In 2013, I bet big on a cannabis stock. I realized a 1200% gain in six days and felt like I should write a book on stock picking.
I lost the money on my next trade.
You don’t rise to the level of your wins, you fall to the level of your habits.
Tim Grover was the strength and conditioning coach for Michael Jordan. In his book, Relentless, he described an iconic moment after Jordan had won another championship:
“We were back in the locker room, champagne dripping down the walls. I asked him one question, five, six or seven? As in, what time are we hitting the gym tomorrow morning? He snapped back a time and that was it.”
For Jordan, it wasn’t about winning a championship, it was about being ‘The Greatest Ever’. It wasn't a goal. It was an identity.
Jordan started acting like ‘The Greatest’ long before he ever won a championship. He adopted the habits, the discipline, the patience. And, over time, he received the compound interest.
Acting like the greatest ever didn’t mean signing autographs and taking interviews. It meant hitting the gym when everyone else was celebrating.
Our identity is what we do every single day. Nothing more and nothing less.
Goals are important. They help set the direction of our thoughts, they impact decision making and provide our lives with meaning and purpose.
But in the face of competition, both winners and losers have the same goal - so what’s the difference?
Taken from author James Clear, goals are a good start, but habits are more powerful.
For example, I want to age slowly and extend my healthy lifespan. I want to wrestle with my Grandkids and run a marathon in my 70s. This will require some lifelong habits, so I’ve created the identity of an athlete. Because I am an athlete, I train everyday. I fuel my body with high quality, nutrient dense food. I haven’t competed recently, because I don’t need competition to motivate me. An athlete is what I am. So everyday I train.
It is an identity.
I used to take mini breaks from alcohol. Every year I would set a goal to do a month sober. I was always amazed at how good I felt at the end of the month. After I accomplished the goal I would go back to my old patterns. Any realized gains would fade.
Eventually, I became curious about what the compound interest would look like if I extended sobriety long term, so I switched from monthly goals and created a new identity: I am a non drinker.
That was six years ago.
After 12 months, I felt like I had wound my physical clock back five years. After 24 months, I felt what I can only describe as a psychological renaissance - a reprogramming of my self beliefs. The compound interest kept coming. This wasn’t because of a goal, it was the lifestyle - the identity.
I have a goal to publish a book in the next two years. It’s very important to me that I accomplish this.
If my goal is to write a book, then everyday, I will think about my book.
But if my identity is an author, then everyday I will write.
The identity and the habit are more useful to me than the goal.
In 2013, when I picked that winning cannabis stock, my goal in the market was to pick winning stocks. I picked one. And then I picked a loser. I wasn’t an investor. I was trying to make money. It was a goal, not an identity.
Although I didn’t get lucky with stocks, I got lucky with mentorship. I met a future legend in the business, someone that I believe will prove to be one of the Greatest of all time. He taught me about discipline and patience.
He taught me the importance of building a moat before you build a castle. He taught me that if your identity is an investor, then the only goal that matters is that you stay in the game.
I had to slow down. I pumped the brakes on activity, and started building habits. I stopped plowing money into the next private placement or the next hot trade. I started building a war chest - slow drips into safe haven assets.
I am far from retirement. But today, if I needed to, my family could live for a few years off of our war chest - and it is not because I got in early on a hot stock. It’s because of slow, consistent contribution to appreciating assets. Coincidentally, the war chest gives me more confidence to be daring when I want to be.
I am still aggressive in the market, but with the identity of an investor - The habits, the lifestyle and the lifelong time horizon. Ironically, since I stopped obsessing over trying to find ten baggers I’ve made far more money.
Sometimes my portfolio is up, and sometimes it is down. But year over year, I am more wealthy. Getting a win is great, but the trajectory is far more important.
Be patient, stick to your process and in the words of NFL Great, Bill Walsh: The score will take care of itself.