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Mental Tips, Tricks, & Lifehacks Vol. 3 With David Gardner

In this episode of Rule Breaker Investing, Motley Fool co-founder David Gardner treats investors with another installment of his "Mental Tips and Tricks" series. Drawing from his own experience and the help of Foolish listeners, David shares advice for better decision-making, tidying up, effective processes, and more.

A full transcript follows the video.

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This podcast was recorded on March 1, 2017.

David Gardner: Welcome back to Rule Breaker Investing. I'm David Gardner. A pleasure to have you. And this is the continuation of a sometimes series -- it's our "Mental Tips and Tricks". I did, later on, kind of add in the phrase "life hacks" as well series. This is volume three.

So I was looking back at our two previous volumes, and I was noticing that first one, in which I give the right number of fingers to have behind your back to get people to do your will. That one's worth relistening to. Volume two -- well, this was really the first one that started to include your ideas, as I'll be doing here in volume three.

You all helped us think through pairing wants with needs, preparing your own food going into work, and taking good photos, which is something that each of us in this photo-dominated world is well served to attempt to do ... to take better photos. So some of the past treats. Rick Engdahl, our professional photographer, here (who is also the producer of this show), made one of his cameos there.

So that's what we've done in the past, so a lot more than that. In fact, each of these (we've typically had seven), and that's what we're going to do this time again. I have seven for you. Again, this is some combination of mental tips, mental tricks, life hacks, ways to improve your daily existence.

Mental Tip and Trick No. 1: Let's start it off very simply with number one. Number one is a quick and simple one. This is very much the mental trick. So a lot of us have a hard time with big numbers, very understandably. We were all born as hunters and gatherers millions of years ago, and the idea that we would understand how far away the moon is at the time, or really what the true size of the federal budget deficit could become, or any of these really large numbers are not something that comes intuitively to our minds. It's still true for the human mind in the year 2017.

And here's a way I've had fun kind of showing that, and it's another way you can win a bar bet. These are always helpful. So this is what I call the "Zero to a Billion Hand Trick." So you're going to hold your hands out and they're going to be about shoulder width.

And you're going to say, "Hey, here's zero," you're going to say, "on the hand that's on your left." Zero. And in the space from your left hand over to your right hand (about that distance) you're going to say, "This right hand -- this is a billion." OK, so zero on one side and a billion on the other. And you ask your friend, "If this is zero and this is a billion, where is a million?"

Now most people, in my experience (and what will happen if you want to turn this into a bar bet), most people are going to spend five or 10 seconds, think about it, and then usually they'll put their hand about a third of the way from your zero toward your billion. So they're not going to put it right in the middle. They're going to put it closer to zero, but they're going to put it right about there and say, "That's where a million is, zero to a billion."

But, as you now know going forward, you really couldn't even fit a knife between how close those hands are together because think about it, now. How many millions are in a billion? And the answer is there are 1,000 millions in a billion, so it's really only 1/1000 of the way from your one hand, about shoulder-width apart, from your other to get just from zero to a million.

There's the trick. The trick is that for us and our minds, we're not really good at processing large numbers and understanding their proportions, and I think that that probably reminds us of the benefit of keeping things simple and big picture, and not allowing gigantic numbers to roll up too much in different contexts in our lives, because a lot of people have a hard time even conceiving of that. So this simple zero-to-a-billion hand trick, for me, is a great teaching tool, and it works just as well for adults as it does for kids. Test it out.

And by the way. If any of your friends when you play this trick with them -- if any of your friends get it right, give them a huge pat on the back, because very few people, including yours truly when I first had it done to me, get anywhere near right.

Mental Tip and Trick No. 2: So are you one of those people who, when faced, let's say, with Microsoft Excel, finds yourself clicking through the different menu options up there in the window bar? Just kind of clicking through the file. See what all those ... what's underneath all that ... the File menu?

Hmm, but what about View? What are some of the options that might be available for me as an Excel user under the View menu? And you go across and there's maybe 10 different choices. And you draw down and you're like ... and I think ... I'm guessing you're probably not this kind of person.

I think most people are not this kind of a person. It is impressive when someone brings that kind of intellectual curiosity and wants to see all of the different menu options, but I think Excel for me, anyway, is the classic example of an application that is so deep ... that has been built for so many years ... that has too many things it can do ... that hysterically to me anyway -- most people, I think, who use Excel use probably 3% of the actual power of the program, not that they need to be maxing it out anyway.

So why am I mentioning that? Because I recently did my own menu diving. My own hunting quest on an app, because while I wouldn't quite do it for Excel, I do find myself motivated to click in and see what [some of the functionalities are] or menu choices that are available to me in any given app.

And the one I'm going to mention is the Kindle app. Because the Kindle app is one that I make quite a bit of use of. Maybe you do, too. If you'd asked me 10 or 15 years ago, "Do you think you'll be reading most of your books on an iDevice," I would have said no. As somebody who has a library full of books, as you may as well ... I'm even somebody who usually brings out a pen and writes notes. Makes the book my own. That's just been how I was taught to read. So the idea that I would do that on my iPhone, which I've done quite a lot of, or my iPad would have struck me as bizarre at the time.

But truly these days the advantages, I think, of an app that saves all your highlights -- allows you to search text and find any kind of past reference or anecdote you were looking for from any book in your library -- there are a lot of advantages, indeed. I just like seeing that if you use the Kindle app, you know it shows how many people have highlighted a given line or paragraph, and that's really interesting to me as well.

So there are a lot of great advantages, I think, to using the Kindle app. So I decided, "Let me learn this app a little bit more," and I came across the flash card functionality. I'm guessing that most people haven't seen this menu item. And let me explain to you what it does, because I think it's pretty compelling.

So the Kindle flash card functionality basically takes any highlights that you've put in the text of a book, and turns each of those into a flash card. And then right there on your Kindle, you can even like randomize the order of the flash cards and quickly review your highlights in any book that you've read.

Now I think it was last week, or a week or two ago, I mentioned on our podcast a book I'm enjoying called Make It Stick, which is teaching us about how really to learn now that psychologists, and scientists, and brain research has taught us really how we do learn best. There's a lot of preconceived notions about how humans learn best coming from pedagogy and really centuries of so-called wisdom, but the truth is there a lot of new learnings about how to learn effectively.

Make It Stick is very focused on that, and one of the primary points in Make It Stick is that it's very helpful for you to quiz yourself after you read something. So the book will mention a study in which two groups of adults all read the same passage and then one of those groups is asked right away -- given a quick quiz on the material -- and the other group is not. And then a week later, both groups are asked to recall, to take a quiz and recall what they learned. And sure enough, the group that immediately quizzed itself after reading the material retained far more effectively than that which did not.

And so I think I see some wisdom in the Kindle app allowing that flash card functionality and making it something where you can quiz yourself. Each of the flash cards you can then click green check mark (yes, I got it, I learned it) or red X (nope, I still need to learn that one). So in case you've never dived back into your Kindle app and noticed that flash card feature, if you're looking to make things stick, take a look.

Mental Tip and Trick No. 3: All right, mental tip and trick No. 3 and this one comes from Mike Kaneko. Mike dropped us an email at RBI@Fool.com and said: "Hi, David. This is the first email I have ever written into a podcast, or any type of media, for that matter. I'm a very insulated individual. But after listening to the February Mailbag RBI podcast, I felt compelled to write in and attempt to open myself a little. I'm an ex-trader who really enjoys the insight that I receive from Market Foolery, Motley Fool Money, and of course RBI. I figured this is a great way to start since the next phase of my life," Mike writes, "will require me to put myself out there more than I have in the past."

"The life hack I use comes into play when I need to make difficult decisions. There are two parts to this process and I may use them in conjunction or separately depending on the situation. The first is actually taken from a David Mamet movie from 2001 called Heist. I am paraphrasing, here, but Gene Hackman responded to another character in the movie. When asked how he figured something out, he responded (once, again, I'm paraphrasing here)," Mike writes, "'I think of someone smarter than myself and ask what would he/she do, and then I do that.' I think this allows an individual to step out of his current mindset and take some perspective on the situation. In my opinion, it leads me to make the best decision and not the one I want to make."

"The second part of the process relies on not focusing too deep on the problem to come up with a solution. I find that when I'm so entrenched with trying to figure out the solution, I tend to think of too many variables which inevitably causes more confusion. Instead, I take a walk or perform another activity to get my mind off the issue and allow myself to relax a little.

"Naturally, and this may happen in a relatively short time (or it may take a little longer), but your mind will gravitate back to the issue but in a different state. At this state I usually find clarity and the solution to the problem is clearer. The subconscious mind is a powerful thing. You just need to allow it to work. Thanks again, David. I continue to listen and learn from you guys at the Fool." Mike Kaneko.

Mike, I don't feel much need to go back over your two excellent bits of advice there. I like them very much. The first one, which you ascribed to Heist, a movie I didn't see, but I know a lot of people loved that and enjoyed that scene, I think. That line is one that I've heard before.

It reminds me of the "creative whacks" methodology of Roger Von Oech, if you've ever seen his work. The creative whack pack. It's a deck of cards you can order off of Amazon, and each of the cards challenges your thinking. Gives you a different angle to think from. And one of them is, indeed, "What would blank do?"

And for business people, in particular, I think it can be effective and here, the more different types of businesses you know as an investor, the more tools you have in your toolbox, here. But ask yourself what Jeff Bezos would do in your business situation. What would Reed Hastings -- how would he frame that up to Wall Street?

The list goes on and on of anybody, really, that we admire. And to ask, as you have, and as you've suggested, Mike, what would that person do in my stead ... whether or not you're even right about what that person would do, by the way, that's a separate question. But whether you take that advice or not, it's deepening your perspective, as was your second idea, which also makes a great deal of sense. Thank you, Mike Kaneko.

Mental Tip and Trick No. 4: This one comes from my own experience, and I just kind of learned it over the course of time. It's hard learning in some cases, because when you're as disorganized as I have been through my life, and when you tend to be in your own spouse or partner/couple relationship, the person who's not as neat ... the person who is not the bed maker ... I admit it. For 25-plus of marriage, not ever really ever the bed maker.

Another of my poor habits is the tendency just to take whatever I wore yesterday and toss it onto a chair nearby and then let that happen the day after that. And the day after that. And then you end up with clothes piled up, and you can't find the belt that you're looking for because it was worn three days ago. Maybe I'm speaking to you. Maybe you understand where I'm coming from.

So what I developed was a very simple mental approach to getting better at this. I simply call it my "two things" approach. Two things. And think of it as not necessarily about your garments. It could be anything. It could be as you walk in your office or in any common area for you -- let's say a place you spend a lot of time in. If you find that it's not as kempt as it should be, here's the two things approach.

Every single time you walk into that room, you train yourself. You're going to pick two things up and you're going to put them back where they should be living. Maybe the clothes hamper. Or maybe a book back on a shelf. Whatever it is, it's always got to be two things, and don't start faking yourself out. Don't make it four or five things. If you start thinking it's five, then you'll start cheating and not doing it because you'll be like, "Oh, I don't want to have to find five one of these." It's only ever two things. Just put them back in place.

And over the course of time, you'll find that areas that were once almost inaccessible to you, the person who was living in it, become not only functional but actually sometimes quite lovely, because you've taken the time to put a process in place in your life that is going to create better solutions than if you hadn't done it in the first place. So that's the Two Things approach. It reminds me ...

There's a book called Integrity by Henry Cloud, which I love. I read it about 15 years ago, and he has a chapter in there about "act like an ant". And this is an "act like an ant" mentality, right? Ants can't build those anthills right away. What they do is they just pick up a crumb, drop it, keep moving. Another crumb. We build things incrementally.

And to just tie this back briefly to an investment thought on a largely non-investment-focused podcast this week, often people don't realize they can do the same thing with buying into a stock or selling off a stock. Too often I think we train our minds to think all or nothing, buy or sell ... but acting like an ant and moving incrementally can often be a more effective way to invest. So that's the two things approach. Feel free to swipe it.

Mental Tip and Trick No. 5: This one is all about negative space. Now this is one of my favorite thoughts. I use it all the time for investing. I think in a lot of ways it explains the rule breaker mentality. I've probably mentioned this before on the podcast but not in a while.

And that's the Betty Edwards book Drawing on the Right Side of the Brain. So last "Mental Tips and Tricks" we talked about taking better photos. This time we're going to talk about drawing better. Now, it's not something that I'm personally aspiring to do. I take far more photos than I'll ever draw but once you understand the concept, here, you're going to see it's not really so much just about drawing.

But it did start that way for Betty Edwards, who wrote a book called Drawing on the Right Side of the Brain. And what she does ... and you can buy the book. It's a classic. It's often, these days, as much about creativity. It will be recommended by mentors not to help you draw better but to help you think better.

But what Betty Edwards does is she has you forgetting all of those past conceptions or hang-ups you had about whether you're an artist or not. And drawing stick figures. And not doing anything since kindergarten. She just says simply this. Pick up a pencil. And I want you to pick an object. Let's just say a flower vase. And the key, the mental tip and trick going on here is Betty says don't draw the flower vase. Draw the space around the flower vase.

I haven't studied the mind that deeply. We often hear about left brain versus right brain, and I think I've even sometimes heard people say there's some misconceptions around that, as well, so I'm not going to get too deeply into the actual psychology going on here. But by drawing the negative space around objects, you will be shocked by how well you can start to draw. In fact, a lot of what we do when we draw the negative space is we start to blur our lines a little bit. Get softer. We don't do these hard line stick figure drawings.

And so if you're looking for some fun this summer at the beach, or you have a child, or really a grandparent ... any of us will be starkly surprised if you go at least halfway through this book how much better you're drawing. But of course, I mention this not just in the context of drawing.

But this is really how I think rule breaking works, as well. I think of rule breaker investing as the negative space around the stock market and companies. In fact, in a world in which so often people are picking stocks based on certain numbers they're looking for through screeners. They're looking on the balance sheet for various ratios. Very hard-edge, left-brained thinking. I think we are rewarded as rule breakers by specifically not looking at those things. By saying those are the obvious things. Those are commoditized. Everybody already knows those and computers can crank them out and screen them faster than you or I ever could.

It's, instead, by looking at the things that are softer. That are around the balance sheet. Things like what [the culture is] at the company. Can this company innovate? Who are the leaders? Lots of things that can never, frankly, be captured on an income statement or a cash flow statement. And this is, I think, the heart of rule breaking. So Betty Edwards' rule breaker approach to drawing -- I think each of us can learn a lot from the concept of negative space.

Mental Tip and Trick No. 6: This one comes in a two-parter. This one's very brief because it's tweeted by Jason Hawthorne, @JHHawthorne. And Jason simply went with: 1-calendar reminder every AM "how you think & feel determines how the world treats you" & 2-"stop taking elevators."

Well, I definitely wanted to include this one on this podcast, Jason, because I had on my own short list of tips and tricks one of mine which is "always take the stairs." I think that's a great approach to better health and so you went right there with "stop taking elevators," so we're already of like mind on this. But I really appreciate your first one, as well. Every day it sounds like you pop up on your calendar that reminder that how you think and feel determines how the world treats you.

Really, there's probably not enough made of just pop-up calendar reminder functionality. I think we all probably could do a better job reminding ourselves of things -- everything from need to make sure I pick up a bottle of wine on the way home right through to reminders that we need to put back in front of our face every day of the year, sometimes. So thank you, Jason.

Mental Tip and Trick No. 7: And that brings us to the final one this week, mental tip and trick No. 7. This one came in from Aaron Bush. He tweeted, "with money (+ other realms) systems > goals. Less thinking. Less beholden to arbitrary timing, consistent, and great outcomes."

So this was a tweet that I think I mostly got. I mostly understood. I think it's about systems and the power of them, and how if you have a good system in place, that's better than just putting a good goal in place. But why should I speculate when Aaron Bush happens to be an employee here at The Motley Fool and one of my Rule Breaker premium service teammates. Aaron, welcome.

Aaron Bush: Thanks, David.

Gardner: Now before we go right into your mental tip and trick, briefly describe what you do here at The Motley Fool.

Bush: Sure. Well, I'm an analyst on the Rule Breakers team, so I do my best to filter through that universe for coverage. Find new ideas for David. And then I also work in Supernova for Odyssey 1. So help maintain that portfolio there.

Gardner: Yes, indeed. Aaron, it's been a pleasure to work with you these last few years. Still one of our youngest employees at The Motley Fool.

Bush: I still might be the youngest.

Gardner: Are you the youngest?

Bush: Maybe.

Gardner: How old are you, Aaron?

Bush: I'm 22 now.

Gardner: Yes, great. And that means Aaron came to us in his late teens.

Bush: Well, I'm just grateful that you let me come here in my late teens.

Gardner: It's been a great three-year run. Aaron, I want to understand where you're going with the mental tip and trick. I love systems thinking. Is this where this is headed?

Bush: Yes, definitely. So I guess, just over the past year, I had all these goals for myself. I wanted to learn web development. I wanted to get healthier and improve my nutrition. More exercise. But I just kept on failing at everything I tried and I just couldn't figure out why.

So just through some reading and thinking, I finally ... it just dawned on me. Hit me really hard one day. It's because I'm not putting in place a system to help me keep myself accountable. To help it just become a habit to where I don't have to think about it and such.

So in December, for every single one of these areas that I was having trouble in, I said, "OK, I'm done just with the goal. I'm not even going to think about that anymore. I'm just going to put in place just a system. Essentially just times on my calendar where I'm going to do particular things."

So for the web development, now every Monday and Wednesday from 6:30 to 9:30 I'm spending time doing that, as well as some time on Saturday. For nutrition, we're fortunate enough to have PowerSupply, here, which delivers food to the office and now I don't have to think about almost any meal at all. It just handles that for me. And even for exercise, just setting out particular times over the week where that's just where I'm going and I'm held accountable for going there.

It has helped me so much not fail, and in the time that I have done this, which hasn't been very long (only two or three months or so), I found that the outcomes already are better than when I just had a goal that was just sitting there.

Gardner: What do you think it is about that, Aaron? What is it about having a goal and not a system?

Bush: Well, I think a goal, in the first place, really just is a hope-filled aspiration with a deadline. But the system -- that is your actual, ongoing process order team for getting something done. So just at the root of the definitions, there, I think that holds a lot of insight.

If you dive one step deeper into the derivative of it, I think what makes systems so powerful is that first of all, they don't make you think at all. They generally take care of themselves, especially if you start morphing it into a habit. They're less beholden to arbitrary timing. I'm not so obsessed about, "OK, I've got to have this much money at age 30," or "have gained this much muscle over the next 12 months," or something like that. I don't have to think about that. I just stick with the system and it takes care of itself.

It's consistent. I think a lot of people when they set goals, they forget that life is unpredictable sometimes, and that things can happen that just totally sway the outcome. When I was a kid, I was one of those spreadsheet nerds that I had my whole life detailed out in front of me. This was like when I was 10 years old. It was like, "All right, when I'm 70 years old, this is everything that's going to be happening because that's what the spreadsheet said."

But then as you start working, and start paying bills, start earning income, start investing more of your own money, you start to realize, "Oh, wait. Not all of that is actually planned." But sticking with the system instead of just throwing it out, there, helps make sure that it becomes accomplished.

Gardner: It does seem, as well Aaron, that if you're going to be a systems-driven kind of person (and I definitely am, as well), looking for processes and thinking through ... being choiceful and designing well ... is really important, right?

Bush: That's right.

Gardner: Because it's one thing to say system, but if it's a bad system, that's very disruptive.

Bush: Yeah, so sometimes it might take some tweaking to figure out if it works, but once it works, you know it works because it doesn't stop working. And this works the same way for investing, too, and this is something that I've learned from you, just working here, and seeing all the different ways that you just think about doing your research, or working with teams, and all that kind of stuff. It all plays a role.

And really systems can play a part in most everything that we do, and that's something that I'm striving to work toward to make it a more integral part of I guess everything that I'm trying to accomplish.

Gardner: That's awesome. I'm glad to hear that. Thanks for tweeting that out, and it was delightful to know that just a floor away from where we're taping in the studio, I could have you down and just have you explain that tweet.

Bush: Yeah, and thank you for letting me explain it in more than 140 characters. I feel like that was needed.

Gardner: OK, Aaron Bush. Thanks a lot for your cameo appearance on Rule Breaker Investing this week.

Bush: Thank you, David.

Gardner: And that was a nice reflection by Aaron at the end, talking about our processes internally and indeed something that I've done here for 10 or 15 years. I think it was when we started Motley Fool Stock Advisor in 2002, then in 2004 started Rule Breakers, and I was going to be overseeing both. I started to realize I'm going to need to get a lot more organized.

And the way that I found to organize myself was through processes and systems, so we have a lot of systems in place to make a service like Motley Fool Rule Breakers works to get our two stock picks out every month to you, our 10 Best Buys Now, and to ensure that over the course of time we're going to be providing market-beating advice across a couple of different services. And now Supernova, as well.

It's been critical, I think, to have systems thinking and processes in place and to design them well, and as Aaron well said, to be ready to tweak them as we go, because tweak them we have, and tweak them we always will.

Well, that's all we have for you this week on Rule Breaker Investing. I'm delighted that you joined with us, and thank you for those who provided some of the material of this show. Thank you Mike, and thank you, Aaron. Thank you Jason for your efforts.

And next week it's going to be a horse of a different color. Well, in fact, we're going to go right back into the realm of investing; but this time I'm going to focus on some investment terms. I want to pick a small menu of terms and teach you about them and get smarter as investors based on some of the things that we look at in Rule Breaker Investing.

As always, people on this program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. Learn more about Rule Breaker Investing at RBI.Fool.com.

Teresa Kersten is an employee of LinkedIn and is a member of The Motley Fool's board of directors. LinkedIn is owned by Microsoft. Aaron Bush has no position in any stocks mentioned. David Gardner has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.