How to Be Richer, Thinner and Happier... In Five Easy Steps, Part 4

Alexander Green
by Alexander Green, Chief Investment Strategist, The Oxford Club

Part 3

We’ve spent this week discussing how you can apply the same principles to your efforts in investing and weight loss. Yesterday, I explained why it’s crucial to cure your knowledge deficit; to hold realistic expectations; and to eschew all-or-nothing thinking. Today, let’s conclude our crash course in how to become both richer and thinner...

Control Your Environment

I’ve practically made a fetish of telling readers to avoid CNBC and the other “financial porn” channels.

The basic premise of these programs is that you should be in a constant state of reaction: “The federal government has revised GDP growth down a half point. What should you do with your portfolio?”

“The Fed is going to taper its $85-billion-a-month bond buying program. What should you do with your portfolio?”

“Punxsutawney Phil saw his shadow. What should you do with your portfolio?”

This is meaningless noise.

And so are the regular pronouncements of the perennial merchants of doom who use fear and anxiety to sell financial products and spook you out of the stock market, causing you to forfeit higher returns.

Dieters need to control their environments, too. If your cabinets are stuffed with crackers, chips, cookies and cake, you’re going to find it awfully hard to eat healthy. By the same token, you should keep nutritious snacks - like almonds, walnuts and cashews - in your car or bag. That makes it less likely you’ll fall prey to vending machines and fast-food joints.

Stick to Proven Principles

Investors who understand the basics - asset allocation, diversification, trailing stops, etc. - can still see things go awry. Warren Buffett’s mentor Benjamin Graham often commented that an investor’s biggest problem is likely to be his own fallible emotions.

It’s easy to think you will stay the course when times are good. But what really matters is what you do when the dark clouds gather - as they inevitably do from time to time - and the market turns unfriendly.

Sadly, Wall Street is the one place where the customers won’t buy when the merchandise goes on sale. Contrarians know better. Use bear markets as buying opportunities. And if you don’t have the guts for that, at least reinvest your dividends at lower prices. History shows you’ll be well rewarded.

Likewise, don’t say you’re trying a new diet. Say you’re adopting a new lifestyle: nutritious foods and regular exercise. And remember: if you’re not hungry enough to eat an apple, you’re not that hungry. If you want a piece of cake or a bowl of pudding, that is not genuine hunger.

With real hunger, you are hungry for anything (preferably something healthy) and not just craving a particular food. Whenever you’re tempted to eat something unhealthy, walk away for 10 minutes to curb the urge. Trust me, you will never regret in the morning what you didn’t eat last night. And fit feels better than anything tastes.

In sum, there are many similarities between successful investing and healthy, long-term weight loss. The key to being both richer and thinner is gaining knowledge, managing your expectations, thinking realistically, controlling your environment and having the discipline to stick with proven principles.

If you can do this on your own, great. If you need a mentor, a coach or a partner, that’s fine too. After all, that’s why The Oxford Club exists. If you’re not already a member, let me invite you now to join us.

Our specialty is turning dreams into reality... not with magical solutions or secret formulas but with reason, due diligence and uncommon good sense.

Good investing,

Alex

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