To thrive during the currency wars, we can’t become a victim of believing in our own hype. Today, markets demand flexibility and adaptability to cope with extremely volatile asset price behavior. Believing our own hype will lead to a rigid refusal to adapt and an unhealthy adherence to failing strategies. Today, I’d like to take an opportunity to incorporate one of my favorite topics, mixed martial arts and the recent “stunning” upset of Holly Holm over Ronda Rousey at UFC 193, into applicable lessons for the global currency wars. For those of you that don’t follow mixed martial arts, Ronda Rousey was widely considered to be the best pound for pound MMA fighter in the world, by far, before she recently lost to Holly Holm, a 19 time world boxing champion, last week in a UFC sanctioned title match in Melbourne, Australia.
Before you tune out if you have zero interest in the fight game and mixed martial arts, even if this is the case for you, there are incredibly important lessons for an investor that can be extracted from analyzing why Rousey lost to Holm. In a subject as dry as global finance, many of you that have followed me for years know that I like to extract lessons from other areas of interest and relate them to investing strategies to turn typically dry subjects into a more compelling and interesting read. In the past, along these lines of combining seemingly disparate topics, I’ve written articles titled, “7 lessons I learned from a Navy SEAL”, “7 More Lessons I Learned from a Navy SEAL”, and “How Bruce Lee Made Me a Better Investor”. Additionally, for those of you that are Rousey fans, don’t tune out of the podcast in the first 5 minutes. My admiration and respect for Holly Holm does not mean I am disrespecting Ronda Rousey, though I am sure that those that lack critical thinking skills (see the Problem with Education Today for further explanation here) won’t be able to understand that it is possible to respect and admire both Holly Holm and Ronda Rousey, and that these two opinions are not mutually exclusive events. Furthermore, it is still very possible to point out flaws in Rousey’s game plan against Holly Holm, while still retaining the utmost respect for Rousey as a fighter. I have nothing but respect and admiration for Ronda Rousey as the female trailblazer in the UFC and as a champion, and I have no doubt that Rousey will return stronger and better than ever.
In the below maalamalama podcast, I discuss how Rousey’s coach, Edmund Tarverdyan, seemed to buy into the hype that surrounded Rousey. Instead of warning Rousey not to become a victim of her own hype, Tarverdyan inflated Rousey’s ego by feeding the hype with ridiculous statements that Rousey could win the gold medal in boxing right now. Rousey undoubtedly has the heart of a champion that would enable her to develop into an Olympic boxing champion if she devoted all her waking hours solely to boxing, but as she devotes many hours of her training to MMA striking that is not allowed in professional boxing, any logical person would understand that you cannot match the boxing skillset of Olympic boxers that have been training for 15 years since they were just 6-years old with just a few years of training in stand up boxing skills, no matter how skilled and talented a fighter you may be. Rousey is an unbelievable champion and still a great fighter, even though many have been quick to unjustifiably tear her down after her loss this past Saturday. It is my opinion that Rousey simply fell victim to believing her own hype that she was a terminator-like unbeatable opponent with no Achilles heel.
In the below podcast, I discuss how we, as investors, often display the same Achilles heel, in our refusal to learn from past mistakes and in our rigid adoption to many investment principles that are either outdated or inapplicable in the real world. This inflexibility, or belief in our own hype, often causes us to refuse adopting new knowledge that is presented to us that can greatly assist us in our wealth preservation strategies. In other words, as investors, many of us alarmingly reject new and incredibly helpful knowledge to continue embracing outdated and unhelpful strategies. This is the type of hubris that always precedes the fall. In other words, if only we would stop believing our own hype, we would stop being our own worst enemy when it comes to adopting intelligent investment strategies that actually work.
About the author: JS Kim is the founder and managing director of maalamalama, a fiercely independent research, consulting and education firm that focuses on providing low-risk, high-reward wealth preservation and wealth building strategies to clients in 30 different countries around the world. He eschews his Ivy League education and his two Master degrees for the practical learning environment of the real world, including lessons learned from his martial arts training, to develop wealth preservation strategies that have outperformed all major global markets in the US, the UK and Australia by very significant margins since their launch in 2007. Please come by maalamalama.com for more information.