When I was younger I fell subject to the beanie baby craze. I had to have them all… especially the limited edition ones like the “Princess Diana Bear” with the "White Rose of England", Ooo that was a good one! The difference is I never wanted them because it was the “cool thing”. I wanted them because somehow, even at the age of 9 or 10 I saw the value in them. I knew that if I was paying a ridiculous amount of money for stupid stuffed animals, then so was everyone else...and if I held onto them long enough, eventually stores would run out and I could sell mine for more. I guess my brain has always been wired that way (surprised?).
The problem is, I held onto them too long. In fact, I never sold them. This was my first ever-entrepreneurial attempt that clearly ended badly. One thing I had to learn the hard way was that with a fad, they hit fast and end fast. By the time I got around to selling my beanie babies, nobody wanted them anymore. So here I am almost 15 years later and I still have like 200 beanie babies stuffed in a cabinet waiting for some love and attention. I keep them as a reminder… in business, yes. But mostly for life, if you wait too long to go for what you want, you often miss out on opportunity.
I started thinking about this today in the middle of my Financial Management class. As Mr. Wiley went on and on about how risk aversion changes the SML slope, my silly brain translated it to life. So here it goes…
Often in the stock market it’s all about perception. What is actually going on compared to how you see it can change how you respond. Is this not true with EVERYTHING in life!? Often the way we perceive things comes from our past experiences, fears, failures, and successes. When you’re younger it’s easier to take risks because you don’t see much to lose… with the beanie baby situation I think I was just being greedy. I wasn’t afraid I would lose out, I just thought the longer I wait, the more money they will be worth, but there’s always a top line before it starts to drop.
The problem is, I held onto them too long. In fact, I never sold them. This was my first ever-entrepreneurial attempt that clearly ended badly. One thing I had to learn the hard way was that with a fad, they hit fast and end fast. By the time I got around to selling my beanie babies, nobody wanted them anymore. So here I am almost 15 years later and I still have like 200 beanie babies stuffed in a cabinet waiting for some love and attention. I keep them as a reminder… in business, yes. But mostly for life, if you wait too long to go for what you want, you often miss out on opportunity.
I started thinking about this today in the middle of my Financial Management class. As Mr. Wiley went on and on about how risk aversion changes the SML slope, my silly brain translated it to life. So here it goes…
Often in the stock market it’s all about perception. What is actually going on compared to how you see it can change how you respond. Is this not true with EVERYTHING in life!? Often the way we perceive things comes from our past experiences, fears, failures, and successes. When you’re younger it’s easier to take risks because you don’t see much to lose… with the beanie baby situation I think I was just being greedy. I wasn’t afraid I would lose out, I just thought the longer I wait, the more money they will be worth, but there’s always a top line before it starts to drop.
The older I got, the more my experiences taught me to fear risk…I learned to put up walls, avoid confrontation, and wait for a “sure thing”. Let’s bring it home, for example, true or false? It’s better to keep your mouth shut and not say what you really feel than risk losing a person, right? Maybe. Usually not, but it’s often what I think…what usually ends up happening is you lose them in a different way- they move on…and there you have it, opportunity lost. I’m not going to get too deep into that it’s just an obvious example I think many have struggled with at some point or another.
Risk aversion is the pessimistic version, but what about being overly optimistic? Is that even possible? I think so. In the stock market those are the people that take high risk with a low rate of return…in other words, they end up buying junk and lose money (hello beanie babies). But how can being overly optimistic be bad in life? To me it’s obvious, how about trusting everyone and everything? You end up getting punched in the face, so to speak, at every corner. You acquire leeches as friends and people walk all over you because you allow it. This used to be me at one point as well…what I had to learn is it’s not bad to love people and want to do everything you can for them, but you have to draw a line somewhere. There has to be a balance, as for most things in life. The beauty is finding that balance between releasing your fears enough to take the important risks and being smart enough to know where to draw the line before you’re taken advantage of. For this, I think may take a lifetime to fully understand…but here are a few things I’ve learned along the way that may help get you started in the right direction:
1.) Test Your Friends- I’m a social butterfly, but there are very few people I actually lean on for advice. They are the ones that have gone through the fire and come out on the other side. They aren’t afraid to tell me the truth and have proven themselves to be trusted. It’s good to test your friends, make sure they are there with your best interest in mind and not just for a good time…I like the “good timers” but they’re a dime a dozen. They don’t get to know my heart. OH! And always, always make sure the people you care about know it before it’s too late. This is something I had to learn the hard way.
2.) Find a Mentor- I have a few mentors that I go to for advice on different things. One is for business, one for spiritual things, and one for life in general. The good thing is they know me, but are disconnected from my daily life so there is less of a bias. They look at the situation with fact and logic, separated from emotion. This is one of my greatest assets in life.
3.) Believe in Yourself- It doesn’t matter if 100,000 people believe you can do something, if you don’t believe in yourself it will never happen. The truth is, if you don’t believe in yourself, you won’t have 100,000 people believing in you anyway. Bottom line, you are the passion behind your own successes.
1.) Test Your Friends- I’m a social butterfly, but there are very few people I actually lean on for advice. They are the ones that have gone through the fire and come out on the other side. They aren’t afraid to tell me the truth and have proven themselves to be trusted. It’s good to test your friends, make sure they are there with your best interest in mind and not just for a good time…I like the “good timers” but they’re a dime a dozen. They don’t get to know my heart. OH! And always, always make sure the people you care about know it before it’s too late. This is something I had to learn the hard way.
2.) Find a Mentor- I have a few mentors that I go to for advice on different things. One is for business, one for spiritual things, and one for life in general. The good thing is they know me, but are disconnected from my daily life so there is less of a bias. They look at the situation with fact and logic, separated from emotion. This is one of my greatest assets in life.
3.) Believe in Yourself- It doesn’t matter if 100,000 people believe you can do something, if you don’t believe in yourself it will never happen. The truth is, if you don’t believe in yourself, you won’t have 100,000 people believing in you anyway. Bottom line, you are the passion behind your own successes.
So there you have it, funny how a 40 minute class about risk aversion in the stock market could translate to all this. It’s obvious I’ve had a lot on my mind lately, just thought I would share with the class. Anyone want to add to this list? Let me know your thoughts.
