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Sunday, December 28, 2014

How Your Experiences Affect Your Investor Psychology

The first emotion that serves to undermine investors' efforts is the desire for money, especially as it morphs into greed." --Howard Marks, The Most Important Thing Illuminated

When I look back at the year that was 2014 I can't help being satisfied with all I've been able to accomplish.  I set out in January, as I will again in a few days, with the same financial goal: to make it the most prosperous year of my life.  2014 has indeed been my most prosperous year.  I've made many sound investing decisions and multiple connections with businesses.  I've also expanded my network, and grew my brand.

However, I don't evaluate my life with how I've helped myself gain personal or social capital.  I like to be able to recall at least a handful of instances where I helped someone in need OR did the "right" thing.  First, although I help troubled students and their desperate guardians on a weekly basis at school, I don't consider any of these moments of my own, per se.  They belong to my employer.  I get paid a salary as compensation for providing great "customer" service.



In 2013, my most memorable moment came when a woman carrying a child into a Panda Express dropped a $20 and didn't notice.  I was in the lot, getting out of my car, and saw the bill fall to the pavement as the woman extended with her available arm to grab the restaurant's door.  Jessica and I were going to have lunch there, and instead of waiting for her so we could walk in together, I rushed to the free money on the floor.

I'm so glad I didn't hesitate.  Though I wouldn't blame someone if they did stall a few seconds before deciding on the right thing to do.  I've worked with teenagers that would have kept the money knowing the owner, walked into the restaurant, seen the woman completely mortified at the register, and used the found cash to pay for their own food.  There are adults too, unfortunately, that would behave this way.  Inside the Panda Express I saw the woman ordering her meal, walked up to her, and said,

"Mam, you dropped this outside."  The look on her face was a mix of surprise and confusion.  With her little girl still in her arms she said,

"Thank-you so much.  I didn't bring anything else to pay for our food."

Jessica then walks into the restaurant, finds me in line and says,

"What happened?  Why'd you walk inside so quickly?"

I said, "Oh nothing, that woman just dropped something on the floor and I returned it to her."

I made a lot of money, wrote an E-book, etc... in 2013, but this is the most vivid memory I keep of that year.

Credit for Pic
2014
This year my most memorable moment came when on a drive out to Chili's for lunch, I noticed something not right from the corner of my eye.  Have you ever seen something that just didn't look and feel right?  Well, something went off for me and I slowed our Nissan Rogue to a stop.  Jessica said, "What's wrong?  We're in the middle of the street."  I looked in the rear view mirror for cars, and luckily none were behind me so I put the vehicle in reverse.  When I got to the end of the sidewalk, on a curb, there he was, a feeble old man.  I put the car's hazard lights on, and said to Jessica, "That man outside your window has fallen and he can't get up."

Who knows how long he'd been there struggling.  He was upright on the curb so from appearances someone could've perceived him to be resting.  I got out, making sure it was safe to do so, and ran to him.  Jessica opened her door and stood just outside the car, keeping a close eye on Rehani and Ajani, yet within reach if help was needed.  I got to the gentleman.

"Sir, it looks like you need help.  Can I help you?"  I said.

He said, "Uh, yes, I fell on my knees but was able to take a seat right here on this curb."

I got him to his feet very easily.  He probably weighed less than 120 pounds, standing at around 5'8''.  Holding his arm so he didn't fall again from the rush of blood to his legs, I said,

"Where do you live?"

He said, "Oh, not too far from here.  I didn't tell my daughter I was going to the store."

There's a shopping center nearby we frequent ourselves.  The community he lived in is about half a mile from our home, made up of many condominiums and apartment complexes.

I walked him to where Jessica was and said, "I gotta take this gentleman to his house."  Not giving it a second thought, Jessica said, "Let's put him inside.  I'll just wait here while you do that."  Parents will attest that even in an SUV, there is not much you can put in between two toddler car seats.  So we helped this gentleman climb onto the passenger seat, strapped him in, and I headed out, following his direction.

We got to his condo, a little under a quarter mile from where we were before, and parked.  I helped him out.

"Can you walk?" I said.

He said, "Yeah, I'm just right here," pointing to the front door of his place.

I walked beside him anyway, spotting him.  Seeing him walk so gingerly, carefully measuring each step, I thought, Why would he ever think he could walk so far from home on his own?  Of course, people, no matter the age, make terrible decisions all of the time.  He took out his house key, struggled with it on the lock for a few seconds, opened the door, and said, "Thank-you."  I said, "No problem, sir.  You take care."  I got in the Rogue and drove back to Jessica.

Jessica's first question once we were reunited was, "How did you see him down there?"  We were making a left turn when I first spotted him.  Before starting the turn at my stop, I'd looked left for oncoming traffic, right, for traffic on the lane I would be merging onto, and then left again to confirm I had enough time to begin.  When turning left, one is essentially narrowing their vantage point (angle) on what's in front and to the right, while gaining view on everything to one's left.  Jessica on my right, and the cars parked along the street, would've blocked my view of the man even more.

I said, "I'm not sure.  Maybe it was my grandpa."

"Your grandpa?" Jessica said, confused.

"Yes.  I believe it was my grandpa who gave me the eyes to see him."



My grandfather, Jose Gomez, died about eight years ago.  He met his demise from a fall out on his backyard.  The fall itself didn't kill him, obviously.  It was his inability at his age to get up from the ground.  He yelled for help, but no one heard him for some time.  My grandmother, Luz, was napping.  It wasn't exactly the hottest month of the year in Chihuahua, Mexico, but it was hot enough out there for my grandfather to start succumbing to exposure.

My grandmother would be eventually roused by the screams: "Luz!...Luz!"

She too was too weak to help him rise.  She had to make a phone call to a friend who then sent from her home a strapping man to my grandma's door.  As my father, Carlos Sr., would later tell me, this young man easily lifted my grandfather from the dry ground and took him inside.  Once inside the cooler adobe, and on his bed, my grandfather went into cardiac arrest.  Even with Uncle Ruben, an anesthesiologist, there at his side by this time to administer CPR, Grandpa Jose would not wake from his heat induced sleep.


I felt guilty.  I felt bad about not having been there to help grandpa during his time of need.  You see, I like to believe we shared a special bond.  I was his first grandson.  I spent more time around him as a child than I did around my own father, until we left Mexico for the U.S.  The bond was weakened and broken by distance.  But the love I had for him was not.  In January, I wrote two pieces to celebrate the memory of my Abuelo Jose.  One, a short story, was first runner-up in a contest: The Freight Train.  The other piece, a poem, was published in my latest E-book: The Scars Have Names.  I am sharing it with you below:






The Day I Lost A Great Man

The day I lost a great man
I thought back of that crank handle, grinding maize
of the time you swung my tiny arm like a fan
of following your every move and that mysterious gaze


you shared with the sun
below the tarp of your sombrero, we crossed
the lands your forefathers toiled where I spun
the string of my spinning top and tossed


the lasso of my childhood innocence.
Abuelo, I lament your passing grace
on your back looking up, your Pecan tense
wishing its limbs and leaves could cover your disgrace.


The youthful arms that finally lifted you
from the desiccate Chihuahuan soil were not mine
but I imagine they were strong like the hue
of my memories, of that sublime


time I spent ignoring the infernal heat
enjoying your stories of a time long past
when men stood their ground and wouldn't retreat.
Of that final breath of life their noble lives made last.


On Investor Psychology

As you can see by now, this post has had very little to do with financial literacy, money, stock tips, etc.  But it has had everything to do with human literacy.  It has many parallels with the one aspect of investing that determines whether you will be successful or not long term: your psychological profile.


Knowing who you are, and how you react under certain circumstances, trumps everything you could have possibly learned in books about investing.  Having done the right analysis on an investment means absolutely nothing if you can't carry out the right decisions objectively.  In his book, The Most Important Thing Illuminated, Howard Marks talks specifically about the metaphorical oscillating pendulum that swings between greed and fear, euphoria and depression, and so on.  Mr. Marks makes it very clear that the pendulum spends most of its time moving to either extreme and the least amount of time hanging in the middle.  Your decision making ability also swings from optimal to outright destructive.  Your life experiences, therefore, especially those that tested your character, integrity, and response, are the teachable moments of your investing psychology.

2014 for me was great, not because of what I accomplished on a personal level, but because I have this moment to always remember.  I know Grandpa Jose had a part in it and I am very thankful.

We all have opportunities to safely intervene and help others.  Indeed, many of us do.  And this is what makes humans awesome, not being glorified by their money performances, but rather by doing great things without the expectation of compensation or recognition.  Just because we can.  Investing to make money should come second to investing to make your life meaningful.  Keep this always in mind and I have no doubt you will come out ahead!

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I hope you had a memorable 2014 of your own!  Thanks for reading.  Subscribe to my blog by email and get my E-book, Common Core Money...free.  One last thing:

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