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Don’t wish it were easier, wish you were better.
-Jim Rohn

You can see some of the traits of the 10x companies; I talked about in my last post on becoming wealthy under any economic condition in Warren buffet.

Let’s do a quick recap of the attribute of the 10x companies, studied by Jim Collins, bestselling author of Good to great.

Collins concluded that 10x companies have four main attributes in common:

1. Fanatical Discipline
2. Creative Experimentation
3. Productive Paranoia
4. Level Five Ambition

I talked about the first two traits- fanatical discipline and creative experimentation- in my last post

I am going to move on and show you how you can apply – productive paranoia and level five ambitions -to help you profit in all stages of the economic cycle.

You see, smart investors get wealthy no matter the economic cycle. . The latest Organisation for Economic Cooperation and Development (OECD) research study on income equity backs my point. According to the OECD research, the average income of the top 10 percent of Americans in 2008 was $114,000, nearly 15 times higher than the bottom 10 percent.

You can achieve the same level of income as top earners do. All you need is to develop the habits of highly successful people.

I found a similar pattern for success, reading Collin’s book on the 10 x companies. I believe you can also develop the traits-10x companies have to climb your own ladder of success

Let us look at the other two traits in more detail

Productive Paranoia

All of the 10X companies seemed to be paranoid about risk to their business. Instead of reacting like people on the lookout for the next crises, they always made it a duty to keep an eye for the risk that could doom their company.

The leaders of 10X companies knew at all times the weaknesses and threats to their companies and devised a way to make sure they never got close to it. They knew that their companies would run into   rough times along the way, but they made sure they could afford to stay in business during times of their downturn.

There were three specific things that each of these companies did:

1. They ensured they had enough cash on hand to make sure they were prepared for the unforeseen circumstances before it happened.
2. They ensured they were comfortable with the risk they were taking on before taking on any new project.
   1. They always studied the trends of their market place. They would sense a change in the marketplace, and determine how long they had to respond and then take appropriate action. They would then focus on the execution of plans and objectives.

Moral of this trait:   You should think carefully before for taking risks. You must know your risk to the downside and be prepared to minimise your finance risk, before you take on any new project.

Let me explain…

In real estate investing, a smart investor plans for unforeseen risk s in buying a property. He does his homework on the carrying costs and other expenses that can happen buying a property.  He will make an offer only after he feels he is comfortable with the deal. a smart investor also plans ahead for the carrying costs, rehab expenses  and  makes sure he has enough cash  hold on to the property  in case  the property takes longer to sell  as initially planned .

To succeed as a stock market investor, you have to keep an eye on the downside risk when you buy stocks. Successful investors allocate a portion of their cash to buy stock. He never spends too much buying one stock.  Smart investors always make it a duty to have an entry and an exit strategy when they buy stocks. A successful stock investor never tries to correct a stock buying mistake. He cuts his losses and let his winners run.

If you look closely at great investors, you’ll see productive paranoia   at work. Warren Buffet’s Berkshire Hathaway sits on a huge pile of cash ($ 106 billion and counting). Warren Buffet only buys a company when he is sure he knows enough about the company. He does not speculate.  Warren Buffet will invest in a company share only when he is sure he can make money. His often quoted words are “never lose money…if you lose money…remember rule number 1”

Level 5 Ambition

Jim Collins concluded that 10X leaders displayed level five leadership traits; they displayed a desire for their companies to succeed beyond their tenure. The way they did this was through something called SM and C.

These are Specific, Methodical and Consistent Operating Principles. The SM and C’s are specific criteria for how they will run their company.

Moral of this Trait – You need have criteria before taking on any new project. You see to become a wealthy investor you must invest like a pro. The difference between a professional player and an amateur is in the way they act and practice. A professional investor understands the rules of investing. He uses the rules of investing to his advantage.

Robert Kiyosaki, bestselling author of Rich Dad Poor Dad says the secret to wealth is to find a formula for getting rich and keep on using it.

The late Jim Rohn, author, philosopher once said the problem you’ll ever face in life is not the state of the economy affecting your finances…but the greatest enemy to your financial freedom is yourself. Rohn often use to say “do not wish things were easier, rather ask for skills”.  Jim Rohn concluded that your operating philosophy is critical if you ever want to become wealthy. He also said once your philosophy was right, you‘d ride through any economic hardship to become wealthy.

I believe Jim Rohn know what he is talking about…and for this reason I recommend you look up the 4 traits of  10x companies in Jim Collins book Great by Choice .  See if you can apply them to your present situation and you will end up better prepared to succeed under any economic condition