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My son is a goalie in hockey, and I think the best advice I ever gave him was he had to keep the emo­tion out of the game. At his level, blowout games are common.

When you are up by a lot of points, it’s easy to get com­pla­cent or an ego, both can lead to a quick turn­around in the game dynamics.

On the flip side, when the roof starts cav­ing in, it’s easy to give into despair, instead of keep­ing your head and work­ing your way out of the rubble.

You can see how the emo­tions come to rule the game as goalies face their chal­lenges. A close game can turn into a blowout as the play­ers give into their emo­tions. In hockey, I often watch the goalies for signs that their emo­tions are start­ing. When they do, it’s game over for the team unless the coach makes a change, or he gets con­trol of them.

The same rules apply to busi­ness and invest­ing, you need to keep your emo­tions out of the game.

In Busi­ness

I once had a client who was cheap. They always asked me for advice on how to improve their busi­ness, then would go and get some­one cheaper to imple­ment my ideas. I didn’t mind, the client often got what he paid for. One time, he did this to me and the prod­uct he got made was so poor qual­ity though, that he got really mad at me. No amount of explain­ing that, since I didn’t actu­ally build the prod­uct and had no con­trol of the fin­ished result, could calm him down…it was hurt­ing his busi­ness, and I was my idea.

Well, much to the con­fu­sion of some friends of mine who knew the story, I helped the client to redo the prod­uct, and it wound up work­ing exactly how I said it would. My friends all though I should just walk away from the client, as I never made any money from him, and it wasn’t worth the stress…

To me, I saw it as a threat to my rep­u­ta­tion though. I needed to prove to the client that what I said was true, before he went to oth­ers and com­plained that I had ruined his busi­ness. The truth rarely mat­ters in life, per­cep­tion trumps truth. It was vitally impor­tant to me to avoid get­ting emo­tional, and fix the prob­lem, pre­serv­ing my reputation.

In Life

When I was in the car acci­dents and lost my income, had no sup­port and face a bleak future I became depressed. I knew I was depressed, I knew why I was depressed, it didn’t make life any eas­ier. It would have been very easy to give into the depres­sion, but I forced myself not to. I’m not say­ing it was easy, or that I was always suc­cess­ful, but I did have a fam­ily to sup­port, so I needed to find a way.

Each day I tried to force myself to do some­thing. Learn some­thing, do some­thing, think of some­thing, just some­thing. Instead of sit­ting around, giv­ing into the emo­tions, I slowly started to change my life. I learned invest­ing, I changed my busi­ness, I devel­oped pas­sive income…

It wasn’t always easy, I remem­ber see­ing the mount­ing bills and won­der­ing if I should dump my invest­ments which hadn’t yet begun to grow in order to pay them off…those are some of the tough­est deci­sions I’ve ever made, but I made them log­i­cally, not emo­tion­ally. I kept my head, and worked my way out of the mess.

In Real Estate

I remem­ber one time I was busy, in a hurry and didn’t do my nor­mal screen­ing on a ten­ant. It turned out to be a dis­as­ter when they got into a domes­tic dis­pute and trashed my place (we’re talk­ing huge holes in EVERY wall, and police involve­ment). I remem­ber look­ing at the place the next day and think­ing how much the repairs were going to cost…

The ten­ants of course, wanted to stay (well, one any­way since the other was going for free rent in jail). Instead of kick­ing them out, I allowed them to stay (they assured me they’d fix the dam­age, but I wasn’t that fool­ish). The rea­son I let them stay though was an unemo­tional one. I needed the place repaired before it was rentable again, this would cost me both repairs and lost rent as the repairs were being done. By allow­ing them to stay, I gen­er­ated prof­its which could help to pay for the repairs at a later time.

My gam­ble paid off and, though they weren’t the ideal ten­ants, I man­aged to gen­er­ate a sig­nif­i­cant amount towards the repairs by the time thy left, min­i­miz­ing my loses.

In Stocks, Bonds, Etc.

Invest­ments fluc­tu­ate, fact of life. I’ve made many invest­ments that have fallen in value from where I first pur­chased them. I can’t con­trol that. In most cases though, my research was cor­rect and the invest­ments turned around and did what I expected them to do. Not always, but more often than not.

It’s best if you don’t fol­low your invest­ments to closely. These days espe­cially, it can be a bumpy ride. You need to trust your­self, assum­ing you actu­ally did your home­work, and ride out the bumps. Back in 1996, you could have bought Apple on the way down, but had you timed it wrong, you may have lost, on paper, even more (maybe 50–75% of your invest­ment) if you didn’t time the bot­tom right. Of course look­ing back today, any price you paid for Apple back in 1996 would look like a bar­gain hav­ing gone up by huge fac­tors (not hun­dreds of times but thou­sands). If you pan­icked, you missed the boat, deals like this hap­pen all the time, but maybe not as great.

Les­son: Trust in your­self, do your home­work, and keep your emo­tions out of the game. If you can’t, things will only get worse.

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