What Dykstra And Investors Fail To See

Like The Majority Of Investors, Lenny Dykstra Didn’t Work On The Right Side Of His Problem

                                                                                                                                                By: Brendan Magee

A few weeks ago Lenny Dykstra may have finally hit rock bottom. He was arrested and charged with violating the terms of his bankruptcy agreement. It’s hard to imagine someone who at one time sold a car wash business for $55 million ever having any kind of financial problems, but that is exactly what Dykstra is facing. Unfortunately, if, all you focus in on his financial and legal problems, you fail to see that these are the symptomatic outcomes of a hidden, yet, much bigger and dangerous problem. It’s a problem that even at this very moment Dykstra cannot even begin to deal with because he can’t n see it. Remember, your biggest most dangerous problems are the ones you cannot see.

Many investors are dealing with serious investment problems and unknowingly are also in similar circumstances as Dykstra. They are seeing and dealing with symptoms, not the real problem. As a result, untolled damage is being done to theirs and their family’s financial security.  

Let’s focus on Dykstra for a while. Here you have a guy who by all accounts is not the most physically gifted athlete who figured out how to have a very successful professional baseball career. He was a World Champion with the 1986 New York Mets and was a major reason why the Philadelphia Phillies won the pennant in 1993. After baseball,  he becomes a very successful business man opening a string of car washes in California. By all accounts, this a very intelligent man, so a lack of intelligence would not be a reason as to why Dykstra is in the shape he’s in right now. So it begs the questions, how in the world does an intelligent guy with millions of dollars in his pocket wind up in jail?

My guess is the same things that led him to baseball success and gave him the platform to launch a successful business venture led to his demise. Unfortunately, he, like a lot of investors, fail to see that the same traits that lead to success in other areas of life,  are in many cases going to lead to your demise as an investor, and not one of them is based on intelligence. They are instinctual and emotional, and as human beings we tend to under estimate just how powerful our instincts and emotions are. When we do this, we pay a terrible price and only recognize it long after it is too late.

 I remember a news story where Dykstra spoke about how as a player he invested $200,000 with a broker and the broker lost his money. He was livid and vowed to never let that happen again. He plunged into learning how the stock market worked and how to make smart investment decisions. Remember this was a guy who figured out how to hit major league pitching. I’m sure he thought if he just worked hard enough he’d eventually master investing. Unfortunately, no one was ever there to help Dykstra figure out that he was on the wrong side of two problems. Number one, neither he nor his broker were ever engaged in investing. They were engaged in gambling and speculation. In holding himself out to professional athletes as financial advisor he couldn’t see he was in denial that he was really any different from the broker who had lost his money.  Instinctually, it would be awfully painful to admit you are what you had grown to despise.

Number two, his never say die attitude would not let him step back and realize he was fighting the wrong fight. You do not control the stock market, you learn how to go with the flow. Dykstra’s ego wouldn’t allow him to step back and recognize he was fighting a battle he could never win.  Emotionally, how many of us would want to admit defeat.  What Dykstra couldn’t see and could never become responsible for was, that his instincts and emotions were overpowering  his intelligence and were at the root of his financial and legal problems.  In other words when it came to investing , he couldn’t see that he was just like everyone else, human, and as a human being he was the biggest most dangerous factor in all his investing. He went to work on his finances and was completely oblivious to how much of an impact his instincts and emotions were having on his success or failure as an investor.

He never went to work on being able to recognize where and how his instincts and emotions could get the best of him as an investor. As he had a hitting and fielding coaches, he never enlisted the help of an investor coach. He never empowered that coach to reveal to him his personal blind spots when it came to money and investing. As result of never working on the right side of the problem Dykstra blew $55 million dollars and now is in jeopardy of losing his freedom.

So if you have been dealing with investing and financial problems, the good news is that it is not a lack of intelligence. In that regard you are not handicapped in any way. The bad news is, you may have to swallow your pride and admit you’ve failed to work on the right side of this problem. Your investment problems are the result of your humanity. You were born with instincts and emotions, and they are not wired to help you make prudent investment decisions. In fact, they are wired to make self-defeating investment decisions. You could fight them till last dying breath or you could embrace your instincts and emotions for all the good they’ve brought to your life and then acknowledge you are totally powerless and at their mercy when it comes to investing. It is in admitting a weakness that you will gain strength.  

Brendan Magee is the founder and president of Inevitable Wealth Coaching. With questions, comments, or suggestions call 610-446-4322 or e-mail Brendan@coachgee.com.