When we hear the expression “confidence game” or “con game”, we immediately think of scams and bunko schemes, but that’s not what this month’s letter is all about. In this letter, I want to deal with something that touches all of us to a certain degree; and in my view is a major determinant as to how well a person does as an entrepreneur or investor. Hopefully, I’ll be able to share some insights that will be helpful to some readers out there. As for you seasoned pros, think of this letter as a sort of literary chicken soup; if your sick, it will make you better; if you’re not sick, it couldn’t hurt.
In my trips around the country I have an opportunity to observe hundreds of people who attend my seminars and who join me on our tours every year. They represent a real cross section of America. Among their numbers I see all age groups. In this egalitarian group, wealthy people routinely rub shoulders with those who must scratch for every nickel. Credulous eager true believers compare notes with incredulous jaded skeptics. Old pros that have attended dozens of seminars, mentor “starters” who try to understand the complex world of creative financing. Brokers, accountants, lawyers, doctors, professors mix and mingle with small business owners, military personnel, investors, retirees, landlords, technicians, and inventors. Among them I’ve noticed an interesting fact:
Despite their differences, some of these people share a common problem that must be dealt with. They lack self-confidence. This was articulated to me by one subscriber who pointed out that many of the ideas expressed in this letter fall by the wayside, unused, because the reader doesn’t have the confidence and self-assurance to put them into practice. This is especially true when legal and tax strategies have been explored. I think he has a valid point. Given that, what can I do to help you become more confident?
Let’s look at successful confidence-building techniques that have been proven over the years. Confidence is a term that describes poise, aplomb, self-assurance, shyness, awkwardness, lack of conviction, and diffidence. All of these terms are traceable to a person’s awareness that another person possesses more skill, talent, knowledge, or experience in a particular situation.
For example, where I might be perfectly self-assured discussing single-family houses, I’d be very quiet in any group that was discussing something I knew nothing about. Or I might be willing to mumble a few words in Italian when accompanied by only English-speaking friends, but wouldn’t say a word if I found myself in a group of only Italian-speaking people.
In other words, a person’s self-confidence is relative to his or her qualifications, with respect to what he or she knows first hand about a specific subject in a particular situation, in comparison to the experience of a particular group of people. Jimmy Napier used to say that if smart people would like to see what it felt like to be dumb, all they have to do is to trade jobs for one day and see how stupid they felt. The point is that confidence, and lack of confidence can’t be neatly summed up as merely a function of education or the lack thereof. The ultimate test of confidence is being willing, able, and ready to place yourself at risk in a situation that requires the use of what you think you know.
This isn’t as easy as it might seem. When taking an exam in school, it’s possible to make a good grade by guessing at the right answer; but guessing doesn’t build much confidence. Sometimes, sophisticated tests penalize guessing. One point is awarded for every right answer; one point is deducted for every unanswered question; and two points are deducted for every wrong answer. This makes it unprofitable to try to fake an examination. It can be costly to fake know-how too.
