The Stockdale Paradox: Positive Thinking is Not Enough

Last week we were chatting with someone who was pretty frustrated with their accomplishments.

More specifically, their recent lack of any.

They had read "The Secret" when it first came out and had believed they were practicing the art of affirmations and positive thinking aggressively but weren't seeing any change in their circumstances.

They had studied the classic, "Think & Grow Rich", by Napoleon Hill.

They had read, The Power of Positive Thinking.

They had scoured the bookstores for hours trying to find something that would answer the question, the one question, that was haunting them, "Why weren't they were they wanted to be financially, mentally and even spiritually?"

We've been fascinated by personal growth for years and are students of it.

And a few years ago we realized something.

Personal growth wasn't enough.  We need systems that produced consistent results in the real world.

We could "think positive" as long as we wanted but we didn't actually achieve very much.

Ultimately you need to play ball and enter the marketplace.

You need to pick a niche to serve.

Then come up with something to offer that niche.

And then, figure out how to get your message in front of them.

That's where real estate came in for us.

When you buy a property you're forced into action.  You have advertising to get going.  You have leases to sign and money to collect.  And the interesting part of this?

You can be the grumpiest person in the world and the results will still come.  The mortgage will be paid down, equity will build, cash will flow.

You didn't even need to think positively.

It was almost a disappointing realization for us.

But it was an important observation.

We were in shock when we met so many grumpy, frustrated, even angry, landlords but they were all making money.

And many of the happy, "positive thinking", people we knew were broke.

Didn't seem fair.

At that point we became convinced that hard work and systems were more important than "The Secret" and positive affirmations.

Business was done in the real world after all, not some fantasy land.  

After spending a few years fixing up properties, managing them, and profiting we began to notice something.  

The landlords and property owners who survived the longest and profited the most had two things:

Financial Capital and Emotional Capital.

The most successful investors had more than just money.

They were able to deal with almost any foundation problem, roof leak, eviction or contractor much better than the others.

They were very resilient.  Nothing got them off track.

When we started our real estate brokerage we found that it was important to have systems for our business but also important to build up our emotional capital.

To make deposits to our emotional bank accounts regularly.  That's why we travel, attend mastermind meetings and take the time to read good books.

Each of those are big deposits into our emotional bank accounts.

It's this combination of financial and emotional capital that really makes you powerful.

A few years ago we learned about the Stockdale Paradox, in Jim Collins' book, Good to Great.

In the book Jim talks about a Vietnam prisoner of war James Stockdale.  He was held for seven years and was beaten repeatedly but refused to succumb to the demands of his captors.

He was eventually removed from the other prisoners and placed into solitary confinement for his refusal to cooperate.

When he was released he could barely walk or even stand.  He went on to receive a Medal of Honour and eventually ran for Vice President next to presidential candidate Ross Perot.

Jim Collins recorded a conversation he had with Stockdale.

He said, "I never lost faith in the end of the story.  I never doubted not only that I would get out, but also that I would prevail in the end and turn the experience into the defining event of my life, which, in retrospect, I would not trade."

And when Collins asked who didn't make it out alive, Stockdale replied, "Oh that's easy, the optimists.  Oh they were the ones who said, 'We're going to be out by Christmas.' And Christmas would come, and Christmas would go.  Then they'd say, 'We're going to be out by Easter.'  And Easter would come, and Easter would go.  And then Thanksgiving, and then it would be Christmas again.  And they died of a broken heart."

Stockdale then added, "This is a very important lesson.  You must never confuse faith that you will prevail in the end - which you can never afford to lose - with the discipline to confront the most brutal facts of your current reality, whatever they might be."

The Stockdale Paradox: Faith you will prevail plus the discipline to confront the brutal facts.

How insightful.

Positive thinking is not enough.

Problems happen.  In business and especially in real estate.

But that's OK.

It's the way you deal with them that makes things more bearable.

A blindly optimistic real estate investor thinks that eventually they'll collect their rent.

A disciplined investor says, "I don't have the rent, I'm going to deal with this right now."

We now believe that you need three things to carry you forward in real estate and in business:

1. An underlying positive belief system with regular emotional deposits to it.
2. You need to be accurately assessing the facts of a situation.
3. And you must take action and work hard - and you do it, not out of frustration, but because you want to, it's part of your mission.

Although real estate on its own offers a very effective system for acquiring wealth in your life.

You can accelerate your growth and success with accurate thinking ... the Stockdale Paradox.

Positive thinking alone is not enough.

We searched high and low for a quote that would summarize all of this, here's the closest we've found so far:


Thoughts become words.
Words become beliefs.
Beliefs become actions.
Actions become habits.
Habits become your character.
Character becomes your destiny.

- Mahatma Ghandi

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