Tony Robbins: How to Suffer Less

(and Invest Intelligently)

Whether youd like to avoid unnecessary emotional suffering or

unnecessary financial suffering, this post has something for you.

In my second podcast with Tony Robbins, he said that all fear comes from
three triggers: loss, less, and never. He mentioned this in passing, and
many of you asked for more details. This post will cover that and much
more.

There are two parts:

1) Part 1 Tonys discussion of suffering and his framework of loss, less,

never. This is a abridged excerpt from Tonys newest book, Unshakeable:
Your Financial Freedom Playbook. Its exactly what thousands of you
requested.
2) Part 2 Many of you ask about how I take notes, and what I record
when I read 1-2 books (or more) per week. This is an example. Specifically,
my highlights and notes on Tonys book and investing. If youre interested
in investing, the mindsets of billionaires, asset allocation, or avoiding
losses, youll enjoy this.

PART 1 HOW TO SUFFER LESS (IN TONYS WORDS,

BOLDING HIS)

The human brain isnt designed to make us happy and fulfilled.

Its designed to make us survive.

This two-million-year-old organ is always looking for whats

wrong, for whatever can hurt us, so that we can either fight it or
take flight from it. If you and I leave this ancient survival software to
run the show, what chance do we have of enjoying life? An undirected
mind operates naturally in survival mode, constantly identifying and
magnifying these potential threats to our well-being. The result: a life filled
with stress and anxiety.

Most people live this way since its the path of least resistance. They make
unconscious decisions, based on habit and conditioning, and are at the
mercy of their own minds. They assume that its just an inevitable part of
life to get frustrated, stressed, sad, and angryin other words, to live in a
suffering state. But Im happy to tell you theres another path: one
that involves directing your thoughts so that your mind does
your bidding, not the other way around.

Now, before we go any further, lets just clarify the difference between
these two emotional and mental states:

A Beautiful State

When you feel love, joy, gratitude, awe, playfulness, ease, creativity, drive,
caring, growth, curiosity, or appreciation, youre in a beautiful state. In this
state, you know exactly what to do, and you do the right thing. In this state,
your spirit and your heart are alive, and the best of you comes out. Nothing
feels like a problem, and everything flows. You feel no fear or frustration.
Youre in harmony with your true essence.

A Suffering State

When youre feeling stressed out, worried, frustrated, angry, depressed,

irritable, overwhelmed, resentful, or fearful, youre in a suffering state.
Weve all experienced these and countless other negative emotions, even
if were not always keen to admit it! Most achievers much prefer to
think theyre stressed than fearful. But stress is just the
achiever word for fear. If I follow the trail of your stress, itll
take me to your deepest fear.

Everyone has his or her own flavor of suffering. So heres my question for
you: Whats your favorite flavor of suffering? Which energy-sapping
emotion do you indulge in most? Is it sadness? Frustration? Anger?
Despair? Self-pity? Jealousy? Worry? The specific details dont really
matter because theyre all states of suffering. And all this suffering is really
just the result of an undirected mind thats hell-bent on looking for
problems.

Think for a moment about a recent situation that caused you pain or
sufferinga time when you felt frustrated or angry or worried or
overwhelmed. Whenever you feel emotions like these, your sense of
suffering is caused by your undirected mind engaging in one or more of
three particular patterns of perception.

Consciously or unconsciously, youre focused on at least one of three

triggers for suffering:

1. Suffering trigger is Loss.

When you focus on loss, you become convinced that a particular problem
has caused or will cause you to lose something you value. For example, you
have a conflict with your spouse, and it leaves you feeling that youve lost
love or respect. But it doesnt have to be something someone else didor
failed to dothat caused you to perceive the sense of loss. This sense of
loss can also be triggered by something you did or failed to do. For
example, you procrastinated, and now youve lost a business opportunity.
Whenever we believe in the illusion of loss, we suffer.

2. Suffering Trigger is Less.

When you focus on the idea that you have less or will have less, you will
suffer. For example, you might become convinced that because a situation
has occurred or a person has acted a certain way, you will have less joy, less
money, less success, or some other painful consequence. Once again, less
can be triggered by what you, or others, do or fail to do.

3. Suffering trigger is Never.

When you focus on the idea or become consumed by a belief that youll
never have something you valuesuch as love, joy, respect, wealth,
opportunityyoure doomed to suffer, youll never be happy, youll never
become the person you want to be. This pattern of perception is a surefire
route to pain. Remember: the mind is always trying to trick us into
a survival mindset! So never say never! For example, because of an
illness, an injury, or because of something your brother did or said, you
might believe that youll never get over it.

These three patterns of focus account for most, if not all, of our suffering.
And you know whats crazy? It doesnt even matter if the problem is real or
not! Whatever we focus on, we feelregardless of what actually happened.
Have you ever had the experience of thinking that a friend did something
horrible to you? You became tremendously angry and upset, only to
discover that you were dead wrong and that the person didnt deserve all
that blame! In the midst of your suffering, when all those negative
emotions were swirling inside your head, the reality didnt matter. Your
focus created your feelings, and your feelings created your experience.
Notice too that most, if not all, of our suffering is caused by focusing or
obsessing about ourselves and what we might lose, have less of, or never
have.

But heres the good news: once youre aware of these patterns of focus, you
can systematically change them, thereby freeing yourself from these habits
of suffering. It all starts with the realization that this involves a conscious
choice. Either you master your mind or it masters you. The secret
of living an extraordinary life is to take control of the mind since
this alone will determine whether you live in a suffering state or
a beautiful state.

IN THE END, ITS ALL ABOUT THE POWER OF DECISIONS

Our lives are shaped not by our conditions, but by our decisions.
If you look back on the last 5 or 10 years Id be willing to bet that you can
recall a decision or two that has truly changed your life. Maybe it was a
decision about where to go to school, what profession to pursue, or who
you chose to love or marry. Looking back on it now, can you see how
radically different your life would be today if you had made a different
decision? These and so many other decisions determine the direction of
your life and can change your destiny.

So whats the biggest decision you can make in your life right
now? In the past, I would have told you that what matters most is who you
decide to spend your time with, who you decide to love. After all, the
company you keep will powerfully shape who you become.

But over the last two years, my thinking has evolved. What Ive come to
realize is that the single most important decision in life is this:
Are you committed to being happy, no matter what happens to
you?

To put this another way, will you commit to enjoying life not
only when everything goes your way but also when everything
goes against you, when injustice happens, when someone screws
you over, when you lose something or someone you love, or
when nobody seems to understand or appreciate you? Unless we
make this definitive decision to stop suffering and live in a
beautiful state, our survival minds will create suffering
whenever our desires, expectations, or preferences are not met.
What a waste of so much of our lives!

This is a decision that can change everything in your life, starting today.
But its not enough just to say that youd like to make this change or that
your preference is to be happy no matter what. You have to own this
decision, do whatever it takes to make it happen, and cut off any possibility
of turning back. If you want to take the island, you have to burn the
boats. You have to decide that youre 100% responsible for your
state of mind and for your experience of this life.

What it really comes down to is drawing a line in the sand today and
declaring, Im done with suffering. Im going to live every day to
the fullest and find juice in every moment, including the ones I
dont like, BECAUSE LIFE IS JUST TOO SHORT TO SUFFER.

PART 2 HOW TO INVEST MORE INTELLIGENTLY

[TIM: The below is a small sample of my notes from Tonys newest

book, Unshakeable: Your Financial Freedom Playbook. I originally
captured these notes in Evernote.]

Paul Tudor Jones questions:

Is this truly the hard trade (something others cant easily replicate)? Does
it really have asymmetric risk/reward? Is it a five-to-one or a three-to-one?
Whats the entry point? Where are your stops?

Pg. 36, -38% year TF: How long to recover to baseline if you entered that
year?

The stock market is a device for transferring money from the impatient to
the patientWARREN BUFFETT
****TF: If corrections of 10% come once per year, couldnt I hold cash and
simply have that trigger purchases 1x per year? Or wait for 20% bear
market drop, then invest?

Buffett did just that in late 2008, investing in fallen giants such as
Goldman Sachs and General Electric, which were selling at once-in-a-
lifetime valuations. Better still, he structured these investments in
ways that reduced his risk even further. For example, he
invested $5 billion in a special class of preferred shares of
Goldman Sachs, which guaranteed him a dividend of 10% a year
while he waited for the stock price to recover.

And/Or: Go with index fund

Showmethefees.com for 401(k) plan fees,

etc. http://getasecondopinion.com/ for Tonys Creative Planning

pg. 78

In the interests of cutting through the confusion, Im going to make this as

simple and straightforward as possible. In reality, all financial advisors fall
into just one of three categories. What you really need to know is whether
your advisor is:

a broker,
an independent advisor (RIA)***, or
a dually registered advisor.

Now lets break this down in more detail so you know exactly what youre
dealing with.

Question to ask: Do you act as a fiduciary [what you want] or a

broker or both?

Wealth manager needs to understand taxes, insurance, etc.

7 QUESTIONS FOR WEALTH ADVISORS

1. Are You a Registered Investment Advisor? If the answer is no,
this advisor is a broker. Smile sweetly and say good-bye. If the answer is
yes, he or she is required by law to be a fiduciary. But you still need to
figure out if this fiduciary is wearing one hat or two.

2. Are You (or Your Firm) Affiliated with a Broker-Dealer? If the

answer is yes, youre dealing with someone who can act as a broker and
usually has an incentive to steer you to specific investments. One easy way
to figure this out is to glance at the bottom of the advisors website or
business card and see if theres a sentence like this: Securities offered
through [advisors company name], member FINRA and SIPC. This refers
to the Financial Industry Regulatory Authority and the Securities Investor
Protection Corporation, respectively. If you see these words, it means he or
she can act as a broker. If so, run! Run for your life!

3. Does Your Firm Offer Proprietary Mutual Funds or Separately

Managed Accounts? You want the answer to be an emphatic no. If the
answer is yes, then watch your wallet like a hawk! It probably means
theyre looking to generate additional revenues by steering you into these
products that are highly profitable for them (but probably not for you).

4. Do You or Your Firm Receive Any Third-Party Compensation

for Recommending Particular Investments? This is the ultimate
question you want answered. Why? Because you need to know that your
advisor has no incentive to recommend products that will shower him or
her with commissions, kickbacks, consulting fees, trips, or other goodies.

5. Whats Your Philosophy When It Comes to Investing? This will

help you to understand whether or not the advisor believes that he or she
can beat the market by picking individual stocks or actively managed
funds. Over time, thats a losing game unless the person is a total superstar
like Ray Dalio or Warren Buffett. Between you and me, theyre probably
not.

6. What Financial Planning Services Do You Offer Beyond

Investment Strategy and Portfolio Management? Investment help
may be all you need, depending on your stage of life. But as you grow older
and/or you become more wealthy with various holdings to manage, things
often become more complex financially: for example, you may need to deal
with saving for a childs college education, retirement planning, handling
your vested stock options, or estate planning. Most advisors have limited
capabilities once they venture beyond investing. As mentioned, most arent
legally allowed to offer tax advice due to their broker status. Ideally, you
want an advisor who can bring tools for tax efficiency in all aspects of your
planningfrom your investment planning to your business planning to
your estate planning.

7. Where Will My Money Be Held? A fiduciary advisor should always

use a third-party custodian to hold your funds. For example, Fidelity,
Schwab, and TD Ameritrade all have custodial arms that will keep your
money in a secure environment. You then sign a limited power of attorney
that gives the advisor the right to manage the money but never to make
withdrawals. The good news about this arrangement is that if you ever
want to fire your advisor, you dont have to move your accounts. You can
simply hire a new advisor who can take over managing your accounts
without missing a beat. This custodial system also protects you from the
danger of getting fleeced by a con man like Bernie Madoff.

PAUL TUDOR JONES

The most important thing for me is that defense is 10 times more

important than offense. . . . You have to be very focused on protecting the
downside at all times.

Paul Tudor Jones, who uses a five-to-one rule to guide his investment
decisions. Im risking one dollar in the expectation that Ill make five,

RAY DALIO

What I realized is nobody knows and nobody ever will, he says. So I have
to design an asset allocation that, even if Im wrong, Ill still be okay.

TONY TO ADVISORS
Dont even bring me an investment idea unless you first tell me how we
can protect against or minimize the downside.

TAXES

Cap gains of 20% versus 50% for income. Believe me, all the billionaires
Ive ever met have one attribute in common: they and their advisors are
really smart about taxes! They know that its not what they earn that
counts. Its what they keep. Thats real money, which they can spend,
reinvest, or give away to improve the lives of others.

Tony: Of course, I dont start with taxes. That would be a severe

mistake. I always start with a focus on not losing money and on
getting asymmetric risk/reward. Then, before making any
investment, I make a point of asking, How tax efficient is this
going to be? And is there any way we could make it more tax
efficient? Focus on after-tax returns and consider MLPs (p. 108).

DIVERSIFICATION

1. Diversify Across Different Asset Classes. Avoid putting all your money
in real estate, stocks, bonds, or any single investment class.
2. Diversify Within Asset Classes. Dont put all your money in a favorite
stock such as Apple, or a single MLP, or one piece of waterfront real
estate that could be washed away in a storm.
3. ***Diversify Across Markets, Countries, and Currencies Around the
World. We live in a global economy, so dont make the mistake of
investing solely in your own country.
4. Diversify Across Time. Youre never going to know the right time to
buy anything. But if you keep adding to your investments
systematically over months and years (in other words, dollar-cost
averaging), youll reduce your risk and increase your returns over
time.

David Swensen:

Of course, there are many different ways of diversifying. I discuss this in

detail in Money: Master the Game, laying out the exact asset allocations
recommended by Ray and other financial gurus, such as Jack Bogle and
David Swensen. For example, David told me how individual
investors can diversify by owning low-cost index funds that
invest in six really important asset classes: US stocks,
international stocks, emerging-market stocks, real estate
investment trusts (REITs), long-term US Treasuries, and
Treasury Inflation-Protected securities (TIPS). He even shared
the precise percentages that he would recommend allocating to
each.

Ray Dalio:

Aim for 15 uncorrelated bets. The holy grail of investing is to have 15 or

more goodthey dont have to be greatuncorrelated bets. In other
words, everything comes down to owning an array of attractive assets that
dont move in tandem. Thats how you ensure survival and success. In his
case, this includes investments in stocks, bonds, gold, commodities, real
estate, and other alternatives. Ray emphasized that, by owning 15
uncorrelated investments, you can reduce your overall risk by about
80%, and youll increase the return-to-risk ratio by a factor of five. So,
your return is five times greater by reducing that risk.

SURVIVING/THRIVING IN BEAR MARKETS

Sir John Templetons famous remark: The four most expensive words in
investing are This time its different.

Tony co-author, Peter Mallouk: Throughout the crash, we continued

to invest heavily in the stock market on behalf of our clients. We
took profits from strong asset classes such as bonds and
invested the proceeds in weak asset classes such as US small-cap
and large-cap stocks, international stocks, and emerging-market
stocks. Instead of betting on individual companies, we bought
index funds, which gave us instant diversification (at a low cost)
across these massively undervalued markets
On average, the market is down about one in every four years. You need to
recognize this reality so you wont be shocked when stocks tumbleand so
youll avoid excessive risks. At the same time, its useful to recognize that
the market has made money three out of every four years.

One reason why the best investors are so successful is that they override
the natural tendency to be fearful during periods of market turmoil. Take
Howard Marks. In the last 15 weeks of 2008, when financial
markets were imploding, he told me that his team at Oaktree
Capital Management invested about $500 million a week in
distressed debt. Thats right! They invested half a billion dollars
a week for 15 straight weeks during a time when many thought
the end times had arrived! It was obvious that everybody was
suicidal, Howard told me. In general, thats a good time to
buy.

ALTERNATIVE OPTIONS THAT CO-AUTHOR LIKES

Real Estate Investment Trusts (REITS). Im sure you know people

whove done well by investing directly in residential property. But most of
us cant afford to diversify by owning a slew of houses or apartments.
Thats one reason why I like to invest in publicly traded real estate
investment trusts (REITs).

Private Equity Funds

Master Limited Partnerships. Im a big fan of MLPs, which are

publicly traded partnerships that typically invest in energy infrastructure,
including oil and gas pipelines. Whats the appeal? As Tony mentioned in
the last chapter, we sometimes recommend MLPs because they pay out a
lot of income in a tax-efficient way. They dont make sense for many
investors (especially if youre young or have your money in an IRA), but
they can be great for an investor who is over 50 and has a large, taxable
account.

p. 132 Doesnt like gold or hedgefunds

REBALANCING

Burton Malkiel: Unsuccessful investors tend to buy the thing thats gone
up and sell the thing thats gone down. One benefit of rebalancing, says
Malkiel, is that it makes you do the opposite, forcing you to buy assets
when theyre out of favor and undervalued. Youll profit richly when they
recover.

[Read more on investing from Tony here.]

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Posted on: February 20, 2017.

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