How many of you are familiar with Bill Gove? He passed away a few short years ago at the ripe old age of 91. Right up to the end, he had more energy and emotional intelligence than many people half his age. In case you don't know, he was the first president of the National Speaker Association and generally considered the greatest platform speaker for the second half of the 20th century. The "Tiger Woods" of motivational speaking. In the years before he passed on, he passed on all of his secrets to his young partner, Steve Siebold.
As I told you on Tuesday, Siebold was good enough to be on the pro tennis tour but not good enough to win consistently. Its a similar situation to many of Tiger Woods' opponents. We also discussed the most important reason why Tiger Woods' dad believed his son continues to lap the field.
What do Siebold and Woods have in common? Approximately 25 years separates their athletic careers. Woods obviously has the mental toughness as a player that Siebold wished he had. It took 25 years, but Siebold went about studying the mental toughness secrets of the world class and developed a program to teach to corporate America as well as individuals. You can develop mental toughness one of two ways. You can model it from parents, teachers, coaches or mentors. You can also learn it in the school of hard knocks, but that is a trial and error method that takes much longer. For some, it can take their whole lives. What we are going to do is go over 10 of the most important mental toughness principles and apply them to what we do here.
1. You must have a vision and passion that will motivate you to run through walls. If you pick a career that you are lukewarm about, odds are when the going gets tough, you will give up. There has to be something that motivates you to put up with life's adversities. As far as the markets go, ya gotta love it or you won't put in the hours necessary to succeed.
2. Champions dedicate their lives to greatness. Thomas Edison is the best example of this. He must have figured out 10,000 ways a light bulb wouldn't work. But he kept refining his method until that filament produced a current. You have to really be dedicated to stick with it like that, wouldn't you say? Edison did because his vision really was to put electric light in every home in America. See #1 above. Most traders, myself included, didn't know much about trading (or forecasting) when we started. However, if you study your mistakes/blunders and make improvements, you have a chance to become profitable. This leads us to #3.
3. You must be a lifetime learning sponge. Many studies have been done that correlate a person's literacy to his success in life. You need to read a lot. But its not how much you read as it is what you read. Assuming you have a vision, you need to learn everything about that chosen path until you get to the level of excellence. For traders, this means learning new and better methods. This means, if you have a major loss, you need to learn why it happened. If there is something wrong with your methodology, fix it. If your mind isn't right, find a mentor and make it right. There's always somebody that has the missing link you need. You can either do it the hard way on your own, or cut your learning curve and get the information from somebody else. That's what books and tapes are for.
4. Do the thing you are most afraid of. Many motivational speakers tell us our income potential is directly correlated to our comfort zone. That comfort zone is like a muscle. The more you use it, the stronger it gets. This means working through a certain amount of pain, whether it is emotional or physical. If you are out of shape, you might need to get on a treadmill. The first day you might do 15 minutes, the next day 20 minutes. The third day you might do 20 minutes uphill. The point is everyday a little harder. Soon you will find 30 minutes uphill isn't so tough. Same thing goes for making difficult telephone calls.
5. Not worrying about what others think. This one comes from Bill Gove. He says the biggest breakthrough in his speaking career came when he stopped worrying what the audience thought of him. Don't confuse that with not wanting to do a good job. Even the best of us will get heckled. Gove strove to create the best talk possible and delivered it to the best of his ability. If he did that, he was being true to himself and didn't care what the audience thought. The result, he was less self conscious and produced better performances. His audience loved him. Do you see how Tiger Woods is able to tune out the crowd and the enormity of the moment? He has practiced these shots thousands of times, goes out and does what he trained to do. Most of the other players can't do that. Case in point: Greg Norman.
This is one of the most important traits needed for success in financial markets. We need to sell when they get the party hats out on CNBC. We need to buy when the negativity is so thick you can cut with a knife. In other words, we need to take action in scary places on the chart. The only way you can do this is if you've followed the first 5 steps above.
6. Take Personal Responsibility. What I never understood was the lawyers who came out of the woodwork when 90% of the people lost 90% of their money in the NASDAQ bubble. During the bear, the big sport became suing the broker. Nothing against lawyers, everyone has to make a buck. What about accepting personal responsibilities? Now I know many brokers misled investors either maliciously or out of stupidity because most of them don't even understand how financial markets work. Still, everyone still pulled the trigger on their own decisions. Taking responsibility for your own actions goes a long way in personal growth. It also goes a long way in allowing a person (if he's really honest with himself) to understand why his life is the way it is.
7. Willing to admit you are wrong. Contrary to popular belief, its not macho to be right all of the time. It takes a stronger person to admit when they are wrong. This manifests itself in so many different ways. When it comes to financial markets, we need to be able to admit we might not know what comes next and we might be wrong. We use stop losses when trades go against us. Actually, we are seen as more attractive to our friends, associates, mates and coworkers when we can admit we are wrong. We also attract greater abundance by admitting we are wrong in financial markets. What is the one thing that can wipe us out? Staying in a losing trade until our bankroll goes to zero. The flip side of this is not assuming we know exactly what comes next. Let's say we are in a winning trade. You buy xyz stock at 20 with the idea it will go to 25. Sometimes we'll get lucky because it won't stop at 25 and will go to 30 or 35. If we assume to much, we won't be around when it gets to 30.
8. Faith in a higher power. Hey, its not religion but things will go against you. We are all created in the image of the God of our understanding. If we believe that, we also believe that things will work out. This one will get you through a lot of adversity and pain.
9. Having personal standards. This one is about honesty and win-win situations. What are your personal values? Do you have any? Are you honest in all of your dealings? If you have a set of standards outlined you will avoid putting yourself into certain situations that are not for your own best interests. In trading, you need certain criteria before you are willing to pull the trigger or you will find yourself getting into lower or mediocre probability trades. The same thing goes for anything else in your life. Why do most businesses fail within 5 years? Most people don't do their due diligence about opportunity, market, business plan or the partners they pick. Invariably, they get into lower probability situations.
10. Slow to judge, quick to forgive. Ooh, this is a good one and perhaps one of the most difficult. Who is the person you should be most forgiving towards??? Yourself. Think of all the situations in your life where you perceive you received the short end of the stick. This one is easier said than done.
There are many more traits, but if you carefully go over these 10, you'll see they encompass just about every area of your life that you need to take yourself to the next level and beyond.