UNSHAKEABLE! How to find peace of mind in a world of volatility and uncertainty
I recently read a book by Anthony Robbins titled “Unshakable” I was sure what my expectations for this book was before I read it but wanted to give it a read and see if there were some nuggets in there for me. And for me, there really was!
I like Anthony Robbins very much but sometime I need more than just positive affirmations that he is a master at articulating. I do find value with having a positive mindset and all that but this book was different for me than some of Anthony’s previous material. Tony truly is a master at getting to the very heart of any issue.
Mr. Robbins is very well connected and what he did in this book was have in-depth interviews with 50 of the top financial masters of the universe. To, in his words: “help people gain control over their financial lives so they will not be victims of a game they don’t understand”
Some of the people Tony Interviewed are:
- Jack Bogle, Founder of Vanguard mutual fund
- Ray Dalio, one of the most successful hedge fund managers
- Mary Callahan Erdoes, manager of 2.4 trillion in assets for JP Morgan Chase
- T Boone Pickens, Billionaire Oil tycoon
- Carl Icahn, American investor and Philanthropist
- Warren Buffet, Most celebrated investor on earth
This is just a small sample of the interviews Tony did. Some of the points that they touched on really struck a cord with me and helped me to feel more secure about the markets, the ups and downs and how to keep moving forward in uncertain times. I wanted to share of few take away’s for me from the book.The biggest conclusions? There were many but several are laid out below:
Many of the points outlined below can apply to either the stock market as well as real estate investing.
Timing is key to making money but…
It’s better to invest and make a lot of mistakes as far as timing than it is to do nothing (and leave it in cash)! or sit on the side lines and try to time the market when things look a little shaky
The only problem is what to invest in…..the Stock market at times is no more than a ponzi scheme.
In Unshakeable, Tony Robbins goes to length to expose professionally managed mutual funds for what they are – schemes to take your money.
These are the funds that take your money and invest them across a group of assets and are professionally managed by a highly paid fund manager – These funds can invest in everything from real estate, automotive, or high income producing companies etc. In most cases, these funds charge excessive (and often hidden fees) despite their promise of growth.
In almost all cases, Robbins demonstrates how mutual funds (with charges included) fail to outperform the market. That means if you simply stuck your money in all the companies on the index, you’d be better off than investing in any mutual fund. You can do this via an “Index Fund” which tracks the market, or a section of the market and has much lower fees because these are not professionally managed.
What does it mean?
If you want to invest in the stock market or mutual funds, Invest in index funds rather than professionally managed mutual funds! Over the long hall, these will outperform almost every mutual fund out there!
The book reiterates the point that the whole market is rigged against you. You think you’re getting a good deal but you are not, you are simply feeding the needs of the shareholders of the companies managing the system. The best investor is an educated investor who tracks the index rather than thinking he can outsmart the market or employ a professional team with a mutual fund or similar investment vehicle.
Which leads us to a few principle points
Principle : You Can’t Outsmart the Market
This is how amateur investors lose every time: they think they can do better than professional teams who not only have access to massive resources but also to trading systems that can operate in milliseconds and outbid you every time.
Robbins says that by admitting to yourself that you have no special advantage, you give yourself an enormous advantage. You will do so much better than all those overconfident investors who delude themselves into believing they can outperform and time the market.
Overconfident investors often talk up single stocks telling you how this game-changer is their ticket to early retirement. It rarely happens. Few people enjoy these “home runs”. The best way to win the game of investing is to achieve long term sustainable returns. As Robbins says,
“it’s enormously tempting to swing for home runs, especially when you think other people are getting rich faster than you.”
Principle : On average, corrections occur about once a year since 1900
These are normal correction and are not to be feared. Stay invested during these inevitable downturns because once these occur, the markets generally goes on to surpass the market prior to the downturn.
Principle : Less than 20% of normal corrections turn into bear markets
if you reach a point where you are getting nervous during one of these downturns and sell, you may well be doing so right before the market rebounds. once you understand that the vast majority of corrections aren’t that bad, it’s easier to keep calm and resist the temptation to hit the eject button at the first signs of turbulence.
Principle : Markets have been rising over time despite many short turn setbacks
As an example to this, the stock market averages a 14.2 % drop each year, but despite this, the market historically has ended up with positive returns in 27 of the past 36 years or in other words, 75% of the time! The real estate market also acts in a similar fashion.
Principle : With regards to the stock market, bear markets have occurred every 3-5 years
Between 1900 and 2015 there have been 34 bear markets, in other words, every 3-5 years. More recently, bear markets have occurred slightly less often. In the 70 years following 1946, there have been 14 bear markets, or one every 5 years. I hope you are seeing now why it’s better to be a long term investor and not try to time the market. Equally, you don’t need to live in fear of these inevitable corrections.
Principle : Downturns and corrections are short lived
This was one that really resonated with me.
This what you need to know about bear markets! They are short lived! Tony went on to say that markets downturns are very short in comparison to the overall general upward market trend. So when a downturn happens, don’t panic, stay the course because you know an eventual market rebound is coming If you look at the chat below you will see what has happened in the last 14 bear markets we have see over the past 70 years. These downturns lasted from 45 days to nearly two years. On average, they lasted only about a year!
Principle : Bear markets become bull markets, Pessimisum becomes Optimism!
Do you remember 2008 when it seemed the sky was falling, the banks were collapsing and the real estate market took one of the biggest nose dives in recent history? Back then, did things seem bleak or did it seem like the good times were just around the corner? I can tell you from my prospective…Things looked pretty bad back then! in the 12 months following the bottom in March of 2009, the S&P 500 surges 69.5% Fast forward to 2017, the stock and real estate markets are at all time highs!
Principle : The greater danger is being out of the market!
Sitting on the sidelines could be the costliest mistake of all. if you try to time the market, you will inevitably be on the sidelines when the market rebounds, taking you out of the game on many of the best trading days. This can have a devastating impact on your returns potentially cutting them in half or even to zero over the long haul.
These are some of the points in Tony’s book, I recommend you have a look for yourself. There is so much more there I couldn’t touch on right now.
What does all this mean for me and us as investors both in real estate and the stock market?
-Don’t run at the first sign of trouble, when you do, you lock in a real loss, not just a paper loss.
–Downturns are short lived, don’t fear them.
–Downturns are amazing opportunities to take advantage of. The rebound will be coming, be invested when it comes!
–The markets will continue to rise over the long term despite how bleak things seen at any given time.
These principles can be applied to our real estate investing as well! There are many parallels there.
Having said all this, yes, the markets now are very high and expensive. Many feel a correction is coming. I am one of those, it is coming…I don’t know when but I am not in fear of it. I welcome it! I am ready for it and if we buy right and don’t over pay, we will be fine and come out even stronger on the other side as long as we don’t panic.
I hope Tony insights are helpful to you, Please read the book as there is many more great points in the book that I didn’t touch on.
Please feel free to contact me if you have any questions about this article or investing in apartment buildings in general 510-863-1447
www.jbrealestateinvestments.com
thanks,
Jeff
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