This is your LIFE

Knowledge versus Competence

I hear and I forget. I see and I remember. I do and I understand - Confucius

There are three methods to gaining wisdom. The first is reflection, which is the noblest. The second is imitation, which is the easiest. The third is experience, which is the bitterest. – Confucius

Above are 2 quotes from Confucius to act as the backdrop for my post today.

What is the difference between Knowledge versus Competence?

If you take someone relatively new to the stock market and give him/her a pop quiz on stock market terminologies – be it fundamental or technical – I bet he/she will score highly in this quiz! If we repeat the same quiz on old-timers in the stock market, they will not score too highly as their answers probably don’t fit the “standard” answers…

Why? These veterans would have “internalized” or “adapted” the theories and terminologies to reflect their real life experience; while rejecting those that don’t work.

As newbie, we do what we have been taught in school – quote famous people and sayings to “score” points in exams – forgetting this is not how it works in the stock market... (Hey! I just quoted 2 sayings from Confucius. Ouch!)

Knowledge is WHAT we KNOW.

Competence is HOW to DO IT.

It’s quite fashionable these days to see investors/traders giving themselves (including me) titles:

I am a value investor.

I am a dividend investor.

I am a growth investor.

I am a day trader.

I am a swing trader.

Blah, blah, blah.

But what we all really want to be is a MONEY MAKING investor/trader!

And we all know that takes competence (how to make money); not book knowledge (what we know).

No incantations or invoking of gurus’ names (but boy it sure impress people!) would help us in our competence development if we don’t:

1)     Act independently

2)     Experience the reality ourselves

3)     Reflect on the outcome ourselves

Please don’t steal the reflections of gurus as your own. Don’t believe? Just ask those self-declared disciples of Warren Buffet and ask how much they have made so far… You can easily substitute Warren Buffet with any famous guru – be it Peter Lynch, George Soros, Jim Rogers, etc. Ask and run away!

You may also want to take a peek at my previous post:  Are you the Opinion leader or Follower?

Be a first rate you!

Not a 2^nd rate or 3^rd rate Warren Buffet.

Be yourself! Stand tall, walk straight.              

          

          

         

Let our children learn “that” language so they don’t fall behind

The English language at Elizabethan times was merely a local “dialect” that’s part of the Germanic language family.

For the nobility and the intellectuals in England at that time, French was used instead to set themselves apart from the “common folks”.

It’s with the advent of Shakespeare that the English developed the self-confidence that it’s OK to speak with pride in their mother tongue.  

Of course, another main driving force of this new found confidence and self-believe is it coincides with the reign of Queen Elizabeth the first - when Britain defeated the Spanish Armada in 1588. Spain was the strongest and wealthiest European power at the time.

This set forth the foundation for Britain to rule the waves and the expansion of the British Empire, challenging the other European powers for world domination (Land grab? It’s definitely not spreading democracy and world peace!) And who can forget the spectacular naval victory at the Battle of Trafalgar during the Napoleonic wars?  

New markets emerged for British traders and manufacturers. (Although I wouldn’t call it free trade)

The sun never sets in the British Empire. This empire was so vast that even after the sun did finally set for the British Empire, English is now the most widely used language today – just add all the countries in the British Commonwealth plus USA and you can see how many countries have English as their first or second language. OK, Americans may have a different opinion as they speak “American” – not English. It’s a bonus! So we include additional countries that speak “American” – Taiwan, Philippines, Korea, Japan, and the Caribbean countries.

It’s a combination of three factors: cultural renaissance, economic power and military might that elevates a language to global prominence.

And for those non-British people in the colonies that can speak English, they have more opportunities opened to them and they enjoyed a different social status amongst their “local” peers.

Fast forward a few hundred years to today, and we see a new power emerging from her sleep…

I am amazed at the number of Koreans, Japanese, Europeans, and Americans that are now learning and speaking “that” new language during my travels and work assignments.

Perhaps a financial legacy that we can leave behind to our children has nothing to do with dollars and cents. It’s a gift of language?

Note: I am not advocating giving up English. Oh no! Britain went into decline long ago, but English is still widely used. English will not go away anytime soon. Yes, even if USA one day is no longer the sole superpower of the world.

If you call yourself an investor or trader, surely you would understand diversification or making a hedge. So encouraging our children to be bilingual – in English and “that” 2^nd language could be a wise move.

Heads we win; tail we win too!