Wealth-building attitudes

Published on Wednesday, 14 November 2012 18:56

Written by John Mangun / Outside the Box

A GROUP of filmmakers came together in 2005 to create a television documentary called Reversal of Fortune. The premise of their film was to give a homeless person living on the street a sizable amount of money and see what they do with the money.

Ted Rodrigue, in his 40s, lives under a bridge in Los Angeles, collecting cans and bottles to sell at a recycling center for his daily food, beer and cigarettes, averaging about $25 per day. He has an old bicycle that he rides making a regular round of local trash dumpsters.

In one of the trash bins, the producers of the film place a briefcase stuffed with $100,000 and a note informing him that this money is his to do with as he pleases.

Ted buys a new bicycle, rents a motel room and takes his buddy Mike to an amusement park. He speaks with his estranged family and makes arrangements to go home to them. Within the first week, he has spent $2,000. Before he leaves for his family’s home, he buys his friend at the recycling center a car as a thank you for the kindness he had been given over the years.

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In the weeks following his return to his mother’s home, Ted spends a lot of time at the local bar, spending an average of $10,000 a week. He then purchases a brand-new $35,000 SUV/truck and another truck for one of his recently acquired girlfriends, rents an apartment and buys furniture.

The producers give Ted free access to a financial planner as well as a counselor at a shelter for the homeless. Ted meets with the financial planner but is convinced that this person is only trying to cheat him through the financial advice. He tells the homeless counselor that he has no intention of getting a job and that now he is set for life. His sisters repeatedly try to convince Ted to get a job but he ignores them.

Six months after receiving the money, Ted is down to $5,000 and within a year he is back on the street living homeless and collecting cans and bottles for recycling with absolutely nothing tangible to show for his cash windfall. At the end, Ted is resentful of the producers for giving him the money and returns to his old lifestyle, if not happy, at least being able to say, “I am contented.”

We have all heard this kind of story before. In the US, most lotto winners spend all their newly found money within five years. However, the extreme nature of these people’s actions leading to their financial ruin is not much different from the common character that keeps the average person from realizing their wealth potential.

Steve Siebold is a motivational speaker and coach who has written a very informative book, How Rich People Think. After countless interviews with the “rich” and a careful examination of how this 1 percent financial class lead their lives, he draws some interesting conclusions.

The conventional wisdom from the people that are not rich is that the only difference is that the rich have money. But beyond that simplistic idea is the fact that some people have larger wealth because they are different in their attitude and thinking.

For stock-market traders, this might be helpful. Siebold says that, “average people believe the markets are driven by logic and strategy. Rich people know they’re driven by emotion and greed.” The average investor believes that they could become successful in the stock market if only they had the inside information or the special insight that the successful traders possess.

Experienced successful investors have learned that the way to make profits is to follow the emotions of the market and go the other way when those emotions get out of hand.

The most clearly defined attitude of the rich is the way they view money.

Average people think money is the root of all evil. Rich people believe poverty is the root of all evil.

Countless books have been written that encourage people to overcome their fear of success. Too many people say they are afraid to fail but that really means they are afraid of success. Siebold discovers that average people set low expectations so they’re never disappointed. Rich people are up for the challenge. Average people long for the good old days. Rich people dream of the future.

My conclusion from reading Siebold is that rich people view wealth as a friend and do not think that money is a necessary evil. They nurture and build their relationship with wealth and become more financially successful.

E-mail to mangun@gmail.com, web site is www.mangunonmarkets.com, and Twitter @mangunonmarkets. PSE stock-market information and technical analysis tools provided by COL Financial Group Inc.