Fixed Mindsets vs. Growth Mindsets
Updated: Apr 5
What do I mean by fixed mindsets? Well, we're going to ensure that our...
Yeah, what do you mean by Fixed Mindsets?
Great question, Tom. And I want everyone to think of it as one of two possibilities.
There are two kinds of people in the world, right?
I know there's a ton of jokes about that - there's memes about that. There are stories galore, ad infinitum about that. But I want you to focus on the concept for a very specific, positive mental attitude purpose.
I'd really rather focus on the jokes.
I'm sure you would, but anyone can do that. Instead, let's dig into this goldmine.
I said jokes, I didn't say metaphors.
Right, well, a fixed mindset, in a very simple and short way, is a mindset focused on limited outcomes.
If you or anyone you know, has a mindset on any topic of "if you get some of that bit of money, then there's less of it for me to have", that's a fixed mindset.
It's possible for you to have that mindset only about one topic, like the stock market, and not about other topics.
The fact is that usually one mindset or the other will dominate your thinking.
And is that really a bad idea?
Let's see! Take a friend of yours, a friend...
Who has friends?
Well, you probably don't, Tom, but most people do.
Suppose you have a friend. And, even more, you and that friend are the only two people in the world.
Yeah, okay, let's make sure we get our planet straight.
There are the two of you, there's food service, recreational services, you know the necessities of life,
And there are 10 cars.
That's the whole world?
Yes, at least in this scenario.
Yes, in this example...
What is this? 1902?
No, DT. Henry Ford started the Model T Thing in 1903, so I'm thinking the ten car thing would have been long past by then.
You may have noticed my being a little distracted there. Wait, was that a stock market crash?
I sure did notice Doubting Squirrel, but to continue, each one of you would get five of the cars.
And for whatever reason,
It could have to do with money or insurance or circumstance,
Your friend gets six of the 10 cars.
More than half, right?
Yep, that's right.
I see where this is going.
That means that you can "only", and please imagine big air quotes around the "only", have four cars.
Less than half.
You are without question a math genius.
Thanks, and you're the money genius.
I thought you'd never say that!
Who may or may not still be my friend...
Okay, focus everyone. This friend has six of the 10 cars and you have four.
Your friend has more than you do.
That's okay with a fixed mindset isn't it?
Not even a little bit! In a fixed mindset world, this is horrible.
In your mind that person has won and you have lost.
They have more than you. They will have more money in savings, more money in retirement than you do.
But there's more isn't there?
Yes, in reality, but in the fixed mindset there's only so much to go around.
That's the key phrase.
And instead of "money in" savings or retirement like a second ago, people get "money from", money from savings, money from family, money from friends.
It applies to everything. It could be jealousy that you have against a co-worker.
Yeah, yeah, I hate co-workers. Yeah, I should be the only one in charge. I mean, not only in charge but the only one who ever benefits!
(Whistling briefly) Let's say you're at a large office, or a manufacturing plant, or whatever.
But there would be co-workers there.
Oh yeah, dozens of them, all with varying degrees of college experience, just like the majority of workers.
You might even view it as being yourself versus all the co-workers at, say, promotion time, or bonus time, or salary increase time.
Hey! You've been in that situation. At a really great tech company as I recall.
True. That's a great example of a fixed mindset. It's just like it is in most people's family budget. There's only so much to go around.
That's true, isn't it?
No, it is just not true.
In fact, you can even have a growth mindset. That's right, a growth mindset.
Oh, you're going to say that everybody needs to write that down.
And everybody needs to write that down.
Fixed mindset. No. Growth mindset. Yes.
It's a good idea, and we should practice and strive to get there. Now.
Whatever it takes, right?
Sort of...We also need to be kind to ourselves and forgive ourselves.
If we have a goal for something, and we don't make it today, then we start tomorrow fresh.
Not making it today doesn't mean quitting before tomorrow.
Still strive tomorrow. In the long run, you'll feel better.
Patience too, right?
Absolutely. Like I said at the top of this pod,
Whatever you do now will make you happy about a month from now, or three months from now or six months from now.
Or in the case of investing five years from now or 10 years from now or 20 years from now?
Yes, thanks DT! As long as you're patient, as long as you understand the difference between the fixed mindset and the growth mindset.
We'll come back to that concept, with some more examples. Right after the break.
Right before the break, I mentioned examples of fixed and growth mindsets.
As I look around me, I see maybe 500 acres.
Maybe it's more. Maybe it's less. I don't know.
I'm terrible at estimating this kind of thing.
You are terrible at something?
Good point, DT. Let's change that.
Ahem, I need work at estimating this kind of thing.
But right now, all I can see are California Black Oaks.
And even though we're about halfway through fire season of 2021 which is a clue that I'm recording this in early September.
May I assume you're getting to the point?
Yep, after I paint the picture, which I'm still learning how to do.
Learning. That old stuff again.
There's a lot of dead grass everywhere so it's kind of an odd juxtaposition if you're not used to it.
Dead yellow-brown grass and green oak trees at the same time.
But acres and acres of it. It's this huge space. You could build places for low-wage workers, and you could build places for upper-income adults.
Yet I hear people complain...
That their special whatever is something?
That, and they're gonna take vast amounts of money to build some stuff over there and we're gonna build all these roads...
And there will be traffic - all this traffic. It'll be terrible. Ah, kuf, got caught up in your stuff again.
And I know that some of this property is privately owned, and that's important, but that sort of thing has been dealt with many times before, both in this country and other countries in the world.
But the point is, is that there is room to grow. And we don't have to put it on a credit card.
How do you know that? Are you a credit card company?
No, don't change the subject. I know because there is proof everywhere you look if you look for it.
There is more than enough, there is more than a fixed mindset.
When we come back from this break, I'm going to make John talk about how this ties into investing.
Okay, so finally the part we've been waiting for.
Really? The part we've been waiting for?
Well, the audience has anyway. You'll like it too!
How do we tie the whole idea of fixed mindset versus growth mindset into investing?
That thought did cross my mind...
When great ideas come along, it is often very important to be quick off the mark.
That means both being fast to decide and fast to act. There are various strategies we use for that like having what's called "dry powder".
But the important thing is to be able to evaluate the thing or hook up with someone who can do that, and then stick with it for the long term.
Is this a sales pitch? Are you going to "fanboy" something?
Take Tesla, for example.
It had a decent start. The first roadster was available to a few people prior to the year 2010. But for the most part, Teslas were not for sale publicly until the Model S came out in the year 2012.
And by today's standards, the 2021 models are vastly superior. All their cars get updated over-the-air about once a month or so.
Right, DT. Thanks. From an investing standpoint, was it smart to get in then? Then being 2012? Yes. You rode it up from nothing to a pretty high number now. That's some serious extra money.
How about a year ago? Was it smart to get in a year ago? Again, the answer was yes and the reason for it is the same: You rode it up from there to a pretty high number now.
If you want to know the right time for this kind of investment, I'm here to tell you that it is any 24-hour period.
Should you get in now? No spoiler here, the answer is again yes. Yes, they are where they are now. And last year was a better idea than now, and 9 years ago was better than last year, and it just keeps going.
Like that pink bunny with the sunglasses whose trademark I'm not going to violate here?
Well, they hope so. And since I own some of the stock I hope so too. These are the financial situations we all want to be in.
Meanwhile, whether you get in, air quotes "late" or not, they're just going to keep on riding a lot higher.
They are making a product that people are going to want to buy that will make their lives easier in the future, even if not everyone can see that right at this moment.
So, you're saying that most investors are visually challenged?
No, I'm not. What I'm saying is that the successful investor is able to see that or feel that as appropriate.
And that takes a growth mindset that takes going where you haven't been before.
A fixed mindset is what you can see.
A growth mindset is the addition of a faith component on top of that, not necessarily religious, but a belief component on top of that, that allows you to go further than what you can see right now.
That's how it applies to investing. And no active financial advisor will ever tell you that.
So Doubting Thomas, come back at that one. Throw all of your body weight against it. I dare you.
How about if I just take us out nicely - - - for a change?
OK then, I call on Doubting Thomas to tell you what you must remember.
Remember, ALL YOU NEED TO DO IS PRACTICE, AFTER WHICH YOU’LL GET GOOD!