[Kung Fu Girl Note: This article differs slightly from the one I wrote for Early to Rise last week, and includes my top three ideas for how to be a more daring, contrarian investor…I hope you enjoy it!]
“Life is either a daring adventure or nothing. Security does not exist in nature, nor do the children of men as a whole experience it. Avoiding danger is no safer in the long run than exposure.” ― Hellen Keller
Truth or Dare
When you were a child, did you ever accept a dare from a friend or play the famous game “Truth or Dare”?
I still remember sweating it out when it came to be my turn, wondering which would be worse:
- Squirming uncomfortably in my chair while someone asked me a truly embarrassing question that I did not want to answer (and I’m a terrible liar so that was never an option for me—everything I feel and think is written all over my face), or
- Being forced to summon the courage to do a physical stunt that was probably even more embarrassing!
I can still remember my heart beating wildly and my extreme nervousness just before I had to choose…it was terrifying!
Facing your fears is one of the most difficult challenges you will ever encounter. The very act causes your palms to sweat, your heart to beat rapidly, and your adrenaline to surge.
And yet, if you want to achieve something more in your life than what you have achieved up until now, you must learn to overcome your fears.
That is the very definition of daring:
To summon your courage so that it is stronger than your fear and to take action in spite of not knowing the outcome.
Daring is not just for childhood games…when you think about it, this is exactly what successful investors do.
The most successful investors are daring contrarians. They are leaders, not followers, who consistently think for themselves rather than mindlessly following what “everyone else” (“the herd”) is doing.
They stand by the strength of their convictions and have the guts to buy when everyone else is selling and to sell when everyone else is piling in to buy.
Just look at a few famous successful (and daring!) investors:
Warren Buffett in 1999
In 1999, when “everyone” was investing in high-tech dot-com companies, Warren Buffett refused to participate, eschewing technology stocks saying he “didn’t understand them” (translation: “how does a company with zero revenue and infinite expenses get valued at $350M?”).
Everyone laughed at him and wondered if he might not finally be getting just a wee bit antiquated to be a good investor anymore, when suddenly the bottom dropped out of the NASDAQ, technology investors lost billions, and Buffett laughed quietly all the way to the bank.
It took guts and courage for Buffett to go against what “everyone” else was doing in 1999. He was publicly ridiculed in multiple media outlets, but because he dared to think for himself and to stand by his convictions, he successfully navigated through that tumultuous period unscathed while “everyone” else lost billions.
Mark Ford in 2006
Likewise, in 2004 – 2006 when “everyone” fancied themselves a professional real estate investor, Mark Ford decided that the market was just too overheated for him and got out, saying, “By 2006, the houses I had been buying were selling for twenty times their yearly rentals….I knew it was time to get out. I stopped buying and advised my friends to do the same. They thought I was crazy.”
But we all know what happened next…
Who turned out to be “crazy”, Mark or his friends? You are correct…it certainly wasn’t Mark, the daring, contrarian investor willing to think for himself and to go against what “everyone else” was doing in 2006.
Me in 2008
Likewise, in 2002/2003 when I first began to contemplate buying physical silver, everyone thought I was NUTS. There were no websites about silver except for a very few old-school silver analysts, exactly zero of my friends had even known you could buy silver coins (“Do they still have coin shops? Oh yeah, I used to buy baseball cards at that place!”), and in general I just felt like a total weirdo for even contemplating it.
Even my husband thought I was crazy!
Unfortunately, unlike Warren Buffett and Mark Ford, I was so worried about all of those negative opinions that it took me several more years to actually make my first purchase, at $10.97/oz.!
(I could have bought it for $3 or $4 earlier, but no, I lacked confidence at the time and instead relied too much on what “everyone else” thought and so waited!).
I still felt like a “weirdo” when I finally did buy silver, but by then I had gained enough confidence in myself to finally overcome my fear and take action on what I knew to be correct for me, despite what “everyone else” thought.
Fast-forward a decade, and silver is above $30 rather consistently, and almost touched $50/oz. last year (when thankfully I sold quite a bit, again feeling crazy because it was on the news every day and “everyone” was buying!).
I wish I had grasped this lesson years earlier, but I am so glad I finally got it!
Being Daring is NOT Easy
It is not easy to be daring. It is difficult to summon enough courage and self-confidence to stand firm in the face of doubt and fear and do what you think is right, not what “everyone else” would have you do.
And, as we “grow up” our lives become filled with responsibilities and routines and with all of the things we feel we “must” do, instead of with exciting challenges we feel “inspired” to do or “dare” to do.
As investors, we settle in, watch the nightly news, faithfully contribute to our 401k’s, talk about the stock market with our co-workers and neighbors, and tend to the financial responsibilities of everyday life.
We forget what it’s like to be a daring child, and instead we play it safe. Rarely do we dare to do anything different from our neighbors or coworkers or to challenge the status quo.
But this is a mistake!
Because in order to become a more successful investor, you must summon your courage and face your fears…you must be a little daring. You must dare to think for yourself, dare to trust in yourself and your own thoughts and abilities, and dare to challenge the status quo and go against “the herd”.
As Mark Twain famously said,
“Twenty years from now you will be more disappointed by the things that you didn’t do than by the ones you did do.”
How Can You Dare?
So this is all well and good (“Got it! Kung Fu Girl says I must be more daring…OK!”) but how exactly do you do it?
How can you shake yourself out of complacency and reject the ever-present “herd mentality” that surrounds you to become more daring in your life and in your investing?
(By the way, I’m not talking about throwing caution to the wind here and taking wild, imprudent, unnecessary risks, but simply how to insert a little more courage, daring, and trusting of yourself into your life to help you become a more successful, contrarian investor!)
Here are three methods that have worked for me, and I hope they will help you, too:
1. Ask yourself:
“What is the worst that can happen?”,
“How likely is that to happen?”, and
“Can I live with that if it happens?”
As long as you are taking prudent risks and daring appropriately (e.g. not going “all in” on a brand-new investment class you know nothing about), you will find that “the worst” is usually quite manageable and you can take many precautions to prevent it from happening in the first place.
2. Increase your financial education.
Continuing to increase your financial education will give you the confidence you need to actually pull the trigger when you are ready to take action.
I would never have had the confidence to buy silver many years ago if I hadn’t thoroughly researched it and increased my financial education tremendously—everyone (including my own husband!) thought I was a certifiable lunatic at the time!
But because I had taken the time to study the market and learn all there was to know about silver, I was able to face my fear of “going against the herd” and finally pull the trigger.
3. As Eleanor Roosevelt said, “Do one thing every day that scares you.”
Practice, practice, practice being daring.
Each day, try to expand your comfort zone a little by doing just one thing that you find slightly “daring”. Start small and slowly work your way up until you are consistently thinking for yourself, forming your own opinions, trusting yourself, and ignoring “the herd”.
These small wins will give you the confidence you need to pursue bigger challenges later. (Investing is one area in which you should never take “massive” action…that’s a quick way to lose your shirt!).
Finally, remember the child in you, trust in yourself, and like Nike,
Just do it!
(I dare you!) 🙂
And please let me know how it goes! l will help you however I can.
To your financial success,
— Kung Fu Girl