How Atomic Habits Lead to Explosive Profits
Every once in a while, you read a book that helps you see things in a different light.
Atomic Habits: An Easy & Proven Way to Build Good Habits & Break Bad Ones, a New York Times bestseller by James Clear, is one of them.
Clear’s premise is that, to a great extent, your outcomes in life are a lagging indicator of your habits.
Your knowledge is the sum of your learning habits. Your health and fitness are the sum of your eating and exercise habits. Your net worth is the sum of your saving and investing habits.
We’ve probably all realized this even if we’ve never articulated it.
But here’s where things get interesting…
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Clear points out that getting the results you want – financial or otherwise – is not about setting the right goals. It’s about following the right systems.
(You should hear a bell clanging right now.)
For example, your office may be a complete mess. Your goal might be to have it neat and organized.
So you take an hour or two and straighten up, throw things out, and organize what’s left.
Great. Except, if you don’t change your habits – adhere to a system – it will soon be a disaster again.
Why is this so common?
Because most of our daily behaviors are automatic. We follow unthinking routines because it frees up our minds to tackle the truly important issues we need to deal with.
That’s why it’s crucial to put proper systems in place for the things that really matter. Like financial freedom.
Tiny changes here can lead to dramatic results in your life.
That’s why Clear calls them atomic habits. Atomic means both extremely small… and explosive.
For example, if you go to the gym three times, you are unlikely to notice any real changes to your body except for an uncomfortable soreness.
However, if you go to the gym regularly for six months and follow a proven routine, you will see incredible changes.
And so will everyone else. Not maybe. Definitely.
(And that uncomfortable soreness? You’ll actually start to look forward to a pleasant “burn,” which is your muscles breaking down before they build back up firmer… and stronger.)
What does this have to do with investing? Just about everything.
In my previous life as a portfolio manager, prospective clients who came to me were often enormously frustrated.
These were successful businesspeople or professionals – doctors, engineers, pilots – and plenty smart, but struggling to earn decent returns with their portfolios.
When I took a look at what they were doing, it didn’t always make a lot of sense.
They owned a bunch of stuff. They weren’t really sure why, except that they wanted to diversify.
They didn’t have an asset allocation. They didn’t have a buy or sell discipline for the securities they owned. They often traded on emotion. And they paid way too much in fees and commissions, many of them hidden.
In short, they didn’t have a system.
Or they had one that didn’t work, wasn’t easy to understand, and, not coincidentally, was paying for their advisor’s lavish home in a gated community.
Is it any real surprise that things weren’t really working out?
I’ve spent the last two decades at The Oxford Club, distilling everything I’ve learned in 35 years as a research analyst, portfolio manager and financial writer into a simple, battle-tested investment system.
My goal is to help everyday men and women reach financial independence, whether they define that as being happily debt-free or building a seven- or eight-figure net worth.
The minimum goal is to no longer worry about money. The more usual goal is to have enough to live their dreams.
Over the course of the next several columns, I’m going to explain exactly what our system is – and the habits you need to adopt in order to benefit from it.
Wealth is created by following a system, proven habits that lead to uncommon results.
I’ll have more to say on this important topic in Friday’s column…
About Alexander Green
Alexander Green is the Chief Investment Strategist of The Oxford Club, the world’s largest financial fellowship. For 16 years, Alex worked as an investment advisor, research analyst and portfolio manager on Wall Street. After developing his extensive knowledge and achieving financial independence, he retired at the age of 43.
Since then, he has been living “the second half of his life.” He runs The Oxford Communiqué, one of the most highly regarded publications in the industry. He also operates three fast-paced trading services: The Momentum Alert, The Insider Alert and Oxford Microcap Trader. In addition, he writes for Liberty Through Wealth, a free daily e-letter focused on financial freedom.
Alex is also the author of four New York Times bestselling books: The Gone Fishin’ Portfolio: Get Wise, Get Wealthy… and Get On With Your Life; The Secret of Shelter Island: Money and What Matters; Beyond Wealth: The Road Map to a Rich Life; and An Embarrassment of Riches: Tapping Into the World’s Greatest Legacy of Wealth.