So, a few years ago there was a study that was done on two groups of kids. They were giving a task, i think it was puzzles or something and nobody actually checked how well they did on the puzzles and they all got a score. They all got. Eight pluses, everybody was happy kumbaya amazing.

Now they split the group into two groups. One group was told that essentially they did really well because they work hard and the other group were told essentially that they have what is called like the smart gene they're. So smart, they just did it because they were insanely. Smart well done.

So what happened next? Is they presented these two groups with a much harder task, so the kids that were told they sold it so nicely because they were so smart, failed and felt miserably on the much harder task and got discouraged and sad and didn't even enjoy it. Now the same kids that were told that they work hard and that's why they got a plus in the previous assignment killed it, and the reason is because we all, as human beings have this thing called the internal versus external locus. Essentially, if some bad happens to you, do you say it's on you or something bad just happened yesterday i tweeted about talenteer and i put it with essentially saying: hey. The stock is up four percent wow.

Now i'm only down like a couple hundred thousand dollars and i laughed it off with a laugh emoji now that tweet was genuine and honest and i'm not a rich guy, i mean i don't have chamath money or elon money for me. Losing a couple hundred thousand is painful, so obviously i'm not able to answer thousands of people, but i can make a video explaining. How can you remain so focused and calm and basically laugh it off, even though it's a huge loss every single day, you have a set of difficulties and challenges, and if you say well, you know the big players are manipulating the market or whatever, like the markets, Are irrational and stuff like this or if you sit down and say well, i didn't research hard enough. I didn't apply the right set of characteristics to the stock.

It's on me made. A bad decision should have been smarter about. This should have been more patient should have maybe set longer outside or basically not materialized, a thousand different things that you could have done better. If you do this, just the psychological impact of reinforcing that internal locus of control is really really important for your future and i'll explain why? Because understanding this internal versus external is really nice, but this is auditory.

Learning humans, don't learn habits from auditory learning. They learn habits. By doing i always sit down after a bad decision, and i try to figure out what i did wrong. What's my fault as a parent, one thing i can tell you is that having rules is really important, but it's useless zero use.

If you don't enforce these rules religiously, they completely lose their meaning, if you don't enforce them and it's the same thing in this theory. If you don't enforce these rules, i'm about to teach you you'll never get that internal locus and control, and that's why every single loss is going to freak you out, you're, not going to be able to say, focus and center, like i stay with palantir, for example, Or other stock, you will be hard as a rock as an old russian refrigerator. Nothing will move you. If you learn these simple five rules, i'm about to teach you rule number one is basically avoiding the casino mentality.

You lost some money, you're trying to win it back. It's not your money anymore, it's completely virtual uh or i'm winning i'm on a hot streak. I don't want to get out it's going to go to the moon, right, the hot streak, mentality or essentially holding on to money. You don't have any more as if you have some sort of a psychological property claim to some money that you lost, and now you have to win it back.

So these sort of casino tricks that are designed to keep people playing until they eventually lose apply in the same manner in the stock market. You can't think of virtual money as if it's yours, if you lost it, it's gone and there's no point in thinking about it and keeping some score of a score tab in your head, some scorebox of how much money already lost and how much you need to Win, you have your account and, what's in it is in it, that's it don't make this mistake because you're going to chase these virtual losses or gains and you're going to basically, you know, drive your portfolio to the ground. The other thing is really important is what i call the 24 hour rule there's a 24 hour cool off for me for any single position. I want to open or close if i made a decision that i want to close or open the position.

I wait for 24 hours now i've been known to make mistakes with this rule and every single time i can guarantee you every single time. I didn't listen to this rule and i basically made an impulsive decision. I lost one of the most famous ones. Is the tesla trade which i sold a whole bunch of tesla stock just minutes before the close of trading? And then you know it was on the eve of the announcement of the split cost me a lot of money.

I was just angry and impatient and you know volatile and let emotions basically drive into this bad trade. So rule number three is probabilities. Now people keep asking well tom this company, it might go big if it does this and this and this i'm not going to give you names, but there's a lot of plays where there's a story involved and the question you want to ask yourself: well: is this Probable, or is this possible because there's a lot of possible things i mean my grandpa can basically attach wheels to his legs and become a bicycle that is possible, but i would not say that is probable. You got to look for the probable trades, not the possible trades, and in this case less is more now you look at social media and you look at all these guys that are trading and are putting out 15 different trade ideas per day, and you think that That's how you need to basically run your trading or investing, there's no need for that.

Less is more! You don't need to be making 15 trades a day. You don't even have to make one a day, there's days that go by, i don't even buy or sell a single stock, there's nothing wrong with being patient you're like lying in the bush. You have to wait your chance, so you don't need to own 50 stocks. You probably have a portfolio of 5 to 15 stock max and there's no need to the basically to devalue the the essence of portfolio by adding numerous positions and completely diversifying yourself to death, because you keep reading all these.

You know social media artists, i'm not gon na, say what they are because, because you know i'm just gon na call them artists now. The second thing is research correctly and when i say research correctly is a lot of people tend to research into their bias. Essentially, they look for confirmation bias. So if people like tesla or palantir they'll watch my videos and that's fine, but if you truly want to research a company, you have to be open to attacking your position.

You have to play devil's advocate. You have to research against yourself, so if you have this company, you absolutely gag about your high conviction stock, you have to watch and listen to people who hate it and basically understand the rationale, because you have to try and put holes in this armor in order For for you to find out whether this is indeed a good stock, or just a lot of confirmation bias, it's really critical that you do that, and the last rule i would just say, accountability. It's always on you. It's never the irrationality of the market.

It's always on you. Let me give an example: if you're an employee for a company - and you manage your portfolio for clients and all of a sudden, you lost a whole bunch of money for your clients. Would your employer get this explanation from you and you basically saying well sorry boss, the markets are just irrational or will you get fired? I mean most likely you will get fired because nobody cares if it's an external reason or something it's always on you. So once you accept that accountability - and you basically say well up - i made a mistake - then it's much easier to handle than just to keep blaming external factors, and that brings us back to the internal locus of control practice.

Your internal locus of control every single day on everything you do. You know you late to a meeting. You can't fall asleep a million different things you handle in the middle of your day find a solution that makes it better and then understand how you did it to yourself how you improved your situation. For example, i was fat for a long time took care of it.

You know, dropped a lot of weight. It didn't just happen because god decided. I want to be thinner, it's not about my genetics. No, in fact, i think i went against my genetics.

I mean i'm not genetically thin, but i did the work got the results and it's on me the same thing for the law side every day you have to practice this internal locus of control. If you want to be poised - and you want to be - you know kind of like me being able to joke about a big loss in your portfolio. Now that i'm saying that big losses are good, but i mean i made a whole video sharing. Every single lost position - i have i'm gon na - put it right here, it's not something that i'm proud of, but i'm completely open about it.

So it's right here go watch it and if you haven't yet and since we're coming up on christmas - and this is actually an impromptu video for the community - there's a subscribe button right here might want to subscribe. For christmas, see you tomorrow.