“Alchemy is the art that separates what is useful from what is not by transforming it into its ultimate essence.”
How do you create wealth from nothing? Ancient alchemists have been searching for this answer for ages. The key ingredient is something you would not expect. With this key, you will not be able to just turn lead into gold. You will be able to turn anything into gold – and become wealthy beyond your wildest dreams.
Throughout ancient times the wise and the educated have been searching for a recipe for the philosopher’s stone – a magical jewel capable of turning lead into gold, bring untold riches to whomsoever possesses it. Though searching far and wide – the recipe was never completed. They were missing a key ingredient.
Now – gold has turned into money – and most people are still searching for the key ingredient to turn lead into gold. The truly wealthy, however, have already long found the answer and the gap between the rich and the poor continues to expand. What do they know that others are missing?
The recipe starts with lead. Whether it is gold or money or even lead – currency is essentially worthless by itself. You cannot eat gold or money and it will not bring you happiness by itself. Currency – throughout all ages – is merely a tool designed to transfer value.
If one person has something that is valuable to the other – and the other has currency, he will exchange the valuable goods for currency. In turn, the receiving party gladly takes the currency – for he wishes to exchange it for yet another valuable good somewhere else.
The more valuable your goods are – the more currency people will be willing to exchange for said goods.
This means – if you find a way to deliver more value – you can ask for more currency in return.
If you have a business – you sell better products and you are able to raise your prices, or you find a way to sell more of the products you have. If you have a job, you deliver more value for your boss and you can then ask for a raise.
But these value propositions are costly. To deliver better and more products – you have to invest a lot of money and effort into R&D, marketing, sales, property, assets in order to grow your company. To become better at your job, you have to invest a lot of money and effort in education, ‘selling’ yourself to your boss or invest more of your precious time in being at the office.
This is essentially how the ancient alchemists looked at transmuting lead into gold. Now, in fact, scientists have already discovered that the actual physical transmutation of lead into gold is technically and scientifically possible. It, however, prohibitively expensive to do so.
So, we now have gold. Yet have we really created wealth? Clearly, this is a mediocre way of reaching real, stupendous, Scrooge-McDuck-type wealth. Certainly not the philosophers stone or Midas touch we are looking for. We are still missing something. What if – there is an intangible component to the value exchange?
(A fair warning to all involved, the next two paragraphs contain accounting practices. Hide your children, hide your wife and proceed with caution.)
Whenever a company (or a portion of the stock) is traded – a significant portion of the value accountants describe on the balance sheet is called intangibles. This – almost impossibly to have accurate – accounting practice comes from the fact that a company is worth more than just the physical assets on the balance sheet – ‘stuff’ such as factories, machinery and real estate.
An example of an intangible is the brand recognition. Although you cannot sell the brand recognition factor directly like you would a factory – it is still a significantly valuable part of a company. A Coca-cola bottle simply sells for more than the exact same formula packaged in a generic nameless bottle. Clearly, the physical quality and representation of a product is not the entire package of value being delivered.
A company, person or product is worth more than the physical expression of the company, person or product.
We all know this intuitively when we talk about a person – he or she is more than just a hump of flesh with organs. It’s character, soul, spirit infused with an infinite myriad of beautiful ingredients that make a person.. a person.
Why would whatever product or service you are trading be any different?
The Philosopher’s Stone
So what is really the value being exchanged in most transactions?
The most valuable portion of any transaction is the human emotion being traded.
This is such a powerful concept in life, business and relationships that it is worth being repeated.
The most valuable portion of any transaction is the human emotion being traded.
If you factor in human emotion – any transaction can be justified in relationship to the human emotion being traded as well as the currency being exchanged. Let’s look at a few examples:
Example #1. Stock market crash.
The stock market crashes out of nowhere. Stocks go down very hard and very fast. People are selling the companies they own at a staggering loss. Did the companies suddenly become worth 50-70% less than the day before? No. In fact, the companies are still the same – churning out money for their owners like a printing press. Do the sellers know they are making a loss, even though they are in the stock market to earn money? Yes.
So why would anyone sell during a crash? Some do because they are defaulting on margin debt, but mostly people sell because they are afraid. They are afraid they will lose all their savings, they are afraid they cannot pay their debts, that they will lose their house, that their wife will think they are foolish for investing in the first place.
What they are exchanging is the company (which is still just as valuable as before the crash in real-life) for a lower amount of currency + the dissolution of their fear. On the other side of a transaction is an investor that sold them pennies and courage.
Example #2. McDonalds.
McDonalds. Everyone you ask will agree that McDonalds burgers are not high quality. They are not a great meal. They are not nutritious and not especially delicious. In fact, they are notoriously bad for your health.
Clearly, the value that they sell is not in their hamburgers. They don’t sell hamburgers. They sell the happy meal. They sell the smile on your kids face when you bring them to McDonalds. They sell avoiding the stress of having to make your own meal. They sell a dopamine rush from whatever mystery chemical they put into their burger. They sell emotion.
Example #3. The News
Another great example of the marketing of emotion. The news. For most of us, the news is not especially useful. Knowing that a thousand people on the other side of the planet got covered in a mud slide and died will not bring you a better life. It does not gain you any advantage in your relationship, business, daily routine or in any way bring you safety, wisdom, a comfortable lifestyle or a better chance at survival.
What the news does very effectively is market fear. Can you imagine paying someone for selling you a negative emotion? Yet that is exactly what the news is doing – very successfully. They sell emotion.
Example #4. The 9-5 job
Working for a boss is another enormous value transaction that is very common in western society. When you work for a boss – in terms of pure currency – you are generating more money for your boss than you receive back in income. In fact – the difference in monetary value is often quite large – a multitude of what you earn.
But the 9-5 is a very successful product in capitalism because it sells some very important emotions to people. Most of it is a cure to fear. The 9-5 gives people certainty, security, safety and a steady income. Even though the value trade is very lopsided in terms of money and time, the value exchange is still performed on a daily basis by about 90% of the western population because of the emotions being sold. A boss sells emotion.
In other words, you can transmute human emotion into wealth. By adding emotion to a product or service you create wealth from seemingly thin air. After all, human emotion can be generated ‘for free’. This is how true wealth is created – from nowhere but the human spirit.
Note also that this recipe holds firm in any human relationship and the specific currency being traded in that relationship – be it friendly, romantic, business or within your own personality.
Thus, the recipe, the philosophers stone and the Magnum Opus of ancient alchemy – consists of two parts:
Find a way to generate emotion
- What emotion do you really sell? As much as you might think – people are not buying your product, they are buying an emotion. What emotion is this? Find out what it is you really sell.
- Market this emotion – not the product.
- How can you magnify and expand upon this emotional trade? How can you bring even more emotion to the trade – and generate wealth from thin air in this way?
Master your own emotion
- On the other side of the equation, which of your own emotions are involved in the trade? You are also human – and if you want to maximize the monetary value of the transaction on your part you need to find a way to meet your emotional needs outside of the transaction.
- Challenge yourself to act rationally in situations of extreme emotion. Challenge yourself in this way in, for example, a romantic relationship or physical combat.
- Train yourself to become aware of your deeper emotions through practices such as meditation.
- Educate yourself on cognitive bias injecting emotion into rational decisions.
The ancient alchemists trying to discover the philosophers stone were missing one thing in the creation of their Magnum Opus – they were too focused on the physical expressions of matter and thus forgot to include the key ingredient – intangible human emotion.
With this key, you can’t just turn lead into gold. You now have the Midas Touch.
You can turn anything into gold.