10-year

10-Year Anniversary Promotion (20% off)

Join GuruFocus Premium Membership Now for Only $279/Year

Once a decade discount

Save up to $500 on Global Membership.

Don't Miss It !

Free 7-day Trial
All Articles and Columns »

PRIMAL FEAR

July 05, 2007
insider

Krasimir Karamfilov

0 followers
Last week, I asked two of my neighbors the following question:

If you were given the guaranteed option of getting 10% return in cash from a stock in 10 days, would you buy that stock?

One of my neighbors is a retired teacher and a millionaire. The other is a working architect and not a millionaire. Here’s what they answered:

Millionaire: I don’t do things like that.

Architect: What’s the down side?

There was no down side. A company was paying a special dividend of $11 and I wanted to help my neighbors make some extra cash.

In addition, these two neighbors, who are also my friends, know what I do, but have never asked me for a financial advice. They also know that I consistently get over 30% annual return on my investments, and they continue to buy bonds and mutual funds.

In the end, both didn’t buy the stock.

In the case of my millionaire neighbor, I understand why he didn’t care. He’s 72, and he just beat prostate cancer. He doesn’t have any ambition left in him and his main purpose in life is to be entertained.

My architect neighbor is 54, plays tennis, has a girlfriend, and lives on rent. He wants to own a house, but doesn’t have enough money for a down payment. Why did he reject my offer?

Upon further investigation with more of my friends, I realized that all of them feared losing their money. Only one person, out of 150 people in my Contacts, was willing to listen to my financial advice. They all read my monthly Financial Freedom Newsletter, but none of them did anything to improve their financial situation.

What’s wrong with these people? Why are they so afraid of my free advice? Why are they so afraid of making money and being financially free?

In practical terms, money equals security. Most people fear losing their security. They fear losing it because, on a subconscious level, security means “Life” and lack of security means “Death.” This is also called conditioning.

Also, in broad psychological terms, the way we relate to one thing is the way we relate to all things. If we fear losing a loved one, we fear losing our money, our glasses, our keys, our reputation, and so on.

Lastly, most people lack financial education, which feels like blindness when dealing with money. That’s why they grow their money in non-threatening ways: Savings Account, IRA Account, CD Account, 401(k) account.

In order to conquer this primal fear of dying, one has to understand that money is an abstraction, a concept. It is not real. And fearing something that isn’t real is called paranoia.

When we lose money, we don’t lose anything of value. Money has no true value. People, with their skills and knowledge and emotions, have value. Money is just a result of the value in us.

So next time you fear losing your security by investing your money in stocks, remember that nobody can rob you of your riches. You’re already wealthy.

If your bank account doesn’t reflect that and you’re still unhappy, remember what philosopher Arthur Schopenhauer said:

“Money is human happiness in the abstract: he, then, who is no longer capable of enjoying human happiness in the concrete devotes his heart entirely to money.”

Measured by Schopenhauer’s wisdom, most of us are 50/50: we strive to find happiness, but we also strive to make money. But we can’t be truly happy if we fear losing our security.

Hence, we’re neither happy nor financially free. And this is not good.

Luckily, there’s hope.

Investing in ourselves by learning more about who we are and how we function, trying new things and venturing outside of our comfort zone, letting go of attachments, and finding inner balance helps us develop high human value, from which springs health, happiness, love, and limitless abundance.

I may have asked my two neighbors whether they wanted to make 10% return in 10 days, but what I was really asking them was: Are you willing to be happy and financially free?

They declined. Will you?


By Krasimir Karamfilov, who is the manager of Pirgos Mirgos LLC, an investment company in Santa Monica, CA. He holds two Master's degrees in the arts, which helps him invest creatively.

About the author:

Krasimir Karamfilov
GuruFocus - Stock Picks and Market Insight of Gurus

Rating: 2.7/5 (3 votes)

Comments

billytickets
Billytickets - 7 years ago
Krasimir your story reminds me of Mark Fisher's instant millionaire. This book was instrumental in teaching me about the subconsonsius mind and realizing my goals while most peopel continued being unhappy and poor. I wrote my book and expected my friends finances to improve and them to learn"my system". It didn't happen Instead TOTAL strangers who have read my articles on here have "bought my book and embraced my"philosophy".Which proves that those who have logic and desire like this gurufocus group of"likeminded value investors" who 99% of have the"millionaire mentality". Stick around this group and you will have more faith in your fellow man. This small but intelligent group is educational and friendly and they are GREAT INVESTORS and even better people.I have only"partied" with Vooch. But anyone who wamts to visit Cleveland Ohio can party with me like VOOCH did.peace
armeetofo
Armeetofo - 7 years ago
the most single important thing to be a investor is defeat the fear, fear to lose!

the biggest enemy is youself!
musto
Musto - 7 years ago
krasimir,

don't feel bad about your friends rejection.

There are those who can sell anything to anyone,

and others who can think big ideas but can't sell those ideas

to others.

It's very rare to have those two characteristics together in one person.

My guess is you're an artist and not good at sales.

Your friends didn't buy your ideas because you were too honest with your

presentation. You didn't employ any of the psychological concepts

to take advantage of people's insecurities, or character flaws etc.

How do you think the whole pension fund industry is set up?

It's based on salesmen getting commissions on sales for the products

the buyer may be worse off buying from the beginning.

For e.g. all this private equity boom is financed by debt bought by institutions

for less than respectable investments at spreads only a few points over the treasuries.

Are the buyers really better off with those types investments?

By the way, you wanted to know..

>They declined. Will you?

Why didn't you let us know about this thing earlier?

I think I would not have declined as your friends.

ccyork
Ccyork - 7 years ago


great article


but a question...don't stocks usually decline following a special diviend in equal proportion to the dividend?


billytickets
Billytickets - 7 years ago
armeetofoo is correct. I was always afraid to"borrow" money and invest it. Now i realize that if i cant make more than 6.75% on money annually over a 5 year period then I need to NOT call myself an investor and need to QUIT selling my book. Be on the look out for a new article coming soon.Thanks for motivating me guys.peace
Valuemonkey
Valuemonkey - 7 years ago
Yep. And the nice thing about value investing is that you can do very well even if you are an extremely risk adverse person. Just ask Seth Klarman.

ccyork Wrote:

-------------------------------------------------------

> but a question...don't stocks usually decline

> following a special diviend in equal proportion to

> the dividend?

ccyork
Ccyork - 7 years ago


so what I don't understand is how you can make money from a special dividend when the stock loses an equal amount of value. isn't it just a wash?

armeetofo
Armeetofo - 7 years ago
you are right,

you are too honest: it is not wrong

due to most people are afraid to face the honest, if you want to sell ideas, you need to conqeur people's fear.

"reason": we don't invent new reasons to hold the wrong investments.

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK