INSTANTLY begin making better decisions with your money and your business.
It’s the single most common mistake made by almost everyone — especially the media.
In fact, it happens so frequently because most media reports are written by people that don’t actually understand what really drives an economy, or how to invest.
And since most people (tragically) take what they see on TV news and in the newspaper as “fact”, it gets amplified, and ends up leading the majority of people to wrong conclusions.
You’re about to learn not only this massive danger to your success, but how to eliminate it permanently.
I call it “The Danger of Polarized Thinking”, and it comes down to thinking about things in terms of “duality”.
“Polarized Thinking” Explained
Some people call it “black and white thinking”, referring to something either being one, or the other.
Duality implies that something can
only be one or the other,
but not both (and that there’s no other option).
On and off. Up and down. Good and bad. Fast and slow. Increasing or decreasing.
You get the idea.
One or the other, but not both.
The challenge to this is that when we talk about people, money, business, the economy and such complex topics, duality doesn’t work.
Is the real estate market
good?
Or is it bad?
At any given time, I can go out and make money in real estate – while at the same time, there could be people losing everything they own in real estate.
If “the market” were either good or bad, how can this be possible?
The answer lies in the fact that there
is no such thing as “the market”.
That’s right. “The real estate market” DOES NOT EXIST.
There is no such thing as “the stock market”.
When you think about it, the big national real estate market that you read about or see the talking heads discuss on CNBC is actually
a collection of thousands of small, individual markets.
The town you live in, the one 3 hours away, and the one across the country.
All of them, all thrown together and referred to as “the market”.
Same with the stock market – it’s a grouping of every stock that actually trades on that market, not a single entity or representation at all.
Think about this — any day of the week, you can go into the stock market and lose money .. and that same day, someone else is out there making money as you take a loss. How could that be possible if the market were just “good” or “bad” on a certain day?
Taking it even further, if you know how to do it, you can actually
make MORE money on the day that the world thinks the market is “bad”.
And “
the economy” is the same thing — it’s a combination of thousands (millions) of individual items and pieces of information, balled together like a bunch of wet towels coming out of the washer.
“The economy is terrible”.
“The market is strengthening.”
“The real estate market is heating up.”
It’s what the daily business headlines are made of.
Saying this is like having your foot frozen in a block of ice, having your head in a stove at 400 degrees,
but the overall temperature of your body is “comfortable”.
I’m so sick and tired of hearing people talk about how the market is “good” or “bad”, because it completely misleads you as an average investor.
Here’s an example of why this is so dangerous:
Let’s say on the same day
I buy a stock for $10 and it goes to $30 — I triple my money. That’s a 300% return.
But you buy another stock for $10 and lose 100% of your money.
Those are pretty different results, right?
But if we average our results together (-100% return + 300% return),
we end up with an “overall market” of 200% return.
The problem here is that the numbers don’t lie – and
focusing on the “overall market” completely misleads you to what’s really going on.
(By the way, this is a fundamental trick that the financial industry plays on you to pretend they’re generating better results for you than they are .. but that’s another topic for another day).
Ignore “The” Market and
Focus on “Your” Market
One of the fundamental principles when it comes to investing and business is that
you need to ignore what’s happening in the bigger market, and know exactly what’s happening in the market where your money happens to be.
Now, I’m talking to the investor in you, not the speculator or “trader”.
If you’re going to be trading commodities and jumping in and out of markets in the same day, this won’t apply to you.
Professional traders rely on the crazy emotions and irrational behaviors that show up in the market to capitalize on. But unless you’re going to devote your full-time effort to trading or investing, that’s a dangerous thing for you to try and do.
For example, if you’re a real estate investor, you can ignore the national statistics (in fact you should), but
you need to get VERY clear on what’s going on in the specific market where you’re investing.
If you’re investing in a certain asset class like precious metals, you need to understand
exactly what is going on with the specific type of metal that you are investing in.
What drives that market? What influences the supply and demand? What macro and larger trends are impacting it?
If you really want to start doing better with your money, stop watching shows like CNBC or reading newspapers or blogs that report on “the market”, without giving
practical insight into what’s
really going on.
Recognize that
the overall market reports make for good, emotional stories that sell advertising, but sophisticated investors ignore the big picture and focus on what really matters.
Stop getting sucked into emotional conversations about “the market” and what it’s going to do, and focus on seeing what’s really going on beyond the top line.
And remember that Polarized Thinking is the root of many of the major economic problems we have today. Politics is driven by polarized thinking — in many people’s eyes, you’re either good, bad, smart or dumb simply because you’re associated with a certain political party.
Is that true?
Of course not.
Ok, well maybe if you’re a Democrat.
Just kidding.
See how Polarized Thinking affects you? It just created a reaction for you, maybe good or maybe bad.
The point is that Polarized Thinking creates a lot of emotion, and takes the real focus away from what
SHOULD be discussed.
IMPORTANT: BELOW, let me know what you thought of this article, and what’s the biggest example of Polarized Thinking you see in the world?]]>
64 Responses
What a fucking joke. http://www.saltydroid.info
Hey Greg, this is so true!!! Thank you for the valuable insight and I agree with everything you said (does that make me right or wrong? 😉 ). One of the biggest examples of Polarized thinking I see is around religion. If you believe in my God, you are good, but don’t you dare say you believe in another or not at all or you are Bad.
I look forward to more of your posts.
Great example Rob, and great to hear from you! The most emotional topics and issues are generally also the most polarized and polarizing – religion, money, abortion, politics, are just a few of them. Unfortunately it wastes a lot of energy on unproductive focus as opposed to pouring energy into action or results that improve the situation.
Greg . . . simply a fantastic article. It is so important that people turn their attention to how they think and see the world. Not doing so causes one to walk around seeing things through a constant blur of whatever biases or misinformation they have picked up in the past. Great advice, and well worth the read. Thanks.
Actually, this was a very valuable article. I would guess that many people have never thought about “the markets” this way, and that this insight can prove to be very valuable.
Very positive, find myself thinking more this way after reading a few of your articles. Now when I hear about economies in trouble, I focus on the bargains I can get before the economies recover.
Previously I’d hear about economies in trouble and worry how that may affect me in a bad way. I’d lose my job (I never have), lose my home (never have), etc.
Thankyou for being one of the people who have put me on a new path.
There is always a flip side to a challenge, and it’s just a matter of figuring out what it is.
You are very right hey. I think in any industry what matters is whats really going on because it doesnt make sense to me that in the same type of enviornment one person should succeed and the other fail – clearly the one who is succeeding is doing something right. Now I need to ask a question: in terms of MLMs what is the best approach to attract and keep customers
Hi there – the question is a bit off topic for the article, but the simple answer is to get crystal clear on your target market, and their greatest fears, pains, problems and frustrations. You need to represent an important solution to a big problem they have – that’s why most money is spent.
So called business experts have told me over and over again that my business won’t make money until the economy picks up. I have been stuck for over a year and have not generated even 1 cent in revenue. As a result of this mindset, I lost everything I own.
The last line says it all: “Polarized Thinking creates a lot of emotion, and takes the real focus away from what SHOULD be discussed.”
Starting with the right questions is the key to getting answers worth having. False dichotomies – polarized thinking – are the wrong place to start, but they give us the comfort of being able to pick a side and the ease of excusing us from further thought.
I don’t know who to attribute it to, but a great quote I heard is “The quality of your life is determined by the questions you ask.” That’s my experience, 100% and so true.
I think it was Anthony Robbins who said it in “Unlimited Power”
I’m loving the dialogue (and the thinking) you’re opening up around this subject, Greg.
To my way of thinking it’s L-O-N-G overdue. Bring it on! 🙂
Wonderful article. Someone has to stir the pot and get a national dialog going on what is best for the individual in each situation. The problem is really a problem of individual perception, not national perception. We are so trained to think negatively about every situation. The national media just amplifies this doom and gloom approach.
People need to be taught (reminded) there are always two ways to look at an event. We are always in choice (even if we sometimes forget) to view the event as positive, not negative. This includes the current economy.
There are people sowing the seeds of vast Real Estate fortunes even as the national media laments the condition of the real estate market. There are entrepreneurs, like yourself, who are building great companies in the middle of this recession.
We need to look at the positive. Where can we benefit from the current situation? What do we have to change to benefit from the current situation? How can I lose my fear and have the courage to trust myself to succeed?
Keep up the dialogue. We all need to constantly examine ourselves to know what is best for us. We all need to believe we will succeed no matter the circumstances
I totally agree with you Greg. I beleive you can apply this to all thinking. There really isn’t anything that is either good or bad, depending on the desired results. Focus is key, don’t be swayed away from your own good judgement. Thanks Greg
Thank you, Greg, Your effort and honesty are tangible.
I thought folks interested in this topic would enjoy a new book out called “The Righteous Mind – Why Good People are Divided by Politics and Religion” (see intro chapter here: http://righteousmind.com/about-the-book/introductory-chapter/)
The book gives a refreshing way to think about our own thinking, and some red flags and ways out from our own tendencies towards polarized thinking. If we could take his advice and make demonizing the ‘other’ team/ party/ sect etc. taboo, our political and economic systems would change for the better!
Bill Moyers had a very thought-provoking interview with the author, as described below:
The Righteous Mind:
Bill Moyers and moral psychologist Jonathan Haidt talk about the psychological underpinnings of our contentious culture, why we can’t trust our own opinions, and the demonizing of our adversaries.
You can see the whole interview here: http://billmoyers.com/episode/encore-how-do-conservatives-and-liberals-see-the-world/
I hope I get to take a course from you soon!
cheers!
christina
Greg you always hit it out of the park for me. Your perspective here brings this to mind.
“When You Change The Way You Look At Things The Things You Look At Change” Thank you for continuing to provide Personal Development Goodness!
The “market” is a crap-shoot that the ‘wall street smart guys’ know how to work it so well. Just look at the chip shot they pulled off with Facebook, turn up the hype, run the sheep over the cliff, make big money! Then there are the ranting clowns like Cramer who cannot possibly be as stupid as he appears to be, more likely just another Judas Goat. So the fear-mongers keep running the herd and the sheep have already been sheared down to their hides. There is nothing let but a big mutton feast…..
Hi Joe – the real key is to listen to a variety of opinions, and then to come to your own conclusions – as opposed to just substituting someone else’s opinion for your own. Unfortunately, people watch Cramer and other market experts, and just do exactly what he says without doing any thinking or due diligence – and the results they get are not surprising.
I’m reminded of polarized thinking about which way is best to teach
children reading. one group said that reading should only be taught
by repitition and by using phonics. the other group said that reading
should only be taught by letting the children experience it by listening
to stories and by a more free learning style. My childrens 2 nd grade
teacher said, they’re both right and incorporated both philosophies into
her lessons for the children.
Thank you, Greg, for this valuable info.
Sooo true!
Being able to see the issue from both sides is very helpful to finding the best solution, especially if you are trying to connect with someone and service their needs and meet your needs as well. The biggest example of polarized thinking in this world is that the world revolves around me, and my needs is all that matters and to hell with everyone else and their needs. This is the basis for all polarized thinking. But the best way to overcome this is to let go of our selfishness. Love God and love others as you love yourself is the key to a great society. Healthy respectful boundaries of love and limits, liberties and freedoms all bound together makes for a great existence. Bring value.
Thanks for the article. I agree we all live in our own little world. If i lose my job to me the economy sucks. Even during the worst days of the last few years, over 80% of people were employed. Is the glass half full or half empty?
Great comment Kit. At the end of this life we’ll only have to give account to the Most High so it is wise to live in a way that honors him. It is also our responsibility to be good stewards of what we have been given and use it to benefit the lives of others who are not as fortunate. That being said it is a very real reality that our dollar is not going as far today as it used to and we need to insure our finances against inflationary decay. The best way I’ve seen for the middle class to do that can be found at the following links:
http://karatbarstv.com/
http://www.karatbars.com/?s=johnsparks
Well if I understood your article correctly I’m not even going to try and give you an example of how the world is letting polarized thinking effect it. But instead what it does in my world…my niche. I feel a heavy weight trying to understand and keep on top of all of the markets/economies. It just can’t be done and occasionally find myself immobilized with it all. Look at In-N-Out Burgers; they do just a couple of things but they do them very well. I agree I need to focus on what’s applicable and give up trying to be everywhere and know everything at the same time. We all know that never works.
both/and versus either/or thinking is the biggest resource that I have learned in my life! Yes, be specific to your situation.
For me the article remined me to not look at or even entertain black or white thinking. There is a vast grey zone between black and white. Concentrate on your market don’t base your decisions on what is said over all. Base your decisions on what is happening around you in the grey zone. The bigest example of Polarized Thinking I see in the world is the idea that this is the end of the world and it’s not the world goes on and so do we.
The biggest issue if of course the epidemic of worry that sends most of us to an early grave. When you become a slave to your emotion you tend to see what you are programmed to see and a lot of us are negative worryers. The classic book “How to stop worrying and live your life” by Dale Carnegie is highly recommended. If you worry then you often tend to behave tactically rather than strategically. You make quick angst driven decisions and you seem to have bad news filters on full beam. I’m afraid to say I spend quite a bit of my time in that mode and it is painful. I do however reaslise that there is opportunity everywhere so thanks for reminding me Greg.
I agree with you and with Brian below; polarized thinking is a lot simpler, and finding out “what’s really hppening” takes a lot more work… plus some background. I trust future blogs will offer some suggested resources, for those of us who would rather look beyond the headlines but don’t have huge blocks of ti me to do it.Thanks for all the guidance you provide. Has anyone called you a NICE name lately? You deserve it!
Great article. You explain things in such an easy way to understand. Thank you.
It will be good to start thinking in more dimensions but it’s not easy. 🙂
The one thing that all political parties have in common is our money. They are attracted to it regardless of polarity.
I do agree that polarising can be a problem. It also generates energy – the problem is that it tends not to be directed intelligently but expressed crassly.
I’d rather say that a phenomenon like ‘the market’ has lots of parts. The market exists but is incredibly complicated and complex. A person exists but is incredibly complicated – they can be taking in one sort of energy (say food) and giving out another (say oxygen) while being drawn to a thought and repelled by an emotion while resting in spirit and exercising vigorously and on and on.
I think what you are saying is that we need to focus on one part of life/the market that we can get a reasonable understanding of and take action in this area. I entirely agree.
Hi Greg, thank you for your informative article. I agree 100% with your thinking……we are all such CONDITIONED thinkers and it is so refreshing to listen to someone that challenges CONDITIONED thinking! The biggest example of Polarized Thinking I see in the world is around the fact that so many of us are disconnected from our third dimension (higher self) and the natural intelligence of life itself. I often feel like an Alien from Gobbledegook Town when I share my views about this truth!! 🙂 Congratulations on your recent achievements in Africa…..you are certainly “BEING the change you want to see in the world” (GHANDI). Thanks for your valued contributions.
Lots of folks prefer polarized thinking, because there’s no personal accountability. I’m amazed at how many people see themselves as victims they’re comfortably uncomfortable like your oven/ice example.That’s a reason there are so few entrepreneurs, we simply cannot view things in that manner and expect results – better go play the lottery instead.thanks for stirring the pot.
Greg, you’ve hit a nail on its head but that’s only the start. I have been making this argument with my friends for years and it extends to all other aspects of life. I think that people, across-the-board, become mentally polarized due to our experiences and the information we receive. We then form our opinions and decisions based on that polarized thinking. I call this biased logic.
Yeah, Yah Ho!. You finally revealed the reality that no one is talking about – I wrote a whole chapter in my book about the mistake of thinking in terms of black and white and accepting whatever the media says as true.
Thank you for more confirmation that we Canadians are really smart about these things. 🙂
Hi Greg, thank you for helping make this world a better place in the many ways you are doing so. I work with a group of young people in their 20s and it scares me how polarized their thinking is. Keeping on writing and expressing from your heart. We as a broader community need to support one another.
Absolutely loving this direction you are going with. It’s well aligned with the values you always teach us and the current needs of the market. Thanks for sharing 🙂
Great article Greg. If I may take it a step further. The “market” isn’t a think that we can touch or feel, but a narrative. People live in narratives and there is tremendous power when we understand and move in the space of these narratives. For example, if I say there are three things that you must do or you will never understand polarized thinking. I have invented linguistically a new narrative. If my new narrative addresses the concerns that people have, people will rave and share it. If it doesn’t it is powerless and will disappear. As the marketplace shifts, we must constantly invent new and more powerful narratives to achieve greater success. Some of the most successful people we know take existing things and invent new narratives that more powerfully address peoples concerns. Apple didn’t invent a mobile phone, but a narrative about culture, success, efficiency, coolness etc. Other companies try to build a better phone, but they don’t have a better narrative.
Thanks Greg. Love the article. EVERYTHING is a matter of perspective. I try not to watch too much news because I have two businesses and if I listened to everything the newscast said I would probably give up and stop marketing or even trying to grow my businesses.
Even the great depression made a lot of people into millionaires.
“Albert Rothenberg coined the term ‘Janusian Thinking’, now termed janusian process, to refer to the ability to conceive and use two or more antithetical or opposite thoughts simultaneously, a capacity Rothenberg found to be a component of outstanding creativity.”
http://en.wikipedia.org/wiki/Albert_Rothenberg
Ignoring the talk of the town might also be going to the other extreme. Good to read but not necessarily be emotionally affected.
Ignoring the talk of the town might also be going to the other extreme. Good to read but not necessarily be emotionally affected.
live in another country for a week with no resources except your brain…that would shake up perspective…or better yet survive a plane crash in the wilds of alaska and see how everything you thought you ever knew about yourself changes…knowledge is power.
Fantastic article Gerg! I think the biggest example of Polarized Thinking is the “world economy” the media projects as so bad. It scares people into not being able to make an intelligent decision when it comes to investing. I’ve been telling my clients for years that the worst place to get financial advice is from the media.
Perfect Truth! thanks.
From my perspective, this article is just plain common sense. I can see how there might still be a lot of people out there caught in the emotional roller coaster of what the news says or what the “average” market picture is.
This begs for more detail to me. For someone who knows this already but knows nothing about investing. Where do you start? What resources do you rely on for a more accurate picture of a local market or specific commodity? Looking forward to future posts that may answer these other questions.
Hi Greg,
There is a law for polarity and naturally nothing can exist without the other or the absence of its opposite. Hot is the absence of cold and vice versa likewise the rest
There is always a duality to things for everything is a result of our thinking. You may
think the colour you see is white and somebody else will promptly tell you that’s
because of the absence of black. They are always changing ..ever changing. There
is a very good reason for us to join forces …
I teach people to generate wealth through my MasterMind and you teach them how to save it. A fine combination indeed.
Greg
I think one of the biggest examples as you pointed out is politics . I am from Wisconsin and the level of polarized political think that was on display for the last 18 months during the recall attempt targeting govenor Scott Walker had to be expereinced to be beleived. People so entrenched and committed to their polarized views of the states economic challenges that they were willing to do almost anything to defend them. In the end enormous amounts of emotional energy and financial resources were used up by both sides to end up in a place very similar to the one from which the whole thing started. Time will tell if anything of value was learned.
Thanks for this thought provoking article
Way back in the beginning nineties, when this young german fella (that was me) lived in Canada for a long cold winter and listened to David Suzukis radio show on CBC, he was introduced to the concept that the nature of truth is pluralistic. Changed my life!
The idea that there is wrong and right, black and white etc. causes most of us to consider being right more important instead of figuring out win/win possibilities. All wars are eventually about being right or wrong (and/or about money). Is it absolutely true that there is right and wrong? Is it absolutely true that there isn’t enough? is it absolutely true that a healthy economy needs growth (what we would label as cancer in a body)? is it absolutely true that ‘more’ is better, and that we will become happy through consumption… Thanks for bringing this up in such a practical manner. I love it when wisdom and down to earth thinking come together.
Hi Greg,
YES YES YES!!! Someone understands markets! Thanks!
However, I take issue with your math…
You are not taking into account your original capital, and then your final cash position.
Start with $200, buy $100 of each WWW and LLL stock.
WWW is a winner and you end up with $300
LLL is a loser and you end with $000
Total gain at the end of the day is 300-200=+$100
It took you $200 to make this return of +$100
This is a 50% ROI.
Wiki says:
Return on investment (%) = Net profit ($) / Investment ($) * 100 %
ROI% = $100 / $200 * 100% = 50%
You’re right the numbers don’t lie… as long as you interpret appropriately.
But then again, that’s how Wiki and I see ROI.
Terry Williams
RE Investor, Option Trader, FX Trader
Hi Terry – that was the point I was trying to make.. the math is flawed. Same thing that causes people to think that MER on a mutual fund is only costing them 1.25% , yet it’s actually costing 20-50% of their entire return over time.
I live in Cancun, Mexico. One easy example is how the mainstream US media has focus on scaring tourism away by emphazising the unfortunate violence in which the drug cartels are incurring in very localized areas of Mexico. My country is made of 115 million people who live and work and love and play in peace and freedom and have nothing to do with those few thousands of gang members who are fighting among themseleves creating this violence, and all because the US drug consumption is bigger than ever.
The many americans that still come to visit us can testify how friendly and safe our country is, and that the violence has nothing to do with the common citizen or visitor.
FEAR is what the media is feeding the people. Don´t fall pray to it!
Hi Greg, I have only been reading your blog in the last couple of weeks, but really appreciate the thoughts you put out here. I agree with you that ‘Polarized Thinking creates a lot of emotion’, and yet whether the emotion created is ‘bad’ or ‘good’, we (as a society) continue to engage in this type of ‘clouded’ thinking. It seems to be our only way of making sense of the world at the present moment. However blogs like yours may be a way to encourage us to listen to our own inner guidance on what choices to make for the experiences we need to encounter at that time in our lives. Hopefully in time, we will be part of a society that views good and bad as mere experiences (not essentially right or wrong, but just happenings), which will therefore encourage rational ‘practical insight’ and reverse this ‘don’t question me’ old addage that has been the old way of doing things. Buying into polarized thinking though, I feel, is a fear for that one person e.g., you fear loosing all your money in the stock market – therefore, you will buy into polarized thinking around the stock market. It can also be a way of ‘learning’ about a particular subject we don’t know about, and in doing so, without knowing it unless we put the energy in, we are limiting ourselves to a very restricted view of that subject. I am looking forward to your next thought provoking blog.
I got the point but a $10 going to $30 is not a 300% gain. $10 going to $30 and $10 going to zero when combined is a 50% gain ($10 + 20 +10 – 10 = $30 30/20 = 1.5) Since you started with $20 and end up with $30, then you see that you are 50% ahead (20 x 1.5 = 30).
First sentence should read $20 going to $30 is not a 200% gain.
That was the point I was making – they use these kinds of calculations and most people don’t recognize the problems in the math.
It is in the basic beingness of each individual to be right So, every individual from their point of view explaining their observations or actions is always right. Consequently, this explains a lot of behavior which seems unsound at the best. The capacity to put oneself in the shoes of another is a skill that can be mastered and will substantially improve one’s observations, judgments and communication with another and with himself. Polarized Thinking which is operating from deep rooted fears and possibly limited observation, education and experience can pose a significant barrier to communication and hence understanding. There are many fallacious methods of thinking. Highly charged facts and opinions are part of life. My own opinion is that one of the benefits of an education is that we learn to value others and their uniqueness even if we don’t share their point of view.
I live in Vancouver BC, Canada where we are experiencing (in my opinion) a housing bubble equal to the worst bubbles in the US 5 years ago. While I agree that 1 investor takes a loss creating a gain for another – the use and abuse of credit can “time shift” this relationship where expanding credit cycles make everyone win for a period of time (good market) and when the credit cycle collapses, everyone loses (bad market). In a true free market system free from the distortions created by monetary policy I would agree 100 % with your post.
Greg, when you make money out a crisis, doesn’t this mean speculation? Mors tua vita mea?
Again, Gregg,
A lot of people get into things they do not understand. When you talk about “The Market, etc., I totally understand because besides hearing all the negative news on television, I attended university and majored in Business or rather Administrative Studies. Those who do not understand will obviously blame you. People always look for others to lay blame on. It is also ironic that those who have no knowledge and no experience in certain matters always know how best to do things. For example, have you noticed that people who do not have children will tell you how best to raise your child? Knowledge is good, but experience is great and together, they can create an explosion! You are in the field. You have both knowledge and experience. Furthermore, you have done a lot of research yourself. You became a millionaire, and you are making money when many others are losing money. Why don’t they listen to you and do what you tell them? We need to stop blaming others and do what is necessary to transform our lives for the better for good. That’s why I really listen to people like you, Dean, and Brendon. You guys did not just listen to people who are losing money, you went out and did your own research, put information together, and now you teach exactly what you know, which is the truth. You hold nothing back. You tell it to us like it is. I like that! Real honesty! You rock!!!
Annis