Friday 29 Mar 2024
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This article first appeared in The Edge Malaysia Weekly, on October 17 - 23, 2016.

 

Dr Ian Halsall, a University of Cambridge-educated engineer and investor, says his investment portfolio has consistently beaten the FBM KLCI for the last 16 years. And this helped him to achieve financial freedom by the age of 36.

He attributes his success to neuro-linguistic programming (NLP), a methodology that allows you to “reprogramme” the way you behave and communicate. He says by applying its principles to his investing philosophy and strategies, he has been able to produce his desired results.

According to Halsall, the tools offered by NLP can help investors change their negative beliefs and avoid common psychological traps. These traps include the anchoring effect (an over-reliance on original thoughts/perceptions/stereotypes), the sunk cost trap (psychologically protecting your previous choices), confirmation bias (seeking out others who have made the same investing decision), blind spots (shutting out prevalent market realities), the relativity trap (thinking that all decisions made by others are relevant even if the situation or context is different) and the superiority trap (where one thinks he knows better than the experts or market).

“These are all part of your belief systems and they all have to do with the ‘P’ in NLP — your programming. Much of human behaviour is on autopilot, meaning that our unconscious beliefs about money, investing and spending translate into our behaviours,” he says.

When asked if NLP is considered a behavioural science, Halsall says “I consider NLP to be a branch of behavioural science because it is about how humans think and behave.”

He defines NLP as “modelling excellence”. It does this primarily by exploring the relationship between how we think (neuro), communicate (linguistic) and behave (programming). According to NLP co-developer Richard Bandler, by studying these relationships and adopting what works, one is able to develop the strategies for success. NLP has been applied to a number of fields, including sports, education, business, health and personal development.

 

Learning and applying NLP

Halsall, who is in his mid-fifties, has lived and worked in Malaysia since 2000. He says he developed an interest in NLP purely by accident. “At the time, I was not in a good place financially or career-wise. By chance, at a bus stop in Belgium in 1989, I struck up a conversation with a stranger who introduced me to NLP. He even gave me a set of cassettes by Micheal Lebeau.”

He went on to study the books of other NLP trainers, such as Tad James, John Overdurf, Julie Silverthorn and Dr L Micheal Hall, and learnt that he could apply NLP strategies to his investment decisions.

Halsall says it is important to be aware of what money means to you before you can go about changing your negative beliefs or programming about money and investments. “Unlike most investors, I do not invest to maximise returns. Money to me is a means to an end. My current investment strategy allows me to have a stress-free life, good health and money to do what I want. With this investment philosophy, I pay attention to saving rather than investing — and to be pathological about saving.

“I have found that — and many studies have found the same — if you are great at saving, average at investing and mediocre at earning, you will still end up wealthy. [All you need to do is] save 10% of your earnings for 25 years and you may achieve financial freedom.

“Before NLP, my investing was fairly random, with mediocre results. As for regrets, my biggest mistake was listening to other people. The investment decisions I have made on my own — getting my own data and doing my own thinking — have been my best ones.”

Halsall explains how he applies NLP to his investment decisions. “I focus on five key points — my outcome; my state of being; my submodalities or the internal representational systems of my experiences; the fact that as an investor, I am often at the receiving end of rapport; and choosing a role model and modelling their behaviour wisely.

“When it comes to focusing on my outcome, I have a broad plan or strategy for attaining financial freedom. First, I find out what financial freedom means to me, and that is not having to worry about money. So, I choose investments that give me peace of mind. I don’t invest in properties because I don’t like dealing with leaky pipes, general repairs and tenants who may not be able to pay on time. I find all these cumbersome and bothersome.

“In focusing on my state of being, I find out what motivates me both emotionally and physically to reach my goal. I have found that being curious about whether I can reach my goals puts me in the best state of being and drives me to achieve them. For me, getting money right is just a small part of having a better life. The main thing is personal development. Fortunately, many of the things that work for building wealth also work for personal development, such as discipline, knowing yourself better and understanding the role of language in your thinking.

“In terms of submodalities, when I find that I have a hard time making decisions, or I am mentally arguing with myself, or I am comparing a perceived outcome of a situation, I stop and ask myself: Will this help me achieve my goals? My next course of action depends on the answer, which is either ‘yes’ or ‘no’.”

Halsall says he is constantly approached by financial planners who offer to manage his money. However, he adds, he lost money in the past after taking the advice of some financial planners. “A financial planner’s job is to get you to invest and [for you] to feel good about investing with them. So, once I understood that I am at the receiving end of rapport, I learnt to differentiate between feeling good and thinking objectively. That is why I make my own investing decisions today. Once I became aware of that, I could make investment decisions with a clearer head.”

The most important NLP strategy that Halsall applies is modelling. “This is where you pick a role model and model his behaviour. As I would like to be a successful investor, I model investors like Warren Buffett and Peter Lynch as I believe in the values that they uphold,” he says.

“For example, Lynch tells you to value local knowledge. He says this information is everywhere: observe the behaviours of the masses, such as their buying behaviour. Rain or shine, people are going to buy Coca-Cola. Brexit or no Brexit, people are going to buy Topshop clothes. That is why I do not read the newspapers or listen to the news — I need to block out the noise so that I do not panic and make rash investment decisions.

“Buffett practises value investing. He only invests in companies that add value to human life. That is one investment behaviour that I have modelled.”

Halsall says applying NLP means that one has to learn, unlearn and relearn behaviours and beliefs. This is not easy and it requires consistent practice. “Knowing oneself and the process of changing oneself for the better is a journey of constant effort. Hence, if you begin with the end in mind, as you become more aware of your thoughts and behaviours, the better you will be at making investment decisions.

Having applied NLP to his investment decisions for 16 years, Halsall considers himself a successful investor, although he prefers not to divulge his net worth and annual dividends. “I consider myself a successful investor as I consistently beat the FBM KLCI. The key metrics that I use as a barometer for my investments are run rates and margins of safety, which is 10%. I am a long-term investor — I focus on my annual dividend yield rather than how much I could earn in the short term,” he says.

“Most of my investments are in the UK, where I invest in shares, unit trusts and index funds. My first investments were in funds because I think that is a good way to spread risk.

“In Malaysia, I invest in some local unit trusts and stocks. Some of the stocks I invest in are Heineken (M) Bhd, Carlsberg Brewery (M) Bhd, DiGi.Com Bhd, Berjaya Sports Toto Bhd and Malayan Banking Bhd.”

Halsall says he invests in these companies as they reflect mass consumer behaviour in Malaysia — alcohol consumption, gaming, telecommunications and banking will continue even during a recession.

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