A Path to True Confidence in Life

Explore practical steps to replace harmful self-esteem and discover a healthy approach to valuing yourself

A warm hello to all new readers! I’m glad you are on board.

New here? I’m Michael and on a mission to make beating the stock market as easy for you as choosing your favorite ice cream. I write an algorithm that does exactly that.
How it all started. The journey so far.

“Most of us make our self-esteem dependent on success and failure. This is a dangerous game because it inevitably triggers anxiety.

What if you could shift from this risky game to a foundation of real self-confidence and regain peace in your life - forever?

Let’s talk about the problem, the solution, and an easy implementation."

Part 1: The Problem

Let’s take a critical look at how we make sense of what we see, feel, and do, and how we draw conclusions from these experiences.

It’s fascinating—and kind of scary—how much self-esteem influences our beliefs and actions. What exactly is self-esteem, and why does it matter so much in areas like investing and, of course, all other parts of our lives?

Self-esteem is about making value judgments about who we are as people. The person we think we’re or are meant to be. And based on those judgments, who and what we continue to be.

We make these value judgments based on two main categories:

1. Expectations you set for yourself: Think about the goals you have in your education, career, and hobbies. When you hit those goals, you feel great, like a successful, happy person. But when you miss them, it feels like a personal failure. You end up labeling yourself with words like dumb, fat, stupid, idiot, failure, and so on.

2. Expectations other people have of you: It involves relating well with others or perceived authorities, earning their praise, “respect” and temporarily satisfying their “conditional” approval. When you do well and get that praise from these people, you feel good about yourself. But if you don’t meet their expectations, you start feeling like a bad person.

Do you see the risky conflict?

Risks, by definition, mean that something can go wrong, and when your worth as a person is determined by the outcome of these risks, you’re constantly gambling with your self-worth. Read that again.

But.

Taking risks is essential for your learning and development.

What’s the usual thing we do?

1. Problematic solution #1: One solution could be to eliminate all risks, but this robs you of learning opportunities and destroys self-worth in the long run. Since it’s in our nature to improve ourselves, the idea that “Failure is not an option.” is one of the stupidest quotes out there. Here is why.
   Failure isn’t just an option; it’s a requirement for growth.

2. Problematic solution #2: Another flawed approach is trying to be perfect all the time and making no mistakes. But this also means no learning. Unavoidably, you will make mistakes in the future, which is a risk, and your self-esteem will tank again.

3. Problematic solution #3: As humans, we also understand that positive feelings are temporary by nature. They do not last forever. So “Be humble”. This means subconsciously you end up training yourself to wonder, to feel concerned, worried, edgy, and anxious – more and more – we start worrying whether we will meet (our unrealistic) expectations. The result is sobering.

When you tie your self-worth to your performance based on these problematic solutions, you create performance anxiety, which leads you to avoid doing anything that might risk failure.

The need for this kind of self-esteem generates a need to perform.

But at the same time, you set ridiculous standards for yourself to determine your worth, creating anxiety before, during, and after you perform—precisely when it should be lowest.

In other words, if you get a bad outcome, you start beating yourself up because you really believe it makes you a bad person.

This kind of self-esteem can poison people worse than hate.

You start with good intentions, but continuous sabotaging and shortfalls “prove” your negative self-observations correct. Do this often enough, and you can imagine how that feels over time.

So some of us reverse to the mean, go with #3, and don’t react. You end up teaching yourself to hate feeling good about anything, especially yourself or your accomplishments because somewhere you’ve also read these “Be humble” quotes as if that is the solution.

Nice Michael, but what’s the solution?

Given the importance of this topic and my own experiences with it, I want to ensure you have all the information you need right away.

So, no artificial cliffhangers—let’s talk about the solution.

Part 2: The Solution

The solution involves two steps:

1. Saying goodbye to binary self-talk and welcoming a continuum, and

2. Kicking self-esteem into its ass in favor of self-respect.

The key is to stop thinking in rigid, dogmatic ways and switch to a flexible, scientific thinking.

1. What is dogmatic thinking? Dogmatic thinking is pretty rigid. Dogmatic thinking occurs when individuals have rigid beliefs and insist on specific outcomes. Politics uses it all the time. Left vs. Right. You name it. The premises can be anything, but the outcomes are inflexible, like concrete. It’s like saying, “If I don’t succeed at this, I’m a failure (replace “failure” with your favorite insult).” It’s black and white with no room for grey areas.

2. What is scientific thinking? Scientific thinking follows a structured approach while allowing flexibility. It’s rigorous in approach, applying the same method every time, but it accepts that the outcomes can vary. It’s like saying, “I’ll try this method and see what happens. If it doesn’t work, I’ll learn and adjust.”

So, how do we switch from tying our self-esteem to outcomes and instead develop permanent self-respect and confidence?

As we learned, most people base their self-esteem on whether they meet their own or others’ expectations. Do a good job, and you feel great. Miss the mark, and you feel terrible. This constant pressure creates a vicious cycle of anxiety and self-sabotage, because there’s always a risk of failing to meet expectations, leading to poor results, and a decline in self-worth.

Striving to be perfect and making no mistakes eliminates growth to zero and traps you in the prison of your life.

Part 3: How to do it?

Instead of beating yourself up every time you make a mistake, try these 3 simple steps to gain self-respect:

1. Acknowledge your current efforts: Remind yourself that you’re doing the best you can with the knowledge and intentions you have right now.

2. Act with purpose: We are sense-driven creatures. What you do now, you do with a clear purpose in mind. It makes sense to do it that way. That is why you do it.

3. The key - base your self-worth on your purpose: Your self-respect comes from your positive intentions and purpose. Welcome failures as they enhance your knowledge and increase your chance of success next time.

This is the essence and the prerequisite for self-respect.

It’s about evaluating your actions separately from who you are as a person.

A fantastic bike with a flat tire isn’t a bad bike; it just needs a fix.

Similarly, you’re not defined by your mistakes but by the sum of all your actions—positive, neutral, and negative.

So why do we call ourselves idiots when we make a mistake? Or nerds if we like Star Trek? Or party pooper if we pass up a drink? It’s the cognitive poison of self-esteem. Self-respect is the cure. It’s so simple and so powerful.

According to Alfred Korzipski:

Humans are limited in the structure of their language.

Words give meaning. By expanding our language, we can alter our perspective and open the door for self-respect. That’s what we did with the last three steps above. It’s easy to define ourselves by what we’ve done wrong, but in reality, we’re defined by the sum of our intentions and actions.

Being constructive, persistent, and respectful to yourself gives you the chance to learn from every decision. You move from being a passive passenger in your life to being an active driver. By taking stock of your actions, you create space between stimulus and response, allowing for logic and reason to guide your reactions and outcomes (Viktor Frankl is waving his hand). Use those outcomes to evaluate what you did, not who you are. This is where self-love begins, which inevitably leads to self-respect.

Use this concept when you analyze your next bad stock purchase, or wherever in life, because we can apply this concept in all areas of our lives.

By implementing this mindset, you can convert conditional self-esteem into permanent self-respect. Respect is always there for you to take and keep. It always has been and always will be. Many of us just lost sight of it.

This brings me to my last week and how I implement the concept from above in my daily life.

Behind the Scenes

The Progress

As you know, I’m working on the last piece of my code – Value Traps and Red Flags. I spent the whole last week understanding and interpreting the results. Spoiler. I learned a lot. My main takeaway this week is that most of these value trap functions deteriorate with time. In past data, I found a pretty good correlation between the signal and the stock price. But the more I walked to today, the weaker the correlation became. In fact, it dropped by more than half.

My conclusion so far. The moment these formulas become public knowledge, they kinda stop performing. If it’s out there, people can use and manipulate it.
(That’s probably the reason Mr. Simmons never talked about the details of how his Medallion Fund worked.)

It was a sobering exercise because I had high hopes for the formulas as they initially showed great results. However, the results today are not as good as they deserve to be part of the final code yet. So what’s next?

The Plan

With and without it, I will start the training most probably in the next few days. I want to see how the impact of this, as I interpret it, weaker signals are. Anyway, I'm curious to see the results. And I will further research what I can enhance. Because here is the thing.

The concept behind it is still valid as it follows accounting principles, but something changed and I want to understand what that is. I’ve already found other possible ways to approach the value trap topic, but I need to do more research before I write any code.

As you can see, this week wasn’t perfect and yet, I’m still happy with the results, because I’ve learned. That’s the main reason I keep going. I’m curious, stay curious, and don’t attach my self-worth to the outcome.

What’s on my head

I wonder how many “investment principles” have stopped working but are still sold as “sound.” 

Nuggets

This week was packed with a lot of waiting time. So I used it to find a few nuggets besides finding solutions for value traps.

• How much the Net Zero by 2050 will really cost.

• If you like the article above, this might be a good read for you too.

• If like these kind of posts, you will love Dr. Kashey.

Hit that heart if you love clarity!

Michael

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I share my stock investment story without sugarcoating – you get the good, the bad, and those tricky ego trips. I'm developing a service with a mix of smart code and proven investment strategies, making stock analysis a thing of the past if you wish. Why? Because life offers so much more beyond the confines of stock analysis.

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Disclaimer:

The information in this article is my personal opinion. I’m not a certified investment professional. It is not consulting, nor does it constitute investment recommendations.

I do my research carefully and follow my personal investment strategy.

The stock market is a complex building with its own rules. There are no rules set in stone, like the rules of physics.

Therefore, use the contents of this newsletter at your own risk and do your own research as well. Investing in the stock market can lead to a total loss of the capital invested.