I noticed that a large number of readers or folks who are interested in passive income or personal finance are also very susceptible to messages from self-help gurus. Some folks I have spoken to have shared personal stories of putting money into the wrong Internet Marketing programs or have been roped into MLM at a certain stage in their lives, others have paid possibly thousands attending some seminar on forex trading or real estate flipping. The older ones even went to bucket shops.
Readers and other financial bloggers have this problem :
How do we tell the difference between someone who genuinely have something to teach you about financial success versus someone who is just trying to become a financial success at your expense ?
If we were to go really deep into technical differences between a real investment specialist and a financial bullshitter, we'd probably end up with covering the entire CFA syllabus and do note that in the early 2000s, asset-backed securities and CDOs were covered in great detail in the exams at level 2 as no one could foresee that they would play such a big role the Great Recession.
The answer to resolving this problem is to develop a healthy does of skepticism. But skepticism is merely the ability not to take something at face value and critically think about what the other party is trying to tell you accounting for information asymmetries and the context of the engagement. Mastering skepticism is also quite challenging, you may need to complete a liberal arts degree to tell bullshit from the real McCoy. Be too skeptical, and you run into the problem of cynicism, where even good ideas and investments are discarded in the name of prudence.
Before I actually get into the Masterclass, I'm just going to share with everyone why Skepticism is so important.
Start with this idea : We bloggers are experts in engineering diseases of the mind !
Ideas are like viruses, sometimes an idea comes around and its not designed so much to harm you, but to make you more susceptible to other ideas. This is what I would term the immuno-deficiency of the mind. Some ideas are AIDS viruses, it opens your mind to other ideas like MLM, Pyramid marketing, land banking, internet marketing and ILPs. As an example, a book by Robert Kiyosaki would hardly harm the reader and generally have the positive effect of motivating him, but it subliminally prepares the reader for a life engaged in MLM as it keeps harping about building businesses and helping other people -themes which keep getting repeated in MLM seminars. Similarly, I can imagine self-help guru espousing the concept of "saying yes to everything" which inspired a hilarious Jim Carrey movie some years ago. Which is why I really hate stupid websites like Elite Daily and MindBodyGreen.
I think I have developed a vaccine against the immuno-deficiency of the mind.
Here are three books which, if read and processed, leads to the development of healthy skepticism.
a) The first book SHAM, exposes the key issues and flaws with the self-help movement. It is easy to read and immensely entertaining. Almost all your favourite self-help gurus are put to the torch in this book.
b) The second book is Bright-sided by Barbara Ehrenreich which replaces your Pollyannish positive thinking with a dose of gritty realism.
As a side-note, I advise you to always read this book with the works of Martin Seligman who is the father of Positive psychology. I do not find that both author's ideas are mutually exclusive.
c) The third book, which I recently read, is a true classic. Oliver Burkeman hates self-help so much, he practically read the entire body of knowledge of self-help to expose it for his readers and highlights what works and what doesn't. It's hard to imagine a person who now knows more about self-help than Oliver Burkeman.
I think Oliver Burkeman is more than qualified to start a CSHA or a Charter of Self-Help Analyst accreditation body. Life Coaching is pretty good money in the US.
d) Google "John T Reed". John T Reed was an early crusader who set up a website to debunk and expose the real-estate gurus who were his competitors, his points are well thought out and his website contains a lot of dirt on your favorite self-help guru.
A savvy reader would notice that I did not include the ancient philosophers of Skepticism like Pyrrho or Sextus Empiricuswho comes up when you wiki skepticism. The four resources mentioned actually demonstrate how to take down and process key ideas which plague our modern world and form examples on how to skeptical about new ideas.
In the process of reading them, you will also find that they all qualify as great self-help books on their own.
Perhaps in a future book, I will make Skepticism a key skill before we even consider the basic skills required to attain financial independence.