Success is about willpower

This week’s myth: Invest­ing suc­cess is about willpow­er.

When my now-adult sons, Hunter and Tay­lor, were kids, we used to share with them the same wis­dom I’m sure most par­ents dish up: You become like the peo­ple you hang around. Now Tay­lor’s liv­ing in Hol­ly­wood and Hunter’s mov­ing there to join him, so I’m not sure they took it on board… any­way…

I was remind­ed of this wis­dom recent­ly dur­ing one of my long walks when I was ask­ing Claude to come up with some ideas to think about (what it refers to as “idea seeds”). One it threw at me was:

“Envi­ron­ment design beats willpow­er: You can’t change what you do, only what you’re around — so most self-improve­ment is envi­ron­ment design in dis­guise.”

In James Clear’s Atom­ic Habits, in the chap­ter “Moti­va­tion Is Over­rat­ed; Envi­ron­ment Often Mat­ters More”, he writes:

“Envi­ron­ment is the invis­i­ble hand that shapes human behav­iour.”

The chap­ter talks about “choice archi­tec­ture” and how ’ ”behav­iour is a func­tion of the Per­son in their Envi­ron­ment’ ”(aka B = f (PE)).

Of course, as you can prob­a­bly guess by now, my first thought when Claude remind­ed me about this idea was about kung fu. Being in that envi­ron­ment five days a week for the last five years has def­i­nite­ly shaped who I am right now. Not as a result of any­thing that was said to me direct­ly, just a result of being around a group of peo­ple who take their fit­ness and health seri­ous­ly, regard­less of age or pre-exist­ing med­ical con­di­tions or fit­ness lev­els. It’s an envi­ron­ment which con­stant­ly chal­lenges us, in a fun and friend­ly way, to try our hard­est every day to get a lit­tle bit stronger, a lit­tle bit more flex­i­ble, a lit­tle bit fit­ter, a lit­tle bit health­i­er.

It’s been a jour­ney for me. I start­ed slow­ly, one or two days a week for an hour at a time — and, back then, even that seemed like an enor­mous hur­dle, start­ing from zero. Find­ing that amount of time to com­mit to my health each week felt like a mas­sive com­mit­ment. If you’d told me back then that I’d soon be train­ing 10–12 hours a week, I’d have laughed in your face. I derid­ed peo­ple who trained that hard at any­thing as being emo­tion­al­ly bro­ken (as Chris­sy now loves to remind me).

I start­ed train­ing because I knew I had to change some things about my lifestyle or I was prob­a­bly going to die a lot soon­er than I’d want and there­fore miss out on years being with Chris­sy. But the envi­ron­ment got hold of me. After a while, I want­ed to get a high­er belt. I knew that, in order to do a grad­ing, I need­ed to have bet­ter sta­mi­na, because I was get­ting gassed too quick­ly. Nobody told me I had to grade. Nobody told me I had to lose weight (apart from my GP and car­di­ol­o­gist). Nobody told me I had to train hard­er. I just joined the dots myself. I did it because I want­ed to be like the peo­ple I saw around me. Strong. Vital. Healthy. Fit. I could­n’t get there being a fat geek schlub. I saw a cou­ple of guys like me, who car­ried a lot of weight when they start­ed train­ing, lose it. They inspired me to do the same.

But here’s the thing — I know myself well enough at 55 to know that if I stopped turn­ing up at the kung fu school, and did­n’t replace it with a sim­i­lar envi­ron­ment, I’d slow­ly slip back into my old bad habits. A tub of ice cream once a week as a reward — which even­tu­al­ly turns into two or three tubs a week (yeah, I used to do that). Choco­late, my arch ene­my. Con­densed milk out of the tin — just a tea­spoon, I swear! Hey — where did it all go? I only opened that tin a few days ago… blame my moth­er. She used to put that deli­cious elixir of the gods on my dum­my when I was a baby. It’s wired into my DNA.

So after I made the kung fu con­nec­tion, I got to think­ing about QAV as an envi­ron­ment, a com­mu­ni­ty of like-mind­ed peo­ple. It works the same way, but for the invest­ing part of my brain. I get to talk to TK every week and he keeps the invest­ing part of my brain focused on the prin­ci­ples — ignore the hype, ignore the media. Fol­low the rules. Focus on the num­bers. Stay dis­ci­plined. Don’t eat the tasty FOMO ice cream — a minute on the lips, a life­time on the hips.

TK did­n’t have a com­mu­ni­ty of like-mind­ed investors when he start­ed out, except what he could find in books. We’re luck­i­er. We have a com­mu­ni­ty. Not just TK, of course, but all of the QAV mem­bers who post their returns (and their ques­tions and insights) in our Face­book group. Reminders that the sys­tem works if you work it — which sounds like an AA slo­gan. That’s anoth­er com­mu­ni­ty that works by inspi­ra­tion and com­mu­ni­ty sup­port. My dad got sober in AA, as did I when I was 18 and Chris­sy in her ear­ly 30s. My mum has been in Al-Anon (the less­er-known sup­port group for friends and fam­i­lies of alco­holics) for 45 years because it helps her deal with life. There are lots of great slo­gans they use that we could adopt for QAV: one day at a time, easy does it, first things first, this too shall pass, and my kung fu mot­to — progress, not per­fec­tion.

By the way — being part of an invest­ing com­mu­ni­ty isn’t always a good recipe for suc­cess. It can go the oth­er way, too. It all depends on the com­mu­ni­ty you’re part of.

The 2012 study “Face­book Finance: How Social Inter­ac­tion Prop­a­gates Active Invest­ing” shows that investors in a com­mu­ni­ty will often adopt the strate­gies of the loud­est mem­bers of that com­mu­ni­ty. These loud­est mem­bers are often those who had short-term suc­cess, but not long-term suc­cess. Fol­low­ing their advice leads the oth­er mem­bers to mim­ic their approach, which “may rein­force and even pro­mote reck­less trad­ing behav­ior. This is large­ly dri­ven by bias found among traders in which they devel­op fore­casts of future returns that are mere­ly extrap­o­la­tions of the recent per­for­mance of assets. This leads them to fol­low strate­gies with occa­sion­al out­stand­ing results, but that are less prof­itable on aver­age.”

This study was obvi­ous­ly look­ing at com­mu­ni­ties with­out a rules-based strat­e­gy.

So choose your envi­ron­ment care­ful­ly. Envi­ron­ment will win out, for good or for bad. I’m glad my kung fu school isn’t Cobra Kai. You become like the peo­ple you hang around with.

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QAV Myth Killers is a week­ly col­umn in the QAV newslet­ter, tak­ing apart a piece of
invest­ing con­ven­tion­al wis­dom. Read the series, or
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