If you’re anything like me and you find yourself wondering why most people fail at growing wealth, I’d encourage you to read this letter below. I came across this letter in a stack of files kept in my grandfathers study. What I know about him is that he loved investing and was always fascinated by the stark differences in the success rates of those who were involved. Trust me it’s worth the read.
I have received your letters regarding your frustration with your inability to generate wealth in the marketplace. I understand your frustration and can sympathize with you. I have spent some time meditating on your letters and have formulated what I hope to be an adequate response.
Allow me to begin by pointing out your innate, human disposition for wanting the very best of all things. You want the best neighborhood, school, score, clothes, car, Instagram followers, and foods. What do you do when you get on Amazon.com to purchase a new spatula? You pick the one with the best reviews so long as it meets your budget. You optimize for what’s the best. You buy the best. How do you make decisions about where to work? Who to date? Where to live? Where to eat?
Now, this brings us back to your current quandary on why you are struggling to grow your wealth in the marketplace. And my take on your struggles might be somewhat disturbing to you, so please don’t misunderstand me.
I would like to suggest for your consideration that it might not be your fault that you fail to generate wealth in the market. For you are human, and to be human is to do the exact opposite of what is required to grow wealth in the market.
Humans buy the best and dump the worst. Humans compete and compare based on acquiring the best of everything. And when something is the best, it is priced as such because of the unshakable forces of supply and demand.
You are failing because you are playing a game by the rules of your human nature and not buy the rules of growing wealth. You might laugh at my assertion here, but the truth is that growing wealth is not complicated. In fact it’s easy. But most people who play the game are unwilling to play the game by the rules of building wealth, not by the rules of their human nature.
Growing wealth in the market requires humans to act contrary to their nature. That is to buy things at their lowest and sell at their highest. But this advice doesn’t make a lot of sense in the context of every day human experiences, because we typically don’t see our day to day experiences in this light.
So let me reword this advice. Growing wealth in the market requires humans to act contrary to their nature. That is to want what others don’t want – to buy low. And to not want what others do want – sell high.
If you still aren’t with me, try this. You have to be the person who wants the opposite of everyone else. You must want what others don’t want. And not want what others want.
Consider for a moment, that humans all desire the same basic things – certainty, love, significance, growth, variety, contribution. The manner we might seek to fulfill these desires might vary widely, but when you boil it down, we are all after the same things. Our human nature is programmed to go after these 6 things even though we might try to attain them in different ways.
Take for example the stock market. Why is it that the crashes are so fierce and the bull markets are so ferocious? Most human players are playing the game by the rules of their nature and not by the rules of growing wealth. They sell when shit hits the fan and their cousin Louie in Hawaii is selling everything too. And they only buy when the ticker tape is green with plus signs.
Sure, you might point out that you haven’t always lost playing by the rules of your human nature. But let me point out that even a blind squirrel finds a nut every once in a while. If you spin the roulette wheel enough times, you will win. Does that mean you’ve discovered the secret number that will yield consistent wealth building outcomes? Probably not.
How about the real estate market? What could be better than buying a house in the best part of town with the best school district? While this is likely a great decision for your family’s safety and well being, it’s probably not going to grow your wealth in a meaningful way. Especially if you’re the one using the toilets in that home.
If you’re buying a home in the best part of the city, you’re likely paying top dollar and getting what you pay for. But again, this isn’t a wealth building strategy as your reward will be in your consumption.
So this brings me back to my core point – The reason you’re failing to build wealth is because you are playing the game of building wealth by the rules of your human nature, not the rules of the game itself.
There is nothing more difficult than buying what no one wants. Especially because these opportunities are either during times of great panic or at least during times of great asset specific turmoil. It’s incredibly difficult to be the only one buying and the only one selling. But that is exactly what you must be willing to do if you want to grow your wealth.
Now this is if you want to push your money to extraordinary rates of growth. And this is only if you believe yourself to be capable of acting in opposition to your human nature with large portions of your life’s wealth on the line. I will tell you the sad truth that most people cannot successfully manage this. Their human nature is too strong. There’s no shame in this. But there is shame in ignoring this or lying to yourself about it’s truth.
If you learn that you are like most people and are unable to act in opposition to your human nature, might I recommend that you stop investing in growth and start investing in time? Fortunately for us, the laws of capitalism require organizations to push their capital to reasonable and sustainable rates of growth and this is a much safer and assured way to grow wealth.
But first you must decide whether you are able to act in opposition to your human nature or not. If so, you will likely be able to push your wealth to rates of return that few others can. But let me remind you, you would be in a very small minority of individuals capable of this.
If you find that you fall into the majority of people who are unable to switch on and off the programming of your human nature at will, then do not be discouraged. You will simply need to play a different game in order to win. But the details of that game are too much to detail at this time for this weary hand. I encourage you to do some self-reflection and possibly some low-stakes simulations of your control of your human nature. If you find yourself to be in the minority, please do write me. Otherwise, I wish you the best on your journey to building wealth and pray that you find what you’re looking for.
All my love,
Aaron H. Douglas