their own earnings. Want a new fancy car? Figure out how to buy 2 apartments and use the rent from them to pay for the leasing for the car. That way, when you get rid of the car, you still have money coming in. This is a crucial difference in behavior. When money starts coming in, focus on buying assets instead of spending it!
Number 3: They’re not entitled to anything
The rich know that the world can take everything away if they’re not performing, while the poor always look for someone else to take care of them.
Being born in a wealthy family definitely has its advantages. You have access to better tools, to better resources, you don’t have to worry about basic needs, but you also open up yourself to new threats that poor people don’t have to worry about. There is a lot more to lose if you’re not careful, so the pressure is always on.
It’s really important for the wealthy to teach their children that despite them getting a head start in life, the journey ahead is long and they need to remain focused on growth, not just maintaining the pace. Weather or not they will be successful in life depends on their own actions and daddy’s money can only go so far.
Families fortunes where children feel entitled, usually crumble in the 3rd generation.
First, there’s someone who’s really hungry and works incredibly hard to build wealth.
Second, their children grow with a sense that all they need to do is maintain the wealth.
Lastly, the 3rd generation has lost its hunger, feels entitled to success without work or sacrifice and usually spends it all stupidly.
Teaching your kids the lessons from this article will help you avoid this type of downfall.
Number 4: How to be sociable and connect with other people
You would think more people would realize how important it is to be able to have a pleasant conversation with others.
Successful people socialize their kids before the age of 4. Not even kidding.
Here’s why: if your child gets socialized that early, other kids will want to play with him. If he behaves well with other kids, other parents will want to take care of him when he or she plays with their own. This has a massive snowball effect through life. If people like you and like being around you, this builds up and doors open for you that otherwise wouldn’t. Teachers will treat you better, you will get access to better job opportunities, you will make better friends so there’s an entire tree of benefits that grows from early socialization.
We’ve learned this valuable lesson from Dr. Jordan Peterson’s book, 12 Rules for Life.
Ohh yeah, and poor people never teach their kids to read, because they themselves don’t read..
Number 5: Stop expecting immediate results and avoid magical thinking
We’re so caught up in this instant environment; want to watch a movie: Netflix , want to eat: drive through or order, want to have sex: tinder, that most people don’t realize wealth and happiness do not fall in the same category.
Poor people expect to get rich quick. To win a large sum of money or inherit property. They have this weird expectation that their lives will somehow magically become better. The irony is, even if they somehow got their hands on a lot of money, they’re not educated enough to know what to do with it and eventually blow through it all.
Rich parents make it a priority to teach their kids to play the long game. Long term thinking is one of differentiating characteristics of the rich.
Remember our video on 15 Things You Can Control in life? The bonus info there was a specific skill called: Trading with the FUTURE, which the rich employ in order to get themselves an advantage over everyone else. It’s an incredible video filled with actionable insights.
Something really interesting we discovered is how much progress you can make if you think about life in large batches of time 5-10-20 years.
There’s a really great quote from an interview Bill Gates did one where he said:
The year is almost over and that new year new me bullshit will make its way into your lives. Instead of planning for the next year, why don’t you start planning your next decade? And maybe, this time you will do something about it!
Number 6: How to create daily habits that on the long run give them incredible advantages
One of the most valuable skills you can teach your child is How to create a habit for himself.
Habits are amazing and once you realize how valuable they can be, your life changes. It normally takes around 21 days to create a new habit and once you push through that 21 day limit, you’re off to the races. That habit becomes a part of you.
You don’t read enough? Transform reading time into a habit!
You want to get fit but never have the motivation to go to the gym. Make a habit out of it!
One of the most valuable lessons a parent can teach their child is how to generate more money.
This might sound peculiar to some of you, but it’s the truth. The difference is in the approach and the knowledge you use to backup that effort.
The smarter you are from a financial perspective the least effort you have to deploy into the real world. That’s why Wall Street brokers earn so much more than miners. Who between these two do you think deploys more effort?
Poor people are always focused on lowering expenses as much as possible; to the point that life isn’t almost worth living. Do you think the rich care about buying or not a $5 coffee from Starbucks or spending $30 on a movie?
Instead, the wealthy put all their attention to increasing the amount of money flowing in. If you radically increase your income there’s always going to be large amounts of cash left at the end of the month.
Poor people teach their kids to lower expenses while the rich focus on increasing their income.
Major difference.
Combine that with lesson number 2 from this list and you have officially won the game of money.
Number 9: Knowledge is more valuable than money on the long run
There’s another quote that we kept hearing a lot when we were getting started and it took a while to fully comprehend the true implications it had. It goes like this:
Sounds easy right? But it has very little to do with going to school or reading books.
It has a lot more to do with increasing how valuable you are to the world. The world rewards people who are valuable, because valuable people can create value for others and in exchange for that value, they can get whatever they want.
The concept of becoming a valuable person is not thought to their children by the poor, even just a few of the wealthy bring it up when the child is growing up, but those who do see a higher probability of both success and happiness.
There are many ways to become valuable, from filling a position in a company, to creating a product or service that people use, to showcasing your talent to the entire world.
The more valuable you are, the richer you will be. The only way to become more valuable is through the increase of knowledge, skill level and time.
Learn how to be better and then practice being better at it for long enough that you start to see noticeable differences. It takes 10,000 hours to master anything, that’s why the rich have their children try a bunch of activities in order to get a headstart on that number of hours.
Someone who has knowledge will always be able to generate money, because he is valuable to the marketplace! The opposite is not always true, sometimes knowledge can be too expensive to buy.
Number 10: Don’t work for money, Have money work for you!
This is the centerpiece of how to get rich. You can read as many books as you’d like, go to seminars, classes, MBAs, whatever you want, it’s all based on this.
There are big differences in the approach to finance these two classes of people employ.
Most people stay poor because they believe you need large amounts of money to invest, otherwise there’s no point. The rich, are always looking for way to add the smallest drop in the bucket of passive income they can find, because it’s not about the amount as much as it is about freeing your time.
You can start a business these days with less than 100 dollars, if you know what you’re doing or even for free as long as you’re willing to put in the time. As soon as you generate enough revenue, use that money to pay for someone to do the things you used to do to keep the business running as you focus on growth and other things.
The concept of passive income and understanding how to use money to generate more money is the foundation to any wealth building strategy. Whenever anybody new asks us: what is the first book anyone should read if they want to be rich? We always answer with: RICH DAD POOR DAD by Robert Kiyosaki.
It’s the first financial book that made a difference in our actions and beliefs when we were starting out. You’ll find it translated in every language out there. If you haven’t read it, we strongly urge you to pick it up as soon as possible.
It’s such a valuable book!
Number 11: Solving problems is the quickest way to get rich
Something the rich are quick to teach their children is the fundamental difference between getting paid and getting rich.
Let us explain: Poor people get paid to take care of something someone needs done. For example: Deliver the newspaper, wash the car, answer the phone and more single activity jobs. Where you basically do the same thing over and over again.
The rich never do repetitive work, because that’s easily outsourced, instead, they focus on the big problem. The bigger the problem you fix, the richer you get.
That’s how, delivering the newspaper -> became content websites, same result, less hassle.
Answering the phone -> became automated messaging – which btw, google has a new AI that will likely end the job of receptionist for good.
Let’s take 3 Iconic modern entrepreneurs: Elon Musk, Mark Zuckerberg and Jeff Bezos. They all got super rich by solving problems for humanity and creating products and services to serve that mission.
People will pay money for you to solve their problem. Teach your children that and they’re off to the races.
Number 12: Not to waste time on things that do not correlate to the real world
Sorry to break it to you, but nobody sees value in your ethnic or gender studies. Same goes for majors and degrees in: journalism, film and media, history or fine arts.
To be honest, we feel like the entire educational system right now is pretty messed up. They’re just repeating to you some things that used to make sense a while back, with a blatant disregard for the future.
You’re basically getting in massive debt over skills that 1. Do not have a direct correlation to the marketplace you will be performing in once you graduate and 2. If you’re really passionate about any of those topics and put in the time to master them, you have a better shot at making it on your own.
Number 13: How to use good debt instead of bad debt like the poor do
Yeah, there are two types of debt.
Rich parents do not want their kids to be top of the class. Shocker right?! It has to do with the 80-20 rule also known as the Pareto Principle or the Pareto Distribution, which states that 80% of the outcomes is the result of just 20% of the action. In businesses, 80% of the revenue comes from only 20% of the customers. 20% of your employees, basically do 80% of the work and so on.
This is a mathematical ratio that’s been proven to be quite accurate in almost all enterprises and in life in general.
Back to why rich parents don’t want their kids to be the first ones in class? It takes takes too much time and effort. To improve with the smallest deviation you would need to dramatically increase the time you put in which doesn’t leave enough for your real life education. There’s more value to take out from experimenting in the real world than being inside and studying all night just to get 5 or 10% more on your exam.
We first discovered the 80-20 rule in Tim Ferris’s book The 4 Hour Work Week and to be honest, we’ve been leveraging that concept ever since. There’s also another book called the 80/20 principle that’s focused exclusively on this concept by Richard Koch.
Between us, we recommend the 4 hour work week, it’s more fun.
Number 15: Having money doesn’t make you a better person, it just solves some of the problems.
Surprise surprise.. When you’re thinking of rich kids, you probably picture snotty, arrogant pricks who believe that just because they have money they’re better than anyone.
That’s not usually the case. Unless you inherit money, you probably worked your butt off to get to where you are in life. On the road to riches you got to understand how valuable humility can be and most rich people are very humble individuals. Because they never forget where they came from, these values don’t get lost.
Humility and respect for others are some of the first lessons rich parents teach to their children, because they know what it feels like to be sitting on the other side.
You should never be ashamed of having money or being successful, it’s actually something the entire world should celebrate. A lesson most people figure out too late in life is that you can’t buy a clear conscious, no matter how much money you throw at it. Money pays for comforts of the body, but not for comforts of the mind and soul.
Source: www alux.com
Let’s take a look at the differences in parenting employed by the rich in order to make sure their kids get s better shot at success in the long term, shall we?
This is something we’ve been interested in for a while especially since, as time goes by, we’re considering having our own children and we most certainly wish to give them the right tools to get an advantage in life.
This article will benefit you no matter where you finds yourself in life, because you can still draw tremendous value from the lessons and advice the wealthy share with their kids.
So much to say that the right piece of advice provided early on or at the right time can make great differences in the long run.
As always, here’s the video version of this article in case you don’t feel like reading:
Number 1: Understanding how money works
While the poor remain financially illiterate.
This might sound basic to some of you, but there aren’t that many people who asked themselves:
How do people make money?
This might sound basic to some of you, but there aren’t that many people who asked themselves:
How do people make money?
Why am I being paid this much by my employer?
What factors determine my salary or revenue?
How do taxes work? Can that be optimized?
What needs to happen to improve my finances?
Rich parents usually make it a priority to discuss about the value and importance of money in their household as soon as possible. This familiarizes kids from a young age with the concept of value in exchange for services provided. They’re introduced to the household expenses and put in real life situations where they figure out pretty quickly that money is a lot harder to earn than it seems.
On the other end of the spectrum, the poor never talk about money at home, it’s usually a secret how much money the parents earn or how that money is spent. The only time the kids hear about money is when the parents are arguing about not having enough, thus associating the entire concept with a negative feeling.
Number 2: The difference between an asset and a liability
Rich parents usually make it a priority to discuss about the value and importance of money in their household as soon as possible. This familiarizes kids from a young age with the concept of value in exchange for services provided. They’re introduced to the household expenses and put in real life situations where they figure out pretty quickly that money is a lot harder to earn than it seems.
On the other end of the spectrum, the poor never talk about money at home, it’s usually a secret how much money the parents earn or how that money is spent. The only time the kids hear about money is when the parents are arguing about not having enough, thus associating the entire concept with a negative feeling.
Number 2: The difference between an asset and a liability
The poor never know what is a good purchase and a bad purchase.
After poor people earn money, they go ahead and spend it. That’s how you stay poor.
Let us explain in as simple terms as possible:
an ASSET = Makes you money,
while a LIABILITY = Costs you money
The problem here is, poor people never realize what counts as a liability. For example, both the car you drive to the grocery store and the house you live in are liabilities. They do not generate any revenue for you, but demand money to keep running. Same goes, for your new iPhone, fancy clothes your flat screen tv and everything else you purchased without thinking.
The rich focus all their time and money on acquiring more assets. Buying an apartment that generates rent, writing a book that generates revenue once it’s completed, purchasing a part of a business that’s doing ok and more.
“But Alux, most rich people have fancy cars and fancy houses? Isn’t that against what you’re saying?”
Yes, they do own luxuries, but please pay very close attention because this is extremely important:
"THE ASSETS pay for the LUXURIES!"
Rich people never buy luxuries from their own earnings. Want a new fancy car? Figure out how to buy 2 apartments and use the rent from them to pay for the leasing for the car. That way, when you get rid of the car, you still have money coming in. This is a crucial difference in behavior. When money starts coming in, focus on buying assets instead of spending it!
Number 3: They’re not entitled to anything
The rich know that the world can take everything away if they’re not performing, while the poor always look for someone else to take care of them.
Being born in a wealthy family definitely has its advantages. You have access to better tools, to better resources, you don’t have to worry about basic needs, but you also open up yourself to new threats that poor people don’t have to worry about. There is a lot more to lose if you’re not careful, so the pressure is always on.
It’s really important for the wealthy to teach their children that despite them getting a head start in life, the journey ahead is long and they need to remain focused on growth, not just maintaining the pace. Weather or not they will be successful in life depends on their own actions and daddy’s money can only go so far.
Families fortunes where children feel entitled, usually crumble in the 3rd generation.
First, there’s someone who’s really hungry and works incredibly hard to build wealth.
Second, their children grow with a sense that all they need to do is maintain the wealth.
Lastly, the 3rd generation has lost its hunger, feels entitled to success without work or sacrifice and usually spends it all stupidly.
Teaching your kids the lessons from this article will help you avoid this type of downfall.
Number 4: How to be sociable and connect with other people
You would think more people would realize how important it is to be able to have a pleasant conversation with others.
Successful people socialize their kids before the age of 4. Not even kidding.
Here’s why: if your child gets socialized that early, other kids will want to play with him. If he behaves well with other kids, other parents will want to take care of him when he or she plays with their own. This has a massive snowball effect through life. If people like you and like being around you, this builds up and doors open for you that otherwise wouldn’t. Teachers will treat you better, you will get access to better job opportunities, you will make better friends so there’s an entire tree of benefits that grows from early socialization.
We’ve learned this valuable lesson from Dr. Jordan Peterson’s book, 12 Rules for Life.
Ohh yeah, and poor people never teach their kids to read, because they themselves don’t read..
Number 5: Stop expecting immediate results and avoid magical thinking
We’re so caught up in this instant environment; want to watch a movie: Netflix , want to eat: drive through or order, want to have sex: tinder, that most people don’t realize wealth and happiness do not fall in the same category.
Poor people expect to get rich quick. To win a large sum of money or inherit property. They have this weird expectation that their lives will somehow magically become better. The irony is, even if they somehow got their hands on a lot of money, they’re not educated enough to know what to do with it and eventually blow through it all.
Rich parents make it a priority to teach their kids to play the long game. Long term thinking is one of differentiating characteristics of the rich.
Remember our video on 15 Things You Can Control in life? The bonus info there was a specific skill called: Trading with the FUTURE, which the rich employ in order to get themselves an advantage over everyone else. It’s an incredible video filled with actionable insights.
Something really interesting we discovered is how much progress you can make if you think about life in large batches of time 5-10-20 years.
There’s a really great quote from an interview Bill Gates did one where he said:
“Most people overestimate what they can do in one year and underestimate what they can do in ten years.”
The year is almost over and that new year new me bullshit will make its way into your lives. Instead of planning for the next year, why don’t you start planning your next decade? And maybe, this time you will do something about it!
Number 6: How to create daily habits that on the long run give them incredible advantages
One of the most valuable skills you can teach your child is How to create a habit for himself.
Habits are amazing and once you realize how valuable they can be, your life changes. It normally takes around 21 days to create a new habit and once you push through that 21 day limit, you’re off to the races. That habit becomes a part of you.
You don’t read enough? Transform reading time into a habit!
You want to get fit but never have the motivation to go to the gym. Make a habit out of it!
Same goes for work, if you make it a habit to organize and optimize your workflow large portions of your day open up for other things.
The rich use the power of habit to get ahead in life, while the poor, nurture toxic habits which leads to their lives in ruin.
The power of habit is a tool, it magnifies what you feed it. The rich simply choose wealth creation actions as their daily habits, while the poor pick negative routines.
Careful what type of habits you instill in your child.
Number 7: Money is a tool and it’s a Good Thing
The rich use the power of habit to get ahead in life, while the poor, nurture toxic habits which leads to their lives in ruin.
The power of habit is a tool, it magnifies what you feed it. The rich simply choose wealth creation actions as their daily habits, while the poor pick negative routines.
Careful what type of habits you instill in your child.
"Children learn from what you do, not what you teach them to do!"
Number 7: Money is a tool and it’s a Good Thing
How many times have you heard people saying: “money is the root of all evil”?
Plenty huh?! Think back of the person you heard saying that. How successful were they? How happy were they with their lives?
Poor people blame their misfortunes on the lack of money in their lives and attribute an element of negativity to the concept of money. This is because, even when they get money it leads to more and more problems which they don’t know how to tackle.
The rich do the exact opposite. They understand that money is merely a tool, which you use to navigate life. It’s just pieces of paper & plastic with drawings on them which we exchange for material value. Nothing less, nothing more.
Stop taking money so damn personal and use it for what it was created for. Exchange it to make your life better.
It’s super similar to scissors. You can cut hair with them or you can stab yourself in the eye. Why people choose to do the latter is a major mystery to us.
Once you start thinking of money like a tool, the game suddenly changes and you will stop harming yourself with it.
Number 8: Increase income instead of lowering expenses
Plenty huh?! Think back of the person you heard saying that. How successful were they? How happy were they with their lives?
Poor people blame their misfortunes on the lack of money in their lives and attribute an element of negativity to the concept of money. This is because, even when they get money it leads to more and more problems which they don’t know how to tackle.
The rich do the exact opposite. They understand that money is merely a tool, which you use to navigate life. It’s just pieces of paper & plastic with drawings on them which we exchange for material value. Nothing less, nothing more.
Stop taking money so damn personal and use it for what it was created for. Exchange it to make your life better.
It’s super similar to scissors. You can cut hair with them or you can stab yourself in the eye. Why people choose to do the latter is a major mystery to us.
Once you start thinking of money like a tool, the game suddenly changes and you will stop harming yourself with it.
Number 8: Increase income instead of lowering expenses
One of the most valuable lessons a parent can teach their child is how to generate more money.
"It takes the same amount of effort of work to barely survive or make a fortune."
This might sound peculiar to some of you, but it’s the truth. The difference is in the approach and the knowledge you use to backup that effort.
The smarter you are from a financial perspective the least effort you have to deploy into the real world. That’s why Wall Street brokers earn so much more than miners. Who between these two do you think deploys more effort?
Poor people are always focused on lowering expenses as much as possible; to the point that life isn’t almost worth living. Do you think the rich care about buying or not a $5 coffee from Starbucks or spending $30 on a movie?
Instead, the wealthy put all their attention to increasing the amount of money flowing in. If you radically increase your income there’s always going to be large amounts of cash left at the end of the month.
Poor people teach their kids to lower expenses while the rich focus on increasing their income.
Major difference.
Combine that with lesson number 2 from this list and you have officially won the game of money.
Number 9: Knowledge is more valuable than money on the long run
There’s another quote that we kept hearing a lot when we were getting started and it took a while to fully comprehend the true implications it had. It goes like this:
“Invest in yourself, it pays the best dividends!”
Sounds easy right? But it has very little to do with going to school or reading books.
It has a lot more to do with increasing how valuable you are to the world. The world rewards people who are valuable, because valuable people can create value for others and in exchange for that value, they can get whatever they want.
The concept of becoming a valuable person is not thought to their children by the poor, even just a few of the wealthy bring it up when the child is growing up, but those who do see a higher probability of both success and happiness.
There are many ways to become valuable, from filling a position in a company, to creating a product or service that people use, to showcasing your talent to the entire world.
The more valuable you are, the richer you will be. The only way to become more valuable is through the increase of knowledge, skill level and time.
Learn how to be better and then practice being better at it for long enough that you start to see noticeable differences. It takes 10,000 hours to master anything, that’s why the rich have their children try a bunch of activities in order to get a headstart on that number of hours.
Someone who has knowledge will always be able to generate money, because he is valuable to the marketplace! The opposite is not always true, sometimes knowledge can be too expensive to buy.
Number 10: Don’t work for money, Have money work for you!
This is the centerpiece of how to get rich. You can read as many books as you’d like, go to seminars, classes, MBAs, whatever you want, it’s all based on this.
"Poor people exchange their time for money and then spend it!
The rich, use the money they get to create more money."
There are big differences in the approach to finance these two classes of people employ.
Most people stay poor because they believe you need large amounts of money to invest, otherwise there’s no point. The rich, are always looking for way to add the smallest drop in the bucket of passive income they can find, because it’s not about the amount as much as it is about freeing your time.
You can start a business these days with less than 100 dollars, if you know what you’re doing or even for free as long as you’re willing to put in the time. As soon as you generate enough revenue, use that money to pay for someone to do the things you used to do to keep the business running as you focus on growth and other things.
The concept of passive income and understanding how to use money to generate more money is the foundation to any wealth building strategy. Whenever anybody new asks us: what is the first book anyone should read if they want to be rich? We always answer with: RICH DAD POOR DAD by Robert Kiyosaki.
It’s the first financial book that made a difference in our actions and beliefs when we were starting out. You’ll find it translated in every language out there. If you haven’t read it, we strongly urge you to pick it up as soon as possible.
It’s such a valuable book!
Number 11: Solving problems is the quickest way to get rich
Something the rich are quick to teach their children is the fundamental difference between getting paid and getting rich.
Let us explain: Poor people get paid to take care of something someone needs done. For example: Deliver the newspaper, wash the car, answer the phone and more single activity jobs. Where you basically do the same thing over and over again.
The rich never do repetitive work, because that’s easily outsourced, instead, they focus on the big problem. The bigger the problem you fix, the richer you get.
That’s how, delivering the newspaper -> became content websites, same result, less hassle.
Answering the phone -> became automated messaging – which btw, google has a new AI that will likely end the job of receptionist for good.
Let’s take 3 Iconic modern entrepreneurs: Elon Musk, Mark Zuckerberg and Jeff Bezos. They all got super rich by solving problems for humanity and creating products and services to serve that mission.
People will pay money for you to solve their problem. Teach your children that and they’re off to the races.
Number 12: Not to waste time on things that do not correlate to the real world
Sorry to break it to you, but nobody sees value in your ethnic or gender studies. Same goes for majors and degrees in: journalism, film and media, history or fine arts.
To be honest, we feel like the entire educational system right now is pretty messed up. They’re just repeating to you some things that used to make sense a while back, with a blatant disregard for the future.
You’re basically getting in massive debt over skills that 1. Do not have a direct correlation to the marketplace you will be performing in once you graduate and 2. If you’re really passionate about any of those topics and put in the time to master them, you have a better shot at making it on your own.
“We’re lending money we don’t have, to kids who will never be able to pay it back, for jobs that no longer exist. That’s crazy, right?
That’s what we’ve been doing for the last forty years.”
Number 13: How to use good debt instead of bad debt like the poor do
Yeah, there are two types of debt.
Bad debt, makes you poor while Good Debt makes you rich.
Did your parents ever mentioned this to you when you were growing up? Probably not.
It’s one of those lessons that the rich have figured out a long time ago. Other people and institutions will actually help you get rich quicker if you know the difference between those two.
It’s all about the purpose of the debt. Poor people take out loans with the purpose of spending the money on liabilities. They borrow money to get a new car, to get a new phone, to cover necessities.
The rich only borrow money with the purpose of generating more money. Banks and investors love to lend money to this kind of projects, as long as you can clearly explain to them how their money will be safe and you will be able to pay it back.
That’s how people build skyscrapers, they don’t pay out of their own pocket for the building, not even for the land, it’s all borrowed. The bank is certain that you will be able to cell or rent the building and is willing to take that risk with you. Prove that you know what you’re doing and that you’ve done this successfully in the past.
Number 14: 80% of results comes from 20% of the effort
It’s one of those lessons that the rich have figured out a long time ago. Other people and institutions will actually help you get rich quicker if you know the difference between those two.
It’s all about the purpose of the debt. Poor people take out loans with the purpose of spending the money on liabilities. They borrow money to get a new car, to get a new phone, to cover necessities.
The rich only borrow money with the purpose of generating more money. Banks and investors love to lend money to this kind of projects, as long as you can clearly explain to them how their money will be safe and you will be able to pay it back.
That’s how people build skyscrapers, they don’t pay out of their own pocket for the building, not even for the land, it’s all borrowed. The bank is certain that you will be able to cell or rent the building and is willing to take that risk with you. Prove that you know what you’re doing and that you’ve done this successfully in the past.
Number 14: 80% of results comes from 20% of the effort
Rich parents do not want their kids to be top of the class. Shocker right?! It has to do with the 80-20 rule also known as the Pareto Principle or the Pareto Distribution, which states that 80% of the outcomes is the result of just 20% of the action. In businesses, 80% of the revenue comes from only 20% of the customers. 20% of your employees, basically do 80% of the work and so on.
This is a mathematical ratio that’s been proven to be quite accurate in almost all enterprises and in life in general.
Back to why rich parents don’t want their kids to be the first ones in class? It takes takes too much time and effort. To improve with the smallest deviation you would need to dramatically increase the time you put in which doesn’t leave enough for your real life education. There’s more value to take out from experimenting in the real world than being inside and studying all night just to get 5 or 10% more on your exam.
We first discovered the 80-20 rule in Tim Ferris’s book The 4 Hour Work Week and to be honest, we’ve been leveraging that concept ever since. There’s also another book called the 80/20 principle that’s focused exclusively on this concept by Richard Koch.
Between us, we recommend the 4 hour work week, it’s more fun.
Number 15: Having money doesn’t make you a better person, it just solves some of the problems.
Surprise surprise.. When you’re thinking of rich kids, you probably picture snotty, arrogant pricks who believe that just because they have money they’re better than anyone.
That’s not usually the case. Unless you inherit money, you probably worked your butt off to get to where you are in life. On the road to riches you got to understand how valuable humility can be and most rich people are very humble individuals. Because they never forget where they came from, these values don’t get lost.
Humility and respect for others are some of the first lessons rich parents teach to their children, because they know what it feels like to be sitting on the other side.
You should never be ashamed of having money or being successful, it’s actually something the entire world should celebrate. A lesson most people figure out too late in life is that you can’t buy a clear conscious, no matter how much money you throw at it. Money pays for comforts of the body, but not for comforts of the mind and soul.
Source: www alux.com
Quote for the day
"Fear is the main source of superstition, and one of the main sources of cruelty. To conquer fear is the beginning of wisdom." - Bertrand Russell
Friday, 21 May 2021
Quote for the day
"A failure is like fertilizer; it stinks to be sure, but it makes things grow faster in the future." - Denis Waitley
Thursday, 20 May 2021
What is Bitcoin Mining?
Bitcoin is currently the most popular cryptocurrency in the world. It’s symbol is “₿”. It was created and launched in 2008 by someone under the name of Satoshi Nakamoto. The cryptocurrency went into real world use in 2009 as open-source blockchain software. Bitcoin was the first decentralized digital currency separate from a central authority. It can be sent directly from peer-to-peer on its own enclosed network with no intermediaries needed for transactions. Each payment and transfer is verified by a network of nodes through cryptography and recorded in a publicly shared universally distributed ledger inside its blockchain.
New bitcoins are created and rewarded during the process of validating the transactions, this is what is known as bitcoin mining. The bitcoins earned through mining can be converted to other currencies and used to purchase products and services. The price of bitcoins can be extremely volatile at times but the overall trend in its price has been higher since it started trading publicly.
Bitcoin mining is the record-keeping service completed through the use of computer processing power of nodes. Miners work to keep the blockchain record consistent, complete, and unalterable by continuously assembling new transactions into a block and broadcasting it to the total network and verifying it through recipient nodes. Each block contains a cryptographic hash of the previous block, and links to the previous block creating a chain of blocks on the ledger or blockchain.
New bitcoins are created and rewarded during the process of validating the transactions, this is what is known as bitcoin mining. The bitcoins earned through mining can be converted to other currencies and used to purchase products and services. The price of bitcoins can be extremely volatile at times but the overall trend in its price has been higher since it started trading publicly.
Bitcoin mining is the record-keeping service completed through the use of computer processing power of nodes. Miners work to keep the blockchain record consistent, complete, and unalterable by continuously assembling new transactions into a block and broadcasting it to the total network and verifying it through recipient nodes. Each block contains a cryptographic hash of the previous block, and links to the previous block creating a chain of blocks on the ledger or blockchain.
For acceptance by the network, a new block must have a proof-of-work (PoW). The PoW requires miners to locate a number called a nonce, so that when the block content is hashed with the nonce, the resulting numerical sequence is smaller than the network’s difficulty target. This proof is easy for a node in the network to verify, but time-consuming to create. For a cryptographic hash that is secure, miners try many different nonce values before achieving the target for difficulty.
After every 2,016 blocks, the difficulty target is changed based on the network’s performance. The goal is to keep the average time between new block creation at approximately ten minutes. The system automatically changes to the amount of mining power currently on the network.
The proof-of-work system and the chaining of blocks, makes any modifications on the blockchain network difficult. A network hacker would need to modify all previous blocks in the chain to create modifications on one block to be accepted. Since new blocks are mined and added to the chain continuously, the difficulty level of modifying a block grows as time passes and the quantity of previous blocks increases.
The miner that finds the new block is permitted by the rest of the network to reward themselves both newly created bitcoins along with transaction fees. On May 11, 2020, the current reward was 6.25 newly created bitcoins per block that is successfully added to the blockchain, along with transaction fees from processed payments on that block.
Mining the first half of the supply of bitcoins took four years while the remainder will take another 120 years. An artificial process called “bitcoin halving” reduces the amount that miners are compensated with fewer and fewer bitcoins as time passes. The reward is claimed for a block processed by a transaction called a coinbase that is added to the processed payments.
After every 2,016 blocks, the difficulty target is changed based on the network’s performance. The goal is to keep the average time between new block creation at approximately ten minutes. The system automatically changes to the amount of mining power currently on the network.
The proof-of-work system and the chaining of blocks, makes any modifications on the blockchain network difficult. A network hacker would need to modify all previous blocks in the chain to create modifications on one block to be accepted. Since new blocks are mined and added to the chain continuously, the difficulty level of modifying a block grows as time passes and the quantity of previous blocks increases.
The miner that finds the new block is permitted by the rest of the network to reward themselves both newly created bitcoins along with transaction fees. On May 11, 2020, the current reward was 6.25 newly created bitcoins per block that is successfully added to the blockchain, along with transaction fees from processed payments on that block.
Mining the first half of the supply of bitcoins took four years while the remainder will take another 120 years. An artificial process called “bitcoin halving” reduces the amount that miners are compensated with fewer and fewer bitcoins as time passes. The reward is claimed for a block processed by a transaction called a coinbase that is added to the processed payments.
All the bitcoins that currently exist have been created through the use of coinbase transactions. The original bitcoin protocol states that the reward for creating and adding a block will be halved approximately every four years after 210,000 blocks . The reward will continually decrease until it reaches zero, after the 21 million bitcoins cap limit is achieved. After the maximum bitcoins allowed is reached then the record keeping fees for miners will then be paid only in transaction fees.
To compete with other bitcoin miners can take a large capital investment in powerful computing equipment like a graphics processing unit (GPU) or an application-specific integrated circuit (ASIC). The prices of this computing equipment can can be from several hundred dollars up to tens of thousands of dollars. Some crypto miners purchase individual graphics cards as a lower-cost way to build mining operation equipment. The other big requirements of bitcoin mining computers is access to cheap and reliable electricity and a cooling system for the room the computers are in as well as the computer itself. Bitcoin mining is a professional endeavor and requires beating other nodes to solve the cryptographic puzzles to be rewarded. There can be a high barrier to entry in cost for the computing power and electricity to attempt to achieve these goals.
Nakamoto originally created a monetary policy using artificial scarcity. Bitcoin’s total market cap and float was set at inception as the total number of bitcoins would never be greater than 21 million. This fixed quantity helps maintain the value of bitcoins using a limited supply and slowly releases new bitcoins into circulation. The value of bitcoin rewarded to miners early in the process helped motivate the network and the value of the fees will continue to motivate the miners for years to come.
To compete with other bitcoin miners can take a large capital investment in powerful computing equipment like a graphics processing unit (GPU) or an application-specific integrated circuit (ASIC). The prices of this computing equipment can can be from several hundred dollars up to tens of thousands of dollars. Some crypto miners purchase individual graphics cards as a lower-cost way to build mining operation equipment. The other big requirements of bitcoin mining computers is access to cheap and reliable electricity and a cooling system for the room the computers are in as well as the computer itself. Bitcoin mining is a professional endeavor and requires beating other nodes to solve the cryptographic puzzles to be rewarded. There can be a high barrier to entry in cost for the computing power and electricity to attempt to achieve these goals.
Nakamoto originally created a monetary policy using artificial scarcity. Bitcoin’s total market cap and float was set at inception as the total number of bitcoins would never be greater than 21 million. This fixed quantity helps maintain the value of bitcoins using a limited supply and slowly releases new bitcoins into circulation. The value of bitcoin rewarded to miners early in the process helped motivate the network and the value of the fees will continue to motivate the miners for years to come.
Quote for the day
"Our destiny is not determined by the number of times we stumble but by the number of times we rise up, dust ourselves off, and move forward." - Dieter F. Uchtdorf
Wednesday, 19 May 2021
The 14 Stages of Investor Emotions
Efficient markets are based on the assumption that rational people enter transactions with the intent to maximize gains and minimize losses. While this theory is sound, most investors are not the purely rational robots that efficient markets rely upon. Instead, emotions often cloud our decision-making and prevent us from acting in a rational manner.
Knowing we can never conquer our inherent emotional biases, we should seek to understand the range of emotions we may experience as investors and how it affects our interactions with the market. A common market psychology cycle exists that shines light on how emotions evolve and the effect they have on our decisions. By understanding the stages of this cycle, we can tame the emotional roller coaster.
The fourteen stages are:
Optimism – A positive outlook encourages us about the future, leading us to buy stocks.
Excitement – Having seen some of our initial ideas work, we begin considering what our market success could allow us to accomplish.
Thrill – At this point we investors cannot believe our success and begin to comment on how smart we are.
Euphoria – This marks the point of maximum financial risk. Having seen every decision result in quick, easy profits, we begin to ignore risk and expect every trade to become profitable.
Anxiety – For the first time the market moves against us. Having never stared at unrealized losses, we tell ourselves we are long-term investors and that all our ideas will eventually work.
Denial – When markets have not rebounded, yet we do not know how to respond, we begin denying either that we made poor choices or that things will not improve shortly.
Fear – The market realities become confusing. We believe the stocks we own will never move in our favour.
Desperation – Not knowing how to act, we grasp at any idea that will allow us to get back to break even.
Panic – Having exhausted all ideas, we are at a loss for what to do next.
Capitulation – Deciding our portfolio will never increase again, we sell all our stocks to avoid any future losses.
Despondency – After exiting the markets we do not want to buy stocks ever again. This often marks the moment of greatest financial opportunity.
Depression – Not knowing how we could be so foolish, we are left trying to understand our actions.
Hope – Eventually we return to the realization that markets move in cycles, and we begin looking for our next opportunity.
Relief – Having bought a stock that turned profitable, we renew our faith that there is a future in investing.
Individuals clearly follow this cycle in their decision making process.
Optimism – A positive outlook encourages us about the future, leading us to buy stocks.
Excitement – Having seen some of our initial ideas work, we begin considering what our market success could allow us to accomplish.
Thrill – At this point we investors cannot believe our success and begin to comment on how smart we are.
Euphoria – This marks the point of maximum financial risk. Having seen every decision result in quick, easy profits, we begin to ignore risk and expect every trade to become profitable.
Anxiety – For the first time the market moves against us. Having never stared at unrealized losses, we tell ourselves we are long-term investors and that all our ideas will eventually work.
Denial – When markets have not rebounded, yet we do not know how to respond, we begin denying either that we made poor choices or that things will not improve shortly.
Fear – The market realities become confusing. We believe the stocks we own will never move in our favour.
Desperation – Not knowing how to act, we grasp at any idea that will allow us to get back to break even.
Panic – Having exhausted all ideas, we are at a loss for what to do next.
Capitulation – Deciding our portfolio will never increase again, we sell all our stocks to avoid any future losses.
Despondency – After exiting the markets we do not want to buy stocks ever again. This often marks the moment of greatest financial opportunity.
Depression – Not knowing how we could be so foolish, we are left trying to understand our actions.
Hope – Eventually we return to the realization that markets move in cycles, and we begin looking for our next opportunity.
Relief – Having bought a stock that turned profitable, we renew our faith that there is a future in investing.
Individuals clearly follow this cycle in their decision making process.
By Sean Hannon, CFA, CFP is a professional fund manager.
Edited article from http://www.stocktradingtogo.com
Edited article from http://www.stocktradingtogo.com
Quote for the day
"Life is not easy for any of us. But what of that? We must have perseverance and above all confidence in ourselves. We must believe that we are gifted for something, and that this thing, at whatever cost, must be attained." - Marie Curie
Tuesday, 18 May 2021
Quote for the day
"Greatness lies not in being strong, but in the right use of strength." - Henry Ward Beecher
Monday, 17 May 2021
Sunday, 16 May 2021
7 Lessons Investors Can Learn from Warren Buffett
Beyond Value Investing, Warren Buffett Is a Brilliant Strategist
By Joshua Kennon
Warren Buffett, the legendary Chairman and CEO of holding company Berkshire Hathaway, was born on August 30, 1930. During the 50+ years he has run the former New England textile mill, he's taken it from around $8 per share to $270,000 per share (as of September, 2017), having never split the stock (Buffett did introduce the Class B shares, which for many years, traded at 1/50th the value of the Class A shares, but now trades at 1/1,500th the value due to a stock split to facilitate the acquisition of the Burlington Northern Santa Fe railroad).
Along the journey, his capital allocation discipline has spawned several billionaires besides himself, and an unknown (but substantial) number of multi-millionaires, including some families that amassed hundreds of millions of dollars only to reveal the extent of their fortunes in charitable bequests at death.
What are some of the lessons we, as an investors, can learn when looking back on his career and strategies? I want to take some time to point out a few of the ones I think are particularly important.
5. Surround Yourself with the Right People and Create a Culture That Rewards the Behavior You Want Emulated
The heavy lifting is done by Berkshire Hathaway's operating subsidiaries. Those businesses, many of which would be in the Fortune 500 if spun-off, are run by CEOs who show up to work each day. They manage truly global enterprises that produce billions and billions of surplus wealth that then gets shipped to Omaha twice a year. Though occasional problems pop up, which is bound to happen in a firm of its size, Buffett's talent for attracting great executives, making them want to win, and staying loyal to the business is too important to casually dismiss. In many businesses, the quality of the people doing the work is of the utmost importance to the profitability. Get better people, enjoy better results.
Likewise, be on the lookout for perverse incentives. You want to avoid creating compensation or recognition systems that cause employees, contractors, or other parties to engage in immoral, unethical, illegal, or otherwise questionable behavior. You get more of what you subsidize so subsidize wisely.
6. Focus On Your Best Ideas
Buffett's business partner, Charlie Munger, sometimes points out that if you took the best 4-5 ideas he ever had and stripped them out of the equation, Buffett's record would be about average at Berkshire Hathaway. It was the courage of conviction to load up on shares of The Coca-Cola Company; to focus on property and casualty insurance; to take a stake in the then-Washington Post Company or Gillette that made the difference.
When something crosses your radar that is right in your sweet spot - you understand it, you know the risks, the probabilities are highly in your favor, and it's so obvious you can reach out and grab it - don't let it pass. Once every decade or so, you'll be presented with a chance to swing for the fences without hurting yourself if it goes wrong. When it happens, let it rip.
7. Do Good and Give Back to Society
Like great tycoons before him, Warren Buffett is gifting nearly all of the productive efforts of his career to the broader civilization. Through the Gates Foundation, his net worth will provide philanthropic funds to save lives, improve education, and change the world for the better. Think beyond yourself. Try to find a way to apply your talents to upgrading the experience of those around you, being a blessing to them in ways they never thought possible.
Source: www.thebalance.com
By Joshua Kennon
Warren Buffett, the legendary Chairman and CEO of holding company Berkshire Hathaway, was born on August 30, 1930. During the 50+ years he has run the former New England textile mill, he's taken it from around $8 per share to $270,000 per share (as of September, 2017), having never split the stock (Buffett did introduce the Class B shares, which for many years, traded at 1/50th the value of the Class A shares, but now trades at 1/1,500th the value due to a stock split to facilitate the acquisition of the Burlington Northern Santa Fe railroad).
Along the journey, his capital allocation discipline has spawned several billionaires besides himself, and an unknown (but substantial) number of multi-millionaires, including some families that amassed hundreds of millions of dollars only to reveal the extent of their fortunes in charitable bequests at death.
What are some of the lessons we, as an investors, can learn when looking back on his career and strategies? I want to take some time to point out a few of the ones I think are particularly important.
1. Get the Structure Right
Almost nobody seems to discuss the fact that the real secret to Warren Buffett's wealth is his ability to get the structure of his holdings put together in a way that gives him enormous personal advantages. The seven early partnerships he ran gave him an override on earnings that makes modern wealth managers look cheap in comparison, taking between 25% and 50% of profits depending on the specific limited partnership agreement.
If he had generated the exact same investments results as a salaried member of the local bank trust department, you probably never would have heard his name.
The same goes for Berkshire Hathaway. By using the insurance float as a sort of super-efficient margin account with none of the drawbacks of margin debt, Buffett was able to parlay 11% to 15% compounding results in the equity portfolio, along with reinvested earnings from the operating subsidiaries, into 20%+ average annual gains in book value for half a century.
Had he held the exact same stocks in a non-leveraged brokerage account, his results would have looked far more ordinary. He gave himself a structural advantage. As a strategist, he's horribly underrated and should be given a lot more credit for his ability to put together systems that disproportionately reward him, his family, and his partners. You can see the influence one of his early obsessions, Henry Singleton at Teledyne, had on his behavior.
Almost nobody seems to discuss the fact that the real secret to Warren Buffett's wealth is his ability to get the structure of his holdings put together in a way that gives him enormous personal advantages. The seven early partnerships he ran gave him an override on earnings that makes modern wealth managers look cheap in comparison, taking between 25% and 50% of profits depending on the specific limited partnership agreement.
If he had generated the exact same investments results as a salaried member of the local bank trust department, you probably never would have heard his name.
The same goes for Berkshire Hathaway. By using the insurance float as a sort of super-efficient margin account with none of the drawbacks of margin debt, Buffett was able to parlay 11% to 15% compounding results in the equity portfolio, along with reinvested earnings from the operating subsidiaries, into 20%+ average annual gains in book value for half a century.
Had he held the exact same stocks in a non-leveraged brokerage account, his results would have looked far more ordinary. He gave himself a structural advantage. As a strategist, he's horribly underrated and should be given a lot more credit for his ability to put together systems that disproportionately reward him, his family, and his partners. You can see the influence one of his early obsessions, Henry Singleton at Teledyne, had on his behavior.
2. Get Really, Really Good at Something and Exploit It to Your Maximum Advantage
People get distracted in life. If you want to have outsized success, you need to hone in on a specific skill set and become extraordinary at it. If Buffett had spent the past five decades also trying to launch a chain of restaurants or attempting to become a world-class novelist, he probably wouldn't have had a modicum of the influence, wealth, and reputation he does today. Even geniuses who excel in multiple areas, like Benjamin Franklin, did not do so concurrently, but rather, focused on different areas at different times in their lives.
Figure out what you can do better than everyone else. Sam Walton and Ray Kroc were better operators and executors. Steve Jobs and Walt Disney were better showmen and visionaries.
Whether your objective in life is to become an opera star or build a Fortune 500 business from the ground up, develop a "laser-like focus", as Buffett himself has called it. Know what you want, when you want it, and how you are going to get it. Out-execute everybody.
People get distracted in life. If you want to have outsized success, you need to hone in on a specific skill set and become extraordinary at it. If Buffett had spent the past five decades also trying to launch a chain of restaurants or attempting to become a world-class novelist, he probably wouldn't have had a modicum of the influence, wealth, and reputation he does today. Even geniuses who excel in multiple areas, like Benjamin Franklin, did not do so concurrently, but rather, focused on different areas at different times in their lives.
Figure out what you can do better than everyone else. Sam Walton and Ray Kroc were better operators and executors. Steve Jobs and Walt Disney were better showmen and visionaries.
Whether your objective in life is to become an opera star or build a Fortune 500 business from the ground up, develop a "laser-like focus", as Buffett himself has called it. Know what you want, when you want it, and how you are going to get it. Out-execute everybody.
3. Reputation is a Form of Capital That Should Be Nurtured and Protected
If you become known for your integrity and fair dealing, you'll find yourself on the receiving end of a lot of grace and a lot opportunities that otherwise wouldn't have presented themselves. Buffett took advantage of this every chance he could. Even during the leveraged buyout craze of the 1980s, he wouldn't engage in unfriendly takeovers because he wanted to cast himself in the light of a friendly white or gray knight; the rich, nice guy with the checkbook who shows up and rescues you from the pirates wanting to raid your ship.
He had a vision for the type of reputation he wanted and cultivated it every step along the way. It became a brand; an image.
When you look into his life, and study it deeply, you see that the avuncular façade masks a shrewd, ruthlessly brilliant man with an IQ that is off the charts and a tendency toward avarice (which, ultimately, benefits society since he's giving 99% of it back to improve civilization). He will let businesses fail. He will abandon his friends if it risks his reputation capital. He will put the needs of himself, and Berkshire Hathaway, above all other considerations. He is no fool. He knows exactly how to attain, increase, and take maximum advantage of power through financial, political, and social means.
If you become known for your integrity and fair dealing, you'll find yourself on the receiving end of a lot of grace and a lot opportunities that otherwise wouldn't have presented themselves. Buffett took advantage of this every chance he could. Even during the leveraged buyout craze of the 1980s, he wouldn't engage in unfriendly takeovers because he wanted to cast himself in the light of a friendly white or gray knight; the rich, nice guy with the checkbook who shows up and rescues you from the pirates wanting to raid your ship.
He had a vision for the type of reputation he wanted and cultivated it every step along the way. It became a brand; an image.
When you look into his life, and study it deeply, you see that the avuncular façade masks a shrewd, ruthlessly brilliant man with an IQ that is off the charts and a tendency toward avarice (which, ultimately, benefits society since he's giving 99% of it back to improve civilization). He will let businesses fail. He will abandon his friends if it risks his reputation capital. He will put the needs of himself, and Berkshire Hathaway, above all other considerations. He is no fool. He knows exactly how to attain, increase, and take maximum advantage of power through financial, political, and social means.
4. Take Advantage of the Tax Code and Understand the Power of Small Gains Over Time
The small things that Buffett has done throughout his career to get an extra risk-free 2% or 3% here or there, especially as it relates to tax efficiency, are truly remarkable. In some ways, the tax efficiency he's built into Berkshire Hathaway, which allows him to move capital like engine oil throughout the whole empire to the most productive use, is a huge part of the secret to his success. From the obvious things, like only making acquisitions of at least 80% of the subsidiary equity so he can take dividends tax-free out of the operating companies and redeploy it, to the quirks that were found decades ago in the Nebraska tax code as it pertains to the insurance industry itself, by hitting a lot of singles and doubles, he's materially added to the end result of his life's work. (Therein lies another quirk - Buffett himself is one of the biggest dividend investors on the planet, yet refuses to pay them to his own stockholders for reasons he has well-articulated in the past.)
Smaller investors can take advantage of this, too. Invest through a Roth IRA, which is the closest thing to the perfect tax shelter as exists in the United States. Don't take on non-deductible debt for depreciating assets. Take advantage of deferred taxes by keeping turnover low (have you seen the built-in unrealized capital gains in Berkshire Hathaway's portfolio!? They're beautiful!).
The small things that Buffett has done throughout his career to get an extra risk-free 2% or 3% here or there, especially as it relates to tax efficiency, are truly remarkable. In some ways, the tax efficiency he's built into Berkshire Hathaway, which allows him to move capital like engine oil throughout the whole empire to the most productive use, is a huge part of the secret to his success. From the obvious things, like only making acquisitions of at least 80% of the subsidiary equity so he can take dividends tax-free out of the operating companies and redeploy it, to the quirks that were found decades ago in the Nebraska tax code as it pertains to the insurance industry itself, by hitting a lot of singles and doubles, he's materially added to the end result of his life's work. (Therein lies another quirk - Buffett himself is one of the biggest dividend investors on the planet, yet refuses to pay them to his own stockholders for reasons he has well-articulated in the past.)
Smaller investors can take advantage of this, too. Invest through a Roth IRA, which is the closest thing to the perfect tax shelter as exists in the United States. Don't take on non-deductible debt for depreciating assets. Take advantage of deferred taxes by keeping turnover low (have you seen the built-in unrealized capital gains in Berkshire Hathaway's portfolio!? They're beautiful!).
5. Surround Yourself with the Right People and Create a Culture That Rewards the Behavior You Want Emulated
The heavy lifting is done by Berkshire Hathaway's operating subsidiaries. Those businesses, many of which would be in the Fortune 500 if spun-off, are run by CEOs who show up to work each day. They manage truly global enterprises that produce billions and billions of surplus wealth that then gets shipped to Omaha twice a year. Though occasional problems pop up, which is bound to happen in a firm of its size, Buffett's talent for attracting great executives, making them want to win, and staying loyal to the business is too important to casually dismiss. In many businesses, the quality of the people doing the work is of the utmost importance to the profitability. Get better people, enjoy better results.
Likewise, be on the lookout for perverse incentives. You want to avoid creating compensation or recognition systems that cause employees, contractors, or other parties to engage in immoral, unethical, illegal, or otherwise questionable behavior. You get more of what you subsidize so subsidize wisely.
6. Focus On Your Best Ideas
Buffett's business partner, Charlie Munger, sometimes points out that if you took the best 4-5 ideas he ever had and stripped them out of the equation, Buffett's record would be about average at Berkshire Hathaway. It was the courage of conviction to load up on shares of The Coca-Cola Company; to focus on property and casualty insurance; to take a stake in the then-Washington Post Company or Gillette that made the difference.
When something crosses your radar that is right in your sweet spot - you understand it, you know the risks, the probabilities are highly in your favor, and it's so obvious you can reach out and grab it - don't let it pass. Once every decade or so, you'll be presented with a chance to swing for the fences without hurting yourself if it goes wrong. When it happens, let it rip.
7. Do Good and Give Back to Society
Like great tycoons before him, Warren Buffett is gifting nearly all of the productive efforts of his career to the broader civilization. Through the Gates Foundation, his net worth will provide philanthropic funds to save lives, improve education, and change the world for the better. Think beyond yourself. Try to find a way to apply your talents to upgrading the experience of those around you, being a blessing to them in ways they never thought possible.
Source: www.thebalance.com
Quote for the day
"Anyone can give up; it is the easiest thing in the world to do. But to hold it together when everyone would expect you to fall apart, now that is true strength." - Chris Bradford
Saturday, 15 May 2021
The Journey to Profitable Trading
Here are fourteen common steps on the path to profitable trading.
1. You start trading with a lack of knowledge, not even knowing the right questions to ask. Your trades and results are random.
2. You lose money and learn that every trade is not going to be profitable.
3. You try to follow gurus thinking they can predict the future but learn that they do not have a crystal ball.
4. You lose more money but start to learn that trading isn’t as easy as you though it would be.
5. You start to educate yourself through quality trading books and courses.
6. You have a little success and start to think you know something. You are confident before you are competent.
7. Losses after you think you know something educate you.
8. You start to learn you better trade your own plan and system and avoid being swept away with the herd.
9. Your losses become smaller and smaller and your winning percentage and the size of your wins gets bigger.
10. You learn trading is not about expectations, predictions, and opinions but about a positive
expectancy system.
11. You start getting to almost break even in your trading.
12. You begin to learn that the majority of trading comes down to your own psychology and self discipline.
13. Everything starts to make sense and fit together.
14. You start to make money consistency over the long term.
Source: www.newtraderu.com
Friday, 14 May 2021
10 Types of Toxic People You Should Be Careful Of
By Casey Imafidon
Stressors are ever present in our lives. In order to achieve more and be more productive we need to get toxic people and stressors out of our lives. Focusing on priorities and ridding the weeds in our lives can be beneficial to our forward momentum. But first we have to identify these toxic people.
1. The Egotist
Pride sometimes is a virtue. But being arrogant means you are full of yourself and believe you are better or superior to everyone around you. Being around someone who doesn’t treat you with respect but rather intimidates and belittles you can be toxic to your personal development.
7. The Liar
It’s true that lies are common and some lies aren’t harmful; however, toxic people who lie frequently can destroy you because in order to grow, you have to surround yourself with trustworthy people who will support you and offer candid and honest opinions.
8. The Gossiper
These types of people are insecure and use their tongue to twist facts and distort information. They want to be accepted and recognized and doing so may just be the only way they can get the attention they want. Even when you try to solve the problems they have caused, the only way you can truly solve the issue is to kick them out of your life, because they can be cancerous.
Stressors are ever present in our lives. In order to achieve more and be more productive we need to get toxic people and stressors out of our lives. Focusing on priorities and ridding the weeds in our lives can be beneficial to our forward momentum. But first we have to identify these toxic people.
1. The Egotist
Pride sometimes is a virtue. But being arrogant means you are full of yourself and believe you are better or superior to everyone around you. Being around someone who doesn’t treat you with respect but rather intimidates and belittles you can be toxic to your personal development.
2. The Envious
It seems such people appreciate your difficult times more than your periods of victory. They believe they deserve your moment of success and not you. Although you may try to make them your supporters and fans by letting them know they are a part of your success, such people only prefer to resent you for your humility and reasonableness. This type should be avoided at all cost.
3. The Pretentious
These types only act as friends on comfortable terms. When you need their help they tend to depart and stay away. They can’t be leaned on; rather, you have to recognize their pretentious traits and establish boundaries within such relationships.
It seems such people appreciate your difficult times more than your periods of victory. They believe they deserve your moment of success and not you. Although you may try to make them your supporters and fans by letting them know they are a part of your success, such people only prefer to resent you for your humility and reasonableness. This type should be avoided at all cost.
3. The Pretentious
These types only act as friends on comfortable terms. When you need their help they tend to depart and stay away. They can’t be leaned on; rather, you have to recognize their pretentious traits and establish boundaries within such relationships.
4. The Retrogressive
These types have a way of distorting your progress and dragging you backwards to old habits. They believe in being stagnant and want you to be the same person you were. This type may be hard to pinpoint, but they are people who have always being an integral part of your life and may seem difficult to ignore. But it will be better to make them aware and remind them how important success is to you. if they can’t live with it, they can walk out the door.
5. The Judgemental
Nothing is ever good enough for this type of person. They believe everyone should be criticised and scolded rather than praised. Even when intentions are good and you try to make them understand your genuine motives, they wouldn’t listen. They are terrible communicators since they are not good listeners. Squashing their negative talk or avoiding their disdainful speech could be helpful to your progress.
These types have a way of distorting your progress and dragging you backwards to old habits. They believe in being stagnant and want you to be the same person you were. This type may be hard to pinpoint, but they are people who have always being an integral part of your life and may seem difficult to ignore. But it will be better to make them aware and remind them how important success is to you. if they can’t live with it, they can walk out the door.
5. The Judgemental
Nothing is ever good enough for this type of person. They believe everyone should be criticised and scolded rather than praised. Even when intentions are good and you try to make them understand your genuine motives, they wouldn’t listen. They are terrible communicators since they are not good listeners. Squashing their negative talk or avoiding their disdainful speech could be helpful to your progress.
6. The Controller
This type is a control freak. They want you to their bidding. They can be devious, mischievous and sly in trying to twist or out-muscle you to fulfill their desires. Rising above such people may be your best option since you really can’t convince or try to make them better.
This type is a control freak. They want you to their bidding. They can be devious, mischievous and sly in trying to twist or out-muscle you to fulfill their desires. Rising above such people may be your best option since you really can’t convince or try to make them better.
7. The Liar
It’s true that lies are common and some lies aren’t harmful; however, toxic people who lie frequently can destroy you because in order to grow, you have to surround yourself with trustworthy people who will support you and offer candid and honest opinions.
8. The Gossiper
These types of people are insecure and use their tongue to twist facts and distort information. They want to be accepted and recognized and doing so may just be the only way they can get the attention they want. Even when you try to solve the problems they have caused, the only way you can truly solve the issue is to kick them out of your life, because they can be cancerous.
9. The Parasite
Such people are only in your life to suck you dry and feed off of you. Being used can be helpful sometimes, but not with the parasitic. Their intentions are only for their self interest. Such people have to be avoided at all cost.
10. The Victim
The victims never accept responsibility. They are great at pointing their fingers at others and never accepting that they have made a mistake. What chain reaction they cause can be detrimental to your success. It is best to get rid of such people and get them out of your life.
Such people are only in your life to suck you dry and feed off of you. Being used can be helpful sometimes, but not with the parasitic. Their intentions are only for their self interest. Such people have to be avoided at all cost.
10. The Victim
The victims never accept responsibility. They are great at pointing their fingers at others and never accepting that they have made a mistake. What chain reaction they cause can be detrimental to your success. It is best to get rid of such people and get them out of your life.
Source: www.lifehack.org
Quote for the day
"Don't try to rush progress. Remember -- a step forward, no matter how small, is a step in the right direction. Keep believing." - Kara Goucher
Thursday, 13 May 2021
Quote for the day
"Take the opportunity to learn from your mistakes: find the cause of your problem and eliminate it. Don't try to be perfect; just be an excellent example of being human." - Tony Robbins
Wednesday, 12 May 2021
Five Keys to a Peak Performance Mindset for Best Trading
By Brett Steenbarger, Ph.D.
What is the right mindset for best trading? Here are five ideas, drawn from successful traders I've known and admired:
What is the right mindset for best trading? Here are five ideas, drawn from successful traders I've known and admired:
1) An open mindset – Traders succeed when they see things that others don’t. Sometimes those are overarching themes and trends; sometimes they are short-term patterns in market behavior. To see things differently, we need a mind that is open to new and different information and open to shifts in market behavior.
2) A quiet mindset – Minds filled with noise can’t process new information. When we’re focused on ourselves and our profits/losses, we’re no longer focused on markets. We can’t exercise self-control in our actions if we are not able to sustain control over our thought processes.
3) A constructive mindset – Losses happen. We miss opportunities. The great trader learns from mistakes and embraces the lessons from drawdowns. If every day brings wins from trading or wins from learning, there is always something of value to be taken from each day.
4) A positive mindset – It’s because we cannot count upon our profits and losses to make us happy that we need to lead a fulfilling life outside of trading. A life that is filled with meaningful activities, fun activities, activities that bring us close to others, and activities that give us energy is most likely to provide us with the emotional fuel needed to power through challenging market times.
5) An action mindset – All the best ideas and intentions will get us nowhere if we aren’t prepared to act upon them. The action mindset is one focused on plans, translating excellent ideas into excellent risk/reward opportunities. Preparation is idea-focused, but also execution-focused. It is as important to work on our implementation of ideas as our generation of them.
The above criteria form a useful checklist for making sure you're in peak performance mode. The right mindset won't, in itself, bring profits, but the wrong mindset can ensure losses. At the end of the day, trading requires skill in the processing of information. When we work on our mindset, we keep our information processing engine well-tuned.
2) A quiet mindset – Minds filled with noise can’t process new information. When we’re focused on ourselves and our profits/losses, we’re no longer focused on markets. We can’t exercise self-control in our actions if we are not able to sustain control over our thought processes.
3) A constructive mindset – Losses happen. We miss opportunities. The great trader learns from mistakes and embraces the lessons from drawdowns. If every day brings wins from trading or wins from learning, there is always something of value to be taken from each day.
4) A positive mindset – It’s because we cannot count upon our profits and losses to make us happy that we need to lead a fulfilling life outside of trading. A life that is filled with meaningful activities, fun activities, activities that bring us close to others, and activities that give us energy is most likely to provide us with the emotional fuel needed to power through challenging market times.
5) An action mindset – All the best ideas and intentions will get us nowhere if we aren’t prepared to act upon them. The action mindset is one focused on plans, translating excellent ideas into excellent risk/reward opportunities. Preparation is idea-focused, but also execution-focused. It is as important to work on our implementation of ideas as our generation of them.
The above criteria form a useful checklist for making sure you're in peak performance mode. The right mindset won't, in itself, bring profits, but the wrong mindset can ensure losses. At the end of the day, trading requires skill in the processing of information. When we work on our mindset, we keep our information processing engine well-tuned.
Source: http://traderfeed.blogspot.com
Quote for the day
"Success is a lousy teacher. It seduces smart people into thinking they can't lose." - Bill Gates
Tuesday, 11 May 2021
Quote for the day
"In three words I can sum up everything I've learned about life: it goes on." - Robert Frost
Monday, 10 May 2021
Quote for the day
"Do not measure success by today's harvest. Measure success by the seeds you plant today." - Robert Louis Stevenson
Sunday, 9 May 2021
12 Rules for Good Trading
Here are twelve great rules that can give new traders a quick list to see what the right questions to answer that will lead to good trading and also a guide to more experienced traders that just can’t get to consistent profitable trading over the long term.
1. Create your own quantified trading system with an edge that fits your own goals for potential returns and your personal risk tolerance.
2. Keep your internal mental dialogue positive using both logic and reason as your thoughts to council yourself in during your trading.
3. Only be friends with other traders that are positive and helpful in your journey.
4. Only compare yourself with your past performance not other traders. Everyone has their own goals and path.
5. Do not do anything that would hurt your confidence in your own discipline.
6. Do not concern yourself with anyone’s trading results but your own.
7. Focus on learning how to build your own trading system not following other people’s trades.
8. Always be honest with yourself about your own knowledge and understanding about trading and the markets. Confidence can only come after competence.
9. Assume you can learn one valuable trading lesson from every trader. Even if it is what not to do.
10. Be precise in your risk management but flexible in your expectations of outcome.
11. Encourage new traders to learn the importance of position sizing, entry and exit signals, and the right mindset.
12. Help new traders when you can share your own experience to shorten their learning curve.
Source: www.newtraderu.com
Quote for the day
"Successful people ask better questions, and as a result, they get better answers." - Tony Robbins
Saturday, 8 May 2021
What is Blockchain Technology?
The Emanation of Blockchain and how it relates to Cryptocurrencies.
This is a Guest Post by Michael Kuchar.
In 2008, a man called Satoshi Nakamoto launched one of the most potent technologies in internet history. The introduction of Blockchain technology was to originally act as a framework to Bitcoin which was later introduced in 2009. With the intention of presenting a different currency that could eliminate the double spending problem and become free from the manipulation of any centralized authority, Satoshi Nakamoto created the blockchain to act as a backbone of Bitcoin and make the establishment of the decentralized currency a reality. Few years after its introduction, it was found that blockchain could be more useful outside the role it plays in the existence of cryptocurrency.
What is Blockchain and how does it Work?
One of the most popular definitions of blockchain is that: “it is a distributed, decentralized, public ledger that records transactions,” or “it is a growing list of records called blocks that are linked using cryptography.” According to the authors of Blockchain Revolution (2016), Don & Alex Tapscott, blockchain is an incorruptible digital ledger of economic transactions that can be programmed to store not just financial transactions, but everything of value. Just as the name suggests, blockchain is nothing but blocks arranged in chains. The block represents transaction information, and the chain represents a digital database. The block contains transaction information such as the time and date of transaction as well as the amount involved. The block also stores the information of the parties involved in the transaction. In this case, it represents them with a digital signature instead of their real names. Blocks also contain unique information called “hash,” and this distinguishes one block from the other. In a simple sense, blockchain is made up of series of blocks (just as a book of transaction ledgers is made up of pieces of papers put together. Each page of the ledger signifies a block).
Interestingly, before a block or record is added to the blockchain or the public ledger, four things must happen:
How Blockchain Combine with Bitcoin to Deliver Transparent Transaction.
One attribute that makes Bitcoin a favorite to take over the future financial system is its transparency, and guess what? That transparency attribute exists by the help of the blockchain technology. Just as we pointed above, the blockchain stores the transaction information of the sender (transaction output), the transaction information of the receiver (transaction input) and the amount involved. Assuming I receive a cryptocurrency from someone, my wallet address will get listed on the blockchain including the amount and the address from which the money was sent. When I in return send this amount or a fraction of it to a different Bitcoin address, the blockchain will record me as the sender (transaction output), and record the receiver including the amount, the time and the date of that transaction. As the cryptocurrency move from one wallet to the other, the blockchain records accurate and detailed information of each movement. From this, it becomes possible to trace the original sender of the cryptocurrency and all the addresses that had engaged the cryptocurrency with details of the date and time, and interestingly, the information becomes publicly accessible on the Blockchain. With a more advanced search, the identities behind the addresses linked to the digital currency involved can be exposed. In this sense, cryptocurrencies such as Bitcoin are not completely anonymous. The blockchain works as a perfect banker and information keeper to the cryptocurrencies and all information are available for anyone to access.
What Makes Blockchain Different from the Traditional Ledger?
Blockchain has some attributes that make it unique and feasible to the application of cryptocurrencies and open to use in different fields.
Peer to Peer
Blockchain facilitates and validates a transaction without the involvement of any third party or centralized authority. Unlike the traditional way of sending money through a medium before getting to the other party, blockchain makes it possible for two parties to deal directly without being worried about trust or witness.
Cryptography
It provides the needed security to prevent anybody from tampering with the data.
Distributed and Consensus
Data added to the network are distributed across the whole network to make it impossible to tamper with. Consensus ensures that the public ledger updates itself frequently without the intervention of anybody, and this defines its decentralization.
How Blockchain Relates to Cryptocurrency
Cryptocurrency and blockchain have an interesting relationship which gives relevance to the former. Firstly, Cryptocurrencies such as Bitcoin is dependent on blockchain technology. This means the blockchain will exist with or without the influence of cryptocurrency. From the above-explained attributes of the blockchain, it is clear that Bitcoin and the other digital assets that run on the blockchain takes their decentralized nature and fast transaction attributes from the technology. The strength of cryptocurrencies lies in their anonymity and decentralization.
Interestingly, these strengths are powered by blockchain. Blockchain performs all the underground works that make Bitcoin and other cryptocurrencies relevant. Anything that makes Bitcoin more unique and appealing to individuals and institutions comes directly from the blockchain. From this, it can be said that “Blockchain gives meaning to Bitcoin, but not the other way round.”
The relationship between Bitcoin and Blockchain is likened to a spreadsheet of transaction records. However, the combination of the blockchain and bitcoin or cryptocurrency, in this case, creates a digital asset and digital banking service which is different from the traditional services. Transactions involving traditional currencies deal with the movement of money through different parties. Contrary, transactions made in cryptocurrencies do not deal with the movement of currencies, but the change of ownership on the blockchain network. Selling cryptocurrency to an exchange platform; for instance, means the right to the ownership of the coin has been transferred as nothing physical is involved in the exchange.
Anything that has to do with the movement of cryptocurrencies- from mining to trading of digital assets is facilitated by the blockchain technology. In this case, the relationship between cryptocurrencies or bitcoin and blockchain can be summarized that: “blockchain acts as an independent technology that gives life to bitcoin and makes it relevant in its operation as an electronic peer to peer currency.”
This is a Guest Post by Michael Kuchar.
In 2008, a man called Satoshi Nakamoto launched one of the most potent technologies in internet history. The introduction of Blockchain technology was to originally act as a framework to Bitcoin which was later introduced in 2009. With the intention of presenting a different currency that could eliminate the double spending problem and become free from the manipulation of any centralized authority, Satoshi Nakamoto created the blockchain to act as a backbone of Bitcoin and make the establishment of the decentralized currency a reality. Few years after its introduction, it was found that blockchain could be more useful outside the role it plays in the existence of cryptocurrency.
What is Blockchain and how does it Work?
One of the most popular definitions of blockchain is that: “it is a distributed, decentralized, public ledger that records transactions,” or “it is a growing list of records called blocks that are linked using cryptography.” According to the authors of Blockchain Revolution (2016), Don & Alex Tapscott, blockchain is an incorruptible digital ledger of economic transactions that can be programmed to store not just financial transactions, but everything of value. Just as the name suggests, blockchain is nothing but blocks arranged in chains. The block represents transaction information, and the chain represents a digital database. The block contains transaction information such as the time and date of transaction as well as the amount involved. The block also stores the information of the parties involved in the transaction. In this case, it represents them with a digital signature instead of their real names. Blocks also contain unique information called “hash,” and this distinguishes one block from the other. In a simple sense, blockchain is made up of series of blocks (just as a book of transaction ledgers is made up of pieces of papers put together. Each page of the ledger signifies a block).
Interestingly, before a block or record is added to the blockchain or the public ledger, four things must happen:
- A transaction must take place.
- The transaction must be verified
- The transaction must be included in a block
- The block must be assigned with a unique address called the “hash.”
How Blockchain Combine with Bitcoin to Deliver Transparent Transaction.
One attribute that makes Bitcoin a favorite to take over the future financial system is its transparency, and guess what? That transparency attribute exists by the help of the blockchain technology. Just as we pointed above, the blockchain stores the transaction information of the sender (transaction output), the transaction information of the receiver (transaction input) and the amount involved. Assuming I receive a cryptocurrency from someone, my wallet address will get listed on the blockchain including the amount and the address from which the money was sent. When I in return send this amount or a fraction of it to a different Bitcoin address, the blockchain will record me as the sender (transaction output), and record the receiver including the amount, the time and the date of that transaction. As the cryptocurrency move from one wallet to the other, the blockchain records accurate and detailed information of each movement. From this, it becomes possible to trace the original sender of the cryptocurrency and all the addresses that had engaged the cryptocurrency with details of the date and time, and interestingly, the information becomes publicly accessible on the Blockchain. With a more advanced search, the identities behind the addresses linked to the digital currency involved can be exposed. In this sense, cryptocurrencies such as Bitcoin are not completely anonymous. The blockchain works as a perfect banker and information keeper to the cryptocurrencies and all information are available for anyone to access.
What Makes Blockchain Different from the Traditional Ledger?
Blockchain has some attributes that make it unique and feasible to the application of cryptocurrencies and open to use in different fields.
Peer to Peer
Blockchain facilitates and validates a transaction without the involvement of any third party or centralized authority. Unlike the traditional way of sending money through a medium before getting to the other party, blockchain makes it possible for two parties to deal directly without being worried about trust or witness.
Cryptography
It provides the needed security to prevent anybody from tampering with the data.
Add Only
Data added to the blockchain are in time sequential order. This situation makes it impossible for anyone to manipulate data.
Data added to the blockchain are in time sequential order. This situation makes it impossible for anyone to manipulate data.
Distributed and Consensus
Data added to the network are distributed across the whole network to make it impossible to tamper with. Consensus ensures that the public ledger updates itself frequently without the intervention of anybody, and this defines its decentralization.
How Blockchain Relates to Cryptocurrency
Cryptocurrency and blockchain have an interesting relationship which gives relevance to the former. Firstly, Cryptocurrencies such as Bitcoin is dependent on blockchain technology. This means the blockchain will exist with or without the influence of cryptocurrency. From the above-explained attributes of the blockchain, it is clear that Bitcoin and the other digital assets that run on the blockchain takes their decentralized nature and fast transaction attributes from the technology. The strength of cryptocurrencies lies in their anonymity and decentralization.
Interestingly, these strengths are powered by blockchain. Blockchain performs all the underground works that make Bitcoin and other cryptocurrencies relevant. Anything that makes Bitcoin more unique and appealing to individuals and institutions comes directly from the blockchain. From this, it can be said that “Blockchain gives meaning to Bitcoin, but not the other way round.”
The relationship between Bitcoin and Blockchain is likened to a spreadsheet of transaction records. However, the combination of the blockchain and bitcoin or cryptocurrency, in this case, creates a digital asset and digital banking service which is different from the traditional services. Transactions involving traditional currencies deal with the movement of money through different parties. Contrary, transactions made in cryptocurrencies do not deal with the movement of currencies, but the change of ownership on the blockchain network. Selling cryptocurrency to an exchange platform; for instance, means the right to the ownership of the coin has been transferred as nothing physical is involved in the exchange.
Anything that has to do with the movement of cryptocurrencies- from mining to trading of digital assets is facilitated by the blockchain technology. In this case, the relationship between cryptocurrencies or bitcoin and blockchain can be summarized that: “blockchain acts as an independent technology that gives life to bitcoin and makes it relevant in its operation as an electronic peer to peer currency.”
Source: www.newtraderu.com
Quote for the day
"A lot of people have ideas, but there are few who decide to do something about them now. Not tomorrow. Not next week. But today. The true entrepreneur is a doer, not a dreamer." - Nolan Bushnell
Friday, 7 May 2021
Quote for the day
"You will face many defeats in your life, but never let yourself be defeated." - Maya Angelou
Thursday, 6 May 2021
Wednesday, 5 May 2021
Tuesday, 4 May 2021
Quote for the day
"The horizon of many people is a circle with a radius of zero. They call this their point of view." - "Albert Einstein
Monday, 3 May 2021
Quote for the day
"If you want sympathy, look for a friend, but if you want honesty, an enemy might be the best friend you ever had." - Tonya Hurley
Sunday, 2 May 2021
These are the Principles to Succeed in Trading and in Life
“The funny thing is that the principles you have been teaching me for trading success have also been helping me in other areas of my life. I think much more clearly about many parts of my life now. My journal has expanded into a self-help journal as well as a trading journal. I did not even think about many of these things until after I learned many of the principles we’ve been discussing. I would like to read you some thoughts from my journal and see what you think.”
New Trader believed that his self-improvement would help with his trading and that he had really ingested the principles Rich Trader was trying to instill in him because not only did he understand their application for trading, but he applied them to other areas of his life.
New Trader began reading, excited to finally share these observations with his mentor.
• In life, as in trading, the right mindset is crucial for success. You must be confident in your decisions because they are based on cause and effect, not on emotions or opinion. Negative people who are unsure of themselves are not successful in any field. You need faith in yourself and your methods to be able to persevere and not give up before reaching success.
• You can risk too much and lose it all in your business, life, marriage, friendships or family. You have to measure the potential cost of every action. One affair can cost you your marriage, just like one big trade with too much risk can cost you all your capital.
• In business there are certain methods which bring in customers and turn a profit, and others which cause a business to turn away customers and lose money. Trading is similar: methods which turn a consistent and long-term profit are essential for success.
• Having unrealistic expectations in a marriage, job, or business will lead to unhappiness and failure just like it will in trading. You have to set realistic expectations so you do not get discouraged easily and quit in any of these areas. You have to be satisfied that the results are worth your effort over the long term. You need to understand what to expect before you begin a marriage, a job, a business, or trading.
• Those who succeed in all areas of life are the ones who can manage stress the best. The best way to manage stress is to increase what you can handle step by step so that you grow into new circumstances. Another way to manage stress is to avoid actions which get you into situations you are uncomfortable with.
• Patience can pay big dividends in life. Patience is not inaction; it is simply knowing what you are looking for and taking action at the right time. Whether you are waiting for the right trade setup or the right person to marry, patience can protect you from irrational emotions and feelings. Wait for what you want, and when it is there go get it.
• In life, as in trading, people with written plans accomplish much more than people with no plans. Sit down when you are calm and rational and jot down goals to pursue. This will provide you with a map when life circumstances bring out your fears, greed, and other destructive emotions.
• Education does not end in school. To be successful in life or trading we must never stop learning. The market and the world are constantly advancing and changing and the only way to keep up is to keep learning.
• In life, the majority of gamblers are broke and the majority of good business owners become rich. The same principle is true in trading.
• In life, if you risk everything enough times you will eventually lose everything. Instead, just move in the direction of your goals every day, so even with setbacks, in the long run you will get to where you are going.
• Before making any decision in life, the question: “What do I have to lose?” is a serious question. This should precede, “What do I have to gain?” If the answer is: I could lose $100, but if I am right I could gain $500 and my odds of being right are 50% – then you have a good risk reward profile. If it is reversed, then you have a bad risk reward scenario and should pass. These are also questions you must ask in your marriage, job, business, or friendships before making decisions you regret.
• Failure to admit when you are wrong can be disastrous. When you are going down the wrong road it is better to turn back sooner rather than later. Never fight a war for a hill of bones, because even if you win, all you have is a hill of bones and regret over what it cost you.
• When you have won big prepare to take profits. Have an exit plan in place. If your house goes from $100,000 to $300,000, have a plan to sell and move. Do not just sit there and let it drop back down to $100,000. It is surprising how many people are in the right place at the right time and win what is equivalent to the lottery in stocks, a house, or a business but have no exit plan, so they ride it all the way up then all the way down again with almost nothing to show for it. Tragic.
• What most separates successful people from unsuccessful people in all areas of life is that they persevere until they are successful. Everyone has to overcome failures, but those who keep going are the ones with successful marriages, businesses, careers, and trading systems.
• People who are successful become experts in one area. They put in 10 years of learning and mastering one business, one career, one marriage, or one trading style. do not jump around and become a jack-of-all-trades and master of none.
• Successful people do what really leads to success, not what they believe will make them successful. They read books, study patterns, have mentors, and learn cause and effect.
• Winners base their actions on proven results, not on their own opinions or predictions. Feedback is crucial to them; people with strong opinions who believe they can predict what will happen reject feedback. Winners go with the flow of the trend causing their success.
• In life, those who are driven by their vision, passion, and plan usually end up where they want to be or close to it. Those who let their emotions and feelings take over and drive their decision-making usually end up where they do not want to be in life.
• I believe that people who realize they have made a mistake in a given situation and who cut those losses and try again will be much more successful than people who waste years on a marriage, business, or career that continuously gets worse. It is important to continue in a business or career that is successful until that trend changes.
New Trader believed that his self-improvement would help with his trading and that he had really ingested the principles Rich Trader was trying to instill in him because not only did he understand their application for trading, but he applied them to other areas of his life.
New Trader began reading, excited to finally share these observations with his mentor.
• In life, as in trading, the right mindset is crucial for success. You must be confident in your decisions because they are based on cause and effect, not on emotions or opinion. Negative people who are unsure of themselves are not successful in any field. You need faith in yourself and your methods to be able to persevere and not give up before reaching success.
• You can risk too much and lose it all in your business, life, marriage, friendships or family. You have to measure the potential cost of every action. One affair can cost you your marriage, just like one big trade with too much risk can cost you all your capital.
• In business there are certain methods which bring in customers and turn a profit, and others which cause a business to turn away customers and lose money. Trading is similar: methods which turn a consistent and long-term profit are essential for success.
• Having unrealistic expectations in a marriage, job, or business will lead to unhappiness and failure just like it will in trading. You have to set realistic expectations so you do not get discouraged easily and quit in any of these areas. You have to be satisfied that the results are worth your effort over the long term. You need to understand what to expect before you begin a marriage, a job, a business, or trading.
• Those who succeed in all areas of life are the ones who can manage stress the best. The best way to manage stress is to increase what you can handle step by step so that you grow into new circumstances. Another way to manage stress is to avoid actions which get you into situations you are uncomfortable with.
• Patience can pay big dividends in life. Patience is not inaction; it is simply knowing what you are looking for and taking action at the right time. Whether you are waiting for the right trade setup or the right person to marry, patience can protect you from irrational emotions and feelings. Wait for what you want, and when it is there go get it.
• In life, as in trading, people with written plans accomplish much more than people with no plans. Sit down when you are calm and rational and jot down goals to pursue. This will provide you with a map when life circumstances bring out your fears, greed, and other destructive emotions.
• Education does not end in school. To be successful in life or trading we must never stop learning. The market and the world are constantly advancing and changing and the only way to keep up is to keep learning.
• In life, the majority of gamblers are broke and the majority of good business owners become rich. The same principle is true in trading.
• In life, if you risk everything enough times you will eventually lose everything. Instead, just move in the direction of your goals every day, so even with setbacks, in the long run you will get to where you are going.
• Before making any decision in life, the question: “What do I have to lose?” is a serious question. This should precede, “What do I have to gain?” If the answer is: I could lose $100, but if I am right I could gain $500 and my odds of being right are 50% – then you have a good risk reward profile. If it is reversed, then you have a bad risk reward scenario and should pass. These are also questions you must ask in your marriage, job, business, or friendships before making decisions you regret.
• Failure to admit when you are wrong can be disastrous. When you are going down the wrong road it is better to turn back sooner rather than later. Never fight a war for a hill of bones, because even if you win, all you have is a hill of bones and regret over what it cost you.
• When you have won big prepare to take profits. Have an exit plan in place. If your house goes from $100,000 to $300,000, have a plan to sell and move. Do not just sit there and let it drop back down to $100,000. It is surprising how many people are in the right place at the right time and win what is equivalent to the lottery in stocks, a house, or a business but have no exit plan, so they ride it all the way up then all the way down again with almost nothing to show for it. Tragic.
• What most separates successful people from unsuccessful people in all areas of life is that they persevere until they are successful. Everyone has to overcome failures, but those who keep going are the ones with successful marriages, businesses, careers, and trading systems.
• People who are successful become experts in one area. They put in 10 years of learning and mastering one business, one career, one marriage, or one trading style. do not jump around and become a jack-of-all-trades and master of none.
• Successful people do what really leads to success, not what they believe will make them successful. They read books, study patterns, have mentors, and learn cause and effect.
• Winners base their actions on proven results, not on their own opinions or predictions. Feedback is crucial to them; people with strong opinions who believe they can predict what will happen reject feedback. Winners go with the flow of the trend causing their success.
• In life, those who are driven by their vision, passion, and plan usually end up where they want to be or close to it. Those who let their emotions and feelings take over and drive their decision-making usually end up where they do not want to be in life.
• I believe that people who realize they have made a mistake in a given situation and who cut those losses and try again will be much more successful than people who waste years on a marriage, business, or career that continuously gets worse. It is important to continue in a business or career that is successful until that trend changes.
Sourcse: www.newtraderu.com
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