Have you ever noticed how vehemently people react when you question something they believe in instead of ever being able to have an intelligent discussion with him or her? In the below video, Chris Hedges, a Pulitzer Prize winning American journalist, author, and war correspondent, nails the reason that explains why it is so difficult to change a person’s mind when they are committed to believing something even when they are confronted with a mountain of evidence that points to the contrary. Chris states that universities have stripped away humanities and other courses that develop critical thinking skills and instead, due to the historical influences of men like Andrew Carnegie and John D. Rockefeller, focus on teaching young men and women “what to think” instead of “how to think.”

Like the proverb that states we have two ears and only one mouth so we should listen twice as much as we talk, when we are confronted with actually having our views challenged, many among us fail to listen, fail to analyze, fail to think, and we instead immediately open our mouths in defense without ever seriously considering the contrary information, often in factual form, that has been presented to us. All of us, including yours truly, have been guilty of responding insensitively and unintelligently in this manner, and I believe that there is a reason for this type of response. The powers that be have used education against us by employing teaching methods within institutional academia that condition us to automatically dismiss any notion that might conflict with our internal belief systems that THEY have programmed into us. If you believe that this notion is far-fetched, consider that from 1900 to 1920, at a time when the direction of American education was very much still being molded, Andrew Carnegie and John D. Rockefeller incredibly spent more money than the entire US government in funding and building the education system to meet their specifications and wishes.

Have you ever thought about why repetition, an integral construct in the effectiveness of brainwashing, is also an integral construct in most institutions of academia in every country of the world? Could education institutions possibly be serving as re-education camps? Should not true learning involve students questioning professors, students questioning students, and professors questioning students not just to repeat and regurgitate pre-packaged responses as is so often the case, but also to critically analyze and to defend one’s positions and arguments? The Powers That Be (TPTB) that attend the Bilderberg conference must secretly smile and laugh behind closed doors at the “unthinking” nature that they have been able to instill within us. Refuse to accept something as fact just because an authority figure, whether a professor, the Vatican, or politician, told you to believe it, and automatically many amongst the sheep will accuse one of pandering to conspiracy theories, even when one can present many facts that support one’s opposition view much more strongly than the widely accepted view.

Because universities are so focused on teaching us “what to think” instead of “how to think”, this dumbing down process has produced many media figures and talk show hosts that respond to any questioning of their beliefs with censorship, an attempt to talk over opposition views, or with infantile ad hominem attacks, no matter how cogent and eloquently expressed the opposition view may be. When I lived in Japan, I learned of a Japanese proverb that states, “The nail that sticks out gets hammered down”, as if uniqueness and individuality were undesirable traits. Perhaps this may be the case as the status quo views us, their subjects, but certainly humanity should strive to achieve creativity and foster critical thought in order to establish a more moral society and to root out corruption.

Furthermore, the deliberate destruction of curricula in institutional academia that fosters critical thinking skills has given way to “hero” worship and learned helplessness instead of self-determination and self-reliance. Again, the status quo delights in the hero culture we have built today. Hero worship leaves one longing for salvation to come on the back of some mythical status without any commitment or accountability from the masses. The status quo delights in the hero culture we have built today. Hero worship leaves one longing for salvation to come on the back of some mythical hero without any commitment or accountability from the masses. The status quo delight in the hero culture that they have built in the minds of the masses as they know that longing for salvation to come from someone else will leave people in a state of learned helplessness-induced inertia and thus create an effective barrier from the manifestation of a “peasant” revolt.

Have you ever noticed how often someone will defend every fault of their country’s President, a huge pop star, or a star athlete as passionately as they would defend their own family if you should dare criticize their “hero” figure? From a logical standpoint, such defenses are the definition of irrational, as no one can truly know anything substantial or substantive about the character or true nature of a public figure with whom they have not spent a single hour. But yet people very frequently subscribe to the absolutely absurd belief that they know the character of their “hero” intimately and will defend this person’s honor (or dishonor as it may be in many cases) to the end of time. In closing, in addition to Chris Hedge’s video, I will leave you with a video I posted nearly a year-and-a-half ago in which I discuss ex-KGB Yuri Bezmenov’s discourse on ideological subversion and how such tactics can produce sheeple that will invariably obey and believe what they are told. Hopefully this will help us identify the ideological subversive tactics that are being deployed against us today all over the world and help all of us to transform into more open-minded people willing to consider alternate viewpoints other than the ones that “the powers that be” commanded us to embrace.

Read Part 2 of this series here.

About the author: JS Kim is the Founder and Chief Investment Strategist for SmartKnowledgeU, a fiercely independent investment research and consulting firm with a mission of helping to stomp out Wall Street fraud and to reinstitute sound monetary principles and sound money worldwide. We sincerely appreciate all of you that continue to “like” our Facebook fan page and “follow us” on Twitter. Through these mediums, we will keep all of you aware of some major campaigns we will be launching in early 2012 to raise global awareness of monetary truth and our proposed solutions to institute sound money.

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I take great offense to Mr. Pandit’s willingness to remove all responsibility for this crisis from “each and every employee” in the financial services industry. What made America a great country in the past was each and every American citizen’s willingness to take personal responsibility for his or her mistakes instead of sloughing the blame onto someone else. What made America a great country in the past was the courageous transparency of American leaders to discuss the truth with her citizens, as painful as that truth may have been, versus the cowardice of deception to dishonorably fool the masses into believing a picture of reality that is a lie.

Today, we have a global financial system that is morally bankrupt, shrouded in secrecy and devoid of transparency. Today, we have men in the financial industry that abuse their positions of authority to plant stories in the media that distort the truth so massively that they must continue to tell more lies merely to cover up their past lies. In fact, the lies of the financial industry have become so repetitive and predictable, that one week before big US banks started to declare their earnings this season, I wrote an article here that stated Big Banks would announce surprisingly positive earning statements based upon Enron-style accounting tricks, and indeed they have.

And don’t expect any negative news when the US Treasury and the US Federal Reserve publicly announce the results of their “stress tests” on the 19 largest US banks by the end of this month. The “stress tests”, most of which have now been completed, were such a joke that even the Federal Deposit Insurance Corporation called them pointless and devoid of credibility. The “real facts” will never be told by any of the men that have led us into the crisis for they have not the courage nor the moral character to do so. The “real facts” are that this crisis was triggered not by subprime mortgages, commercial paper, financial derivatives, collapsing stock or bond markets, but by a fraudulent monetary system. A fraudulent monetary system allows for massive distortions in capital markets that would be near impossible with the implementation of a sound monetary system.

Though the US Federal Reserve has instituted this fraudulent monetary system, the biggest enablers of this fraudulent monetary system are the Big Banks. So yes, each and every employee of the financial industry must be held accountable for their role in this crisis. Ignorance is an excuse only for the weak and morally repugnant, not the honorable. For three years now, I have predicted, in writing, every major step of this crisis, months, and sometimes years before they eventually unfolded. Since 2006, I have strongly advocated gold investments and silver investments as a way to create wealth during this crisis. My predictions have been remarkably accurate for more than three years now not because I have remarkable psychic skills. I have been able to do so only because I have understood that the origin of this crisis is a fraudulent monetary system enabled through the corrupt relationships that exist among Big Banks, Central Banks, and governments.

Every Big Bank in the US creates money out of thin air through a system called the fractional reserve system. In the US, the reserve ratio requirement (RRR) is NOT 10% as most American’s believe. It is in fact, effectively zero percent, a fact that all executives at big banks do not want you to know. This means that Big Banks can effectively create $100 million of loans for every $1 million of deposits they receive if they so desired. If you and I tried to execute the same business plan with our everyday businesses, you and I would be thrown in jail for fraud within two weeks. In essence, due to the fractional reserve banking system, every single dollar we deposit in a bank is effectively being devalued from the moment it leaves our hands. Considering that it takes us a minimum of several months to many years to withdraw and spend all of our savings, the money we withdraw from banks will always have less purchasing power than the money we originally deposited with them. Of course, other factors such as the monetary decisions of other major Central Banks affect the dollar’s worth, but in essence, the above statement, even its simplicity, still holds true. Since I extensively explained how devaluation of the US dollar happens in this article, I won’t repeat myself here.

In addition to the Big Banks, the US Federal Reserve, the biggest bank of all, also prints money out of thin air. When Central Banks and participating banks create money out of thin air, they impose a punitive tax upon all of us, willing or not, that they euphemistically repackage and re-label as “inflation.” However, this is a tax that necessarily must be factored into one’s earning power every year. Let me explain. Consider if in 2006, you lived in California and earned a modest (for the state of California) $155,000 annual salary. From this figure, you had to deduct 33% for federal income tax and another approximate 10% for state & local income tax. Most Americans in this income bracket would believe that their net earnings for the year was 57% of their annual salary, or $88,350. However, most of us forget to compute one last very important calculation to determine our true net salary that year. In 2006, the true inflation rate in the US was about 10.5%. Since inflation decreases the purchasing power of your money, you must account for inflation as an “invisible tax” in your overall tax rate.

Thus, if you earned $155,000 in the state of California in 2006, your true tax was 33% + 10% + 10.5% = 53.5%. Consequently, your net earnings from your salary that year was barely over $72,000, certainly not $88,350 and certainly not $155,000. This is exactly why some years you may struggle to make ends meet even though you may be earning what you believe to be a very decent salary. Big Banks are and have been bamboozling all of us out of our hard-earned money through a fraudulent monetary system. And we have the Big Banks, and in particular, the executives at the biggest banks in America, to thank for our current monetary and financial disaster. These are the “real facts” that men like Mr. Pandit do not want you to know. So will I ever be empathetic towards financial executives at Big Banks? When these financial executives run their companies with integrity instead of dishonor, when they are aboveboard instead of deceptive regarding their contributions towards this crisis, and when they engage all American citizens in an open debate regarding solutions instead of shrouding their meetings in secrecy, I will become empathetic. Until this occurs, then no, because frankly, financial executives at Big Banks are getting a free ride right now in proportion to their level of responsibility in creating our present monetary crisis.

So here are two simple steps every American and every citizen of the world must take to end the tyranny of Big Banks. While these steps are not perfect, they will succeed in changing the financial system in America if you truly desire real change.

(1) If you work for a Big Bank, start looking for another job and quit within six months. If you did not understand how the US Federal Reserve and Big Banks are destroying America, if you’ve read this article, you can not claim ignorance as a defense anymore. If you continue to work for a Big Bank, you are silently agreeing that secrecy, deception, & moral repugnancy is okay. Quitting is not as difficult as it seems. I realized my mistake of working for a Big Bank years ago and left to start my own independent company that could truly serve the interests of my clients. If I was still working for a Big Bank today, I would still consider myself part of the problem instead of part of the solution. If you want to remain in banking and don’t want to start your own firm, obtain a new job with a community bank. You have options other than to work for a Big Bank and contribute to America’s downfall.

(2) If you have large accounts, investment, savings, mortgages, or otherwise, at a Big Bank, withdraw all your assets, close your accounts out and give all of your business to a community bank. Yes, you will lose access to more competitive rates that a Big Bank can offer. Yes, closing your accounts will be a hassle. However, the consequences of doing nothing can devastate future generations of Americans. So consider this action the greatest gift you can give your children and your grandchildren.

According to the FDIC, as of April 9, 2009, there are 8,256 FDIC-insured banks in the United States. Of these 8,000+ banks, perhaps taking action against the 20 biggest banks in America and the world is all that is necessary to bring sweeping reform and change to the US financial industry. However, if all banks enable our fraudulent monetary system, you may ask, Why the Big Banks? Here’s the answer. While it is true that all banks serve as enablers of this monetary crisis, it was specifically the Big Banks such as Goldman Sachs, Citigroup and the US Federal Reserve (as directed by Chairman and former JP Morgan director Alan Greenspan) that actively sought the repeal of the Glass Steagall Act (author’s note: For those of you unfamiliar with the Glass Steagall Act of 1933, it was an act loaded with provisions to specifically prevent the exact scenario we are suffering today). The Big Banks in the US lobbied to destroy the act and won this battle in 1999.

For those of you that understand the revolving door that exists among the US Treasury, the US Federal Reserve, JP Morgan, Goldman Sachs and Citigroup, it should be obvious to you why JP Morgan, Goldman Sachs, and Citigroup have all survived this crisis thus far. Seasoned gold and silver investors have often speculated that data seems to incriminate JP Morgan and HSBC US as the two Big Banks that consistently short the majority of gold/silver contracts in the futures markets. So to re-establish any semblance of free markets again in America, the Big Banks must be broken up. Furthermore, a transition period to a sound monetary system is necessary and it is not realistic to believe that a systemic collapse of the global banking system is necessary for change. We still need banks to operate during the transition period and thus, we should lend our support to small community banks during this time.

During a February 5, 2003 PBS Frontline interview, conducted by correspondent Hedrick Smith, Charles Geisst, a professor of finance at Manhattan College in NYC, stated, “Certainly, Citigroup [and then CEO Sandy Weill] pushed for legislation to get rid of Glass-Steagall, pass what was called HR10 at the time, which became the Financial Services Modernization Act [of 1999]… In the year previous to the Financial Services Modernization Act, the thing that overruled Glass-Steagall, Citibank spent $100 million on lobbying and public relations…They spent a small fortune, a king’s ransom, if you will, getting rid of Glass-Steagall. In fact, when thrown in with other financial firms’ lobbying, it was closer to $200 million over the short period of time.”

Of course, the only real solution to this monetary crisis is to re-instate a monetary system backed by gold and silver. However, until that time comes, the intermediate step to take is to withdraw all support from all Big Banks and re-direct your support to your local community banks. I guarantee you that if we fail to act now, we will find ourselves in a predicament two to three years from now where it will be too late to take action for your actions will no longer have an effect. We have arrived at a tipping point right now and the simple actions above can help save our country and restore it to greatness. No matter your nationality or where you live, the greatest gift you could give every citizen of this world is to take the two steps above and to ensure everyone you know also takes the above two steps.

We still have much to learn from past US Presidents John F. Kennedy and Thomas Jefferson. John F. Kennedy once stated, “The very word secrecy is repugnant in a free and open society”. Thomas Jefferson once stated, “The government is best that governs least” and “When governments fear people, there is liberty. When the people fear the government, there is tyranny.” If we consider how the statements of these great US Presidents apply to our situation today, we will realize that never has secrecy in the US financial sector been greater and transparency less; never has our government governed more; and never have government and Central Banks feared us less.

Consider the $700+ trillion derivatives markets that nobody can seem to properly explain because they are unregulated and opaque, other than the fact that a good percent of this market is destined to blow up. And who do you think invented financial derivative products like Credit Default Swaps that are wreaking so much havoc on the financial system today? The Big Banks. Consider the fact that organizations like the Gold Anti-Trust Action Committee petitioned the US Federal Reserve Board and the US Treasury in 2008 for information regarding US gold swaps, but were denied information under the grounds that the disclosure of this information “would harm certain proprietary interests.” This secrecy regarding the US gold reserves and the secrecy of our $700+ trillion derivatives market is the very secrecy that President Kennedy referred to as “repugnant in a free and open society.” This should serve as a wake up call to us all.

Today, we find ourselves in a state of inertia that is induced by a fear created only by the fact that we have been dearly misinformed about the origins of this crisis. Our ignorance, in turn, is maintained by the secrecy and massive misinformation campaigns propagated by bankers. A misinformed, ignorant populace will remain in a state of inertia but an informed populace can create powerful change. The fact that we have been in a state of inertia for decades has created this obscene situation we face today. However, just as the law of inertia states that a body at rest is likely to stay at rest, the law of acceleration states that force equals mass times acceleration. Thus if we sincerely desire change, we must also seize the personal responsibility to inform all of our friends, our neighbors, and our co-workers about our fraudulent monetary system and the steps that can be taken to dissolve it.

We can consequently then generate mass and acceleration. A body set in motion is likely to stay in motion. This is how we can defeat the Big Banks. America has been in state of inertia not because we are stupid as the Big Bankers think of us. America has been in state of inertia not because we are lazy or uninspired. It has been a long time since the world has looked to America as the shining beacon of freedom and justice, but this is our opportunity, and ours alone, to seize. I am writing this article because I believe in the intelligence, the courage, the leadership, the diversity and the resilience of all Americans. And I do believe you will act upon reading this article.

If you believe that my views need be challenged, I agree, because in any free and open society, open debate and transparency is what leads to the best solution. But whatever you do, ACT. Merely pass this article on to your neighbor to open up a discourse then, for a debate about this is better than no debate at all. Also consider this article from a former IMF economist, Simon Johnson, called “The Quiet Coup.” Please take the time to follow this link and read that article as well. For those of you that have followed my writings for quite some time, you may be surprised that I am recommending an article from a former IMF employee, but trust me, it is an article well worth reading.

Perhaps if we take the small actions I suggest, the small community banks will morph into big banking giants, and we’ll have the same problems all over again. Perhaps, but if we all mobilize and place enough pressure on Congress to pass a Glass Steagall Act II by the time we finish taking the steps above, it will not. The only thing we know for certain is that if we do nothing, we will have sentenced not only ourselves but also future generations of Americans to a very bleak future. However, if we take action now, we can guarantee one thing. We the people will serve notice to the banks that we, and not they, are in control of our inalienable rights of life, liberty and the pursuit of happiness. America’s greatness is rooted in the strength of her citizenry, not her government and certainly not her corrupt banks. As the state of New Hampshire motto goes, “Live Free or Die.”

Consider these Art of War principles: (1) If they are greedy, lure them with goods; (2) Show them a little prospect of gain; then attack and overcome them; and (3) When the enemy is confused, then you can overcome them. All investment firms continuously apply these principles. These principles are the difference between intelligent investors and the great majority of retail investors. Retail investors let themselves be deluded by poor investment strategies of firms that push the majority of risk on to them while allowing firms to minimize their risk. Intelligent investors utilize investment strategies that pushes the majority of risk back on to the market and minimizes their own.

For instance, again, in U.S. and Asian markets (before recent corrections in China, Japan, and India), we were consistently bombarded with headlines from the financial media of record highs and how we are in the midst of raging bull markets, many from employees of investment firms or industry employees, otherwise interpreted as “give us more money now or you will miss out on enormous upside potential.” As I had warned numerous times, caution and waiting for dips to buy was the much better strategy as opposed to blindly following the mainstream advice and jumping on board. One would have been well served to wait for dips in China, Japan and India, and I still maintain that one is best served by waiting in U.S. markets as well.

Currently, I see the most nonsense I have ever seen being reported in the financial media as a result, I presume, of industry salespeople attempting to capitalize on the opportunity to gather more assets from the thundering sheep herd now. So more so now than ever, it is critical for a Zen like state of mind to be applied to investment strategies. It is often said that Zen meditation is of no use if the mind is not clear or empty, that without a correct orientation of the mind, that all Zen practices are in vain. The same is true of investing. If the thundering sheep herd mentality that 99% of retail investors assume, leads them astray, than all investment practices are in vain and will lead to failure instead of wealth. Because there is a mass of misinformation out there, the retail investor must be careful to assume a correct orientation of mind to ensure success in the next year.

As an example of utter nonsense that I have read over the past several weeks, I read one article on a financial news website that stated that China was still a good market to invest in but unfortunately one needs to be much more wary in this very risky market as opposed to the U.S. markets because China, compared to the U.S., is much more politically and economically unstable than the United States. The recent drop this week in Chinese markets, this journalist attested, was proof of the inferior nature of Chinese markets compared to the United States (although the Chinese markets have since rebounded). Another article I encountered stated that now might finally be the time to start looking at the precious metal market segment if you have the stomach for it because of its great risk. Again, these are statements made by people’s ignorance with no semblance to reality.

To address the statement about China, if one would rather struggle to earn 10% in an entire year from investing solely in U.S. markets versus consistently boosting returns of one’s portfolio by earning over 100% gains in Chinese stocks and then experiencing a 10% or so normal pullback in a couple of days, then so be it. Even when these swift and strong corrections happen in emerging markets, if one has any semblance of a sell strategy, it is simple to ensure minimum 85% profits on stocks that are purchased in booming markets. Booming markets, again, are not risky, if intelligent investment strategies are applied. I can only imagine that the person that marked China’s markets as far riskier than those of the U.S. would apply a terrible strategy such as buying Chinese mutual funds, and therefore offer such flawed critiques of the Chinese markets.

Furthermore, to say that a market based upon the worst currency in the world (among developed markets), the U.S. dollar, is economically so much more sound than an Asian market that significantly controls the very fate of the U.S. market (because China owns more than a trillion dollars of dollar-denominated assets), can only be made by a person that is solely interested in selling and not by anyone with even an iota of understanding of the global economy.

Likewise, to say that investing in gold, silver, uranium and so forth is risky is just ignorant and can only be made by someone ignorant of how to make profits in this sector. Even with the current pullback in the precious metal sector, I am still sitting on over 11 stocks with more than 50% gains in less than 9 months, with 8 of these stocks still sitting on more than 70% gains. And I own plenty more that are up more than 30% in the same approximate time period that have nothing to do with the precious metals sector. Furthermore, because most people are extremely skeptical that one can routinely achieve 25% to 30% annual gains, something that I teach people how to do through my online SmartKnowledgeU™ course, I plan to post audited statements that prove this on our website within the next couple of months or so to put this skepticism to rest. If it proves difficult to do this due to limitations on the use of audited statements, then at a minimum, I’ll post performance of our global investment newsletter portfolio. Most people are skeptical of what is possible again because they have been misled for decades by the nonsense that masquerades as fact in the investment world.

Again, this happens because they have never learned the proper “orientation of mind to build wealth” so everything they do in an attempt to build wealth is in absolute vain. The precious metal segment certainly is volatile, but how you invest in this segment removes about 80% of the risk associated with the volatility. If you know HOW to invest properly in this segment, it is not risky at all. But of course, knowing how to invest in this segment necessitates an understanding of economics and politics, something that 99% of the people, including all industry insiders responsible for the chatter spread throughout the media, do not have. Gain the proper mind orientation to build wealth, and a whole different world of investing will open up to you – the difference will be so great that when this transformation occurs, you will wonder how you could have invested “blindly” for almost your entire lifetime.

Technorati Tags: zen, martial arts, art of war, investment strategies, wealth literacy, how to build wealth

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J.S. Kim is the founder and Managing Director of SmartKnowledgeU™, a comprehensive online investment course that uses novel, proprietary advanced wealth planning techniques and the long tail of investing to identify low-risk, high-reward investment opportunities that seek to yield 25% or greater annual returns.

Having traveled through the major markets in Asia, including Japan, Korea, Thailand, Singapore, Malaysia, and China for several years now, with the exception of Japan and perhaps Korea, there was an absence of hip-hop music as recently as five or six years ago. Now, you can’t visit any major market in Asia without hearing hip-hop 24-7. However, even with the widespread penetration of hip hop music in much of Asia, the culture and way of life surrounding hip hop is still largely absent. Throughout much of Asia, only the superficial outer skin of hip hop has been imported – the desire for customized, luxury rides, the fashion, the booming bass and the beats – while the culture, the struggle, the resistance and the politics of hip hop, elements crucial to its birth in the inner cities of America is largely still missing.

Any student of hip hop will immediately recognize the following names – Stephen Biko, Nelson Mandela, Malcolm X, Aung Sang Suu Kyi, and Subcomandante Marcos (aka Delegado Zero), Bob Marley, and even the lone, courageous Chinese warrior that stood in defiance in front of an oncoming tank in Tiananmen Square. These individuals personified the elements that bind those that love hip hop – an unflinching commitment to justice and to freedom, and an unwillingness to compromise their values in pursuit of their beliefs. Even hip hop icon Tupac Shakur, with all his faults, and he had many, spoke openly in his younger years about the need for secondary education to provide knowledge about homelessness, racism, and police brutality versus having mandatory classes about physical education and home making. Awareness, not gym, he claimed, would make the world a better place.

However, ask the neophytes of today that embrace hip hop music because it is trendy and fashionable. Many of these neophytes are likely to stare back at you with blank expressions on their faces. There is no digging beneath the surface to understand what gave rise to a movement so powerful that even as the movement gains more widespread acceptance, there sadly is a very important loss of information and a dilution of meaning that accompanies its greater acceptance by millions. As a practitioner of martial arts for many years, I have personally seen this very dilution at work in the realm of martial arts today. Many schools have demagogues parading as sifus and senseis that are only interested in the monthly fees and thus glaringly omit the most important aspect of martial arts – the spirituality- from their curriculum. The same loss of transference occurs in the world of investing.

Some well known talking head on TV screams, frothing at the mouth, arms flailing, and eyes popping out of his head, that stock XYZ or biotech stocks are booming, and millions of investors follow like an unthinking thundering sheep herd, never taking the time to understand that chances are, the appropriate time to buy has long since passed. And even if the stocks and asset classes that receive the widest attention in the media just happen to still be okay buys, the overwhelming majority of investors will never dig below the surface to understand why they may still be strong buys and therefore will never understand when is the right time to sell. Just as today’s neophytes that embrace hip hop music have absolutely zero understanding of its political history as a movement of resistance against injustice, most investors embrace a hot stock or asset class without any understanding of its “history” as well. It is as if they are “pop investors’, ready to drink in and inhale the next great stock story fed to them without question or examination.

If you understand the struggles of the Stephen Bikos and the Aung Sang Suu Kyis of the world, then you will understand the true meaning of hip-hop. Likewise, if you understand the origins behind a stock’s story or the rise of an asset class, you will truly understand whether or not it is time to buy or sell the stock/asset class. So don’t be a pop investor.

Technorati Tags: zen, stephen biko, aung sang suu kyi, tupac shakur, bob marley, investment strategies

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J.S. Kim is the Founder and Managing Director of SmartKnowledgeU™, a comprehensive online investment course that uses novel, proprietary advanced wealth planning techniques and the long tail of investing to identify low-risk, high-reward investment opportunities that seek to yield 25% or greater annual returns.

This week, in Kaeho’s Corner, my blog entry is going to focus on a particularly zen topic. O’ Sensei, the founder of Aikido scripted many lessons cumulatively that were thought to embody the art of peace. Here is one of those lessons: “The key to good technique is to keep your hands, feet, and hips straight and centered. If you are centered, you can move freely. The physical center is your belly; if your mind is set there as well, you are assured of victory in any endeavor.”

For an investor to be centered is just as important as it is for a martial artist. Yet, I’ve encountered an incredibly large number of extremely pessimistic investors in my lifetime. All they talk about is how money managers have lost them money in the past or they always dwell on every negative aspect of the market they can find even when there are positive aspects to discuss about their portfolios. I’m sure that most of you have heard that a common trait among every successful entrepreneur besides unparalleled determination is unbridled optimism. Successful entrepreneurs always see the glass as half full, not half empty and it is precisely this attitude that eventually fills the rest of their glass.

On the contrary, eternally pessimistic investors unwittingly bring more financial disaster into their lives by focusing on only the negative and continually speaking about the negative. By focusing on the negative, they actually attract more negative financial events into their lives. Just as an un-centered martial artist can never win a duel, an un-centered investor will never grow wealthy through investing.

Mind you, this is very different than having something negative happen to you such as suffering huge losses through an incompetent manager and not taking action. Of course, if you are still in your prime-earning years and building a nest egg for retirement, the only person you should entrust with the management of your investments is yourself. Every investor needs to assume responsibility for his or her fiscal life rather than take the lazy way out and hand it over to someone at an investment firm. This way, you can truly use the concept of being “centered” to build wealth. If you hand your money over to another person at a firm, you have no idea or not if that person is centered or is capable of building great returns in your portfolio.

If this blog seems a little esoteric to you, think about this. Numerous studies have shown that terminally ill cancer patients with positive outlooks live much much longer than those patients that have negative outlooks. Successful entrepreneurs all have perpetually positive outlooks on life even during hardships in their business cycles. And think about the drastic difference between the negative people and the positive people you know. The positive people always seem to draw abundance into their lives while the negative people always seem to have more negative things happen to them.

Being centered is not only crucial for martial artists, it is important for investors as well.

Maholo,

Kaeho

Technorati Tags: wealth literacy, martial arts, O’ sensei

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J.S. Kim is the founder and Managing Director of SmartKnowledgeU™, a comprehensive online investment course that uses novel, proprietary advanced wealth planning techniques and the long tail of investing to identify low-risk, high-reward investment opportunities that seek to yield 25% or greater annual returns.

The stronger one’s chi (spirit) is, the stronger is one’s tuition. My sensei used to compare one’s chi to that of a gallon of water sitting in a shack. He said that even if the gallon of water has been sealed that somehow you would know that the water still wouldn’t taste as good as a gallon of water purchased fresh off the shelves of a supermarket even though you know water does not go bad. My sensei said a person’s chi can be like that. From disuse, it can stagnate and become weak. He said that if you’ve ever been in a crowded and you immediately notice someone that enters the room even though that person is not attempting to draw attention to him or herself, then you have been in the presence of a person with very strong chi.

In investing, it is also important not to let your mind or spirit stagnate as well. Markets are dynamic and always evolving so it is important to not remain committed to a certain strategy as a one-size fits all strategy. Someone with a strong investment chi will remain creative in assessing the best ways to invest money as well as the safest ways to invest money. Flexibility, and not rigid adherence to investment concepts, is a key aspect in being able to remain successful in the investment game year after year.

With certain martial arts techniques, though this may seem counter-intuitive to those that do not train in the arts, the use of brute force is actually detrimental. Certain techniques work much better allowing one’s chi, instead of one’s strength, to dominate. I recall a certain class in which my partner was someone much stronger and larger than I. Still, I was able to move him with ease, so much so, that in astonishment, he kept asking. “ How did you do that?” He was astonished because he did not yet understand the concept of chi and how a strong spirit could control and dominate superior physical strength. The key in being able to do this is to always keep the path of energy flowing rather than breaching it. Rigid inflexibility in martial arts often leads to defeat.

In investing, it is no different. The investor that is flexible and willing to seek out better opportunities in foreign markets when domestic markets appear bleak and that is always willing to seek out the ever evolving long tail of investment strategies and analysis will no doubt be rewarded with much better returns than the old dog that refuses to learn new tricks.

I have often heard top money managers in the United States state that they believe the best place for money is in cash when markets turn downward even during periods when the dollar was losing value and when other markets around the world were booming. They would tell clients stay in cash because of their inflexibility to consider other regional markets. This is a prime example of a money manager with stagnant chi. Their investment outlook is so narrowly focused that there no longer remains any moving, evolving element in their strategies or advice.

If you have a financial consultant that sounds like a broken record, and has been telling you the same thing for the last five years, most likely you have a consultant with no investment chi.

If the broken record approach worked during earlier stages of your investment career, most likely the success of such a stagnant approach was due to the fact that all stocks were swept up in a rising tide, and the approach was much more lucky than effective. However, today’s market is a very different one. And for success today, flexibility and evolution in thought, analysis, and strategy are key.

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J.S. Kim is the founder and Managing Director of SmartKnowledgeU™, a comprehensive online investment course that uses novel, proprietary advanced wealth planning techniques and the long tail of investing to identify low-risk, high-reward investment opportunities that seek to yield 25% or greater annual returns.

It’s ironic because in many ways, global investment houses have become demagogues in this aspect. They have convinced people over decades to “abandon the mind” and to trust them explicitly. Even though the masses of people recognize that the quality of publicly accessible information about investments has grown by leaps and bounds over the past decade, most will still unfailingly “abandon the mind” and blindly accept that the best way to invest is the singular method taught by every global investment house – that of diversification. 

In fact, every single unscrupulous business that only wants your money will try to convince you to “abandon the mind”, including shady investment newsletters, shady investment software programs that make outrageous claims of predicting every market correction and bull run at precise points, multiple get rich at home schemes, and so on.

How many “get rich quick” pitches have you ever heard that present unlimited upsides with seemingly no downside? How many meetings have you had with financial consultants that tell you, “Listen, if you think about it, there is no comparison between the financial products that existed 25 years ago and the ones that exist today. Back then we didn’t offer baskets of foreign currency to hedge against a declining dollar; or caps, collars, and swaps; or commission free trading (Bank of America in the United States has offered online commission-free trades; or private equity funds. The difference between back then and today is like night and day. But isn’t it crazy that our recommended investment strategies (primarily Modern Portfolio Theory of diversification) hasn’t evolved at all?”

You’ll never hear that comment. Instead, you much more likely to hear in so many words, “We’re the experts, trust us, and this is what you need to do with your money” with a subliminal message of “abandon the mind’ thrown in the pitch somewhere. The concept of mu shin ryu or of “abandoning the mind” can both be dangerous and beneficial to an investor. It can be dangerous when one allows oneself to be manipulated by instinctive responses to the play on fear and greed that investment firms utilize to convince you to turn their money over to them. It can be beneficial if one abandons the conditioning of investment firms that their way is the best way, that markets are 100% efficient, and numerous other universally accepted beliefs. To have a free mind in this aspect and to question all questionable theories and strategies imposed upon you will undoubtedly make you a better investor.

I only can imagine that most investors unfailingly accept this rubbish because they don’t know the proper types of questions to ask. If you don’t ask the right types of questions, you’ll get wrong answers until your face turns blue. To assist you, my partner J.S. will compile a list of some of the right types of questions to ask your investment advisor, so keep an eye out.

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J.S. Kim is the founder and Managing Director of SmartKnowledgeU™, a comprehensive online investment course that uses novel, proprietary advanced wealth planning techniques and the long tail of investing to identify low-risk, high-reward investment opportunities that seek to yield 25% or greater annual returns.