本帖精华送给最后两篇extended reading, 建议:Extended Reading Articles for intensive reading!
spencer我终于在27号暂时结束了自己的杀G生涯,所以今天是我最后一次发阅读小分队的帖子了,当然,这不是诀别。(神猴de插播~ 周四经管的人选已敲定为“杀G给猴看”童鞋,感谢她和spencer为小分队所有人的无私付出,大家加油~) 小分队一直是一个温暖的团体,我相信,如果没有这个小队,我也许在遇到挫折的时候就放弃了。所以在这里,我想要感谢小分队,想要感谢所有曾经帮助过我的队员!
其实,为别人发帖也是提高自己的一种方式,因为在寻找合适的阅读内容的时候,你也就会拓展你的阅读量——虽然GMAT的阅读是需要一定技巧的,比如总结OG上的题目,找到GMAC出题的逻辑——但是请相信,只有大量阅读,才可以真正提高你的水平。
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言归正传,今天我除了发上速度和越障的文章之外,还发了两篇拓展阅读。这两篇文章在我备考的最后一段时间给了我很大的鼓励,希望大家也能从中有所收获。
ps:文章的标题都被设置成了白色,选中之后即可看见。
最后,祝大家一切顺利!也希望我自己能够在日后顺利拿下T,并且申请到自己理想的学校!
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【Speed】
【Article One】(Check the TITLE later)
Unparalleled arrogance, undisclosed agenda by V.V.V.
APPLE and China seem a perfect fit. Both are secretive autocracies that have produced spectacular economic results and technological marvels—but only for those willing to abide by the strict rules imposed within their great firewalled gardens. Apple is one of China’s most successful brands and China one of Apple’s most important markets.
So it is quite surprising to see the American technology firm come under repeated attack in recent days by mouthpieces for the state and Communist party. On March 15th, World Consumer Rights Day, a much-watched annual programme on CCTV, the official broadcaster, attacked Apple’s policies and practices in China. The suggestion was that the greedy firm treated locals as second-class citizens. This week, the People’s Daily, a party mouthpiece, launched a series of vitriolic attacks that accused the firm of “unparalleled arrogance.”
It is not unusual for foreign companies to come under occasional attack in China. Sometimes, this is well deserved—as when, last year, KFC was exposed for supply-chain lapses that led chickens of dubious quality to be served in its restaurants. But the CCTV exposé, which discussed warranty-repair policies, did not find anything remotely as rotten at the core of Apple’s China business. So what is really behind all this?
【215 Words】
【Time One】
One possibility is that the attacks are being orchestrated by a commercial rival that could gain from Apple’s misfortune. A number of celebrities rushed to join the CCTV attack on Apple by posting rude comments on Weibo, China’s version of Twitter. One of them, known to be a paid spokesman for a rival smartphone manufacturer, made the mistake of including in his Weibo posting the instruction to post the attack at a certain time—making clear that it was not written by him. Embarrassing, to be sure, but that does not prove a firm was behind this—especially since the other celebrity attackers are not thought to be on a rival’s payroll.
It seems more likely that Apple is the target of an officially-sanctioned attack, but which bit of officialdom might be pushing it remains unclear. Some think it might be a shakedown by CCTV, in order to encourage Apple to advertise on its channels. Others think that it is the vanity of bureaucrats at work. The ever-arrogant Apple may have failed to kowtow to the right officials in Beijing. But what if Apple were merely a convenient whipping boy? Some think that this recent skirmish is in retaliation for foreign powers’ attacking Chinese firms abroad. The EU, for example, is currently taking a hostile stance towards China’s solar exporters. And American politicians have all but declared war on Huawei, a telecoms giant that stands accused—on no public evidence, it must be noted—of spying for the Chinese state.
【250 Words】
【Time Two】
It is just possible that the attacks on Apple are a prelude to pushing foreign firms out of the Chinese mobile-phone market. That seems ridiculous, given how popular Apple’s operating system and Google’s Android are in China. However, an official white paper did recently make the extraordinary claim that China’s reliance on Android was dangerous. The country’s censors or security enforcers may want to promote domestic operating systems that they can more easily penetrate, monitor or control.
There is another, even more troubling, theory that could explain the bizarre and unexpected attack on Apple this month. Taken together with other recent tirades against foreign firms like Volkswagen, this could mark a radically different approach to foreign companies being tested by China’s new leadership. Such sabre-rattling could be seen, on this view, as the natural complement to the belligerence seen over the Senkakus and in other military matters.
Truth be told, nobody outside the official inner circle has a clue what is really going on. The only certain thing is that the famously aloof technology firm is surely paying attention. “China is currently our second-largest market,” Tim Cook said to Xinhua, the official newswire of Chinese propagandists, before the attacks. He then perhaps tempted fate by going on: “I believe it will become our first. I believe strongly that it will.”
【220 Words】
【Article Two】(Check the TITLE later)
Why Derivatives May Be the Biggest Risk for the Global Economy By Michael Sivy
Four years after the U.S. recession ended, the global economy is still beset by problems. The present danger comes from Cyprus – where the sea foam once gave birth to the goddess Aphrodite but now only creates froth in panicky financial markets. The proposed bailout plan for troubled Cypriot banks would impose losses of up to 40% on the largest depositors. And that, in turn, could undermine confidence in the banks of other troubled euro zone countries.
Cyprus is only the latest challenge for global financial stability, however. In the U.S., deteriorating urban finances – from Detroit to Stockton, Calif. – threaten municipal bond holders, public-sector workers, and taxpayers. In addition, a rise in long-term interest rates seems inevitable sooner or later, either because of inflation or because the Federal Reserve backs away from its easy-money policies. Higher interest rates would mean big losses for bond investors, and also for government-sponsored entities, such as Fannie Mae and Freddie Mac, that hold mortgage-backed assets.
The greatest risk of all, however, may be one of the least visible – namely, the expanding, shadowy market for derivatives. These highly sophisticated investments have contributed to financial disasters from the 2008 bankruptcy of Lehman Brothers to J.P. Morgan’s 2012 trading losses in London, which totaled more than $6 billion.
【224 Words】
【Time Three】
Basically, derivatives are financial contracts with values that are derived from the behavior of something else – interest rates, stock indexes, mortgages, commodities, or even the weather. Just as homebuyers make only a down payment when they buy a house with a mortgage, derivatives traders put down only a small amount of cash. Moreover, one derivative can be used to offset or serve as collateral for another. The result is that a massive edifice of derivatives can be supported by a relatively small amount of real money.
Some derivatives, such as typical stock options, trade on exchanges. But many are simply private contracts between banks or other sophisticated investors. As a result, it’s hard to know the total volume of derivatives now outstanding. The worldwide nominal value – also known as the notional or “face” value – of derivatives tripled in the five years leading up to the recession, at which time it was around $600 trillion, according to the Bank for International Settlements. Since then, although some specific categories of derivatives have shrunk, the total value of the derivatives market has not been reduced at all, but has actually gotten bigger.
Although recent BIS data shows only a little growth in the overall value of derivatives, some leading bond portfolio managers and derivatives experts believe that the market has continued to expand rapidly, without being especially visible. While there’s no way of knowing for sure, estimates of the face value of all derivatives outstanding tops a quadrillion (1,000 trillion) dollars, or more than 14 times the entire world’s annual GDP. By comparison, the total value of all the stocks trading on the New York Stock Exchange is roughly $15 trillion. Indeed, the New York Stock Exchange itself is being acquired by an up-and-coming derivatives exchange.
【293 Words】
【Left】
The very fact that reliable figures are hard to come by is itself part of the problem. The $638 trillion currently reported by the BIS is only a floor. Estimates for the total capital employed in derivatives trading is somewhere between $10 and $20 trillion, roughly comparable to the capitalization of the NYSE. That means that each actual dollar in the derivatives market is supporting between $35 and $70 of nominal value. Losses of only a few percent of face value therefore would be enough to wipe out even the best-capitalized derivatives traders.
The problems don’t stop there. Not only is the bulk of the market private and hard to track, but it still isn’t properly regulated. Although the Volcker Rule limits the speculative trading that commercial banks can do, it isn’t as rigorous as the actual separation of commercial lending and investment banking that existed under the Glass-Steagall regulatory framework that was in place from 1933 through most of the 20th century. Other recent regulation aims for more transparency and greater capital requirements. But progress is slow, both in the U.S. and in Europe. And regulators acknowledge that the job is far from done.
One key problem is what’s known as counterparty risk. If you buy a stock for cash, you can’t lose more than you invest. But if you sell $1,000 of derivatives and collateralize it by purchasing $900 of another offsetting derivative, how much are you really at risk? In theory, you can only lose $100. But if the person from whom you purchased the $900 derivative ends up defaulting, then you’re on the hook for all $1,000 you sold. So are you at risk for $100 or $1,000? It’s hard to know. Regulators try to assign weights and probabilities to determine capital requirements. But the bottom line is simple: If the whole market comes apart, everyone is at risk for a lot more than they expect.
With Cyprus, or municipal finances or even the bond market, it’s possible to count the amount of money involved and gauge the scale of possible losses. By contrast, the derivatives markets are impossible to measure with any confidence. All that we can know for sure is that they weren’t reined in and didn’t get any smaller after the last financial crisis. It’s difficult to assess the actual risk exposure of any given set of trades, and equally hard to determine the amount of capital needed to be safe. Overall, the markets are extremely leveraged, which means that any miscalculations could have a domino effect. And in theory, at least, the total losses could add up to more money than there is in the entire world.
【445 Words】
【Article Three】(Check the TITLE later)
【Time Five】
The debt run by Buttonwood
INFLATE, stagnate, default. That has been the choice facing highly indebted economies ever since the crisis broke in 2007-2008. It would be nice if growth could lift us out of this mess, but that looks unlikely; see how sluggish growth has become (the 2000 decade ended in 2009, before the Greek crisis hit, so this is not just an issue of austerity).
Why is this? There has been too much focus on government debt; the problem is total debt in an economy, including the financial sector, corporates and consumers. Government debt usually rises sharply when another sector is badly hit; Cypriot government debt, for example, was only 61% of GDP in 2010. Think of debt as a claim on wealth. If a bank extends you a loan, you now have wealth in the form of money that you can spend on goods and services or use to buy an asset, such as a house; the bank also has an asset in the form of its loan, which it records on its balance sheet. Debt can thus increase rapidly relative to GDP and can help increase output, as the debtors spend their wealth.
All is well as long as the creditor is confident that the debtor can repay the debt. Indeed much debt in the modern economy is simply rolled over; businesses renew loans, homeowners replace one mortgage provider with another. And creditors are likely to be confident if GDP (and thus debtors' incomes) are rising.
【250 Words】
【Left】
One can thus have debt levels that are many times the level of GDP; i.e. there can be more claims on wealth than the annual production of goods and services. Of course, a nation's wealth (in the form of land, mineral resources etc) can be many times the value of its GDP so this may not appear to be a problem. But this is only a partial help since only a small proportion of a nation's wealth can be realised at any given year; if every American wished to sell his house to repay his debts, who would buy?
Similarly, when debt levels are many times the value of GDP, a large proportion of GDP needs to be rolled over every year. Say, debt is 400% of GDP and the average maturity of debt is five years; then 80% of GDP needs to be rolled over every year. If creditors become nervous about the debtors' ability to repay - as they will in the face of falling asset prices or stagnant incomes - they they will be unwilling to extend the loan. If debtors are able to pay out of their own resources, they will see a fall in their spending power. If debtors are able to repay by selling an asset, there will be a fall in asset prices. And if they are unable to repay, there will be a hit to the creditors' balance sheet. All three results hurt the economy.
Indeed, think of an indebted economy as like a bank. Just as a bank can function as long as too many depositors do not want to withdraw their money, the economy can function as long as too many creditors do not want repaying. the economy is thus vulnerable to a run.
When the private sector suffers a debt run, then the government can step in, rescue it and take the debt on to its balance sheet. This is fine as long as creditors have confidence in the government. As we have seen in Japan, if all the creditors are domestic, then the situation can be stable for quite a long time (although it is hard to believe that it is sustainable in the very long term). But if the creditors are foreign, as has been the case in parts of the euro-zone, a restructuring (write-off) of part of the debt will be necessary.
Inevitably there will be losers from this process. If you are a Cypriot with more than €100,000 in the two main banks, you will feel pretty hard done by. In reality, of course, a bank deposit is a loan to the bank (it is a liability on the bank balance sheet). It is thus a claim on wealth; if there is not enough wealth to meet all claims, then someone must lose out and as pointed out before, large savers are the most likely victims since they are the ones with the money.
An alternative to default is to inflate the debt away, to create so much money that the creditor suffers default in real terms, not nominal ones. As last week's column points out, this is being done in part by financial repression; holding real rates negative. Maybe this is what QE is designed to accomplish. So far, however, the central banks have had very little success in achieving the right kind of inflation; rapid growth in personal incomes. Such income growth will make it easier for individuals to repay their debts. Instead the West has tended to see imported inflation in the form of higher commodity prices. And that of course depresses real wages and makes it harder for individuals to repay their debts.
In short, we are nearly six years into this crisis and we have made precious little progress in running down debts and thus are vulnerable to further crises; Cyprus is just the latest example. Nor have we decided whether default or inflation is the preferred option. Either way, savers should beware.
【663 Words】
【Obstacle】 Informed Trading and High Compensation in Finance By Vincent Glode & Richard Lowery
Compensation in the financial sector has been a controversial topic in recent years. One particular group of workers who tend to earn extraordinary rewards for their expertise are traders of complex securities. For instance, before the recent crisis managing directors trading exotic credit derivatives were making $3:4 million on average per year. Since then, some Wall Street firms have gone as far as paying a few highly specialized traders more than the CEO to ensure they can retain them.
We propose a labor market model that highlights the importance for financial firms to hire highly talented individuals as over-the-counter (OTC) traders by offering them seemingly excessive levels of pay. High compensation arises in our model even though: (i) the employment of these workers is concentrated among very few firms, and (ii) these workers are hired only to strengthen their employers' position when bargaining with other firms over a fixed pie (hence creating no social value in the model). In fact, we argue that it could be because of these circumstances that specialized traders are so highly compensated.
We model a financial firm as an entity that engages in two interlinked tasks that require the labor of financial experts. Firms compete for a limited supply of skilled workers they can deploy as traders or as surplus creators. Deploying some workers as traders allows a firm to obtain a more precise valuation of a security before agreeing to trade it over the counter with another firm. Deploying some workers as surplus creators, on the other hand, raises the total gains to trade that can be split between firms. This can be interpreted as resulting from expanded efforts to locate counterparties with large private benefits from trade or from designing new securities with improved risk sharing properties.
When the supply of workers is low enough that firms find it optimal to hire them all in equilibrium, traders earn a premium over the profits their expertise generates for the firm. Intuitively, when trading expertise improves firms' ability to extract the surplus in a fixed-sum trading game, hiring traders imposes a negative externality on rival firms (i.e., trading counterparties). This leads to defensive bidding by firms that offer traders a premium over the profits they produce for the firm. Without such a premium, traders would be hired by rival firms, who would then use this additional expertise against the firm in question. Thus, traders are paid what we call a \defense premium" over their internal marginal productivity | they extract some rents for the losses avoided by preventing trading counterparties from employing these workers to bargain against the firm. Trading, as a whole, may still be a very profitable activity for financial firms as long as the surplus it creates is large. However, traders are compensated above the rents their expertise allows their employer to extract from rival firms.
Our model not only sheds light on the elevated levels of compensation we observe for highly specialized traders but also on those we observe for the financial sector in general, even after controlling for workers' ability levels and hours worked (see Philippon and Reshef 2012). Many other skilled workers in finance may see their compensation increased by the participation of their employer to OTC trading. Equilibrium wages for non-traders, or surplus creators, are determined as follows in the model. When workers are offered contracts that are tied to a particular task, surplus creators may appear to be \underpaid" as they earn less than what they produce for the firm and a lot less than what traders earn. The nature of the trading game allows hiring for surplus creation to have positive externalities, thus reducing the temptation for firms to hire surplus creators away from rival firms. The strict inequality of pay levels in this case is guaranteed by the optimal assignment of workers within the firm; all workers generate the same internal marginal productivity but rival firms see more value in poaching a trader than a surplus creator. If, however, firms assign workers to tasks after the labor market has closed, the dispersion in compensation between traders and surplus creators disappears, with all workers now receiving the high, trader compensation. Financial firms thus need to pay all their experts far more than their internal marginal value, and labor appropriates an abnormally large share of any surplus available.
Naturally, high compensation requires the supply of capable financial workers to be relatively small. If the supply of workers is large enough that hiring fewer traders does not imply that rival firms will employ more traders, firms do not find it optimal to offer a defense premium and traders only receive their reservation payoff. As a result, our model highlights the non-monotonic effect that a market's concentration can have on workers' compensation. The less concentrated a sector is, the more excess demand there is for traders and the higher the likelihood is that firms will have to offer a premium over workers' reservation payoffs. However, as concentration decreases, the probability that a firm will trade with the firm that actually hires a given trader it covets becomes smaller; hence the cost of losing this trader to another firm and the compensation he is offered in equilibrium both decrease.
High trader compensation should therefore arise in markets where most of the trading takes place among a few firms and where very few qualified experts are able to value the securities being traded. For example, Begenau, Piazzesi, and Schneider (2012) show that three dealer banks overwhelmingly dominate the market for interest-rate derivatives, whose total notional value surpasses $160 trillion. From a comparative perspective, trading concentration of U.S. interest-rate options is about two thirds greater than that of foreign-exchange options, as measured using the Herfindahl index by Cetorelli, Hirtle, Morgan, Peristiani, and Santos (2007). Consistent with the arguments in our paper, traders in the former market earn roughly twice as much, on average, as those in the latter market (see Options Group's 2011 annual compensation report). Similar patterns in concentration and compensation can also be observed, for example, in credit derivative trading (whose concentration is empirically documented and theoretically rationalized by Atkeson, Eisfeldt, and Weill 2012).
Our results could also apply to traders working in burgeoning markets. Notable, albeit extreme, examples include Josh Levine who pioneered high frequency trading in the early 1990's and allowed the proprietary trading firm Datek to “out-trade the very best in the business. They could grind Goldman to a pulp. They could make Morgan cry" or algorithmic trader Haim Bodek, who was poached from Goldman Sachs by UBS in the early 2000's \to build an options-trading desk that could go head-to-head with the likes of Hull [Goldman's electronic trading arm]."
From a welfare perspective, the cost of financial expertise takes the form of a transfer from firms to workers, but allocating workers to surplus extraction, rather than to surplus creation, still represents a social inefficiency. This inefficiency arises even though traders are, in equilibrium, overpaid" from the perspective of the firm; firms would prefer not to hire traders at the prevailing compensation levels as efficient trade would take place without experts, but do so to prevent other firms from hiring them instead. We discuss, at the end of the paper, how restricting compensation in the sector, as done in the recent crisis, can improve or worsen the allocation of workers across and within firms.
【1240 Words】
【Extended Reading】
【Article One】
The Most Effective Strategies for Success by Heidi Grant Halvorson
For years, I've been trying to convince people that success is not about who you are, but about what you do.
Roughly two years ago, I wrote about the "Nine Things Successful People Do Differently," which became HBR's most-read piece of content over that time span. It was a list of strategies, based on decades of scientific research, proven effective for setting and reaching challenging goals. I later expanded that post into a short e-book, explaining how you can make each one a habit. But how would readers know if they were doing enough of each "Thing"? (After all, we're terrible judges of ourselves.) To help answer that question, last spring I created something I called the Nine Things Diagnostics — it's a free, online set of questionnaires designed to measure your own use of each of the nine things in pursuit of your personal and professional goals.
I now have responses from over 30,000 people who've logged on and completed one or more of the Nine Things Diagnostics. The results are fascinating, and a bit surprising even to me. First, each of the Nine Things had a significant impact on success. (That actually didn't surprise me, for obvious reasons.).
But which packed the biggest punch? To find out, I recently took a look at the responses of about 7,000 people who had completed every Nine Things Diagnostic, along with a brief measure of how successful they felt they had been in reaching their own goals in the past.
In order of effect magnitude, the most impactful strategies were:
1. Have Grit — Persistence over the long haul is key 2. Know Exactly How Far You Have Left to Go — Monitor your progress 3. Get Specific — Have a crystal-clear idea of exactly what success will look like 4. Seize the Moment to Act on Your Goals — Know in advance what you will do, and when and where you will do it 5. Focus on What You Will Do, Not What You Won't Do — Instead of focusing on bad habits, it's more effective to replace them with better ones. 6. Build your Willpower Muscle — If you don't have enough willpower, you can get more using it. 7. Focus on Getting Better, Rather than Being Good — Think about your goals as opportunities to improve, rather than to prove yourself 8. Be a Realistic Optimist — Visualize how you will make success happen by overcoming obstacles 9. Don't Tempt Fate — No one has willpower all the time, so don't push your luck
Notice how persistence is at the very top of the list? While we marvel at people who've shown incredible perseverance — Earnest Shackleton, Nelson Mandela, Susan B. Anthony — I wonder how many people have ever thought to blame their own failures on "not hanging in there long enough"? In my experience, very few. Instead, we assume we lack the ability to succeed. We decide that we don't have what it takes — whatever that is — to meet the challenge. And we really couldn't be more wrong. Grit is not an innate gift. Persisting is something we learn to do, when (and if) we realize how well it pays off.
Or take "knowing how far you have left to go." Even someone with a healthy amount of grit will probably find his or her motivation flagging if they don't have a clear sense of where they are now and where they want to end up. How much weight would a contestant on The Biggest Loser lose if he only weighed himself at the beginning and the end, instead of once a week? How well would an Olympic-level athlete perform if she only timed her official races, and never her practices? We can see how essential monitoring is for others' performance, and yet somehow miss its importance for our own.
But does that mean that the items further down the list aren't as important? Not quite. For instance, #7, "focusing on getting better, rather than being good," actually predicted using each of the other eight things! People who focused on "being good," on the other hand, were less likely to use the other tactics on the list. In fact, if you do a lot of "be good" thinking, you are less likely to be gritty or have willpower, and you are more likely to tempt fate. You're also, not surprisingly, less likely to reach your goals.
Perhaps the most remarkable finding, however, was the extent to which people weren't using these tactics.
Respondents answered each of the diagnostic questions on 1-5 scale, with 1 being "not at all true of me," 3 being "somewhat true of me," and 5 being "very true of me."
If your average score for a particular tactic falls between Not at all and Somewhat, then you really aren't doing what you need to do to be effective. Here's how the percentages break down:
So about 40 percent of responders aren't being realistically optimistic, or focusing on what they will do, rather than what they won't. And 50 percent of responders aren't being specific, seizing the moment, monitoring progress, having grit, and having willpower. An astonishing 70+ percent of respondents also don't bother avoiding tempting fate. (Apparently, people just love to put themselves in harm's way.)
Here's some good news: an incredible 90 percent of responders report pursuing at least some of their goals with Get Better mindsets. But here's the Bad News: 80 percent of responders are also pursuing goals with Be Good mindsets. So there's still way too much I-have-to-prove-myself thinking going on out there, and it's sabotaging our success.
If you have a few spare minutes, I encourage you to take the Nine Things Diagnostics yourself, assuming you haven't already. It's a quick yet powerful way to target your weaknesses (and learn about your strengths). Remember, improvement is only possible when you know where you're going wrong, and what you can do about it
【Article Two】
Nine Things Successful People Do Differently by Heidi Grant Halvorson
Why have you been so successful in reaching some of your goals, but not others? If you aren't sure, you are far from alone in your confusion. It turns out that even brilliant, highly accomplished people are pretty lousy when it comes to understanding why they succeed or fail. The intuitive answer — that you are born predisposed to certain talents and lacking in others — is really just one small piece of the puzzle. In fact, decades of research on achievement suggests that successful people reach their goals not simply because of who they are, but more often because of what they do.
1. Get specific. When you set yourself a goal, try to be as specific as possible. "Lose 5 pounds" is a better goal than "lose some weight," because it gives you a clear idea of what success looks like. Knowing exactly what you want to achieve keeps you motivated until you get there. Also, think about the specific actions that need to be taken to reach your goal. Just promising you'll "eat less" or "sleep more" is too vague — be clear and precise. "I'll be in bed by 10pm on weeknights" leaves no room for doubt about what you need to do, and whether or not you've actually done it.
2. Seize the moment to act on your goals. Given how busy most of us are, and how many goals we are juggling at once, it's not surprising that we routinely miss opportunities to act on a goal because we simply fail to notice them. Did you really have no time to work out today? No chance at any point to return that phone call? Achieving your goal means grabbing hold of these opportunities before they slip through your fingers.
To seize the moment, decide when and where you will take each action you want to take, in advance. Again, be as specific as possible (e.g., "If it's Monday, Wednesday, or Friday, I'll work out for 30 minutes before work.") Studies show that this kind of planning will help your brain to detect and seize the opportunity when it arises, increasing your chances of success by roughly 300%.
3. Know exactly how far you have left to go. Achieving any goal also requires honest and regular monitoring of your progress — if not by others, then by you yourself. If you don't know how well you are doing, you can't adjust your behavior or your strategies accordingly. Check your progress frequently — weekly, or even daily, depending on the goal.
4. Be a realistic optimist. When you are setting a goal, by all means engage in lots of positive thinking about how likely you are to achieve it. Believing in your ability to succeed is enormously helpful for creating and sustaining your motivation. But whatever you do, don't underestimate how difficult it will be to reach your goal. Most goals worth achieving require time, planning, effort, and persistence. Studies show that thinking things will come to you easily and effortlessly leaves you ill-prepared for the journey ahead, and significantly increases the odds of failure.
5. Focus on getting better, rather than being good. Believing you have the ability to reach your goals is important, but so is believing you can get the ability. Many of us believe that our intelligence, our personality, and our physical aptitudes are fixed — that no matter what we do, we won't improve. As a result, we focus on goals that are all about proving ourselves, rather than developing and acquiring new skills.
Fortunately, decades of research suggest that the belief in fixed ability is completely wrong — abilities of all kinds are profoundly malleable. Embracing the fact that you can change will allow you to make better choices, and reach your fullest potential. People whose goals are about getting better, rather than being good, take difficulty in stride, and appreciate the journey as much as the destination.
6. Have grit. Grit is a willingness to commit to long-term goals, and to persist in the face of difficulty. Studies show that gritty people obtain more education in their lifetime, and earn higher college GPAs. Grit predicts which cadets will stick out their first grueling year at West Point. In fact, grit even predicts which round contestants will make it to at the Scripps National Spelling Bee.
The good news is, if you aren't particularly gritty now, there is something you can do about it. People who lack grit more often than not believe that they just don't have the innate abilities successful people have. If that describes your own thinking .... well, there's no way to put this nicely: you are wrong. As I mentioned earlier, effort, planning, persistence, and good strategies are what it really takes to succeed. Embracing this knowledge will not only help you see yourself and your goals more accurately, but also do wonders for your grit.
7. Build your willpower muscle. Your self-control "muscle" is just like the other muscles in your body — when it doesn't get much exercise, it becomes weaker over time. But when you give it regular workouts by putting it to good use, it will grow stronger and stronger, and better able to help you successfully reach your goals.
To build willpower, take on a challenge that requires you to do something you'd honestly rather not do. Give up high-fat snacks, do 100 sit-ups a day, stand up straight when you catch yourself slouching, try to learn a new skill. When you find yourself wanting to give in, give up, or just not bother — don't. Start with just one activity, and make a plan for how you will deal with troubles when they occur ("If I have a craving for a snack, I will eat one piece of fresh or three pieces of dried fruit.") It will be hard in the beginning, but it will get easier, and that's the whole point. As your strength grows, you can take on more challenges and step-up your self-control workout.
8. Don't tempt fate. No matter how strong your willpower muscle becomes, it's important to always respect the fact that it is limited, and if you overtax it you will temporarily run out of steam. Don't try to take on two challenging tasks at once, if you can help it (like quitting smoking and dieting at the same time). And don't put yourself in harm's way — many people are overly-confident in their ability to resist temptation, and as a result they put themselves in situations where temptations abound. Successful people know not to make reaching a goal harder than it already is.
9. Focus on what you will do, not what you won't do. Do you want to successfully lose weight, quit smoking, or put a lid on your bad temper? Then plan how you will replace bad habits with good ones, rather than focusing only on the bad habits themselves. Research on thought suppression (e.g., "Don't think about white bears!") has shown that trying to avoid a thought makes it even more active in your mind. The same holds true when it comes to behavior — by trying not to engage in a bad habit, our habits get strengthened rather than broken.
If you want to change your ways, ask yourself, What will I do instead? For example, if you are trying to gain control of your temper and stop flying off the handle, you might make a plan like "If I am starting to feel angry, then I will take three deep breaths to calm down." By using deep breathing as a replacement for giving in to your anger, your bad habit will get worn away over time until it disappears completely.
It is my hope that, after reading about the nine things successful people do differently, you have gained some insight into all the things you have been doing right all along. Even more important, I hope are able to identify the mistakes that have derailed you, and use that knowledge to your advantage from now on. Remember, you don't need to become a different person to become a more successful one. It's never what you are, but what you do.
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