There was once a time I felt very sad every time an ambulance zoomed by with sirens blazing. I knew someone was suffering, and sorrow would fill my heart not only for the injured, but also for the person’s family and friends. Nothing is permanent, and the ambulance reminds me of this fact every time I hear one.
Over lunch, I was sharing my feelings with a friend, and she changed my mindset. She mentioned, instead of feeling sad, feel happy. Be happy the ambulance is out there saving someone’s life. Feel emboldened help is on its way!
My friend was right. I chose to feel sad about an unchangeable past rather than focus on the good act of trying to make things better. It was this simple epiphany 12 years ago that changed the way I looked at everything, forever.
Rather than sulk about those personal finances on life-support, why not change the way you see your outlook? Instead, look at your massive debt, or your crummy income as an opportunity to recover. The worse you are, the more upside you have!
Related: The Cost Of Calling An Ambulance And The Nightmare That Ensued
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Financial Samurai – “Slicing Through Money’s Mysteries”
Everyday Tips says
My aha moment came pretty recently.
My son had some pretty severe back pain after playing soccer. (He is 12.) We saw the doctor did a bone scan, etc. While we were waiting for test results, a boy we knew of through a friend died of bone cancer at the age of 15.
So, when the doctor came back and said my son had a stress fracture in his spine, I screamed Hallelujah! Yep, stress fracture is a bummer and no sports for 3 months stinks. But, there are a lot worse things out there.
Thanks for sending me to this post from the Yakezie forum Sam.
I agree your friend’s perspective is definitely the more hopeful one and that does lead one to be more proactive. Having a hopeful outlook is your insurance policy for getting through life’s challenges. It is not automatic for me so I have to try really hard to find those silver linings sometimes but I always feel better when I do.
I say a prayer for the person who needs the ambulance then give thanks that I’m not the one having the crisis.
Thanks for suggesting a way to look at a financial crisis in a more positive way.
.-= SFaith´s last blog ..Why Write A Business Plan? =-.
SFaith – Thanks for stopping by and sharing your thoughts and saying a prayer! Over the past 2 years, I sure needed a positive shift in everything, otherwise, I’d be one depressed individual!
Rob, thanks for the explanation. I may have to dedicate an entire weekend to go through it all!
@Kosmo @ The Casual Observer
People are generally pretty good here getting out of the way.
I hope you never need the ambulance either!
I feel lucky that I don’t need the ambulance and I hope that the ambulance arrives in time.
Kosmo @ The Casual Observer says
My thought is usually “why the F aren’t those other cars getting out of the way of the ambulance”
.-= Kosmo @ The Casual Observer´s last blog ..Stock Market Contest Results =-.
Rob Bennett says
ROB – Hmmm, had no idea you had a “goon squad” after you. Care to share a link or two and highlight where the original debate started?
Here’s the URL for an article that contains 101 snippets of posts that my fellow community members put to discussion boards asking that the site administrators do something about the abusive stuff and permit civil and reasoned discussion of these important questions to go forward:
Here’s the URL for an article explaining why the reckless promotion of Buy-and-Hold for 30 years after the academic research showed that there is precisely zero chance of it ever working for the long-term investor is the primary cause of the economic crisis:
The debate started on May 13, 2002, when I put a post to a Motley Fool board pointing out that the Old School safe withdrawal rate studies (these are the studies that financial planners use to help us plan our retirements) get the numbers wrong because they fail to account for the effect of changing valuation levels. Here’s the URL to an article in which I quote 13 big-name experts who have acknowledged in the days since that I am right about this:
There are two sides to every story, and the least I can do is understand both sides.
Yes. This is the best possible reaction to the words that I posted above. The story that I tell is so strange that it it unbelievable for those who have much experience with how humans act. Yet I document the entire thing. There’s got to be some sort of explanation for how such a thing happened.
Many of the Goons are friends of mine from the old days, Sam. The guy who leads the Smear Campaigns (he has devoted the last eight years of his life to destroying me) is the first person named on the Acknowledgments page of my book! He was the fellow who started the Motley Fool board at which I posted about safe withdrawal rates. He had a FAQ statement at that board telling newcomers to “read everything by Rob before posting, his stuff is the best stuff here ” (that’s a paraphrase). There’s obviously something very, very weird going on here.
What’s going on is that a group of academics who in most respects did wonderful work also just happened to make a mistake and that mistake has grown more and more and more dangerous over time. The academics discovered that short-term timing (changing your stock allocation with the expectation of seeing a benefit within a year or two) never works. This was huge. This changed the history of investing. This insight is the foundation for the entire Buy-and-Hold Model, for all of what has become the conventional investing wisdom of the past three decades.
The mistake was that the academics jumped to the conclusion that long-term timing (changing your stock allocation with the expectation of seeing a benefit within five or 10 years) also doesn’t work. Nothing could be further from the truth. Long-term timing always works. There is not a single exception in the historical record. And long-term timing is required for success as an investor. Investors who fail to engage in long-term timing are virtually certain to see their portfolios wiped out at some point in their investing lifetimes. The consequences of failing to engage in long-term timing are truly tragic.
We didn’t learn this until 1981 (this is after millions had already been spent promoting Buy-and-Hold), when Yale Professor Robert Shiller published research showing that valuations affect long-term returns and that therefore the claim of the earlier academics that the market is efficient and sets prices properly in the short term is pure nonsense. Here is the URL for an article quoting numerous authorities for the proposition that the efficient market theory has been shown to be pure nonsense:
Here is a URL linking to 20 studies that show that valuations affect long-term returns (if valuations affect long-term returns, it obviously does not make sense to stay at the same stock allocation at all valuation levels):
The situation that we are in today is that 90 percent of investors believe that it is not necessary to time the market to achieve long-term success. Yet common sense and 30 years of academic research and the entire historical record says the opposite — that long-term timing is critical. The big problem is that The Stock-Selling Industry is embarrassed about the mistakes they have made. They have spent hundreds of millions of dollars promoting an investing strategy that has caused the greatest loss of middle-class wealth in the history of the United States!
My belief is that the Personal Finance Blogosphere offers us The Way Out. We today possess the power to explore the realities of stock investing without getting the permission of The Stock-Selling Industry. Once we do, The Stock-Selling Industry will come around. I have spoken to a number of financial planners who have indicated that they would love to be able to tell the straight story but feel that it would be career suicide to do so in today’s environment. Once the cat is out of the bag, there will no longer be any penalties attached to telling people the straight story.
The rub is — Lots of people who run blogs or post at boards have endorsed Buy-and-Hold in earlier days. They too are embarrassed to admit their mistakes. And these people sincerely believe that Buy-and-Hold kinda sorta works. They are suffering from cognitive dissonance. They have believed in this stuff for so long that it comes as a shock to hear that it doesn’t work and they just cannot easily let that in. So their first reaction is to silence or shun those telling the story of what the academic research of the past 30 years has revealed to us.
My belief is that we need to accept that people are in pain and proceed accordingly. We should be sensitive. We should be diplomatic. We should be loving. All these things are good. But we must also insist that honest posting on the flaws of the Buy-and-Hold Model be both permitted and encouraged at all investing blogs. Over time people will get used to the idea and come around. But people cannot get used to an idea that they never hear! We have to get the ideas out there to have any chance whatsoever of taking things to a positive place.
We are in a period of transition. The people who developed the Buy-and-Hold Model taught us some wonderful stuff. Their work is the foundation for all the strategies that I explore at my site. But their first-draft effort at developing a scientific way to invest was not perfect. We need to help them out by fixing the mistakes they made. Even if they do not want us to help them out, we must do so — it is not in anyone’s interest (least of all the Buy-and-Hold advocates) for the current state of affairs to continue. The current state of affairs is a disaster of epic proportions.
I agree that one can’t buy and hold forever. There has to be an ultimate exit price.
This is a common-sense observation. How often do you see discussions of what that exit price is? We all need to know the answer to this question. We are not going to figure out what the answer is until we open up the possibility of having lots of smart people share their thoughts on the question. We need to have thousands of people providing constructive input. We cannot get to first base so long as there are people insisting dogmatically that there is no price whatsoever at which stocks no longer offer a good long-term value proposition. We need to do something about the dogmatism of the most strident Buy-and-Hold advocates.
There is no one answer to the question you raise here, Sam. I am not saying that I know the one definitive answer. I am saying that we all should support the idea of encouraging extensive discussion of the question. It’s a very, very, very. very good question. Is there some price at which stocks no longer offer a good long-term value proposition? If yes, what is that price? We all need to know. At the very bare minimum, we all need to become informed enough to be able to talk intelligently about the matter. We need to work together to launch a national debate on what really works in stock investing.
.-= Rob Bennett´s last blog ..Podcast #193 — My Vision =-.
@ Jon – Thanks for the tips! I’m a mac user myself, and it worked! Check out “The Samurai Fund” tab above, as well as scroll back to the original post. You can check out all the details. Thanks!
@ Mrs. Micah – Thanks for highlighting that poem/song! Good stuff :) Will check out the Financial Foul Up on Friday I guess!
@ Charlie – Hahaha I hear you loud and clear on figuring out LYRICS! Oh gosh, the discovery of the true lyrics are so funny, and I’ve been wrong so often. Yes, the feedback of making a positive change on someone must be the most motivating thing ever!
@ Bytta – Yes the possibility of financial frugality is intriguing indeed. Very interesting that you don’t feel emotion, but the immediate sense of duty to get out of the way. Maybe I’m just an emotional guy?
@ ROB – Hmmm, had no idea you had a “goon squad” after you. Care to share a link or two and highlight where the original debate started? There are two sides to every story, and the least I can do is understand both sides.
I agree that one can’t buy and hold forever. There has to be an ultimate exit price.
Bytta @151 Days Off says
My financial a-ha moment is when i read this story about a couple who managed to keep their living cost to $12k annually. I realise that I won’t get to that level but it opened my eyes about the possibility of living simply and cheaply. The implication is the sense of freedom in knowing that I don’t need to keep a high-paying job I’m not passionate about in order to maintain a decent lifestyle. While I’m still doing this type of job, I feel better knowing that there is a light at the end of the tunnel.
My life a-ha moment is when my beloved told me that I should accept life as it is and appreciate it. I swear that at that time I thought it was God talking to me through him.
As for the ambulance moment, well, if i was in the car, I would get busy trying to get out of their way. No particular profound feeling other than “i better get out of their way”.
.-= Bytta @151 Days Off´s last blog ..Day 3: The Investment Review: Time for the Truth =-.
I feel neither happy or sad when I see an ambulance, I feel numb in a way, more a feeling of sympathy and say a prayer for them hoping they’ll be okay. I can’t think of any monumental aha moments right now that relate to finance, but I have had some great aha moments lately when I finally learn the proper lyrics of a song. I have been WAY off on some lol.
As far as money goes I try to keep my thinking positive. If I think about how much I’ve had to give away to our inefficient state and fed. government in taxes I just get frustrated so instead I focus on what I’ve been able to save for my future and what I’ve been able to give to charity. Thinking about how I’ve been able to help change someone else’s life and getting positive feedback from that person is very motivating.
Everyone is wired differently in terms of how happy/cheery they naturally are (there are scientific articles about this) but regardless of that we can all make an effort to better ourselves continually and actively look for positive approaches to the problems we face.