Who was Adolf Merckle and Why are we Writing about Him?
May 7th, 2009(We are delaying the upcoming series of blogs about the six psychological money traps for one week to discuss a dramatic story of Poverty Thinking.)
Do any of you know who Adolf Merckle was? Last year, he was one of the wealthiest people in the world. And just a few months ago, he made the headlines for a different reason. This blog is dedicated to Mr. Merckle and the financial and life lessons he offers for all of us.
Merckle was a German billionaire who took over a family company with eighty employees in 1967. He turned it into a giant corporation with 100,000 employees. He owned Germany’s largest cement company and amassed a fortune of about twelve billion dollars! With the global economic meltdown, he lost six billion.
How many of you would be financially content with six billion dollars? Like myself, I assume you can answer that question in a New York minute.
After his loss, Merckle was negotiating with forty banks to get a bridge loan to refinance his investment company. Although he was consistently able to overcome adversity before, this time extreme Poverty Thinking overtook him.
He committed suicide by laying down on the tracks of a speeding train. The ironic conclusion to this story was that his bridge loan was approved less than two days later!
Why did he kill himself? According to a statement by his family, “The desperate situation of his companies… and his powerlessness to act, broke the passionate family entrepreneur…” One of his friends, Ernst Junger, said: “His companies were his life and when he was going to lose control of them he obviously felt he would lose control of his life, that is the only way I can see it.”
Our attempt to understand Merckle is based upon the idea that money means different things to different people. Very wealthy people usually derive a great amount of passion, meaning, purpose, self-esteem and even identity from money. When they lose a large amount and their identity and ego are highly wrapped up in their wealth or power, they usually become depressed. When they believe they are not going to regain their position (as Merckle did), their depression can become suicidal.
The purpose of today’s blog is to see what life lessons we can learn from Merckle’s suicide. Several that come to mind quickly are:
1) Our own lives are more important than money.
2) Relationships (and family) are more important than money.
3) Living in the present moment is more important than money.
4) Six billion dollars is more than enough.
5) When our identity is based upon something external that we cannot control, watch out!
Below are three interviews related to today’s blog:
The CNN interview on Anderson Cooper is where Dr. Gottfurcht speaks about the psychology of billionaire suicides. The Associated Press link afterward provides additional insights into how the wealthy are handling losing so much money. More importantly, in the Vanguard interview, Dr. Gottfurcht gives practical tips to help all of us to handle the economic turmoil.
We invite your comments about what Merckle’s story means to you, what you learned from it and what tools your are using to help yourself to handle these challenging financial times.
James W. Gottfurcht, Ph.D.
Zoreh Gottfurcht
The Financial Power of the Self-Fulfilling Prophecy
April 25th, 2009Let the dialogue begin! Starting immediately, this blog is open to comments.
Here are the responses from one of the three winners from the last blog’s contest. The writer is Marc from the Southern California area. Congratulations, Marc, on your gift of the one-hour Psychology of Money Intro CD.
Marc’s Story
1) Think of an example in which Prosperity Thinking manifested a successful self-fulfilling prophecy with your money or work.
“I have always believed in myself and my ability to manifest financial success (Prosperity Thinking). After teaching for seven years, my friends took me skiing, and I was hooked. The only challenge was that I couldn’t afford to ski very often on my salary. Fortunately, I learned that if I could get fifteen students to go with me, I could ski for free. I found it so easy to get the students at my school to go on my trips. I actually was able to develop this as a small business on the side. For the next ten years while teaching, I kept getting more and more students to ski. It became a highly enjoyable side business for me, combining pleasure with money.”
“Gradually, I branched out from ski trips to other venues. I thought it could be worth the risk of giving up my stable, relatively well paying career because of my passion to develop the travel business. After doing some soul searching, my passion and deep belief in myself (Prosperity Thinking) won out.”
2) Think of an example in which Poverty Thinking manifested a negative self-fulfilling prophecy with your money or work.
“Before reading your blog I could not think of any Poverty Thinking I had about my new career. I became successful right away and my trips were so popular that I added several new locations.”
“However, I now realize I did have Poverty Thinking that manifested a negative self-fulfilling prophecy and caused me to make a lot less money than I could have. In my business, I have a net cost and can mark up what I think is reasonable for my profit. Due to the financial fear I felt about the uncertainty of replacing my teaching income (Poverty Thinking), I minimized my mark-up. Despite being told by my customers “How can you charge so little for your trips,” I worried about people thinking my prices were too expensive. It took a number of years for me to overcome this type of thinking and to raise my prices.”
“The results: Since my overhead for each person was the same, my new prices translated into a dollar of profits for each dollar of increased mark-up. Since my original profit margin was so low, this resulted in increasing my net profits for the same number of customers by 50% the next year! These additional profits gave me more confidence (Prosperity Thinking) so I expanded my trip offerings and increased my profits faster in the following years.”
3) Briefly describe what you learned about money and/or about yourself from these examples.
“Despite my strong belief in myself, my Poverty Thinking in this one area caused me to charge too little for my trips. I could have made a lot more money if I had enough Prosperity Thinking to raise my prices sooner. Also, from doing the exercise, I now realize that my delay in raising my prices resulted in growing my business more slowly. Now, I can see how much one area of Poverty Thinking can reduce financial success.”
Even though Marc’s travel business has been very successful, his comments showed he understood how his Prosperity Thinking and Poverty Thinking produced different self-fulfilling prophecies that influenced his financial success… for richer or poorer, for better or worse.
What are your experiences with Prosperity and Poverty Thinking?
What interesting stories do you have to share?
Beginning next week, the coming series of blogs will be about Psychology of Money’s six psychological money traps that can undermine your goals. These blogs will give you a variety of tools to navigate the traps successfully so you can enhance your financial, relationship and life success.
We call these traps the RAPIDS. For those of you who don’t want to wait a full week before learning about them, you can get a sneak preview by watching Dr. Gottfurcht’s keynote speech on the YouTube video called Mackenzie University Part 2. They can also be accessed at our web site, www.psychologyofmoney.com
James W. Gottfurcht, Ph.D.
Zoreh Gottfurcht
