WEDNESDAY WEALTH RECAP
- While many Americans don’t save nearly enough for retirement, others save more than enough and never enjoy the fruits of their labor.
- The self-proclaimed “apes” lost a boatload of money betting on AMC Entertainment, but it’s never too late to turn your investment around. According to Nicholas Vardy… you should get out while you still can.
- Marc Lichtenfeld shares how – instead of investing the money it borrowed in new software, hiring or research – one company fell down the Bitcoin rabbit hole and now has $2.3 billion in debt.
Editor’s Note: As Dr. Joel F. Wade shares below, the only way to truly achieve a level of excellence is through deliberate practice. And when it comes to investing, paying close attention to the market should be part of your money management system.
Luckily, Chief Trends Strategist Matthew Carr has an impressive track record. His investing knowledge has led to him winning eight awards at The Oxford Club and outperforming the market by 610%.
In his most recent endeavor, he’s developed a new strategy for trading options.
The options market is one of the most misunderstood areas of investing. But those who know how to play the game correctly have seen impressive gains…
Watch Matthew’s most recent presentation to discover the easiest way to book profits up to 7X higher than the S&P 500, see how he delivered a 1,017% gain using options and much more.
– Madeline St.Clair, Assistant Managing Editor
How good do you want to become at investing?
In the next several columns, we’ll seek out the path to gaining expertise in investing – or any other endeavor.
We can learn a lot about how to gain our own expertise by seeing how the great masters gained theirs.
Back in the 19th century, Sir Francis Galton argued in his book Hereditary Genius that the performance of skills for mature adults improves rapidly at first, but then, at some point, “Maximum performance becomes a rigidly determinate quantity.”
What limits any significant improvement beyond that, in Galton’s view, was whatever nature endowed us with.
Other researchers – as far back as 1899 – added that it may take more than 10 years to become an expert at anything.
The idea that this is a relatively orderly process – moving from novice to intermediate to expert – led to the belief that we can judge expertise through someone’s social reputation, education, accumulated knowledge and length of experience.
There’s truth to this, of course, but it’s missing something important.
Because it turns out that a person’s level of training and experience doesn’t always accurately predict their performance.
From psychologists to software designers, decision makers and investing forecasters, research has shown that the amount of time spent in a field is not a reliable measure of performance.
Something else is essential, which K. Anders Ericcson and his co-editors map out in their tome, The Cambridge Handbook of Expertise and Expert Performance.
What makes the difference between a Mozart or a Beethoven and somebody who can play quite well? What makes the difference between a Michael Jordan and a good overall basketball player?
There is a role for raw talent, of course.
You have to be capable of accomplishing such feats as these incredible masters to begin with. There is a role for genius and natural ability. There is also the role played by parents and mentors from an early age, which is usually significant.
But there are plenty of people with loads of talent and ability who never, ever come near their potential.
There are a lot of people with very high IQs who never really challenge their mental capacities.
Everybody knows that we have to practice something to get good at it. But there are plenty of people who spend years and years at their instrument or profession or sport but reach only a level of basic competence and go no further.
The now famous 10,000-hour – or 10 years of experience – rule doesn’t apply when we just go through the motions, doing what we already know.
The one element that is most crucial for developing and maintaining an exceptional level of performance is deliberate, conscious and concentrated practice.
What Makes Deliberate Practice?
Deliberate practice involves purposefully focusing on each precise skill of our endeavor, paying attention to the details, and consciously adjusting and modifying what we do so that we achieve the very best outcome possible.
This is hard work, and it can be emotionally challenging to consistently open ourselves to the kind of feedback and criticism that it sometimes takes to keep our skills growing.
With most everyday skills, like typing, driving a car or learning how to play a game like tennis well enough to have fun with it, there is an initial learning period, which involves intensive focus and attention to detail.
But the goal for most of these skills is not excellence but the ability to perform them easily and nearly automatically.
It usually takes no more than about 50 hours to get to the point where mistakes become rare and the performance is relatively smooth and competent.
Once these things become automatic, we become used to performing them without reflecting on or re-evaluating what we’re doing. And when we stop bringing that level of consciousness to the development of our skills, we continue to drive in the habits we’ve already built.
Once our habits are dug in deeply, it’s much harder to change, grow or fine-tune our skills.
At some point, many people stop consciously honing their skills and settle into a level of competence.
This is how professionals with decades of experience can underperform those who have been at it for far less time. They stop growing and spend their time practicing what they already know.
Can you remember the intensity of focus, the conscious awareness and the level of fatigue that you experienced when you first were learning to drive a car?
You probably don’t think about it much now. You get in and drive. Even though you may have decades of experience at it, you’re probably not much improved from when you had been driving for only a couple of years – for better or worse…
But to really master something – and to continue to improve our level of expertise – we need to maintain something like that initial level of conscious, deliberate practice that we brought to first learning to drive.
Discovering a Level of Expertise That Works for You
An expert basketball player won’t just go shoot baskets. They will spend time and energy paying attention to the fine points of each and every shot, bringing their total focus and awareness to the minute movements and body positioning that allows them to achieve the most accurate and consistent execution of that particular kind of shot.
And they’ll keep doing this throughout their playing career.
When you see a much older musician who is still performing at a virtuoso level, you can be assured that it’s not just because they’re older and have some kind of magical wisdom – it’s because they continue to deliberately and painstakingly think about and practice every element of their instrument.
The same principle holds true for any field of expertise.
So now, how can you hone your own investing skills so that you become better a year from now – and continue to improve those skills for as long as it’s worth the time and energy to do so? Here are a few things to keep in mind:
- Study business, study the markets and continue to study as long as these skills have relevance for you.
- Stay curious about everything that might impact your money and investments.
- Look for – and question – your own limitations, assumptions and blind spots. These include the kind of thinking errors and emotional traps that I talk about regularly in these columns.
- Pay attention to the effects of your actions and be open to changing (or sticking with) your thinking and your strategy, even when your “usual way” points elsewhere.
If you want to become excellent at something, whether it is investing, your work, your play or your relationships, the key is to purposefully, consciously and deliberately practice everything that goes into doing it well.
You don’t have to become Michael Jordan, Mozart, Beethoven or Warren Buffett in order to become excellent at what you do. Use this principle of deliberate practice and find the level of expertise that suits you.