# Unshakeable

Author: Tony Robbins
Created By: Ouwel Zhang
Last Edited: Apr 23, 2020 11:03 AM
Tags: Finance

# Wealth: **Rule Book**

Chapter 1

- Fear emotions and fees

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Chapter 2: Winter is coming.. but when?

- On average bull markets occur every 3 to 5 years but spring always follows on winter
- Example with Joe (started with 19) and Bob (started with 27)
- Set aside a portion of your money and invest it, go for compound interest!!! (Goal should be 10% to 15% or maybe 20%)
- Markets are much more predictable then you think:


- Terms:
- *correction* - >10% fall from it's peak
- *bear market* - >20% fall from it's peak
- Seven Facts that will free you from fear of corrections and crashes:
1. On average corrections have occurred about once a year since 1900
- On average corrections have lasted 54 days
2. Less than 20% of all corrections turn into a bear market
3. Nobody can predict consistently whether the market will rise or fall
4. The Stock Market Rises over Time Despite Many Short-Term Setbacks
5. Historically, bear markets have happened every three to five years
6. Bear markets become bull markets, and pessimism becomes optimism
- 1996 - 2015 S&P 500 —> average return of 8.2%/year
- If you missed out on the top 10 trading days during those 20 years, 8.2% dropping to 4.5%
7. The greatest Danger is being out of the market

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Chapter 3: Hidden fees and half-truths

- DON'T BUY FUCKING ACTIVELY MANAGED HEDGE FUNDS!!!
- Fear Fees! 1% difference in fees can add or cost you over the course of 35 years a fifth of your outcome!

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Chapter 4: Rescuing our retirement plan

- Knowledge is your first defense!!!

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Chapter 5: Who Can You Really Trust

- If you don't understand the incentives of your advisor, you're liable to discover that you've done wonders for his financial future while potentially wrecking your won.
- "Well, brokers are the barbers of the financial world. They're trained and incentivized to sell, regardless of whether you need what they're selling!"
- "Your broker is not your friend"
- Financial advisers fall into just one of three categories:
- Broker
- Independent adviser
- Dually registered adviser
- **Suitable Adviser**:
1. First, check cut the adviser's credentials
2. Ideally, if you're using an adviser, you should be getting more than just someone to design your investment strategy
3. Next, you want to make sure your adviser has experience in working with people just like you.
4. It's also important to make sure that you and your adviser are aligned philosophically.
5. Finally, it's important to find an adviser you can relate to on a personal level.
- **Seven key questions** to ask any adviser
1. Are you a registered investment advisor?
2. Are you (or your firm) affiliated with broker-dealer?
3. Does your firm offer proprietary mutual funds or separately managed accounts
4. Do your or your firm receive any third-party compensation for recommending particular investments?
5. What's your philosophy when it comes to investing?
6. What financial planning services do you offer beyond investment strategy and portfolio management?
7. Where will my money be held?

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# The Unshakeable **Playbook**

Chapter 6: The Core Four

**Core Four**:

1. Don't lose money
- We have to design an asset allocation that ensures we'll "still be okay," even when we're wrong
2. Asymmetric risk/reward
- "Protect the downside"
3. Tax efficiency
- Only the net amount matters
- Don't be self delusional when it comes to your returns (TAXES AND FEES)
- It's not what you earn that counts... It's what you **KEEP**.
- "Nobody owes any public duty to pay more that the law demands."
4. Diversification
- Across different asset classes
- Within asset classes
- Across markets, countries and currencies
- Across time

**The trouble is, everything is cyclical!**

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Chapter 7: Slay the Bear

- "We pay a high risk for certainty"
- "Risk come from not knowing what you're doing."
- The stock market **ALWAYS** rebounds.
- risk premium - the addition reward you receive for taking an additional risk BUT higher risk comes not always with higher reward
- **Key guidelines**
1. Asset Allocation Drives Returns.
2. Use Index Funds for the Core of Your Portfolio
3. Always have a Cushion.
4. The Rule of Seven
1. 7 years of income set aside income producing assets
5. Explore
1. "But at the margins, it can make sense to explore additional strategies that offer a reasonable chance of out-performance.
6. Rebalance. It forces you to sell high and buy low.
- **Major asset classes**
- Stocks
- "You're becoming a part owner of a real operating business."
- The value of your shares will rise or fall based on the company's perceived fortunes.
- Bonds
- Bonds are loans.
- Municipal bond & Corporate bond
- As an asset class, bonds deliver positive calendar year returns approximately 85% of the time.
- Alternative Investments
1. Real Estate Investment Trusts
2. Private Equity Funds
3. Master Limited Partnerships
- Gold
- Hedge Funds

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Chapter 8: Silencing the Enemy Within

- "Instinctively, we yearn for what feels likely to b e immediately rewarding. Needless to say, this isn't always the best recipe for smart decision making..."
- "You need to understand that it's not enough to know what to do. You also need to do what you know.
- Implement and **USE** your solution system
- Checklist by Paul:
1. First establish in your own heart and soul that it was a hard trade - meaning it wasn't a trade everyone would make.
2. Discipline yourself to make sure that there was asymmetrical risk/reward.
- "Is it a three-to-one? Is it a five-to one? (Risk 1 Dollar for 3)
3. Sit down and ask yourself, "Where are the breaking points for other investors?
- Use that insight to establish your own entry point: your target price for executing your investment.
- Don't trade in the middle of the day!
- 80% Psychology, 20% Mechanics
- Mistakes to avoid:
1. Seeking confirmation of your beliefs why best investors welcome opinions that contradict their own
- For investors, confirmation bias is a dangerous predisposition
- Be aware of the "endowment effect" (10 mil example)
- "The power of thoughtful disagreement is a great thing."
- Never fall in love with an investment
- Solution: Ask better questions and find qualified people who disagree with you
2. Mistaking recent events for ongoing trends why most investors buy the wrong thing at exactly the wrong moment
- "recency bias"
- Solution: Don't sell out. Rebalance —> this effectively forces you to "buy low and sell high"
3. Overconfidence get real: Overestimating our abilities and our knowledge is a recipe for disaster
- Don't forget the human nature of "overconfidence"
- "Do I really have an edge that will allow me to be a market-beating investor?"
- Solution: Get real, get honest
4. Greed, Gambling, and the quest for home runs it's tempting to swing for the fences, but victory goes to the steady survivors
- Solution: It's a marathon, not a sprint
- The best way to win the game of investing is to achieve sustainable long-term returns and harness the power of compounding
- Speculators are doomed to fail
- Stock market transfers money from the impatient to the patient
- Check your portfolio only once a year
5. Staying home. It's a big world out there - so how come most investors stay so close to home?
- Putting to much money on stocks from your home country is harmful to your diversification
- Home bias
- Solution: Expand your horizons
- In writing, lay out the reasons why you own what you own
6. Negativity and loss aversion. Your brain wants you to be fearful in times of turmoil - don´t listen to it!
- Human beings have a natural tendency to recall negative experiences more vividly than they do positive ones. This is known as "negativity bias".
- Be careful of "loss aversion"
- But when the stock market takes a hit, this is your chance to get bargains.
- Solution: Preparation is key! (By failing to prepare, you are preparing to fail. ~ Warren Buffet)
- A partner also helps... remember even Warren Buffet has a partner

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Chapter 9: Real Wealth

- reticular activating system (RAS)
- Keep growing
- 90-seconds rule (Deal with it or get over it)