December 18, 2017

This is a review of a book that changed my life called, "Think and Grow Rich" by Napoleon Hill. This is probably the best book that I've ever read. You can pick it up on Amazon relatively inexpensively. A lot of the insights that I put into my trading business plan came from this book. What I'd like to do is just review the highlights of this book, but I do suggest you all go ahead and purchase your own copy. My copy is earmarked and underlined, and I refer to it often. It is extremely powerful, and has helped me immensely to become a success in the marketplace.

Napoleon Hill interviewed about 25,000 people before writing his book.  He was asked to do this by Andrew Carnegie.  Andrew Carnegie was one of the richest people at that period, in the Industrial Revolution, and he wanted to know if Napoleon could determine some of the traits of some of the richest people, and could they be duplicated in others. This particular study took over 20 years of him investigating, studying and interviewing. This was not put together lightly, and the results are amazing.

More than 500 of the most successful men this country has ever known told the author their secrets. Napoleon carefully analyzed these men and over 25,000 others over a long period of time. Most said their greatest success came, just one step beyond the point at which defeat had almost overtaken them. Let me read that again. Most said their greatest success came just one step beyond the point at which defeat had almost overtaken them.  The others, that didn't continue on, failed. The purpose of his book is to present to all who want the knowledge the most dependable philosophy through which individuals may accumulate riches in whatever amount they desire. Now, Napoleon Hill talks about riches and we’re talking about success in the stock market, and that definitely relates the money, but riches also relates to all walks of life – your relationships with people and so on and so forth. This book allows you to extrapolate in all different fields.


Step 1 | Desire


The method by which desire for riches can be transmuted into its financial equivalent consists of six definite, practical steps. One, fix your mind the exact amount of money you desire. Two, determine exactly what you intend to give in return for the money you desire. This is just not a take, this is a give, too. Always be conscious of those less fortunate than you, and always be conscious that if you are going to become a success, how are you going to give back? Step three, establish a definite date when you intend to possess the money you desire. Put a timeline on it. Step four, create a definite plan, and that's the business plan that we've been talking about, to carry out your desire and begin at once to put the plan into action. Step five, write out clear and concise statements, affirmation, business plan, everything written down. And the last step is to read your statement aloud. When you read it aloud, you're telling your gray matter, your subconscious, this is who I am, this is what I want, and this is how I'm going to accomplish it.  The object is to want money and become so determined to have it that you convince yourself you will have it. Through some strange and powerful principle of mental chemistry, which she has never divulged, Nature wraps up, in the impulse of strong desire, that something which recognizing no such word as impossible, and accepts no such reality as failure.


Step 2 | Visualize


Step two is to visualize. Faith is the head chemist of the mind. Faith is a state of mind which may be induced or created by affirmations or repeated instructions to the subconscious mind through the principles of autosuggestion.

Self-confidence formula is I know that I have the ability to achieve the object of my divine purpose in life. I realize the dominating thoughts of my mind will eventually reproduce themselves in outward physical action. I know through the principle of auto suggestions, any desire that I persistently hold in my mind will eventually seek expression. I have clearly written down a description of my definite direction in life. Visualize the plan already being executed, and the enjoyment you and others have received.


Step 3 | Auto Suggestion


Okay, once you have things written down, and you have them visualized, step three is auto-suggestions, the medium for influencing the gray matter that this is who you are, this is what you want to be, this is how you're going to get there. Auto-suggestion is a term which applies to all suggestions, and all self-administered stimuli, which reaches one's mind through the five senses.

By reading aloud your desire, you are communicating the object of your desire directly to your subconscious mind. When you're reading your affirmation, don't be thinking about your grocery list, don't be thinking about anything. Stay in the present, and fully be committed to the words you're saying, fully understand them, fully appreciate them, and fully be focused on them as you are communicating the object of your desire directly to your subconscious mind.


Step 4 | Specialized Knowledge


Step four I find very interesting, and that is you need to have specialized knowledge, and specialized knowledge is really pretty easy, if you have a passion for something. I don't care what it is. You have a passion for teaching kids how to play softball; you have a passion for shooting foul shots. You have a passion for balancing your checkbook. You have a passion for raising your children in a positive manner. General knowledge, no matter how great in quantity, is of little use in accumulating – now we're talking about money.


Knowledge is power. It becomes power when it is organized into definite plans of actions, and directed to a definite end. If you have a passion for the stock market, make it your hobby. Make it your passion. Read everything there is to know about it. Read the great traders. Read Market Wizards, by Jack Schwager. Read Bollinger on Bollinger Bands. Read Living in the Zone by Douglas. Read all of these books. Read about some previous traders, successful traders like Baruch. Read and understand and become knowledgeable in the stock market. Take the time, just don't – just don't invest in a stock because you heard that they just came out with a new hamburger. Study, study, study and specialize your knowledge.


Step 5 | Imagination


Imagination is the workshop of the mind, and there are two forms of imagination, synthetic and creative. Through synthetic imagination, one may arrange old concepts and ideas. Through creative imagination, the finite mind of man has direct communication with infinite intelligence. That's pretty powerful. That's pretty powerful.


Step 6 | Organized Planning


Organized planning is the crystallization of desire into action. You've learned that everything man creates or acquires begins in the form of desire. That desire is taken on the first lap of its journey from the abstract to the concrete, into the workshop of the imagination, where plans for its transition are created and organized. Ally yourself with a group of as many people as you may need for the creation, and carry out of your plan for the accumulation of money, and this again is the – to get together with like-minded people and discuss – discuss your financial freedom, and how are you working to accomplish that.

The author analyzed several thousand people, and 98% of whom were classified as failures. 98%!  That boggles my mind, but what's interesting is that's the same statistic I've heard on how many people lose in the markets. The futures market, the forex market, and the stock market.


Let's look at some of these major causes, and we looked at some of these causes when we were putting together our trading business plan, let's see if some of these are similar.

  • Lack of a well-defined purpose in life.
  • Lack of ambition to aim above mediocrity.
  • Insufficient education.
  • lack of self-discipline.
  • Procrastination, lack of persistence.
  • Negative personality. Uncontrolled desire for the “easy way”.
  • Lack of concentration of effort, lack of enthusiasm, egotism.


I'm going into the casino, I'm going to put everything on black, and if it hits, I'm going to have a huge payday, for nothing. I'm going to get something for nothing. It doesn't happen on a long term basis. Research the horror stories of people who have won the lottery, something for nothing is curse not a dream come true.


My Personal Experience

When I first got involved in the stock market, I was a trained mechanical engineer, and our field was based on the laws of physics, and the laws of physics do not change. Gravity is gravity. Formulas are formulas. I could calculate what was going to happen, and I thought my analysis of the market was just about as correct as the laws of physics, and when it would go against me, I would put more money on that trade, and lose, and lose, and lose, and lose, because my ego said how dare the stock market go against me. You've got to check your ego at the door, otherwise the stock market will chew you up and spit you out.



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Step 7 | Decisions


Decision is the mastery of procrastination. Analysis of over 25,000 people who have experienced failure disclosed the fact that lack of decision was near the top of the list of cause of failure. A lot of times there is no right or wrong answer, it's just what you have decided to do at that point in time, and what's the worst thing that can happen? It could be the wrong decision. Guess what? You need to have rules in place that if you're trade goes against you, you get out. It's that easy. Don’t let fears of failure paralyze your thinking. Make the decision, execute the trade. If it's incorrect, get out. Do not procrastinate and let good trade after good trade after good trade go by. Procrastination, the opposite of decision, is a common enemy which particularly every man must conquer.


Step 8 | Persistence


You've got to stay with it. You come up with a rock solid strategy, and you're in the middle of a losing streak, you have to stay with it. You've studied it, you know what you're doing, you just stay with it and execute. The majority of people are ready to throw their aims and purposes overboard and give up at the first sign of opposition or misfortune. Persistence is a state of mind, therefore it can be cultivated. Like all states of mind, persistence is based upon definite causes, among them, definiteness of purpose, desire, self-reliance, definiteness of plans, accurate knowledge, cooperation, willpower and habit.


There are four simple steps which lead to the habit of persistence. A definite purpose backed by a burning desire for its fulfillment, a definite plan expressed in continuous action, a mind closed tightly against all negative influences. Surround yourself with positive people. A friendly alliance with one or more persons who encourages one to follow through with both plans and purposes, that's what you want. That's what you want.


Step 9 | Mastermind


Step nine is the power of mastermind. The mastermind may be defined as coordination of knowledge and effort between two or more people, for the attainment of a definite purpose. Once again, that's why I do the nightly trading sessions and have monthly get-togethers with all my mentees, so that us of like minds, and these are all recorded, too, us of like minds can look at this and talk about it and visualize it and all become a success. It's the power of the mastermind.


Step 10 | The Subconscious Mind


The subconscious mind works day and night, it never stops. You cannot entirely control your subconscious mind, but you can voluntarily hand over to it any plan, desire, or purpose which you wish transformed into concrete form. Going back to the affirmation, write it down, say it out loud, tell your subconscious mind, tell your subconscious mind who you are, what you want to be, and how you're going to attain it.


Step 11 | The Brain


The brain is a broadcasting and receiving station for thought. When stimulated or stepped up to a high rate of vibration, the mind becomes more receptive to the vibration of thought. Man knows but little concern – little concerning the brain, and its vast network of intricate machinery through which the power of thought is translated into its material equivalent. It is now entering a stage which shall yield enlightenment on the subject. There are over 40 billion nerve cells in the human cerebral cortex, and we know they are all arranged in definite patterns. We also know, from scientific studies, that the human only uses about 10% of their total brain power.


Step 12 | The Temple of Wisdom


Now, you’ve worked on all eleven steps, and step twelve becomes your sixth sense, the door to the temple of wisdom. You think about the sixth sense and you're looking at a trade, and you say, “That just looks good”. The chart looks good, I like it, I've seen this before. It kind of goes against some of the rules, but I’m going to do it." It’s not just a whim, it's something that is coming from your sixth sense. The sixth sense has also been referred to as the receiving set, through which ideas, plans, and thoughts flash into your mind.


The flashes are sometimes called hunches, or inspiration. It is believed to be the point at which the mind of man contacts the universal mind. Through the aid of the sixth sense, you will be warned of impending danger in time to avoid it, and notified of opportunities in time to embrace them. The sixth sense is not something that one can take off and put on at will. The ability to use this great power comes slowly through application of all the other principles outlined in this book.


Napoleon Hill summarized everything and said "Being an earnest student of psychology, I knew, of course, that all men have become what they are because of their dominating thoughts and desires."


I hope you all enjoyed this synopsis of Napoleon Hill's awesome book, “Think and Grow Rich”. Do yourself a favor, go to a library, go to Amazon, buy it, read the whole book. Like I said, mine is earmarked and underlined, written in the side of the page. I refer to this all the time, I think it's a great work. It helps me in putting together my trading business plan. It helps me to stay focused on what I want to do, and also remember, you don't just want to take, you want to give back to society.