much easier to describe than to go out and do.
In basketball, it’s easy to draw a play on a chalkboard. It’s the easiest thing in the world: just a bunch of Xs and Os, a few arrows here and there. Go out in front of 13,000 people and a couple of blind referees and pull it off—that’s a whole different ball game. That’s proficiency. Step onto even a college-level court and try to compete with just competency, and watch yourself learn the real meaning of getting schooled.
Proficiency
Closely related to the word competency is proficiency. Proficiency is a higher degree of competency, and that difference in degree can mean the difference between making money and being wealthy. If competency is knowing the play book, proficiency is execution of the play. Competency is the intellectual ascent to the truth. Proficiency is execution.
In my experience, proficiency is a pursuit and not a destination. We can always become more proficient. I hope that you will be more proficient in the stock market next year than you are today, and even more so the year after that. But, as I said earlier, the stock market is a moving target, and as it changes, so will you. As the markets change, as economies change, so will your need for changes in your knowledge base. You can never be satisfied with competence.
People wonder at what moment they will know that they are able to successfully trade stocks and options. I don’t know the answer to that question because proficiency is a process, not an event. I compare it to the drum lessons I took when I was a kid. I could always hit drums, but it sure didn’t sound very good at first—at least not to my parents. Today I can play in my rock band—and we’re not half bad. But it was a long process over many years of practice. There is never a singular moment where you say “yesterday I could not play but today I can.” There are milestones, however. If you have never owned shares of stock, there will be a day when you begin trading on paper or in a virtual account. There will come a day when you invest a small amount of real money. Then the day will come when you short a stock…and so on.
Over time, you travel along the Education Continuum to proficiency. But you can’t always put your finger on when those transitions happen. There are thousands and thousands of drummers more proficient than I’ll ever be (and that is true for investors as well), but there are probably many more thousands who are less proficient. I can play in my rock band and enjoy making music without effort. Because of my learning and practice, it’s now automatic, and it sounds like actual drumming to most people.
Confusing Awareness with Proficiency Will Cost You Money
Part of the value of the Education Continuum is the humility that comes with knowing that if you are an investor, you are also a student. One of the dangers of the stock market is its accessibility. Unlike playing the drums, you can play the market and not realize you don’t know what you are doing. I see some people make the leap to awareness and confuse that with proficiency. Sometimes this happens because of arrogance, and sometimes it’s merely from the excitement of discovery. If you keep yourself in check with the Education Continuum, you can avoid the costly tuition of the school of hard knocks.
Powerful Suggestions for Becoming a Great Student
Are you ready to take control of your education and become a serious student? Of course you are. You’re the one who knows what you want and what captures your interest. You know what is vital to your education and what is trivial. So let’s get down to some studying.
As Robert often teaches, there is a drastic difference between “reading” and “studying.” I’m going to help you supplement your reading with activities that will make this a study of investing that will actually apply to all the asset classes—not just the stock markets of the world. If you like the idea of becoming a serious student, the suggestions that make up the remainder of this chapter will ensure you a more rapid and powerful transformation than reading alone.
1. Discuss what you read and share it with others who share your interest.
2. Set education goals, not just lifestyle goals or money goals.
3. Begin working with mentors.
4. Do it now!
When you reach the end of this chapter, start writing down additional ideas of your own. Remember, you are now an active participant in your learning. Bring your own experience, your own stories, your own examples to your learning. And be ready to participate.
Share Your Discoveries with Others
You don’t have to become an expert to share what you discover. Let yourself get excited about what you’re learning. Share that excitement and your newfound knowledge with someone else.
I have found that teaching is a great way to learn. As you read, keep a pen or pencil handy to mark the sections that really resonate with you or that you feel you need to review. Write down notes in a journal or notebook, adding your own thoughts or examples. Sharing those notes and sections with someone else will help you remember what you learn. Explaining concepts to someone else will help you keep things simple and putting the ideas into your own terms and your own examples and stories will cement them in your brain. You will find that you can remember the things that you read and then share much better than the things you just read and keep to yourself.
Check out the Cone of Learning developed by Edgar Dale. Years ago he discovered that reading alone was actually one of the least effective ways to learn something new.
Source: Cone of Learning adapted from Dale, (1969)
Consider forming a group with two or three friends who are reading this book at the same time you are, and then meet for breakfast once a week to discuss what you’re learning. Be sure to steer clear of forming too many opinions too quickly. Just focus on what lessons are being taught, being sure to build on each section as you learn.
Review Your Education Goals Now
At the beginning of any journey, it is a good idea to set some goals. It’s not uncommon to have lifestyle goals. And it is not uncommon to have money goals. But few people I meet continue to set significant education goals once they leave school.
As you complete each chapter of this book, remember to keep setting education goals.
Lifestyle Goals
I’m sure that you and I will always have the desire to improve our lifestyles. We all have that in common. You can think of some of these specific desires for improvement as lifestyle goals. As I travel the world and speak at various events I often ask my students to list a few of their goals. Here are some common responses:
• I want to quit my job.
• I want to own a house on the beach.
• I want to own an exotic car.
• I want to travel the world.
• I want to be financially free.
• I want to help and serve others.
Go ahead and make a list of your own goals. Not the goals someone somewhere told you should have. But the goals that would make you happy. Write them down. No one has to see them; you don’t have to justify them to anyone. You know why they are important, and that’s enough.
