Wealth is the result of effective evaluations

Other top investment advisors whom I've studied and modeled in the past year include Peter Lynch, Robert Prechter, and Warren Buffet. To help him in his financial evaluations. Buffet employs a powerful metaphor he learned from his friend and mentor Ben Graham: " As a metaphor for looking at market fluctuations, just imagine them as coming from a remarkably accommodating fellow named Mr. Market who's your partner in private business.... Mr. Market's quotations are anything but [stable]. Why? Well, for the sad-to-say reason that the poor fellow has incurable emotional problems. At times he feels euphoric and we can see only the favorable factors affecting the business, and when he's in that mood he names a very high buy-sell price because he fears that you'll snap up his interest and rob him of imminent gains. At other times he's depressed and he can see nothing but trouble ahead for both the business and the world. On those occasions he'll name a very low price since he's terrified that you will unload your interest on him.... But like Cinderella at the ball, you must heed one warning or everything will turn into pumpkins and mice. Mr. Market is there to serve you, not to guide you. It is his pocketbook, not his wisdom, that you will find useful. If he shows up someday in a particularly foolish mood, you are free to either ignore him, or take advantage of him, but it will be disastrous if you fall under his influence. Indeed, if you aren't certain that you understand and can value your business far better than Mr. Market, you don't belong in the game." Clearly, Buffet evaluates his investment decisions quite differently from those who are extremely worried when the market crashes or euphoric when it soars. And because he evaluates differently, he produces a different quality of result. If someone is doing better than we are in any area of life, it's simply because they have a better way of evaluating what things mean and what they should do about it. We must never forget that the impact of our evaluations goes far beyond hockey or finances. How you evaluate what you're going to eat each night may determine the length and quality of your life. Poor evaluations of how to raise your kids can create the potential for lifelong pain. Failure to understand someone else's evaluation procedures can destroy a beautiful and loving relationship.

The goal, then, is to be able to evaluate everything in your life in a way that consistently guides you to make choices that produce the results you desire. The challenge is that seldom do we take control of what seems like a complex process. But I've developed ways to simplify it so that we can take the helm and begin steering our own evaluation procedures, and therefore our destinies. Here is a brief overview of the five elements of evaluation, some of which you already know, and the rest of which we'll be covering in the following chapters. Below you'll find an arrow pointed toward twin targets. This diagram demonstrates how our Master System of evaluation works. Let's review the five elements one at a time and add each to the diagram as we go.

1) The first element that affects all of your evaluations is the mental and emotional state you're in while you're making an evaluation. There are times in your life when somebody can say one thing to you and it will make you cry, while other times the same comment makes you laugh.

What's the difference? It might simply be the state you're in. When you're in a fearful, vulnerable state, the crunching of footsteps outside your window in the night, along with the creak of a door opening, will feel and mean something totally different than if you're in a state of excitement or positive anticipation. Whether you quiver under the sheets or leap out and run to the door with open arms is the result of the evaluations you make about the meaning of these sounds. One major key to making superior evaluations, then, is to make certain that when we're making decisions about what things mean and what to do, we're in an extremely resourceful state of mind and emotion rather than in a survival mode.

2) The second building block of our Master System is the questions we ask. Questions create the initial form of our evaluations. Remember, in response to anything that happens in your life, your brain evaluates it by asking, " What is happening? What does this situation mean? Does it mean pain or pleasure? What can I do now to avoid, reduce, or eliminate pain or gain some pleasure? " What determines whether you ask somebody out for a date? Your evaluations are deeply affected by the specific question you ask yourself as you consider approaching this person. If you ask yourself a question like " Wouldn't it be great to get to know this person? ", you're likely to feel motivated to approach them. If, however, you habitually ask questions like " What if they reject me? What if they're offended when I approach them? What if I get hurt? " then obviously these questions will lead you through a set of evaluations that result in your passing up the opportunity to connect with someone you're truly interested in.

What determines the kind of food you'll put on your dinner plate also depends on the questions you ask. If when you look at food, you consistently ask the question " What could I eat quickly that would give me an immediate lift? ", the foods you may choose will tend to be heavily processed convenience foods—in layman's terms, junk. If instead you asked, " What could I have now that would nourish me? ", it's more likely you'll pull from such food groups as fruits, juices, vegetables, and salads.

The difference between having a Snickers bar on a regular basis or having a glass of fresh-squeezed juice will determine the quality of your physical body, and this has resulted from the way you've evaluated. Your habitual questions play a major role in this process.

3) The third element that affects your evaluations is your hierarchy of values. Each of us throughout our lives has learned to value certain emotions more than others. We all want to feel good, i.e., pleasure, and avoid feeling bad, i.e., pain., But our life's experience has taught each of us a unique coding system for what equals pain and what equals pleasure. This can be found in the guidance system of our values. For example, one person may have learned to link pleasure to the idea of feeling

secure, while someone else may have linked pain to the same idea because their family's obsession with security caused them never to experience a sense of freedom. Some people try to succeed, yet at the same time they avoid rejection at all costs. Can you see how this values conflict might cause a person to feel frustrated or immobilized?

The values you select will shape every decision you make in your life. There are two types of values you'll learn about in the next chapter: the emotional states of pleasure we're always trying to move toward—values like love, joy, compassion, and excitement—and the emotional states of pain that we're trying to avoid or move away from—like humiliation[102], frustration, depression, and anger. The dynamic created by these two targets will determine the direction of your life.

4) The fourth element that makes up your Master System is beliefs. Our global beliefs give us a sense of certainty about how to feel and what to expect from ourselves, from life, and from people; our rules are the beliefs we have about what has to happen for us to feel that our values have been met. For example, some people believe, " If you love me, then you never raise your voice." This rule will cause this person to evaluate a raised voice as evidence that there is no love in the relationship. This may have no basis in fact, but the rule will dominate the evaluation and therefore that person's perceptions and experience of what's true. Other such limiting rules might be ideas like " If you're successful, then you make millions of dollars" or " If you're a good parent, then you never have a conflict with your children."

Our global beliefs determine our expectations and often control what we're even willing to evaluate in the first place. Together, the force of these beliefs determines when we give ourselves an experience of pain or pleasure, and they are a core element in every evaluation we'll ever make.

5) The fifth element of your Master System is the hodgepodge of reference experiences you can access from the giant filing cabinet you call your brain. In it, you've stored everything you've ever experienced in your life—and, for that matter, everything you've ever imagined. These references form the raw material that we use to construct our beliefs and guide our decisions. In order to decide what something means to us, we have to compare it to something; for example, is this situation good or bad? Think of the tennis example earlier in this chapter: is it good or bad, compared to what? Is it good compared to what your friends do or have?

Is it bad compared to the worst situation you've ever heard of? You have unlimited references you can use in making any decision. Which references you choose will determine the meaning you take from any experience, how you feel about it, and to a certain extent what you'll do.

Without a doubt, references shape our beliefs and values. Can you see how it would make a difference, for example, if you grew up in an environment where you felt you were consistently being taken advantage of, as opposed to growing up feeling unconditionally loved? How might this color your beliefs or your values, the way you looked at life or people or opportunity?

If, for example, you had learned skydiving when you were sixteen years old, you might develop different values about the idea of adventure than someone who was rejected every time they attempted a new skill, concept, or idea. Masters are often people who just have more references

than you do about what leads to success or frustration in any given situation. Clearly, after forty years of investing, John Templeton has more references to assist him in deciding what is an excellent investment than someone who is putting together their, first deal.

Additional references offer us the potential for mastery. Yet, regard- less of our experience or lack thereof, we have unlimited ways to organize our references into beliefs and rules that either empower or disempower us. Each day you and I have the opportunity to take in new references that can help us to bolster our beliefs, refine our values, ask new questions, access the states that propel us in the direction we want to go, and truly shape our destinies for the better.

" Men are wise in proportion[103], not to their experience, but to their capacity for experience."

GEORGE BERNARD SHAW

Several years ago, I began to hear about the incredible success of a man named Dwayne Chapman in tracking down and capturing felons who had eluded[104] the law for years. Known to most as " Dog, " he has become known as the top bounty[105] hunter in the country. I was fascinated and wanted to meet him and discover what makes him so effective. Dog is a deeply spiritual man whose goal is not only to catch the felon, but also to help him make changes in his life. Where did this desire come from? It came from his own pain.

As a young man. Dog made poor evaluations about whom he chose as friends. Out of his desire to belong to a group, he joined a motorcycle gang, the Devil's Disciples. One day, in the midst of a drug deal gone bad, a gang member shot and mortally wounded a man at the scene. Panic ensued[106]; the members immediately fled. Although Dog did not commit[107] the murder, in that state there was no line drawn between being an accessory[108] to murder and being the man who actually pulled the trigger. He ended up serving years of hard time, working on a chain gang, in the Texas prison system. Doing time gave him so much pain that he reevaluated his entire philosophy of life. He began to realize that his core beliefs, values, and rules had created his pain. He began to ask himself new questions and to focus on his prison experiences (references) as being the effect of choices he'd made with his previous life philosophy.

This got him to the point where he believed he must change his life once and for all. In the years following his release. Dog pursued a number of colorful careers and finally settled on starting a private investigation business. When he was brought before a judge for back child-support payments (payments he'd been unable to make while in prison and in the financially unstable period following his release), the judge offered Dog a money-making opportunity in lieu of a payment he knew would never materialize. He suggested that Dog track down[109] a rapist who had victimized many women in the Denver area. The judge suggested Dog use the distinctions he'd made in prison to assist him in figuring out what this criminal might be doing and where he might be hiding. Although law enforcement officials had tried unsuccessfully to find this rapist for over a year. Dog delivered him within three days!

To say the least, the judge was impressed. This was the start of a brilliant career, and today, more than 3, 000 arrests later. Dog has one of the best records in the country, if not the best. He has averaged over 360 arrests a year—essentially one arrest a day. What is the key to his success? Certainly a critical factor is the evaluations he makes. Dog interviews his quarry[110]'s relatives or loved ones, and in a variety of ways he elicits the information he needs. He discovers some of the beliefs, values, and habitual rules of the man or woman he's pursuing. He now understands their life references, which enables him to think the same way they would and anticipate their moves with uncanny precision. He understands their Master System and his results speak for themselves.