The illusion of Financial Knowledge

In my book, “Winning the Money Game”, I shared a story about a friend named ‘Fred’ (not real name). He was asking me how to start managing his finances and how to invest.

This type of question usually will get me on fire, because I was excited about this topic. I began firing off a series of tips and personal experiences to which most he merely answered, “I already know that.”

Whenever, he gave me the answer, “I already know that”, I will quickly jump to something which I think he doesn’t already know. To my surprise, Fred is a very knowledgeable dude and “knows”, most of the things already.

So in the end, I asked him, “Fred, your knowledge is probably as good as mine, what is your experience in investing so far?” He paused at my question and confidently answered, “Well, investing is just too risky, I have not started and will not start until I get enough knowledge.”

Are you a “Fred”? Waiting to accumulate enough knowledge before you are willing to risk your dear hard-earned money? Don’t get me wrong! I do not wish for anyone to risk their cash, but let me share this, to Not Invest, is a sure way of losing your cash through this pesky guy called Inflation!

But Fred feels that he doesn’t have enough knowledge to move on? He is waiting until he gets to complete his thesis and gets his PHd before he is willing to invest a single cent… But we know that the the best investors aren’t Professors, they are Practitioners!

The best investors, invests!

Let me share with you the other end of the spectrum. Those people who acquire enough knowledge just to get them into big trouble. I was one of them. I started by attending a trading course and then threw my entire savings in. Guess what? I lost huge bucks! OUCH!

I am thankful that our authorities are recognizing this problem and are aiming to educate investors before they get themselves into trouble.

 

 

 

 

 

 

Now, let me share my concern…

In this new rule, investors are required to fill in a form to declare how experience they are before being allowed to trade financial derivatives. If you trade more than 6 trades, you are good to go. If you have less than 6 trades before, you are required to complete an online education session followed by a quiz.

Out of curiosity, I attempted the online education session and the quiz. I think that tremendous effort was put into the design, but alas, the skills taught are very very basic. In fact, I would classify them as non-tertiary skills (in other words, just textbook theories that cannot be applied). If taken out of context, it can be misleading as well.

Nevertheless, I applaud the authorities for taking action to emphasize the need to proper financial education before investing your cash.

Who then should we learn from?

When I was in NTU choosing what subject to major in, I asked my friend for advise. I wanted to do ‘Marketing’ as a major but he challenged me asking, “Does it mean that you will be a better marketer after you major in marketing? If we both set up a business, does it mean you will have more sales than mine?”

That made me ponder… If I want to be a good marketer, who then should i learn from?

Probably Steve Jobs, Donald Trump or Bill Gates rather than Marketing Professors.

Does that mean academics is not useful? Not at all, because they provide basics and are studies of people who had gone the path. My point is that we should further seek knowledge from those who produce fruits.

A book, a seminar very often give the illusion of getting you more knowledgeable or educated, but you know that you really know when you do it and produce results.

 

 

 

 

 

 

 

 

 

Seek practical knowledge, seek it from the right source (people who already produced knowledge)

Come to our free workshop and learn how every single one of us produce consistent results via Value Investing.

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To your dreams,

Mind Kinesis Research Team

 

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