010: Douglas Goldstein on How Chess Can Teach Us Lessons on Strategic Financial Planning

Doug Goldstein has over 20 years in the financial planning and services industry, beginning his career on Wall Street in 1992 at Dean Witter. Doug is a Certified Financial Planner, registered Investment  Advisor, Trust and Estate Practitioner, and a licensed investment professional. Doug is the founder and director of Profile Investment Services, Ltd and hosts two podcasts on iTunes called Goldstein on Gelt and Rich As A King. Doug has authored numerous books on financial planning and building wealth and is co-author of Rich As A King: How the Wisdom of Chess Can Make You The Grandmaster of Investing. Doug is quoted in many publications such as The Wall Street Journal and Forbes, as well as guest lecturing on investment in colleges.

Economic Themes:

In this interview, Doug mentions and discusses: investment planning, stock markets, over-confidence, behavioral finance, loss aversion, prospect theory, personal finance, strategic finance, interest rates, bonds, risk, liquidity risk, hedge funds,

Economists and Economic Schools:

In this interview, Doug mentions: Terence Odean, Daniel Kahneman and Kenneth Rogoff.

Doug’s Defining Moment:

• A chance meeting with Boris and Anna, a Russian couple, led to Doug enrolling his daughter and son into Boris’ chess classes. While sitting in during these classes, Doug realised that the strategic thinking and analysis of a chess player is similar to that of a financial planner and investor.

• You can use the strategies of chess to illuminate so many concepts in investment

Doug’s Affirmations/Mantra:

Doug’s Influencers:

Doug’s mother and grandmother who were both in the finance industry.

In this episode, you will learn:

• about two women in Doug’s life who smashed the glass ceiling in their respective careers.

• about the financial planning lessons Doug learned from his mother and grandmother.

• if women make better financial planners or investors than men.

• if trading markets more frequently leads to better returns.

• how the patience of chess playing is similar to the patience needed when planning your stock market trades.

• why the fear of losing results in investors making bad decisions.

• what you should do if you have a question about your business.

• how the concepts of improving your game in chess is the same as that of investment and financial planning.

• about the difference between short-term and long-term financial planning.

• how a game of chess is bounded unlike the uncertainties of a stock market and what you can do to manage these uncertainties.

• ‘how the News causes you to Lose’.

• how goal-setting can get you out of the bottom of the socio-economic ladder.

• who Doug would be if he was a chess piece.

• whether stocks or bonds are more dangerous today.

• which investor performs better – those listening to the news for advice or those that do not.

• if Doug has a crystal ball to help make predictions!

• why building a community is better than building a network if you want to succeed.

• what Doug’s path to success is.

• if we should try to pay off our mortgage early.

• how being a philanthropist can make you a better person.

• Doug’s simple method of identifying if you are risk averse in terms of your investment.

• the parallels that Ireland and Israel have in terms of their economy, innovations and foreign direct investment.

Advice:

• When you’re an investment advisor, you don’t have any prophecy – Doug Goldstein

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• There’s nothing that you’re actually going to know about what’s going to happen tomorrow in the markets. But what you do know is to educate your clients about how to responsibly take care of their own money.

• Every move must have a purpose – Susan Polgar Chess Grandmaster

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• Amateur investors  and amateur chess players move around because they can’t figure out their strategy. They make a move that doesn’t really have a purpose and that’s a huge mistake.

• Go into meetings and discussions with people as a friend. Assume that they’re there to work with you and not against you. You’ll be much happier.

• Plan ahead. ‘It wasn’t raining when Noah built the Ark’ – Howard Ruff

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• Focus on developing a strategy.

• ‘If interest rates move up, the value of your bond could tumble’ – Doug Goldstein

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• Build your community – that’s how you will ultimately succeed. Build a group of people that you can constantly be in touch.

• ‘Spend a lot more time focusing on what you can give to people, than what you can get from them. I believe that’s the path to success.’ Doug Goldstein

• ‘Liquidity, having access to your money, is really really important’ – Doug Goldstein

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Career Advice

‘We are not the same as our parents and grandparents. You’re not going to work for some company for your whole life and then retire with a great pension at 60. it’s up to you to take care of yourself. The governments going broke, your parents are probably going broke, you’re going broke and you’re in debt. You’ve got to get your own act together. As soon as you understand how business works, you should try and set your own sails and find something that you really enjoy doing, that can add value and work really hard to do it.’

‘There’s nothing wrong with a little bit of hard work in order to succeed. Don’t assume someones going give it to you’

Personal Habits:

• ‘I tend to be more conservative. I look for ways of trying to protect my business and my savings. I’m constantly looking for problems, coming up with solutions before the problems arise so that they don’t arise.’

• Goal-setting. Check out Doug’s and Susan’s goal-setting paradigm STRATegic in Rich As A King.

• Doug is an anti-debt person and is a philanthropist.

• Doug organizes everything first thing in the morning – calender, email and builds a list of what needs to be done. He does the unpleasant but most important things first. Everything that’s crossed out are his accomplishments for the day.

Takeaway:

• ‘Get yourself a teacher – a real mentor’ – Doug Goldstein

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• Don’t be afraid to pick up the phone and calling someone if you have a question about your business.

• Having a pretty good strategy today is much better than having no strategy until maybe one day you’ll develop one.

• It’s okay to develop as a strategist. It’s what all investors do and it’s what all chess players do.

• The news you’re getting from most sources is probably useless.
  

  ‘Give me a stock clerk with a goal and I’ll give you a man who will make history. Give me a man with no goals and I’ll give you  a stock clerk.’ J.C. Penney

• ‘You might have a good piece but if it’s in the wrong place it’s going to be very dangerous’ – Doug Goldstein

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• ‘If you don’t know where you’re going, any road will get you there’ – Lewis Carroll

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• Doug uses this quote from Alice in Wonderland to explain the concept of having a specific budgeting roadmap or goal set within a certain time frame.
  

  When Planning for a year, plant corn. When planning for a decade, plant trees. When planning for a life, train and educate people’ – Chinese proverb.

• For those who want long-term success, start with education – Doug Goldstein

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Recommended Books:

• Rich As A King by Doug Goldstein and Susan Polgar

• Eat That Frog! by Brian Tracy

• The Time Trap by Alec Mackenzie

Favorite Internet Resources:

• Financial Snapshot – a tool that builds up your financial profile and identifies your financial situation so that you can work on it or improve it.

Where To Find Doug Godstein:

• Website: Rich As A King

Gift for You:

How To Achieve Exponential Growth in Your Business: The 3 Game-Changing Tactics I Used to Double, Double Again and Then Triple The Size of My Business.

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