One of the most fascinating observations I have made over the years is that most people can’t stay away from their own loss making activities. To put a number on it, I would say we often invest 80% of our time and resources into things that don’t advance us financially.
For example, you may have seen or experienced one or more of the following situations before:
- Spending 80% of your time and resources helping one particular member of your family or a friend while making little progress, but continuing to keep going, often at the expense of neglecting others who would benefit much more from receiving similar assistance;
- Business managers spending 80% of their time handling the issues of unproductive workers and paying little or no attention to the productive workers;
- Share traders either staying in a loss-making trade for far too long or returning to similar loss making trades repetitively;
- Property investors continually investing in investment opportunities which have a history of losing money, such as poorly run investment syndicates or “get rich quick” schemes;
- Property developers and renovators continually returning to development even when they can see they make far less money than simply putting their money into a good passive investment.
This list could go on forever, I am sure you get my point by now. We simply do waste far too much time and resources on non-productive activities.
The key question then is – why we keep going back to something that obviously doesn’t work? We must be addicted to it somehow. If it is an addiction, it must serve one of our desires somehow.
We could simply attribute these behaviours to our habits. Some people say success is a habit, and so is failure. I don’t disagree with this observation, but we all know how hard it is to detect and change our habits.
Over the years, I have been observing myself for similar behaviours. Whenever I found myself repeating unsuccessful actions, I asked myself why I am doing it? Then I would ask the more important questions – why can’t I stop doing it and what am I afraid of if I stop doing it?
When I looked back over all the silly things I have done, I found there was one common motive behind them: I want to be accepted by others. In other words, somehow I didn’t feel I was good enough somewhere; so I was looking for others’ approval and acceptance.
I must stress here that I am only speaking from my own personal experience, it may or may not relate to yours. Let me explain why I think the love of acceptance sometimes can be the source of our irrational behaviour.
Let’s look at a few examples.
1) Wasting 80% of our time and resources trying to help someone who does not accept our help.
Most of us have experienced this in our lives at one time or another. We are really trying to help someone we care about, with money or not, but they utterly refuse to accept our help or show any appreciation for what we are trying to do. We then start to feel rejected and begin to resent this person, and maybe even swear we will never help them again, but the next time they ask for our help, we keep going back and doing it again, again and again!
This keeps going until something happens to stop us helping this person.
In my observation, we usually stop helping someone only when one of the two following situations occurs:
- When that person finally acknowledges and accepts our help; or
- When we are upset enough to walk away forever ☺.
You can easily see that neither of the above outcomes appears to be rational:
- Why would you stop helping someone just when they start being good to you? Isn’t that the time to continue doing even more since now we are being appreciated?
- When we are upset enough to walk away from someone who we have been trying to help, it’s usually because we haven’t got what we are looking for – acceptance! Hence we are more likely to then start looking around for similar acceptance from someone else, and start another cycle of help-reject-walk away upset.
Can you see the love of acceptance may be the source of our irrational behaviour?
2) Wasting 80% of our time and resources imposing our preferences on other people.
If you extend the above case from an individual person to a group of people, you will find similar situations occur among groups, be it a gender group, a work group, a political party, a religion or a country.
Very often when we set out to help other groups, we somehow believe that our group is more superior than them in some way, and they need to improve to meet our standard. The end result of such an effort is usually not desirable either because it is driven by gaining acceptance from others.
In some extreme cases, wars break out between countries simply because Country A rejects the help offered to it by Country B by not accepting the ideology or value systems of Country B. You could say that if Country B did not seek acceptance from Country A, there would have been no need for such a war.
Can you see that the love of acceptance sometimes may be the root of all evil ☺?
3) Wasting 80% of our time and resources on bad (or incompatible) investments.
Coming back to our topic of investing, perhaps you can see now why so many investors keep trying to make money from their bad investments or keep going back to investment opportunities that just didn’t work for them.
Is it possible that investors simply feel rejected by the investment and are still trying to gain its acceptance ☺?
The love of acceptance as a human weakness may be the reason for:
- Why we discontinue our successful investing actions, because we have gained the investment’s acceptance and therefore there is no need to continue;
- Why we can do well for a while until we run into a bad investment, which we then get “stuck in” with no courage to cut our losses and leave, because we are still waiting for the investment’s acceptance.
Can you see more clearly now, how the love of acceptance might cause irrational investment behaviours?
So how do we get over the love of acceptance as an investor?
I don’t think we can ever completely get over the love of acceptance, but we can work towards reducing it and that is definitely a worthwhile exercise.
Here are a few tips which may be helpful:
- First of all, we can’t really gain acceptance from others if we don’t accept ourselves first. In other words, no amount of compliments or appreciation from others can change our own viewpoint of ourselves if we didn’t think we were good enough in the first place. Since no one can help you with the idea of whether you are good enough, you might as well decide that you are simply good enough, with or without other’s acceptance at your earliest convenience ☺.
- If I were to get into an investment opportunity, I would ensure that I am not trying to prove anything to anyone; it is simply an investment that makes me money. If people think my investment strategy is too simple or too stupid, it is acceptable to me as long as it works. In other words, I am not looking for the most challenging investment opportunities that will inspire others or give me a story to tell my grandchildren one day, I am simply looking for simple, repeatable and no brainer investment opportunities that have worked for me (i.e. compatible) in the past.
If we set out to prove something as a property investor, we will attract challenging investment opportunities for us to overcome. Why make it difficult for yourself, when you can just make it easier? If the end financial result is the same, the only extra thing we can achieve by doing things the hard way is to confirm that we are good enough. Why not simply confirm this to yourself right now and be done with it, so that things can be easier for you from now on?
I would like to end this month’s newsletter with one of my favourite quotes from one of the world’s greatest investors:
“I don’t look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.”
– Warren Buffet
Until next month, happy investing.
P.S. If you’d like to discover an easier approach to property investing, based on a simple and repeatable strategy, and you haven’t yet attended one of our Wealth Acceleration Workshops, may I suggest you contact us to register for one today?
We are currently holding workshops in Melbourne, Sydney and Brisbane. You can call 1300 663 836 to speak to Natalie or simply email firstname.lastname@example.org We will give you more details on the dates and venue and answer any questions you may have.
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