Arnold Van Den Berg childhood years, in the 1940s, were filled with angst. He and his family were living in Holland, just down the street from Anne Frank. Taken over by the Germans, both of Arnold’s parents survived Auschwitz. However, a 19-year-old girl saved Arnold by miraculously sneaking him through the German lines. Today Arnold shares his story by speaking at schools on his experiences growing up, being a holocaust survivor, and helping young people learn from those who have been through tough times.

While Arnold has no formal college education, his rigorous self-study, tremendous dedication, and years of industry experience are the foundation of his extensive market knowledge. He began in the industry working for several financial services companies. However, he quickly found that he didn’t always agree with leadership and he wanted to be in a business that he loved at a place that he believed in. Wanted to make his own decisions, Arnold formed Century Management in 1974.

On this episode Arnold discuss the major life lessons he’s learned surviving the holocaust, the power of the subconscious mind and some investing wisdom! 

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Transcript 

[00:06:05] Sean: Arnold, welcome to What Got You There. How are you doing today?

[00:06:08] Arnold: Very good, Sean. Thank you very much. 

Arnold’s Early Life

[00:06:10] Sean: This is an honor. I know I’ve told you this in the past, but you’re truly one of my heroes. I just feel incredibly lucky and fortunate to have this conversation. You’re someone who has not let their past dictate the life that they’re going to create in the future and the way you’ve used your mind, the way you’ve positively impacted others, the way you’ve shared your wisdom and been so kind and humble with that has truly been so impactful for me. I’m just so excited to bring this conversation to the listeners, but I don’t know if there’s a better place and maybe the only place to start is around your beginning and your early life. I would love to hear about the early days of Arnold.

[00:06:55] Arnold:  Okay, well, I’m happy to be here, Sean, and I’m always happy to share what I consider some great lessons that I learned through my life, through the Holocaust, through growing up and building a business, and so on and so forth. It’s always great to share that because it’s so good to see people can benefit when you struggle and suffer and finally come to a conclusion. And now you can share that with somebody and they can learn easily what took you difficulty to learn. If you want me to start off with my life story, I would start off with the fact that I was born in Amsterdam, Holland during the Second World War. 

I lived on Prinsengracht, which is a very famous street because Anne Frank also lived on the same street. We were probably a couple of miles, maybe six to eight blocks, I don’t know exactly. We lived on 823 and she lived on 267. We lived on the same street. Our family followed the same pattern. When Germany invaded Holland, the Jewish people went into hiding and they were hidden by their friends, Dutch people who were willing to risk their lives to hide them. Because if you hid Jews and you got caught, you were sent to a concentration camp. It was a very serious undertaking. 

The Frank family hid in an attic. My folks went to Marie and Hank’s bunker, which was a Dutch family that was friends of theirs. They offered them their home and they built a little fake wall behind a closet where if anybody came in, they would go into the closet, all you did was see clothes and behind that wall was a space where you could hide. And so they did that and the problem was my brother and I was only two and a half to five years old. It’s hard to keep two kids quiet. It was hard to keep me quiet in case somebody searches the house and that became a problem. 

It’s still hard to keep me quiet. Anyway, so they had to find a solution. We did get hidden on the farm for a little while, but the farm people on the farm couldn’t keep watching the kids. So they had to find another solution and they found a 17-year-old girl, it’s hard to believe, who was willing to risk her life to save me and smuggle me through the German lines. The reason that was so risky is you needed a passport. And the problem is my folks didn’t have a passport because Jews didn’t have passports in Holland. My dad was born in Germany, my mom was born in Poland and when Hitler came, they saw it coming so they went into Holland. 

They lived there for a while, built a business, and they had a very good life until the Germans invaded Holland. And they went into hiding. And the big problem was how do we get the kids into this orphanage, they had to go on a train and they had to go through passports. The Dutch people had a fake organization in the underground that made fake passports. And so she had a fake passport. The problem was it wasn’t very good, and if somebody really took a serious look at that, they could see that it wasn’t a genuine passport. So that was the risk. 

In order to mitigate that risk, they put a gentleman in front of us. Like if we were seated here, this gentleman was right in front. So when the guard came up to check the passport, the strategy was to keep him so busy that he wouldn’t have time to check everybody’s passport because he could only hop on the train while it was parked there, check the passports and then a whistle blew and he had to get off. Fortunately, this gentleman in front of us was able to keep this guard or German officers busy to where the whistle blew and they never did have to check our passport. That was a big relief. 

I spoke with the lady that did that after the war, and she told me when he was talking to the guard, her heart was just pounding like crazy. She just thought, boy, if he checks my passport, we’re in trouble. So anyway, she delivered me to the orphanage. Eventually, my brother came through another route, so my brother and I were in this Dutch orphanage. And I was in there from about age two and a half to six. My parents in the meantime were sent to a concentration camp. They were caught and they were sent to Auschwitz. They were in Auschwitz for about 15 months. 

It was just one of the most horrible experiences you can imagine. And you can see what’s going on in Ukraine right now, that’s the same kind of thing that was going on in Holland. The Germans bombed, took prisoners, just terrible. Anyway, conditions in the orphanage were dire because there wasn’t enough food. There wasn’t enough water. Many conditions were difficult. A lot of the kids I learned eventually died there. I almost died from malnutrition. We used to be so hungry. You have no idea what hunger does to people, but you never forget it. 

We used to go out in the field and eat plants and flowers and things like that. Hey, try this. This tastes pretty good. Everybody’s trying to help each other. Plants are not a great diet, but anyway, they did cover some of the hunger pains. And the other thing you learn, you learn survival at a very early age because they would have us in for lunch, we would have one little piece of bread with a little candy type on their little mince-like. And what you do is you bow your head to pray, and then when you lift your head, somebody took your bread. So you learn to cover it. Even as a child, you learn to lean over it and cover it and keep your eyes on it so nobody could take it from you. 

[00:13:36] Sean: That’s why you’re always eating like that at lunch. You’re curled over that salad there. No one’s getting a piece of that lettuce!

[00:13:42] Arnold: Ha that’s right. Well, you learn different things about survival at an early age. It’s just amazing, and you adapt. I stayed there until I was age six. And when my dad picked my mom and dad picked me up, they were just shocked. My dad didn’t even think it was me because when he delivered me to the orphanage, I was bigger than I was three years later. When I first walked in, he said, that’s not Arnold. And I was just shocked. I was so eager to go and leave the orphanage, and these were my parents, and he says, that’s not my son. 

My mom looked into my eyes and she said, that’s Arnold. And so anyway, I went with him. But kind of a cute story, he was going to put me to bed that night and I asked if he would lift me up and I could turn off the light switch and sing goodnight to the sun. So apparently that’s a ritual that we did before the war. He would lift me up, I’d get to switch the light off, and then I would sing goodbye to the sun. And so I asked him to do that again, and then he knew that I was his son because I had remembered that. And I didn’t even know that I remembered it.

[00:15:00] Sean: Arnold, I get chills hearing that because I have a son who’s three and a half, and the thought that I could lose him for a few years, go back to him, and then not be able to even recognize him, what does that do for you? What do you think about that?

[00:15:18] Arnold: Well, one of the things that all the kids wanted was to get back with our parents. Every time a survivor walked up the driveway, all the kids would run to them hoping that it was their parents. Well, I used to do that too, but after a while, it never turned out to be my parents, so I never bothered again. I was sitting out there playing with this girl in the front, and she said, Arnold, guess what? You see those people coming up the driveway, I’ve heard that those are your parents. And I looked at them and I didn’t recognize them. I thought, well, geez, if it is, that’d be great.

It was almost too good to believe. I said, Nah, I don’t think it is. So then all of a sudden, one of the teachers called me and she says, Arnold, come on in. So I thought, geez, maybe that is my parents. I go walking in really excited. My dad looks at me and he says, that’s not Arnold. And I go, oh, but then my mom stepped in and looked into my eyes and she said, she knew it was me. And then that evening he went to lay me to bed and I didn’t realize this was a ritual we had done before the war. He used to lift me up, I could reach to turn off the light switch, and then I would sing a song which is goodbye sun. And he put me to sleep. 

I asked him to do that, and then he instantly knew that I was his son because of the fact that this was something we had done before the war. And so that really got things going well. I was very excited to leave the orphanage. I just couldn’t wait to get out of there. It wasn’t a place that I enjoyed being there, nobody did. And so from then on, we took a trip, we were on a bicycle, I was in the back of my dad’s bicycle and we went to the farm where my brother was hidden during the war. My brother was sent to a farm and he lived there. I was really excited to see him because of the fact that we were split up in the orphanage. 

What happened one day I woke up and went to see my brother and he was gone and I asked everybody and they couldn’t find him. And nobody knew where he was. What happened is my brother was a very gregarious, very lovable type of kid, and when the Germans came in, they didn’t know he was a Jewish kid. They thought he was a cute kid. They’d give him rides on tanks and all of this kind of stuff. And the people who ran the Orphanage were worried about Zig because he knew that he was Jewish and they were afraid that he would give that away.

And there were many Jewish kids hidden in the orphanage and that would’ve given the whole operation away. And he said, one time, my mom doesn’t wear the star. Well, if he would’ve said that to a German officer, they would’ve known he was Jewish. In the middle of the night without telling me they moved him to the farm and I woke up the next morning and he was gone and I was just destroyed. That was probably the lowest point in my life when all of a sudden I’m all alone. I couldn’t wait to get him. And they changed his name from Zigman to Fritz to make it sound like a Dutch kid.

I kept telling my mom, I want to see Fritzie. She says we’re going to see him. So we come up to the farm and he was standing there with a pail. He was getting ready to feed some of the animals. I just jumped off the bike, we both almost fell off the bike and I just ran up and we hugged. And that was probably the happiest moment in my life because he was like my lifeline. He took care of me. He looked after me. He was really a great brother, and then all of a sudden he was gone. That was a horrible situation. But then I was really relieved when I saw him. And then the family got back together. 

Lessons From The Holocaust

My dad went back into the business and we stayed in Holland for about four or five years, and then we came to America. So that’s how all that got started. But one of the things I wanted to mention is there are a lot of lessons that we learned from the Holocaust. And one of the great lessons I learned from the Holocaust is when my mom and dad were on the train to Auschwitz, they were there with a couple of friends of theirs, and she went all through Auschwitz experience with this friend. She was quite a bit younger and my dad was with her fiance and they all went to the outfits together.

The men and women were separated. Her name was Feppie Cohen, and we’re going to be celebrating her hundredth first birthday on March 23rd. She was there all the time with my mom. She told the story that on the way to Auschwitz, she had an argument with her mother and they weren’t talking to each other. When they got to Auschwitz, they were separating the men and women together, and her father went up to her and said, Feppie, I have a very bad feeling about this place, and I think you should apologize to your mother. 

Well, all my life, I thought that she had apologized and I said that in the lecture, but it turns out five or six years ago, I was talking to her son, he says, no, the problem with my mom was, she didn’t apologize. She suffered her whole life feeling guilty because she never apologized to her parents. What happened is she went into the barracks, she couldn’t sleep, she stepped outside and there was a woman standing there and they got to talking and she said, I see this big chimney with all this black smoke coming out, what is that? The lady said, well before I answer that, let me ask you a few questions. 

And she said, sure. She said, did you come here with your children? She said, no, I don’t have any children. She says, great. She said, did you come here with your parents? She says, yes, I did. She says, well, I hate to tell you this, but you’re going to find out soon enough, and you might as well know now that is the crematorium and when women and children come to Auschwitz, they never keep them. They gas them the first day, that’s number one. And number two, when they’re old and when they’re older people and they can’t work, they also gas them. It sounds to me like your parents were older, and they probably were gassed and that’s the crematorium.

She said her knees just got weak, she just had to go lay down. She said she couldn’t believe it. It was just such a shock coming out of a regular way of living in a place like that. And so she said, the first thing she saw is that she didn’t apologize to her mother. So the first lesson you learn from that and that I learned, and I took to heart, whenever you’re in an argument with a loved one, always apologize. That’s my first rule. And I made that a rule when I learned that story. My wife and one of my daughters always used to, if I blew up in a situation, they’d always bet how long it would take me to apologize. 

I got to the point where immediately when I did it, I walk in and apologize. But there’s another lesson I learned, first of all, if you lose your cool during an argument, even if you’re right in principle, you’re still wrong because when you get mad, your ego get in the way and when your ego gets in the way, you could never solve an argument. And so there’s a quote that says when personality steps in, truth steps out. When you get angry in an argument, that means you’re spending your time defending yourself instead of seeking the truth. 

It’s a very important principle. And when we get into dealing with anger, which I will do later on the podcast, you’ll see how critical it is because when you keep that anger inside of you and it prevents you from apologizing or resolving the conflict, the longer it goes, both parties get more upset, more upset, and then it’s harder to come together. You’re wrong because you lost your cool, so you might as well apologize. And my experience has been that 50% of the time you’re wrong anyway, so you might as well get it over with and apologize, and then you get to the truth quicker. 

So that’s another important principle, you have to apologize. You have to be objective. And it prevents you from building up anger and you become a lot healthier, clearer thinking and everything else. And I’ll get to deal with that a little bit later. The next lesson that I learned, which is probably the most valuable lesson is my dad was on a death march in Auschwitz. And we learned something that is really incredible. I am about 5’8, 158 to 161 pounds, my dad was one inch shorter than me and he weighed 85 pounds. So basically he weighed almost half of what I do now. 

He was on a death march, it was subzero weather, you know Poland in regular clothes, no winter clothes. They gave him a slice of bread, which is the equivalent of about two slices of our regular bread, and the water you got by scraping the snow off the guy in front of your shoulders. And you marched 24 hours. The snow was halfway up your knees, and if your knee touched the snow, which means you kind of buckle or you got weak, they beat you. And if you didn’t get up, they shoot you. So my dad said, as he started the march, said, what’s the most important thing I can do to survive this march? 

He was trying to survive and he thought about it and he said, as he got tired, he knew that the most important thing is to be able to keep going and keep moving his legs but it was snowy and icy so you can easily slip. He said the most important thing was when he moved his leg, he made sure it was on solid ground, that he had a good grip. He would lock his knee so that he wouldn’t fall down and then he’d move the other foot. And he said, the more tired he got, the more difficult it was. But he said he was so focused on just moving his legs because that’s about all he could do. 

So he said, I didn’t think about how tired I was. I couldn’t think about how cold I was. I couldn’t think about how hungry I was. I couldn’t think about how far we still had the march. I just didn’t think about anything, but just moving that leg. And every time I thought I couldn’t take another step, I just concentrated on moving the leg and I was able to do it. And he said I got into a rhythm to where I actually felt the concentration, he said, there’s something about the mind, the more you focus it, the more strength you get. And so I really got into that and I was able to go through the whole thing.

He said we started with a wide field of people, and by the time we got there, there was just a small group of people who made it. And I said, how did you make it? I couldn’t even imagine even today marching 24 hours without breaks. He said it was something about the mind that I cannot explain, but there’s something there when you focus. And I used that principle whenever I was in a tight spot to really just focus on what I had to do and just keep going. So that left an impression on my mind that I wanted to find out what that was, and I searched about it most of my life. And I’ll tell you a little more about it. 

But anyway, that was one of the things that I thought was a very valuable lesson to learn at principle, and I learned to answer the secret to that. And so my family got reunited. We came to America, we moved to East Los Angeles in California. And I started going to school there and I had some very unfortunate experiences there. When we first got there, my mom said, geez, we’re going to America, you’ve heard all these wonderful things about America. She wanted to make sure that we were dressed up properly. She bought an expensive suit for us which was short pants with long socks. 

And that’s how I went to school, so you can imagine how that went over. The first day, I probably got several fights in it because kids were teasing us. My brother turns out, was very strong working on the farm. He had to work with the farmer and he had to do all the duties around there. He got to be very strong. He never really understood his strength. So when the kids were picking on him, he did really well. He would just hit a kid and the kid would go flying and that would be the end of it, but I was very weak and skinny.

We got into several fights, he took care of the kids that were bothering me, but it was a very terrible experience to go to school that way and be received. But the next day, I begged my aunt, we had an aunt that survived the World War because she moved to America before the war, and she went out, bought me a pair of jeans, bought both of my brothers, a pair of jeans. We felt really good going to school the next day.

[00:30:00] Sean:  Arnold, real quickly, how many of your family members survived the Holocaust?

[00:30:05] Arnold: Well we lost about 39 members of the family. The only people that survived were my mom and dad, my older brother, and myself. My mom was from a family of nine kids. She was the eighth and they were all married and had kids. And so nobody survived, but my immediate family.

[00:30:33] Sean: It’s one of those moments, I don’t even know how to respond to that. I can’t comprehend that.

[00:30:38] Arnold: Yeah, it’s hard to comprehend. It really bothered my folks more than me, because I was a little kid and I didn’t really know most of them, but my mom and dad obviously being grown people, felt the pain. I used to come home from school and at least two or three times a month, my mom would sit there with one of the pictures of her sisters and a candle crying. I just used to really feel bad for her. And one day she said to me, she’s a very strong woman. She said, you know, Arnold, this celebrating my brother and sisters’ birthday just depresses me.

I realize they’re not going to come back. They’re gone. I’m going to have to accept this. She took all the pictures and all the candles and all the prayer books, she put them in a box, she put them in the closet and she said, I’m not going to ever look back. This is it, we got to move forward. And from that day on, she was fine, but it took many years to get over that.

[00:31:48] Sean: I interrupted you, you had just gotten the trendy new blue jeans. 

[00:31:51] Arnold: I was saying we were going to high school and when I got to high school, it was pretty tough school, pretty tough neighborhood. There’s always fighting going on in our school for one reason or another, didn’t take too much to get into a fight. I was just scared to death of getting into a fight because I was very weak and skinny and wouldn’t do very well in a fight. But anyway, one day we were taking pictures and I got pushed into this kid and he thought I was pushing him, and so he shoved me off and that means you have to go fight.

I was so afraid to fight the first day I chickened out,  I didn’t show up. I figured maybe he’d go away but he didn’t. The next day he saw me and he called me a chicken and said you got to fight. I realized there was no way of getting out of it. I couldn’t stand the fact that I chickened out, but I just didn’t see any alternative. I showed up for the fight, it was in the bicycle yard, and he was there with all of his buddies and ready to take me apart, which he did. I didn’t offer any resistance. He just hit me. I went down, he put his knees on my shoulder and just beat the hell out of me. 

He beat me until he quit. He just quit hitting me because I was just like a punching bag. He got tired. They finally got up, they all laughed about it. I went home that day, and I was afraid my mom would see me so I snuck in the back door and I went to the bathroom. I was just afraid to look in the mirror because if I looked anything the way I felt it would’ve been terrible. I washed my face, combed my hair and I got up to the mirror and I moved up a little bit just to show my forehead, which looked good. Okay. I’m so good so far. I was afraid to look at my eyes and it shocked me that my eyes weren’t black. 

No black eyes and then my nose just hurt like hell but as I moved it back and forth, I realized it wasn’t broken. It was sore, but it wasn’t broken. My jaw hurt, he hit me in the mouth, and so forth, but all of a sudden I had an epiphany. I thought, God, this is what I have been so terrified of. This is what I’ve been afraid of. This isn’t all that bad. It isn’t as bad as the fear. So there’s the next lesson, face your fears because your fears are always worse than what actually is going to happen. I got very excited right there in the bathroom.

I thought, my God, I got up in front of the mirror, just think about a hit back, and I started thinking about it. If I would’ve hit back then at least I would have bruised him a little bit, so I thought this is really great. My fears were gone. They’re just totally gone. Once you face your fears they dissipate. So anyway, that was a very important principle that I learned.

Arnold’s Internal Dialogue In The Face Of Fear

[00:34:54] Sean:  Arnold, with that I’m wondering what the process is like in your adult life when you face a fear. Even now what’s the internal dialogue like when you’re presented with those tough challenges and fears now?

[00:35:05] Arnold: I just say to myself, how important is this going to be five years from now? I look into the future, we all get caught up the moment something bad happens, and you just agonize and torture yourself. You go through all these things that your subconscious mind creates. It’s a natural fear. Once you face it, the fear goes away. And that means the exaggeration of that problem goes away. You start to face it and then you start thinking, well, how can I work my way out of it? So that’s what I always use. 

How important is this going to be five years from now? Am I going to look back and say, as I did with the fight? Here I feared the worst of getting beat up and I got beat up and it wasn’t bad. I washed my face, I washed the blood off, I changed my shirt, I combed my hair and I was there. That was an epiphany. That was an important lesson. If I saw the guy today, I’d shake his hand and hug him because he taught me something that you couldn’t learn any other way, at least in that situation. It was a very valuable lesson. I think most of the time, our fears overwhelm us to the point where it causes inaction. 

It causes you to not do anything. It freezes you. Move forward, look forward, keep your eyes on the goal, and then they fade away and you learn to deal with it. That was an important lesson. And so that’s what you learn in life, how to handle situations, and I became quite good at it. And actually, because I was such an angry kid, because of all the things that happened, that anger actually came in handy because it was easy to get angry at a kid because I had all this repressed anger. Then I graduated from high school. but one of the great experiences in high school is one of the things I wanted to overcome was my inability to do anything physical.

I was very weak and skinny. At that time, when I got into this fight, I was already starting to climb the rope. My brother, as I said, was a very strong individual and he did very well. You walk in the gym and you have this long rope hanging down. Well, that used to be an Olympic event. It was in every high school on the gymnastic team. They had rope climbing teams. I wanted to be a rope climber because my brother was very good at it because he was strong. And he said to me, Arnie if you go in the gym and start climbing a rope, it’s going to build up your strength. 

I thought that’s great, and I walked the gym, and here are all these guys with these big muscles, I thought, geez, this is what I want to do. I went up to the coach and he was really a cool guy. He looked at me and saw how weak and skinny I was, he said, well, why don’t you start climbing the rope? As you gain strength, we can move you into the other events. Well, after two years I was still climbing the rope. I wasn’t strong enough for the other events, but anyway, I started to get a little bit better as I was climbing. I climbed two hours a day for two years. 

One day a bunch of the kids was sitting around and it was getting into the ninth grade and everybody was choosing what sport they were going to go into, and I was sitting there and one guy said, I’m going out for football and another guy’s going out for basketball. Another guy was going out for tennis. They say, Van Den Berg what are you going out for? I said I’m going out for the rope climb. And so there’s this kid sitting next to me, he looks at me and he says, you’re going out for the rope climb. You got to be kidding. You’re going to be a weightlifter? 

This kid was a weightlifter and a bodybuilder, and he was very strong for his age. His brother had gotten started at an early age. He said I’m going to go out for the rope climb. He said, I just can’t believe that you would go out for the rope climb because he just didn’t think I would be able to do it. So I got my ego involved and I challenged him to a race because I figured hell I’ve been climbing for two years, he’s never done it, I ought to be able to beat him. Well, I got beat so badly, I wanted to cry right there on the spot. He was already all the way up and I was only halfway up. 

He beat me badly. It was just terribly embarrassing. I got home that night and I thought, geez, I’ve been climbing for two years, I’m not going anywhere, and here’s a guy who’s never climbed a rope, beat me. How am I ever going to be able to make the team? And then a thought flashed in my mind and said, why would you consider quitting? You climb to get stronger and you’re getting stronger, and I thought that’s right. Even if I can’t compete, I can build myself up in strength, so I’m going to continue. So I continued, the next year was the ninth grade. 

I was able to compete officially. There are five guys on the rope team, and I made the fifth man only because there were only four guys applying. It was an empty space, and the coach said, would you like to be the fifth man? And I said, yeah, but I’m not anywhere near these guys. That’s okay. We only have four rope climbers, we need five if you want it you’re the fifth man. Just to give you an example of how bad I was, these guys were climbing a 25-foot rope in about six seconds. My best time that year was 8.6 seconds. A 10th of a second can be a lot in a hundred-meter race. 

You can imagine how two and a half seconds it’d be like a guy running 9, and another guy running 11 seconds. He wouldn’t even show up. It was almost an embarrassment to the team, but the coach encouraged me and he was a great guy and wanted to help me with it. I climbed that year, and then after that, and here was the thing that changed my life. I went up to him and I said, coach, I’ve done everything you said, I worked out two hours a day. What can I do to get better? I really want to get better. 

He said, you know, it’s a funny thing I’ve been thinking about you, there’s a new style coming out in the rope climb. It’s not only strength, but it’s also a technique and it’s a breakthrough. And, the people who are using it are making great strides. There’s the champion at this local school, and he’s going to be climbing in the city championship. And what I’d like you to do is go down there and watch him and see how he does it. And then I can help you develop it. I don’t know how to do it because it’s brand new. I thought, great. I got on the bus for two hours. I got there an hour ahead of time. 

I’m just so excited to learn this new technique. I’m sitting there, got the front seat right by the rope climb and the guy doesn’t show up and I am just really down. As I’m sitting there, I’m almost in a different state of mind, and all of a sudden he comes running in, he’s fixing his pants, he’s fixing his Jersey. He sits down, shoots up the rope in 4.6 seconds and I’m just sitting there in awe. And when I looked at the clock, the whole room was swaying. It was just like I was in a trance and I could see this guy going up the rope right today, as we are speaking, it made an impression in my subconscious.

I was so excited, I couldn’t wait to get home to start practicing. And even on the bus, I’m out there moving my hands and kicking my leg, and people are looking at me on the bus, I didn’t care. But the problem was, I didn’t have a picture and I didn’t have a video. I thought I’d go to sleep at night, then I’d wake up about 3:30 in the morning because I was worried about forgetting how to do it. It’s quite a different way of climbing the rope, you had to develop completely different muscles. I would get up every morning at about 3:30 and I would be practicing moving my hands and moving my legs and just kind of smoothly sliding up that rope. 

It was so exciting to me. After about six to nine months, I don’t know exactly how many months it was, but I woke up one morning and I felt like a new man. I felt strong. I felt great. I thought, oh my God, I’m going to break my time today. I just know it. I struggled through four or five classes, finally got to the gym coach, I’m going to break my time today. He said, great, warm up. So I warmed up, I grabbed the rope and I sat down and it just felt different. I thought, oh, this is going to be great.  I sat down, pulled up, and usually when I pull up I kind of struggle going up. I just shot up and I moved my hands. 

When I get to the top, I used to have to pull way down and reach way up to barely touch the plate, and this time I could have hit it with my elbow. I knew this was great, and it just felt so easy and smooth like I was in a dream. I’m hanging up to the coach, what’s the time? He says come on down. He’s fiddling with his watch and I said, what’s the matter? He said, Arnold, this is so good. I thought there was something wrong with my watch. I said, there’s nothing wrong with your watch. I’m going to do it again. I did it 10 times in a row broke that time. It was like a new program. 

I was so excited about it with the time break, I said, you know what, coach, without thinking, I said, I think I’m going to become the new league champion next year. And he kind of woke me up and he said, well, Arnold, this is a great time, and you’ve made a lot of progress, but in every school, they got five climbers and you got to beat each one of them to be the league champion. I was a little embarrassed and I said, yeah, you’re right, coach. And I walked away and I said, bullshit, I’m going to be newly league champion. I can just feel it. 

That year started off as the first man, every guy was a little bit ahead of me, but each time I got into the meet, I beat him. I just knew I was going to beat him. It was just in my mind, it was just like a program. There was one guy who was the league champion and he was three tens of a second ahead of me. That’s a lot when you’re getting into the point where you’re climbing at four and a half seconds, three tens is a lot. I walk into the gym and he’s sitting there kind of bored, as we sat down, there was nobody at a competition and I wasn’t really in any competition either. 

I just had this great feeling, I sat down and I hit 4.3. At that time I was climbing 4.6. My best time was 4.6. His was 4.3. I hit 4.3. Completely disorganized, the guy just kind of woke up and thought, wow. So he tried, you know how you get into competition and you try too hard, you get off the program. So anyway, we changed places, he climbed the best he did that day was 4.6. I climbed 4.3 and then we went into the championship and we tied for first, but it was a huge breakdown for me to go from where I was to the first man in the league. 

I won to league three years in a row and two years after that of three years. I got so good that I even climbed in the National AAU and placed ninth in the nation. And these were all college seniors. So I was a high school guy climbing in the National AAU. There were only three high school kids that even were able to make the meet and I placed ninth. And if I’d had hit my best time, I could have hit either sixth or seventh place. I didn’t hit my best time, but it was a breakthrough. Anyway, long story short, I graduated from high school, and I married my high school sweetheart. 

We were married about four and a half years, and then we got a divorce and that really put me into a depression. And that really upset me. That was a struggle. I got so depressed, Sean, that I was depressed for almost four to five years. I didn’t know what was causing it, but it got so bad that I couldn’t make it after 3:30 in the afternoon. It was just like it was 3:30 in the morning and I was starting my business at that time. I searched all the different ways as to why I could be so tired because I was pretty strong, you know? A friend of mine told me that she had gone to this psychiatrist who helped her with the same problem. 

I went to see him. And I told him that I had developed a technique to get over the depression. I read an article that says, if you hypnotize yourself and go into a hypnotic trance for 20 minutes, it’s equivalent to three hours of sleep. So I thought, wow, that’s the answer to my problem. I learned to hypnotize myself, used to hypnotize my friends. Every day I’d lay down on the floor, 3:30 in the afternoon, I’d go in for 20 or 30 minutes and I could work until 10:30 at night with plenty of energy. I used that for many years. When I went to see the psychiatrist, I told him about it, and he said, how would you like to find out why you’re so tired all the time and depressed? 

Anger Lesson

And I said, well, that would be great. He says, you found a good bandaid, but it doesn’t solve the problem. I said, well, that’s why I’m here. Long story short, this is when we get into the anger lesson. The thing I learned about anger is that the more you repress anger, let’s say you get mad at me and you don’t tell me how you feel, you just don’t want to offend me, or you don’t want to do it for any reason, so you bottle it. But when you bottle it, you keep on thinking about it, you get more resentful. I sent a chart, would you like to show the chart or should we just go on?

[00:49:40] Sean: You can just go on, I’ll include all the notes in the show notes, any charts, visuals, things like that. So anyone wants to go, you can just click on the show notes below and we’ll have everything linked up.

[00:49:50] Arnold: Okay. Well, this is an anger chart. It’s called Dr. TRUST chart on anger. This is an individual that specialized in that. What the chart shows is as you go into repression that creates more resentment, and then it goes into indirect expression, which means it goes into your subconscious mind. Once these angry thoughts go into your subconscious mind, that creates depression because when you do things that you know are wrong, thinking about anger thoughts, you feel guilty. And then the guilt creates the need to punish yourself. You go into all these indirect expressions, which are ways to punish yourself. 

It creates depression, addiction, compulsive behavior, alcoholism, smoking, gambling, eating disorders, sickness all down the line. Every ailment known to man can be caused by repressed anger. That’s a very important lesson for people to learn. And when you tie it into the principle of apologizing sooner and not letting the people you’re arguing with repress their anger and you depress your anger, you develop a much healthier relationship. And that’s so important in a marriage. My first marriage lasted only four and a half years. In my second marriage with what I learned, we’re now going to celebrate our 50th wedding anniversary on April 29.

[00:51:20] Sean: Congrats. 

[00:51:21] Arnold: I’ve learned a few things along the line, and one of them is dealing with anger and being able to express it. My wife and I have a deal, no matter what it is that upsets us, we can sit down and talk about it. We may not agree, but at least, let’s not bottle it. I used to do it with my kids, but anyway, that’s the most important lesson I learned on the anger bit. And that is a lifelong lesson. And I’ll tell you one thing that has to go with that, and that is the ability to forgive. And that is another lesson that is absolutely critical because nobody can go through life, and not be hurt. 

And if you don’t forgive, you’re just building up that anger. I want to explain that on forgiveness. I’ve learned to forgive everybody that’s ever done anything to me, including my ex-wife. I’ve learned to forgive the Germans. I always tell people if I can learn to forgive the Germans, you can learn to forgive whoever hurt you because most of the time you haven’t been hurt that much. So you learn to forgive, and the most important thing in learning to forgive is to understand the other side. There’s always another side to the story, and most people only look through the lens of themselves. 

We are programmed to be selfish, so we are programmed to survive. We are programmed to take care of ourselves, so the way we look at things is only from our own point of view, we never flip the switch and say, what is the other person thinking? Or how is the other person thinking? And when you do, you start to moderate your anger, because all of a sudden you see the other side of the story, which you can’t see when you’re looking through one lens. So the important thing is part of love is understanding. Believe it or not, I made a study of probably the most brutal person in Auschwitz. 

I wanted to understand what motivates these people. There was this girl, her name was Irma Grese, she was one of the worst German guards in Auschwitz. She did things that were just unthinkable to the women in there, and she was only 18 years old at the time when she started as a guard. They ended up hanging her in the Nuremberg trials for gross brutality and inhumanity and all of these kinds of things. She was only 22 when they hung her. So I searched into her life and while I would still agree to punish her through hanging, and everybody has to be accountable, I actually understood how she could get that angry. 

You have a choice to do. You’ve been abused, you can choose the right way and you can choose the wrong way, and both of them have consequences. These kinds of things help you to understand why people can do such evil and brutal things, not to excuse them, but to understand, and to understand so you can diminish your anger and your hostility and eventually forgive them. That’s a very important practice, and I would recommend anybody who is harboring things, whether it’s parents or friends or anybody. 

The other thing I’ve learned, and this really has helped, and only through life experience can you experience that, but I’ve learned that the people who hurt me also tend to hurt other people. They just didn’t pick me out, it’s just the way they are. And as I watch what happened to their life, things happened to their life that I wouldn’t have ever wished on them. So you don’t have to get even with people. My philosophy is don’t waste your time trying to get even with people who hurt you. You don’t need to get even with the people who hurt you, you should get even with the people who’ve been good to you. 

Spend your time thinking about the people who’ve been good to you and be good to them rather than waste your time on negativity. Thinking about the people who hurt you, just makes you angrier. So you learn to forgive them, you get rid of your anger, and then you think about the people you love. And that brings me to the next life lesson. And the next lesson I learned, is just one of the greatest lessons of all. This is the most important lesson I can teach anybody. And that is the lesson of truth.

The Lesson of Truth

And we will never know how powerful truth is, but let me give you an example. There was a Russian author by the name of Fyodor Dostoyevsky. He was in a concentration camp in a Russian gulag. The Russian concentration camps are just as bad as the Nazis’ ones. Anyway, he noticed an interesting thing that the people who did the best in surviving that kind of environment were people of character, and he got very intrigued about why would character make such a difference in being able to endure these atrocities and this kind of lifestyle.

He spent his time learning and studying that, and he decided that if he ever got out of the camp, he would write books and novels and he would display what character does to an individual. He would show a person with a negative character and the play would show how it destroyed his life. And he showed a person with great character and how it enhanced their life. I made it into a chart and here’s what he concluded when you lie, you lose the ability to discern the truth in yourself and others. In other words, when you lie, you put that in your subconscious mind, which becomes part of your ability, to tell the truth. 

And so when the first thing that happens when you lie, you lose the ability to discern. Just think about how important that is to an investment manager, when you lose the ability to discern the truth, right? You can really get punished there. When you lie, you lose the ability to discern the truth in yourself and others. Having lied, you lose respect for yourself and others. Not respecting anyone you lose the ability to love. I want to stop at this point and show you another list. There was a gentleman, a psychiatrist in Auschwitz, his name was Victor Frankl. He was on the same death march as my dad, but they didn’t know each other. 

And they were going through the march suffering, and one of his friends turned over to him and he said, I hope our wives are doing better than we are. Victor Frankl started thinking about his wife, and he said, the more he focused on her, he got so caught up in thinking about her that he forgot that he was even on the march. And he said he could hear her voice, she sounded like she was right there. He didn’t know whether she was alive or not, but she was present there. They talked to each other. He saw her smile. And he said a thought transfixed me. 

For the first time in my life, I realized that the greatest thing a human being can accomplish is love. The ability to give love and receive it. He said it also taught him that even in a dismal place like Auschwitz, a man can experience bliss in the contemplation of those they love. And his whole philosophy came on the basis that there is no greater thing that anybody can ever experience or accomplish in their life. The ultimate success pattern is do you have the ability to love? When you think about the fact that when you lie, you lose that ability to love, you lose one of the greatest potential achievements that a man can achieve or a woman. 

Without love, all that remains are the base pleasures of life. Indulging in the base pleasures of life, you become morally depraved and it all started with a lie. So the single greatest improvement a human being can make is to immediately take the position that lying even white lies affect your subconscious mind and affects your ability to function as a human being. And they are now doing studies with neuroscience, they can hook you up to a computer, they can tell what happens to your brain when you lie. It actually releases certain chemicals that are harmful to the body and harmful to your health and so on and so forth. 

The Subconscious Mind

That leads me to the next thing, and that is one of the most important things connected with anger and lying. And that is that everybody has, scientists now say, the lowest number I’ve seen is 6,000 thoughts per day. And the highest I’ve seen is 70,000 thoughts per day. And probably the one that I feel most comfortable with is a study that shows it’s about 35,000. But whether it’s 6,000 or 70,000 or 35,000, let’s say that nobody disputes the fact that you have at least 6,000 thoughts, now just think if you have a thought, you put a black dot if it’s a negative thought on the board and a yellow dot, bright orange if it’s a positive thought. 

You look at the end of the day, what does your board look like? Well, what your board looks like is what you’re going to be in the future because you are made of the summation of all of the thoughts you’ve had in your lifetime. And at 35,000 a day, that’s a billion thoughts for your life over 78, 80 years. What the students of the subconscious mind teach is that every thought you think eventually materializes in reality. So the more dominant thoughts you have that are negative, the more negative things you’re going to accomplish in your life. 

Your world is not the world that you read about in the newspaper, your is the world that you created in your mind through your own thoughts. And the beauty that they learn in neuroscience today is, they used to think that whatever you were by your genes and your background that was the way your life is fixed, they are now showing that your brain is constantly changing by the thoughts you have. It’s called neuroplasticity. You can create a whole new life just in the way you think. And let me give you a couple of quotes from my favorite collection of subconscious thoughts. 

This is a book that was written by JK Williams. He studied the subconscious mind for 50 years. I’ll just read you a few of his principles. 

“You are the architect of your destiny, every experience or condition in your life, poverty or riches, success or failure, health or illness is the result of action and purpose set in motion by you. Your thoughts create your world.“

“Within the area of your life, you have creative power. You can make a mental image or a blueprint of the progress and expansion you want to achieve and by pressing the concept of your objective upon your subconscious, you can cause the condition you visualize in your mind to be created.“

You can create your own reality by visualizing it. When I went to the psychiatrist, I told him the story about my rope climbing experience, he said, boy, that is just great. And I said, what do you mean? He says this is what we teach in sports psychology. We teach you to set a goal. We teach you to visualize it. We teach you to affirm to yourself that you’re going to be great, and eventually, you believe it and you become it. And that’s what you did. And if you’ll do the same thing with your business, I was starting my business at that time, the same thing will happen. 

My right arm just chilled up when he said that. Whenever I hear a great truth, I get chills on my right arm. I knew that was true, and I was so confident in that, that I went home, cleared out my apartment. I was living in a studio apartment, put all my investment books online, I’m starting my own business. And I really believed no matter what happens that I was going to make it based on the experience. I told him if the subconscious can do all that, I should study it all my life. He says, absolutely. The more you understand the subconscious mind, the more you understand yourself, other people, you learn how to achieve. 

Learning to understand the subconscious mind is critical. Let me just show you how powerful the subconscious mind is, this is hard to believe. This guy, Sir Arthur Eddington, some people may have heard of him, a lot of people haven’t, but he was one of the greatest astrophysicists of the 20th Century. He was equal to Einstein. He interpreted many of the theories of Einstein. Here’s what he said, Sir Arthur Eddington is quoting and saying, 

“I believe that the mind has the power to affect groups of atoms and even temper with the odds of atomic behavior. And that even the course of the world is not determined by physical law but may be altered by the volition of human beings.” 

He’s saying that on a microscopic level, your mind can affect atoms and everything that is out there in the real world is made up of atoms. You can influence people, you can influence things and you can create your own reality. That’s what he’s saying, this is a scientist. Dr. Gustav Jung, one of the great psychologists of the 20th century claimed that the subconscious mind contains not only the knowledge that it has gathered during the life of the individual, but that in addition, it contains all the wisdom of past ages that by drawing upon its wisdom and power, the individual may possess any good thing of life from health and happiness to riches and success.

You asked me a question, how do you get through difficult times? You get through difficult times by having a goal that you want your life to complete. The first goal I had was I wanted to have a family because I never had a family. People used to go to their aunts, uncles, and cousins, I never had any of that. I always felt like I was missing something. I wanted to have a family and I have a family now. I have three children, seven grandchildren, and two great-grandchildren. I’ve accomplished the goal of the family. I wanted to be financially independent. 

I didn’t necessarily choose to make a lot of money, which I happened to do because in this business you could do that but the main goal was financial independence so I can follow my own dreams. And I wanted to have my own business. I’ve accomplished those things. The next dream, and that was a dream in the last 30, 40 years, I wanted to be able to take all this knowledge that I learned from all these different experiences and maybe put it into a book to help other people with some of the challenges that I was faced with. Well, I found a book called From Poverty to Power, which I would recommend to anybody. 

I thought so much of the book that I wanted to give one to each one of my clients. So I called up the publisher and I said, I’d like to order about 2000 copies of Poverty to Power. And he said, oh, Arnold, I don’t have that much in my inventory. Only sell 15 a year. I said this great book, you’re only selling 15 a year? This is ridiculous. I said I’ll tell you what, it doesn’t have a nice cover, and the printing is kind of shallow because he basically xerox,  he didn’t print it. I’d like to make it into a nice book and I’ll pay for all the cost of it. 

And then I’ll give you an order of 2000 for them and I give them out to anybody who’ll read it. And in the cover, I wrote that one day I would like to take everything I’ve learned from all the books and different things experiences put it in a book but when I read that book, I knew I could not improve on that book. Rather than write a book, I give this out as this is basically what I believe, and this is what has helped me to get there. There are another two quotes if I have the time I’d like to quote them. Is that okay? 

[01:08:53] Sean: Oh yeah, absolutely. 

[01:08:55] Arnold: Okay. So here’s one by the greatest psychologist of the 20th Century next to Gustav Jung, William James, the greatest discovery of our generation, don’t forget, this is the generation that came up with the theory of relativity. “The greatest discovery of the generation is the discovery that human beings by changing the inner attitude of their minds can change the outer aspects of their life.” He felt that that was the greatest discovery that when we learn the subconscious mind we can literally program our own lives and create the genie. 

There’s a book called The Genie Within, I’ll tell you about that in a minute, that we can create anything we want to do with our lives, as long as we’re willing to pay the price. And then the final of my favorite quote is by Emile Coue’.  I’m not even sure I pronounce his name right. It’s a French name, but he is the father of autosuggestion, affirmations, and visualizations at the turn of the century, an unbelievable guy. He cured so many people of all kinds of diseases and so forth. 

Here’s what he said, from this and other examples we conclude, if the mind dwells on the idea of an accomplished fact, in other words, if you want to be a musician, you practice your daily deal, but you visualize yourself at the top concert playing the violin and you play that in your mind, and then the subconscious mind helps you to get that. 

“From this, we conclude that if the mind dwells on an accomplished fact, a realized state, the unconscious will produce this state. This is true of our spontaneous auto-suggestion, it’s equally true of the self-induced one. Every idea which enters the subconscious mind, if it is accepted by the unconscious is transformed by it into a reality and form, hence worth a permanent element in your life. “

So you can create it by affirmations, by visualization, by repeating it often, and so on. I have many other ones on that, but that kind of gives you the idea. I have one thing which I don’t know whether we have time for, but I have in this file, which is 550 pages of notes. I sent you the first 54 pages, which I’ve edited, but they’re articles and quotes, and different things about the subconscious mind. And I have one on the subconscious mind that if we have the time, I’d like to read it to you, what it actually does. Out of 45 to 50 years of research, this page is the best that explains how the subconscious mind works. And I’m quoting a woman by the name of Margaret E White. And she explains how the subconscious works and it says, 

“I’m very accommodating. I ask no questions. I accept whatever you give me. I do whatever I’m told to do. I do not presume to change anything you say or do, I file it away in perfect order quickly and efficiently. And then I return it to you exactly as you gave it to me. You think an angry thought, you create angry problems. Sometimes you call me your memory, I am the reservoir into which you toss anything your heart or mind chooses to deposit there. 

I work night and day, I never rest and nothing can impede my activity. The thoughts you send me are categorized and filed, and my filing system never fails. I’m truly your servant who does your bidding without hesitation or criticism. I cooperate when you tell me that you’re this or that. If you have a low self-image, you tell me you’re no good, I’m gonna make you no good. If you tell me you’re great, I’m gonna make you great. 

It’s your thoughts that create the direction. And I play it back as you gave it. I’m most agreeable since I do not think, argue, judge, analyze, question, or make decisions. I accept impressions easily. I’m going to ask you to sort out what you sent me. My files are getting a little cluttered and confused. I mean, please discard those things you do not want to be returned to you, negative thoughts. What is my name? Oh, I thought you knew I’m your subconscious.” 

There is exactly the way the subconscious works. It works like the computer, you type something wrong into the computer and you push the button, it gives it back exactly like you put in. You type in the right thing and it goes to do the right thing. Your subconscious mind does not think, it just acts. Your conscious mind is the direction. So your conscious mind is the software that you create the program and the subconscious is the hardware. It just acts and produces whatever you create. What you have to do as an individual that wants to improve their life is you want to always feed them your goals, your dreams, your aspiration, and your most positive thoughts.

Love

I want to end it with this situation where Victor Frankl talked about how important love was. I read an article by an individual who also believed that love is the greatest thing. He was a man by the name of Ashley Montagu. He’s a very interesting guy, actually kind of funny. He’s got a British accent. They ask him how come you spent all your whole life studying what makes people happy? He studied anthropology, sociology, psychology, every field connected with human beings. And he said the reason I studied happiness is because as a child, I was so profoundly unhappy. 

He spent his life on it and he said, now the most important thing that he came out of all of his conclusions, 70 books, he concluded it in one article, which is a great article Pathway to Fulfillment by Ashley Montagu. And in it, he states the greatest need of any human being is love. I can show it in your x-ray, in your bones, it shows up in everything. If you have it, it fulfills you and if you don’t have it, it destroys you. So he says, now let’s ask the typical question, what if you wake up one day and find out that you’re not as loving a person as you have the capability of being, he was being kind and he said, then what do you do. 

He said you act like a loving person because it’s not what you eat, it’s not what you think, it’s not what you say, but it’s what you do. And when you do it, you become it. If you want to become a loving person, you practice loving things. And the best way that I can think of, and I wrote a three-page little dissertation on this, but I’ll give you the bottom line of it. If you look at the chapter in the Bible every Christian wedding starts off with this describing love,  

Though I speak with the tongues of men and of angels and have no love I become as sounding brass and a tinkling cymbal. 

And though I have the gift of prophecy, I understand all mystery and all knowledge, and though I have all faith that I could remove mountains and have no love, I’m nothing. 

And though bestow all my goods to feed the poor and though I give my body to be burned and have no love, it profits me not. 

Love suffers long and is kind. Love envies not,  Love vaunteth not itself, does not behave unseemingly, seeketh not it’s own. Is not easily provoked. 

Thinketh no evil. Rejoices not in iniquity but rejoices in the truth. Bears all things, believes all things, hopes all things, and endures all things. 

And finally, St. Paul says, and there remain three things; faith, hope, and love, and the greatest of these is love. Those of you who want to learn how to practice love, those are the ingredients to prisms of love. I have translated them from 16th Century English into modern English, and here’s what it means; tolerance, humility, composure, graciousness, consideration, thoughtfulness, goodness, charitable, magnanimity, politeness, altruism, benevolence, affable, agreeable, sincere, honest, straightforward, earnest, trustworthy, and truthfulness.

So basically we get down to the fact that it’s character. Some of the greatest businessmen that I have studied have come to the conclusion that of all the great things you want to achieve in your life is develop the character because it’s the character that gets you through all the things, makes you a lovable person, an honest person, and that should be the dream of everybody. And then you can use what you’ve accomplished to help other people who are along the way. 

[01:18:24] Sean: Arnold, thank you for sharing that. Just a remarkable journey.

[01:18:26] Arnold:  I’m looking at my clock and I’m going over the time, so I wanted to cut it out. 

[01:18:31] Sean: I have some additional questions if you’re open to it.

[01:18:33] Arnold: Go ahead. If you have some questions, I’d be happy to answer them or try to answer them if I can. 

Finding What To Go After

[01:18:40] Sean: I had a lot of people send questions when they knew you were coming on the show. So these are my questions and fan questions here. And one of the things that people were interested in is trying to figure out how do you decide what to go after in life? We have a lot of young people who’ve recently finished school or are still early in their careers. How do you decide what to go after?

[01:19:01] Arnold: That is a great question and that plagued me for many years, and what I’ve come to the conclusion is if I had to do it all over again, it would be a lot simpler. One of the things is that I never had a formal education. I never went to college, so you don’t get the kind of direction you get in a college, I just sort of bubbled my way. And then I came through a quote by James Allen. He says, you either learn by wisdom and knowledge and suffering and woe and you continue to suffer until you learn. So I decided after all the suffering, maybe I should gain something by wisdom because that’s obviously the easier way. 

I’ve devoted my life to studying besides the market, studying wisdom by all the great thinkers, and seeing what they thought their life was worth. I never thought I had any talents, inborn talents because everything I tried was very difficult and I wasn’t very successful at it, no matter what I tried. So I figured, well, I wasn’t given any gifts. But one of the things that my brothers always said to me was, you don’t have any talents. My brothers were very talented, but you have the ability to make up your mind and stick with it against all odds. I don’t think that’s even a talent, that comes from faith, that comes from the belief. 

I think that the first thing I would do if I didn’t know what I was going to do is I would let the subconscious mind tell me where my innate talents are, where the directions are, and you can do that very easily. And I’ll give you an example. What you do is you get a notebook, an empty file, and then you pick up the newspaper and you ask yourself if I was to ask you a question, what’s your favorite movie? I’d write that down. What’s your favorite book? What’s your favorite athlete? What’s your favorite personality? What is it?

So you put all these things together and then I would ask you when you open up the newspaper, what’s the first section you turn to? Somebody will say, well, I look at the drama page, or I look at the sports page, or I look at the financial section or I look at the news headlines. So, you do that for about 10 to 12 days. You just don’t think about it. You open up the newspaper and say the first thing I do when I turn up the newspaper, I go to the opinion section of the Wall Street Journal because they have some of the greatest writers that are trying to be objective about world events, and I’m interested in the whole world what’s going on. 

People would think that I would turn to the financial page because I’m a money manager but no, my favorite page is the opinion section to get the idea of what is the truth because they’re trying to be objective. Like any newspaper, they have people with biases, but the good thing is they always print an opposite point of view. I get to see both sides of the coin and that’s what you want to do as a money manager. You want to study the people who are bullish and you want to study the people who are bearish because the bears will point out things that are wrong that you might not want to consider, and the bulls will tell you all the great things. You always go in between. 

Whenever I hear a great story, the first thing I want to know is what’s the opposite side. What’s the other side of it, because there always is another side. And when I see a stock that I own that develops a high, short position, I start saying, what do these guys know that I don’t know. So I get in touch with different short-sellers and people who give me the bear side. And then I say, geez, there’s some things that they’ve mentioned that hadn’t thought about. That takes me from extreme bullishness, maybe to the middle. It makes it easier to sell or change my mind. 

You always want to go to both sides of defense and try to figure that out. What I would do is collect all this information, put it into a file, and then after a while, say, I turned to an opinion section all the time, or when I look at a movie it’s something to do with this, so that’s another thing. And then when I read a book, my favorite book is this. And when I look at my favorite movies, those are the movies. And pretty soon you start to see, is there any interest in dance? Is there an interest in music? Is there an interest in finance? Is there any interest in learning? Whatever it may be, what are your favorite magazines? 

What kind of people do you admire? That’s a great one to go. Who’s the most important star, like a football star or financial analyst today? In the money management field, you’d say Benjamin Graham and Warren Buffet, and Charlie Munger. And if you are in the artistic area, you look at those and then you study those people and say, would you like to be doing what they’re doing? The truth is you can do what they are doing if you just program it in your mind. And if you’re a young person, you can accomplish anything that they have accomplished.

It’s great to have a role model. When I was a rope climber, I always studied the person that had that type of style that was developed. And I developed that technique and all of the things learned from them. So there’s a quotation by Socrates. He said, spend your time learning from wise people what it took them all their life to learn, and you could learn it in a small period of time. That’s why I love quotes because quotes capitalize things. One of the great Prime Ministers of England was a guy that I really admire because he overcame so many hardships and he had a quote that says, the way you learn is you study hard, you suffer a lot and you observe a lot. 

Through all your suffering, you can learn great wisdom. The wisdom that you may never have learned any other way because when you’re suffering, you’re concentrating your mind on the thing that is bothering you. And the more you concentrate on that, the more the subconscious mind works on it and then shoots you an answer. It doesn’t matter who’s right or wrong, what is the truth? Seeking the truth should be a lifetime obsession. The truth about the stock market, the truth about politics, the truth about whatever you’re studying. And so my focal point is what is the truth? 

When I start out to study something, where do I find the truth? What is the truth? And that guides you into areas that you never thought you would enter. And I would say, and I don’t have the qualifications to do it, but for those who are listening, who are qualified, I would say the real truth is going to come through quantum physics. That is the latest development in physics, not the latest it’s been going on for 30 to 40 years, but it’s becoming more mainstream. I have been reading a lot about quantum physics, not because I understand the math because I don’t. 

I’d have trouble getting through a fourth-break math class, but I can see what they teach. And this is the single most exciting thing I can tell you today, Sean, what they teach is exactly what the subconscious teaches, that your thoughts can create reality. You asked me who would be the person I’d want to interview, there’s a quantum physicist who was part of the book, What The Bleep Do We Know? He has a quote, “if somebody asked me can a human being walk on water? I’d say the answer is yes.” So from quantum physics, you can create the type of dynamic in your mind that can go against matter and you could walk on water. 

He says, then how come most people don’t? He says, because when you say you’re going to walk on water, you have an ocean of negativity that tells you, you can’t do it. Belief is the single most important fact in creating beliefs in the subconscious mind. And if there’s anybody there that is lacking the faith that this could work, that this is the way it works, then all you have to do is repeat something over and over again. And your subconscious mind will begin to believe it. It will even believe a lie. You’ve probably met some people who say he believes his own BS, right?

Well, they do. They keep on repeating a lie, they get to believe it after a while, and then they act on it and it can become very convincing. The most convincing liars are the ones who’ve convinced themselves on a subconscious basis that they believe that lie. That’s what advertising does. You hear these silly commercials and you say, how could they ever get somebody to buy this? This commercial’s ridiculous. Well, what they do is they play this commercial, and the first thing they say is, oh, this is BS. So you’re relaxing, you’re not really listening with your conscious mind, but they get to your subconscious mind.

And if they keep on repeating it, they’re going to get to you whether you reject it on a conscious basis or not, because that’s the most important way to affect the subconscious mind. That’s why you use hypnosis, you relax a person so much they become more suggestible. I used the techniques of the subconscious mind on my son, who was an athlete. Just to give you the bottom line, he was a shot putter, and most guys were 6’4, 240. He was maybe 5’8, 190-200 pounds at the heaviest, and he was able to compete among them because we used to hypnotize him for the meet. 

I programmed him every night during track season. And one time he had a sprained ankle, he had to go into a cast, we had a championship meet nine days later, and the doctor said, he’s out for the season. And I said, well, we have a championship meet nine days from now and we have to win that. That’s what we’ve been programming for. And he says, well, Arnold, I’m sorry, even if you put him in a cast when he steps on the leg, it’s going to hurt. That’s why in a cast, you use crutches so that you don’t hurt your ankle. I said, well, I’m going to hypnotize him and anesthetize him. 

And so he said, oh, I’ll turn him over to you. You let it go. Anyway, long story short, I rented a hotel room, I hypnotized him for the meet. And normally I take him out of the hypnosis before the meet, I left him under hypnosis the whole meet. He went in and he threw six inches from the best he’d ever thrown in his life. So that’s what can be done when you focus and concentrate your mind. And we’ve done some other things that would almost sound miraculous, but they’re not. The subconscious is capable of doing these kinds of things. And I would encourage all of the people who are interested in this to pursue the study of subconscious hypnosis. 

People with bad backs, most of that is mental problems. I’ve cured many people that had back problems for 20 or 30 years in a few sessions of hypnosis and things of that nature. And if there’s anybody who has bad backs, I would recommend a book by Dr. Sarno called Healing Back Pain. He was a back surgeon, and he came to the conclusion after doing back surgery for 25 years, that most people’s problems were not physical, but it was emotional stress that the subconscious uses to put you in pain to take you off your main problems.

And then as you focus on the pain, your subconscious re-roots itself and gets rid of the back pain. I sent the book on the subject to one guy, he had a back problem for 20 years, and it was cured in one session and he did it himself. So there’s a lot of potential in there. Sean, I’m sorry that we’re probably way over time. I apologize for that, but there’s a lot to cover. 

What Arnold Looks For When Hiring

[01:31:40] Sean: Absolutely. I’m actually curious, it’s so funny that the majority of what you talk about has nothing to do with finance, investing, money management, anything like that, what are you looking for in someone you hire?

[01:31:54] Arnold: Well, the first thing I would look for is character. You know, there’s a guy by the name of George Draper. He’s the co-founder of Dayton Dry Goods and which became Target. He said, “Of all the things a person can achieve the most important one is character. And that allows you to do things way beyond what your normal intelligence would do.” A person with lower intelligence, but a higher character is going to achieve greater things. The first thing I do is look for character. The second thing I would look for is unselfishness. 

We’re all programmed to be selfish to survive, and I’ve mentioned that before. So the most important thing is to overcome our selfishness, to be considerate of others and help others and do things for the good of the team. And so with a person on your team, you want him to be a person of character, selflessness, who’s interested in doing good for the clients. And then I would look at his qualifications and the most important thing I would look for is experience. You cannot learn certain things, no matter how much you study the books. I’ll give you an example. The Greeks started the Olympics and the Greeks started the Olympics to train their leaders. 

There’s a page that was written by Plato in the book, the Republic, and he talks about that, and he said we train our students through all of the theoretical knowledge up to age 35, he said, and he actually called them PhDs. That’s where their PhDs come from. He said, are they ready to become rulers? He says, nay. He says they have theoretical education but they have not been in the cave of the world. He said, let this Ph.D. join in the cave of the world. Let them deal with men of cunning and let them get their philosophical shins kicked by the crude realities of the world. 

Some of our perfect products will break down, but those that survive scarred and sober, armed with all the intelligence culture and tradition can teach them, these men will become the rulers of the state. So you want the character, you want the theoretical knowledge, but you want the experience. They got to be in the cave of the world to deal with the crude realities of the world and get sand down by the merciless frictions of life. That’s what I’m looking for.

Investment Themes

[01:34:30] Sean: Well, speaking of being in the cave of the world there, you’ve got a tremendous amount of investing insights and wisdom. I’m wondering for you, what are you looking at? You mentioned before about understanding both sides, what else are you looking at to better understand your investments?

[01:34:45] Arnold: Well, the thing you can’t get enough of is knowledge or experience in investments but what I look for are themes. For example, we are going into a period of inflation, and for those listeners who are interested, I made a tape for Guru Focus. It’s on our website, it’s called Inflation Transitory, and it’s about an hour lecture on how I see the world and what I believe is going to happen. And in short, to answer your direction, I believe we’re going into a period of a commodity boom. We are in a commodity boom, that commodity boom will last about seven or eight years.

And the best investments are going to be in companies that are actually producing the commodities. Those are usually your worst kind of business. They have the highest interest costs. They have the lowest margins and they’re terrible businesses as a rule. However, during this time over the next seven or eight years, there are going to be the best investments you can imagine. And in the tape, I talk about the six or seven investments that did the best during the ’70s inflation, which by the way, I started my business during the ‘70s inflation. So I have experience in it. 

And my first 10 years in the business, which I didn’t really know that much because I was just getting started, I had a track record of 19 and a half to 20% a year. I outperformed the S&P by 5%, and I didn’t really know that much about what I was doing. And the reason is the market had gotten beaten up. I started my business three months before the bottom and things were so shaky and things were so contrary that people thought the world was going to end. And I told my wife, you know, either the world is going to end, or we’re going to make a lot of money for our clients. 

And that’s what happened because the lesson I learned from that is the single most important thing to know about stocks is whether they’re cheap or not. I’m not talking necessarily about cyclical stocks or commodity stocks, I’m talking about all stocks and there are great companies and there are good companies and there are not so good companies, but the value is the thing that determines your return. And so when you can find a company at an extreme discount to valuation, that’s when you make your money and to prove it is, those 10 years were the best performing years out of my 40 to 50, well, almost 50 years of history, as far as outperforming.

We outperformed the market for 38 years by 2%. But this was a period of outperformance by 5%, for 10 years, and that’s the time when I knew the least, I was just getting started. I was just learning about it. And so it wasn’t the wisdom that made that performance, it was the price I paid. We had stock selling at four to five times earnings with six to 7% dividend selling it three times cash flow. Well, you don’t have to be too bright if you just buy a basket of those. And I remember I used to agonize, I had 30 stocks and I’d say this, one’s got a little lower P, it wouldn’t have mattered, I could have bought all of them and they would’ve all been fabulous. 

And that’s what happened. So after struggling through a bear market, as a salesman, I was selling securities from ‘68, I started at the worst time at the top, and it bottomed in 1974. And so all this time, while the market was going up and down for six painful years, while my clients were getting creamed into mutual funds that I was selling, I was studying the markets. What I learned is there were some groups of mutual fund investors that did much better than others. And so I kept asking myself, why are these guys doing better? 

It turns out they were all disciples of Benjamin Graham. So I became a student of Benjamin Graham. I read everything he said, and he was the guy that inspired Warren Buffet, but Warren Buffet was just getting started at the time. Actually, he finished his partnership, and then he got back into the market in ‘74, which was very timely. But the point I’m making is that the research that I learned from what Benjamin Graham taught, taught me that the single most important thing, and Warren Buffet kind of changed it. He amplified it and made a little more enlightenment in it, but he took the basic principles that price determines your return. 

When we were looking at the inflation, we got into the oil business, we bought oil stocks and we were punished for that for being early. They came down very dramatically, but we stuck with it. We continued to buy and we continued to average down and we have a big percentage of our money, 15 to 20% of our portfolio is in oil stocks, which have done very well and are doing very well. And they’re going to continue to do well. And to give you an example, if you watched the video, I say, oil was the best performing asset class during the ‘70s, the second was gold, the third was silver, and the fourth was copper and an unweighted index of commodities. 

That means if you had 20 commodities in each invested in each one, they performed 22% while the S&P produced 2%. I believe over the next 10 years, the best performing asset class is going to be commodities, not buying the commodities themselves, but buying the companies that produce it and at the right price. And then the other sector of the market that’ll do extremely well are companies that have good growth rates at reasonable prices, and the ability to pass on the price. And let me give you an example of what happened to stocks in the inflation of the ‘70s. 

In 72, the inflation rate was 2.64% two years later, it was 11%. And your PE went from 19 on the S&P to 7.8 at the bottom. So you can see the compression of the PE even if the earnings went up. If your multiple contracts, 50 to 60%, even though the earnings stay even, your price goes down. So there’s going to be a tremendous compression in multiples, and it’s already starting to happen and it’ll get worse. On the other hand, if you can buy a good growth company with a good product that has pricing power, and is priced properly, then those are the ways you can protect yourself against inflation.

There are two kinds that I think will do well; companies that produce the commodities and the companies that have good growth records and who are reasonably priced and are priced for higher interest rates, because there’s no way they can cut the inflation rate unless they raise the interest rates. And they’re not going to do it because they’re afraid to do it because if you raise the interest rates too much, you cause a recession. And if you don’t raise it enough, inflation is going to go. And I’ve always said for the last five years, the Fed is in a box. They’ve created so much money through quantitative easing that there’s no way to avoid this situation. 

And as one guy said, the box is starting to look like a coffin. The Fed has really got a serious problem. I would not want to be a Fed official. One of the Fed officials recently resigned, but he said the only way the Fed can stop inflation is to get interest rates above the inflation rate. The inflation rate is 7%, so you’d have to raise the rates pretty much to do that. And they can’t do that because we’d be in a recession. It’s going to be a problem. And in that video, I talk about the amount of debt that was created in the last two years. In the last two years, we created 3 trillion dollars worth of debt each year, 6.4 trillion.

I measured the amount of debt that we created from the time they started counting it from 1900 to 2005, and over the last two years, we created more debt than we’ve done in the last 105 years. So there’s just no way out, and now the war has just aggravated that situation. But the main reason you’re in a commodity boom market, Sean, is because there have been no investments or minimum investments in commodity companies for the last 10 years because everybody was in the S&P and it was doing so well, you know, who needs commodities.

So they didn’t invest in them, including the oil business, and now there’s going to be shortages. The other reason is that renewable energy, the green energy revolution is requiring huge amounts of commodities for batteries, electric cars, windmills, solar panels, and all the commodities that go into it. There was a study from Finland, it’s almost 500 pages and I read every word of it, and there is a research center that is really interested in getting away from fossil fuels and doing renewable energy. But they came to the conclusion that there aren’t enough minerals to support the movement to renewable energy.

And we’re going to have to learn to produce those commodities and so forth. And just an example, we have a client whose job is to look for places to drill for copper, to produce copper. And if we said in the video that it would take nine to 12 months to produce a copper mine, he said it’s 12 to 15 years now because of all the regulations. If you were to replace the internal engine with an electric vehicle, it would take nine times the production of copper that we produce today. And if it takes 12 to 15 years to produce a copper mine, and you know, that copper goes into everything electrical, whether it’s electrical, solar, anything that you have electricity, you need copper, you can see that copper is going to be a great investment for the future.

We expect a dramatic increase in the price of copper, the price of gold, the price of oil is already moved up quite a bit. Silver has a long way to go and many commodities have a way to go, but I would not necessarily suggest that you buy the commodities. Although if you’re commodity trading, you know what you’re doing, that’s different. I would buy the companies that produce the material.

[01:46:25] Sean: Arnold, you and I obviously could talk about markets, the subconscious, life principles for hours and hours. I thank you so much for your time here. This was a really impactful conversation, about your story, what you’ve overcome, and what you’ve created. I just cannot thank you enough for joining us on What Got You There.

[01:46:43] Arnold: My pleasure Sean, and thanks for the opportunity.

[01:46:49] Sean: You guys made it to the end of another episode of What Got You There. I hope you guys enjoyed it. I really do appreciate you taking the time to listen all the way through. If you found value in this, the best way can support the show is by giving us a review, rating it, sharing it with your friends, and also sharing on social. I can’t tell you how much I appreciate it. Looking forward to you guys, listening to another episode.