Self Development: Success= Compound Efforts + Fire In the Belly

Earlier I posted here a great article by Agora Publishing’s Bill Bonner on how to use ‘efforts’ similar to interest rates: by compounding—the length and quality of exposure determines expertise or specialization or productivity.

Austrian Economist Professor Gary North expands the discussion, see link here.

But this time Professor North’s article comes with an additional tip: Fire in the Belly or PASSION (calling).

The reason I am posting topics related to self-development is to help newbies readers like my children. [I noticed that many readers of this blog are from schools, which I presume could mostly be students]

The lessons here applies to almost anything most especially to investment.

The following are excerpts from Prof. North’s wonderful article supplemented by my headings (blue bold emphasis mine)

1. Compound efforts needs FUTURE orientation

It is not a matter of brains. It is a matter of character. From time to time, we do hear of young men who seem to understand as teenagers how little time men have, and how large the payoff is for hard work, high thrift, and dedication to the mastery of some field. These are the super-performers discussed in books like Malcolm Gladwell's Outliers. They invest their crucial 10,000 hours before they reach age 21.

But it is not just character. It is something else. It is their understanding of time. They recognize that effort and assets invested early in life have a compounding effect. This makes an enormous difference at age 40 or 50, if a person finds the right niche in which to invest his time.

To do this, a young person needs future-orientation. This is exceedingly rare among the young. As Ben Franklin put it in 1750, "A child thinks that twenty pounds and twenty years can never be spent." A few musical artists figure it out early, or at least consent to their parents' demands while they are still forming their habits in life. But few understand it with respect to money.

2 Capital accumulation or wealth is a PROCESS

In Chapter XVIII of his magnum opus, Human Action (1949), Ludwig von Mises presented the case for the importance of time perspective as a source of thrift, capital formation, and wealth. He called this outlook "time-preference." Some people are present-oriented. They want satisfaction now. They will not lend money at low rates of interest. They borrow at high rates. Others are future-oriented. They save at low rates of interest. They refuse to pay high rates of interest when borrowing.

He made a profound observation on why we are rich compared to earlier generations.

Our activities are designed for a longer period of provision because we are the lucky heirs of a past which has lengthened, step by step, the period of provision and has bequeathed to us the means to expand the waiting period.

Mises recognized that modern man is the heir of generations of capital formation and thrift.

3. Future Orientation MUST come with PASSION

FIRE IN THE BELLY

There are good employees who meet the criteria of predictable performance. But they will remain employees if they do not have fire in the belly.

Some people call this character trait an obsession. It probably is. Others call it ambition. It often is. Still others call it visionary. It always is…

The person with no fire in his belly is unlikely to take the risks that mastery require. Mastery is a high-risk endeavor. It is more than routine maintenance. It is a matter of putting your reputation on the line in something like full public view.

Rockefeller and Carnegie had fire in the belly. They helped to create a new, far richer world. Both of them switched to charitable giving when they got old. Their money bankrolled some of the most insidious projects of the so-called New World Order. They were better at piling up wealth than giving it away. They had no skills at giving it away. They would have done more good for mankind in their lifetimes if they had stuck to their knitting. But super-rich men cannot escape their responsibility for managing great wealth in this way. Their piled-up capital will be inherited....

I think a person must have this fire in the belly: his calling. I define calling as the most important thing you can do in which you would be most difficult to replace. This may be a person's occupation, but only rarely. It was an aspect of John Wooden's job, but it reached far deeper than his job. After he retired, his calling remained. His influence grew greater over the years as a result of the foundation of his life, which was also the foundation of his occupational success...

Fire in the belly keeps a person from getting sidetracked. He may go over a cliff.

That’s why applied to the stock markets, I vehemently oppose simulation games (because this lacks the element of the stakeholder’s problem) or short term trades (yes even taught by schools!!!).

This is because any person who is dominated by present orientation extrapolates to a lack of depth in analysis or thinking, in trading—limits to gains while enlarging risks (with emphasis on the frequency more than the magnitude), amplifies emotional approach to the markets, and renders one vulnerable to social conformity rather than rigorous independent thinking which is a prerequisite to getting ahead of the curve.

I hope this helps.

Video: The Secret of Powers of Time

This is a terrific video on time perspective. (Hat tip: Keith Rabin)

It's about our choice in viewing life in terms of future or present/past orientation.

As RSA Animate's Philip Zimbardo concludes "It's really the most simple thing there is!"

It seems simple but it is complex because people have different time scale weightings.

Yet this video goes in true fashion with Austrian Economics, where time preference plays a key role in people's choices and thus shape distribution and consumption patterns.

Here is Ludwig von Mises on time preference... (bold highlights mine)

``Time for man is not a homogeneous substance of which only length counts. It is not a more or a less in dimension. It is an irreversible flux the fractions of which appear in different perspective according to whether they are nearer to or remoter from the instant of valuation and decision. Satisfaction of a want in the nearer future is, other things being equal, preferred to that in the farther distant future. Present goods are more valuable than future goods.

``Time preference is a categorial requisite of human action. No mode of action can be thought of in which satisfaction within a nearer period of the future is not--other things being equal--preferred to that in a later period. The very act of gratifying a desire implies that gratification at the present instant is preferred to that at a later instant. He who consumes a nonperishable good instead of postponing consumption for an indefinite later moment thereby reveals a higher valuation of present satisfaction as compared with later satisfaction. If he were not to prefer satisfaction in a nearer period of the future to that in a remoter period, he would never consume and so satisfy wants. He would always accumulate, he would never consume and enjoy. He would not consume today, but he would not consume tomorrow either, as the morrow would confront him with the same alternative."