Belief Arbitrage
Alois Schönn, Vienna, a view of Freyung Market, 19th century
Think of your beliefs as a portfolio of mental assets.
Some beliefs are cash cows, generating consistent returns by supporting positive actions. Other beliefs are depreciating assets, constraining options until they are dropped from the portfolio.
In financial markets, arbitrage occurs when traders capitalize on price differences between markets for the same asset. Traders lock in risk-free profits by simultaneously buying at a lower price in one market and selling at a higher price in another.
Belief arbitrage works the same way: exchange overpriced limiting beliefs for more empowering alternatives.
Your current belief system functions like your home market. Established "prices" (perceived values) exist for beliefs about your capabilities, potential, and what's possible. The outside market is a grand bazaar of every alternative belief. Most wares on display are a fugazi, of dubious provenance, but a discerning eye can spot underpriced gems.
Beliefs Aren’t Solid
The foundation of belief arbitrage is metacognition, which involves turning the gaze of awareness inward. Our “beliefs” are actually fluid patterns of thought and emotion that we solidify through repeated reinforcement. They’re more like weather patterns than fixed structures. When the illusion of solidity is pierced, we can hold beliefs lightly and easily discard them when necessary.
Belief arbitrage is not positive thinking. The trap of optimizing around “feeling good” is that we deny our shortcomings and become demoralized when reality refuses to conform to our expectations. We want beliefs that are logical, pragmatic, productive, and aligned with our values.
Growing up, I was smaller and less athletic than my peers. I never saw the point of lifting weights when I’d never be as strong as they were. Beliefs justifying the status quo are great trading candidates. Instead of building muscle, I saw lifting as essential to being a cognitive athlete, pushing past the internal resistance to discomfort with each rep. After I became mentally resilient, physical strength followed.
An Algorithm for (non)SAME Beliefs:
Surface—Perform an audit of your current beliefs.
Analyze—Conduct a belief cost/benefit analysis.
Model—Experience the potential of more empowering beliefs.
Execute—Deploy systems to reinforce your new belief.
Surface Underperforming Beliefs
There are two secrets to grocery shopping: make a list and don’t go on an empty stomach. The same principle applies to belief arbitrage.
Identify which beliefs need to be traded before looking for alternatives. Wandering the belief bazaar without a game plan is like stepping into a confirmation bias portal. Instead of trading in your lemon, you’ll become a lemon missionary, feverishly convinced that lemons are humanity’s future, disavowing any future compulsion to sample other fruits.
Our beliefs hide in plain sight, embedded in our daily thoughts and reactions. Before trading a belief, you must bring it to the surface through written or verbal expression. Use a journaling practice to examine your assumptions and reactions without judgment. Discuss your challenges with a therapist, coach, or trusted friend while monitoring your inner monologue. Look for the recurring patterns and themes that signal beliefs worth auditing.
Never waste a good trigger. Our most reactive moments are a goldmine for surfacing outdated and underperforming beliefs.
Prompt: Four Types of Triggers
Emotional — What makes you instantly tighten up or feel defensive?
Notice strong emotional reactions. Disproportionate reactions signal a deeper wound.
Language — What excuses or justifications do you find yourself repeating?
Notice when you use words like “always, never, have to, should, or can’t.” This black-and-white thinking signals a fixed mindset.
Behavioral — Where do you feel a sense of obligation or a burden of expectations?
Notice the areas where you procrastinate. Frequently falling short on goals signals dissonance.
Performance — Where are you telling yourself stories about your performance?
Notice the areas where your progress has stalled. Plateauting performance signals a limiting identity.
Analyze Current Returns
Once you have a belief worth examining, it’s time to do a cost/benefit analysis. Assess the belief’s impact on your goals, performance, and overall well-being.
There is always a trade-off. Our beliefs emerge because they benefit us in some way, even if just by protecting us from uncertainty or discomfort. But do the returns justify the costs?
Prompt: Analyzing Trade-offs
Does this belief expand or limit your sense of possibility?
Does this belief energize or drain you?
Does this belief create freedom or constrain your options?
Does this belief spark action or justify inaction?
Track how beliefs cascade into outcomes. Start with a trigger and work backward. What was your immediate reaction? What belief triggered that response? Then, zoom out. How has this reactive pattern repeated over time?
Take my old belief about lifting weights. They saved me from temporary discomfort—no soreness, no awkward beginner phase, and no “wasted time” at the gym. But this belief extracted a heavy toll: diminished capacity, lowered confidence, and a reinforced pattern of avoiding physical challenges. One limiting belief can spawn an entire ecosystem of missed opportunities.
Like a detective, investigate the origins of your beliefs. Our most limiting beliefs often crystallize in childhood and have evaded scrutiny ever since.
Put each belief to the test: why does it deserve a place in your portfolio? Just like real estate, beliefs must generate enough value to justify the space they occupy in your mind.
Prompt: Tracing Origins
When did this belief form?
Who did I learn it from? (Did I choose it or inherit it?)
How do I know this belief is true? (Is the reasoning still valid?)
What new or recent evidence do I have for this belief?
Can I think of any examples or exceptions that contradict this belief?
If I shared this belief with a respected friend, what feedback would they give me?
The default is to judge ourselves for holding an underperforming belief. Instead, treat this discovery as a cause for celebration. Now you have something to trade!
Model Alternative Beliefs
Like all good traders, we start with market research. Why reinvent the wheel when so many smarter, wiser, and more neurotic people have gone before us?
Prompt: Taking the Outside View
What beliefs are shared by top performers in your field?
What beliefs do you respect and admire in those around you?
What beliefs are best supported by research and data?
What beliefs work well in similar domains?
Look for beliefs showing up in multiple categories. These are your high-conviction trades.
Understand the best practices, then adapt the beliefs to your current challenges. I find it most effective to ask my future self for this adaptation.
Visualization: Future Self
Imagine you are interviewing yourself one year in the future. Your future self feels happy and fulfilled, has achieved all your goals for the year, and is excited to share how they did it.
What beliefs were crucial to their success?
What beliefs would they be surprised you once had?
What advice would they share?
How did they handle the challenges you're currently worried about?
The power of belief arbitrage lies in making the value gap between our current and aspirational beliefs as visceral and irrefutable as possible. There needs to be more than an abstract understanding. We must visualize the differences with our own eyes.
Robert Fritz describes this as structural tension, the creative force generated by simultaneously holding the images of where we are and where we want to be. As the differences between these two images become more prominent, our natural drive to resolve them strengthens.
We must feel the gap between our current reality and what’s possible. Like a sculptor who sees the finished piece within the raw stone, make your potential so vivid and compelling that maintaining old beliefs feels like leaving that sculpture trapped inside the block.
Visualization: Parallel Universe
Imagine you’ve stepped through a portal into a parallel universe: Earth2.
Everything is the same in Earth2, except You2 is a proud holder of your updated belief, enjoying all its fruits. Watch You2 go about their day.
How would You2 spend their time differently?
What decisions would You2 make?
What’s different about You2’s relationships?
What new opportunities would You2 pursue?
How would You2 feel about themselves?
Now, instead of watching You2, become them. Embody that expansive belief. Let yourself experience the energies of pride and possibility. Notice your chest opening up, breath deepening, and posture straightening.
Instead of a soon-forgotten hypothetical, this emotional rehearsal is a form of loss aversion. After tapping into the potential already existing within you, settling for less means giving up something genuinely precious.
The gap between your current and potential self becomes impossible to ignore. Maintaining the status quo is unjustifiable. You're ready to trade.
Execute the Trade
Successful trading requires more than just conviction. You need systematic execution.
Be deliberate with your entry points and position sizing. Look for low-stakes situations to test drive your new beliefs, trying them on for size like a new shirt. Start with minor shifts and scale up as you gather evidence of a positive impact.
Progress isn’t linear, so anticipate volatility. To mitigate the risk of belief reversion, prepare for challenging situations where old beliefs resurface. I build mental resilience by simulating myself in those situations and declaring my beliefs aloud, like casting a magical spell.
Build belief equity with reinforcement. Celebrate small wins. Create a trade journal documenting instances where your new belief generates better results. Share progress with those you love and respect and ask them for feedback. Reward yourself for consistent practice.
Examine your trading environment. Audit your physical space, digital inputs, and social circles — are they supporting your new positions or subtly sabotaging them? Organize your surroundings to reinforce new patterns. Curate your information diet to feed your emerging beliefs. Most crucially, surround yourself with people who already embody the beliefs you're trading into.
Nothing is Fixed
An inflection point in my performance was realizing that beliefs are malleable. They are flexible patterns we can consciously choose to reinforce or replace. We soon discover that reality is flexible and open to interpretation, just like our beliefs.
With belief arbitrage, there are no one-off trades. Every stretch of self-perception extends your future reach, creating a virtuous cycle of mental resilience.
Not only can we update beliefs, we must. This is how we steer the ship instead of passively watching the scenery through the passenger-side window. Don’t like where your beliefs are taking you? Grab the wheel. After all, the goal is to chart a course we can be proud of.
Identify a value gap. Reconcile the price differences. Execute the trade.
The market is open—time to trade up.
Thanks for reading.
I offer performance coaching to support executives like you in showing up as the best possible version of yourself. If this resonated, I’d love to have a conversation about upgrading your beliefs and tapping into your full potential.
Visit the Performance Coaching page to learn more about coaching outcomes, and sign up for a complimentary 1:1 Discovery Call to discuss your goals and challenges.
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