Beginner's Mind

In the beginner's mind there are many possibilities, in the expert's mind there are few.
Shunryu Suzuki

Beginner's Mind refers to having an attitude of openness, eagerness, and lack of preconceptions when studying a subject, even when studying at an advanced level, just as a beginner in that subject would. (Wikipedia) It is an openness to learning new things. I hope to maintain beginner’s mind as I continue to study and learn about financial issues, not just today but for the rest of my life.

In a New Yorker article entitled “Greater Fools,” the author, James Surowiecki, examines the dreadful condition of basic financial literacy in this country. The Financial Literacy Center has studied this problem for years. Their conclusions are not pretty. “Almost half of those surveyed couldn’t answer two questions about inflation and interest rates correctly, and slightly more sophisticated topics baffle a majority of people. Many people don’t know the terms of their mortgage or the interest rate they’re paying. And, at a time when we’re borrowing more than ever, most Americans can’t explain what compound interest is.”

The consequences of ignorance and foolishness surround us. High interest rate credit cards, repossessed cars, foreclosed homes, massive unemployment, personal and corporate bankruptcy, the recent subprime crisis, and the slow motion train wreck of the American pension system are all the real consequences of financial ignorance and folly.

Annamaria Lusardi, an economist at Dartmouth and the head of the Financial Literacy Center observes that at a time when financial decisions are more complex than ever, “It’s like we’ve opened a faucet, and told people they can draw as much water as they want, and it’s up to them to decide when they’ve had enough. But we haven’t given people the tools to decide how much is too much.”

Surowiecki observes, “Financial literacy studies have discovered an interesting unexpected result. The less people know, the more overconfident in their abilities they tend to be. In a German study, eighty per cent of those surveyed described themselves as confident in their answers on a questionnaire, yet only forty-two per cent got even half the questions right. This is known as the Dunning-Kruger effect: people who don’t know much tend not to recognize their ignorance, and so fail to seek better information…By contrast, well-informed people are more likely to ask others for help.”

James Chapter 1:5
If any of you lack wisdom, let him ask of God, that giveth to all men liberally, and upbraideth not; and it shall be given him.

This is the key to the Silver Eagle Experiment. Every day the participant asks God for wisdom, studies financial issues that are of concern to them, and every day the participant writes something new they have learned in a notebook. Very simple, very effective. As I continue to talk about financial issues with a wide range of people, I observe that the more sophisticated and successful tend to be more open to new ideas, more likely to study, and seek out expert advice. The people who find themselves in desperate straits seem to be more likely to look to lottery tickets or Government programs for salvation.

I continue to study the financial press every day. I read books, even books that are not in agreement with my personal financial prejudices. I try to maintain beginner’s mind, telling myself, “If you were all that smart you would be rich.”

Go and do likewise

Good article:
http://www.newyorker.com/talk/financial/2010/07/05/100705ta_talk_surowiecki