The 10/10/10 Method: How Making Decisions Like Warren Buffett And Ray Dalio Can Change Your Life
Do you find it difficult to pick a side when presented with some tough decisions to make? If so, then the 10/10/10 method is the perfect solution for you. Master this simple three-step tactic, and you will soon find it easy to make quick and correct decisions just like legendary investors, Warren Buffet and Ray Dalio.
1. What Is The 10/10/10 Method?
The concept of the 10/10/10 method is pretty straightforward. What it advises you to do is to ask three questions when faced with a prospect of making a choice:-
For example, suppose that you are presented with a choice to buy a refurbished vehicle within the next 24 hours at 25% discount. Now, this might entice you to buy the vehicle immediately. But at the same time, you might also be concerned as to whether it would be a bad choice. In this torn state of mind, the 10/10/10 method can offer some simple and beneficial guidance.
Ask yourself how you would feel about the buying decision in 10 minutes, 10 months, and 10 years. If you think that within 10 minutes or 10 months of spending money you might regret it, then do not go for making the investment and buying the car. Look for other options. However, if you think that after 10 years, you will not even be concerned about having spent the money, then you can consider buying it. Just make sure that the asking price is reasonable enough.
2. The Psychology Of Bad Decisions And How The 10/10/10 Method Helps You Overcome It
In order to understand how the 10/10/10 method works, you have to first know the psychology involved in making a bad decision. So, let us first analyze what is a ‘bad decision’.
Imagine that you are suddenly presented with an opportunity to invest in a particular stock that your broker said will double in the next 3 days. But to take advantage of it, you will need to invest the money right away. Now, the prospect of doubling the money in just three days can be so tempting that you decide to bet all your savings on the stock. Then, the unexpected happens and the stock crashes in three days instead of going up. You have lost nearly all your hard-earned money.
In the above example, the decision to invest in the stock turned out to be a ‘bad decision’. And this was something you could have avoided if you had applied the 10/10/10 method. Before investing, consider the worse possibility of losing all your money and ask yourself the following question – how you will feel about your decision to invest in the stock in 10 minutes, 10 months, and 10 years.
If you think that within just 10 minutes of betting your money, you will be fretting and worried about the possibility of losing all your savings, then do yourself a favor and refrain from making the investment. If you think that in 10 months, you will hate yourself for losing all your money, then that again is a sign that you should never invest in a stock, especially one with numerous unknown underlying risks.
And finally, if you are making a huge investment that will have an adverse impact on your life over the course of 10 years, then run away from the stockbroker and never look back. You don’t want to spend the next 10 years of your life trying to make back the money you lost from the trade.
Think about the consequences of a decision. Not just the ‘brief ecstasy’ of a hit decision. Ponder on the implications and decide whether you’ll be well off or decline. In short, train your mind to start thinking beyond the immediate result because that’s usually just based on the emotions involved at the time.
3. Tips To Successfully Practice The 10/10/10 Method
Now that you have understood what the 10/10/10 method is and how it works to help you, the next step is to develop qualities that can enable you to always use this tactic to your benefit. These qualities include – positive attitude, perseverance and temptation control.
i. Positive Attitude
The first quality you should possess if you wish to successfully employ the 10/10/10 method to your advantage is to have a positive attitude. Many people will learn about the 10/10/10 method, but never apply it because they believe it won’t help them much. This is a defeatist attitude. You have literally given up on an idea before you have even tried it. Don’t be prey to such thoughts. Remain positive and mentally decide to practice the 10/10/10 method for at least a month or two. This should give you enough time to decide whether the tactic is useful or not.
Though the 10/10/10 method looks fine on paper, making it practical can be difficult for some people. However, this has nothing to do with the process itself. Instead, it largely has to do with how lazy people can be. In fact, some people get so lazy that they choose not to implement the 10/10/10 method just because it will cost them a few extra minutes of time.
And if you have such tendencies, then make sure to keep them in check. No matter how lazy you might feel, be sure to use the 10/10/10 method in all your hard decisions. Yes, it can become repetitive, boring, and stressful after you implement it the first few times. But remember that all good things come only to those who persevere. So, stick with the method and slowly the 10/10/10 tactic will become second nature. In fact, you will automatically start thinking in terms of the 10/10/10 method.
iii. Control Temptations
You should also develop a good control over your temptations. The 10/10/10 method will give you a good overview on whether a decision will turn out good for you over the short and long terms. However, in order to use this knowledge and convert it into success, you have to implement it. So, if the method tells you not to buy a 50 inch 4K TV, then you should not buy it. If you give into your temptations and end up buying the television, then there is literally no use of even applying the 10/10/10 method in the first place. So, learn how to keep your temptations in check and you will definitely be able to use the 10/10/10 method to your advantage.