Richer, Wiser, Happier: Notes From 40+ Super Investors NOT Named Warren Buffett

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It was very telling that the first chapter of Richer, Wiser, Happier: How the World’s Greatest Investors Win in Markets and Life by William Green was a profile of Mohnish Pabrai. In other words, not Warren Buffett! If you aren’t a student of value investing, then you probably have never even heard of him before. He is best known for a being a “clone” investor.

“I’m a shameless copycat,” he says. “Everything in my life is cloned.… I have no original ideas.” Consciously, systematically, and with irrepressible delight, he has mined the minds of Buffett, Munger, and others not only for investment wisdom but for insights on how to manage his business, avoid mistakes, build his brand, give away money, approach relationships, structure his time, and construct a happy life.

That descriptor always seemed a bit derogatory, but after reading more about Pabrai in this book, I grew quite a lot of appreciation and respect for his approach. If you also like collecting outside wisdom (especially about investing) and incorporating into your life, you will likely enjoy this book as well. Green is an excellent writer and journalist that has managed to interview over 40 of the world’s greatest investors (many of which I’d never heard of until now), and this became the most heavily-highlighted book in my Kindle. Here are a fraction of them:

Mohnish Pabrai

Rule 1: Clone like crazy. Rule 2: Hang out with people who are better than you. Rule 3: Treat life as a game, not as a survival contest or a battle to the death. Rule 4: Be in alignment with who you are; don’t do what you don’t want to do or what’s not right for you. Rule 5: Live by an inner scorecard; don’t worry about what others think of you; don’t be defined by external validation.

Cloning Buffett, who once showed him the blank pages of his little black diary, Pabrai keeps his calendar virtually empty so he can spend most of his time reading and studying companies. On a typical day at the office, he schedules a grand total of zero meetings and zero phone calls. One of his favorite quotes is from the philosopher Blaise Pascal: “All of humanity’s problems stem from man’s inability to sit quietly in a room alone.” […] He says it helps that his investment staff consists of a single person: him. “The moment you have people on your team, they’re going to want to act and do things, and then you’re hosed.”

John Templeton

To his credit, Templeton was especially demanding of himself. Take his attitude toward saving and spending. “After my education, I had absolutely no money and neither did my bride,” he told me. “So we deliberately saved fifty cents out of every dollar we earned.”

Distrustful of debt, he always paid cash for his cars and homes. He also claimed that his wartime bet was the only time he ever borrowed money to invest. During the Great Depression he’d seen how easy it was for overextended people to come undone, and he regarded fiscal discipline as a moral virtue.

Howard Marks

“Look, luck is not enough,” he says. “But equally, intelligence is not enough, hard work is not enough, and even perseverance is not necessarily enough. You need some combination of all four.

He plans to work indefinitely because he finds it intellectually rewarding, not because he has an “unquenchable” thirst for money or status. He recalls his Japanese studies professor explaining a Buddhist teaching that “you have to break the chain of getting and wanting”—an aimless cycle of craving that leads inevitably to suffering.

Irving Kahn

Kahn became Graham’s teaching assistant at Columbia in the 1920s, and they remained friends for decades. I wanted to know what he’d learned from Graham that had helped him to prosper during his eighty-six years in the financial markets. Kahn’s answer: “Investing is about preserving more than anything. That must be your first thought, not looking for large gains. If you achieve only reasonable returns and suffer minimal losses, you will become a wealthy man and will surpass any gambler friends you may have. This is also a good way to cure your sleeping problems.”

Just think for a moment about those basic ingredients that helped to make for a richly rewarding life. Family, health, challenging and useful work, which involved serving his clients well by compounding their savings conservatively over decades. And learning—particularly from Graham, an investment prophet who, Kahn said, “taught me how to study companies and succeed through research as opposed to luck or happenstance.”

Joel Greenblatt

This raises an obvious but crucial question: Do you know how to value a business? There’s nothing admirable or shameful about your response. But you and I need to answer this question honestly, since self-delusion is a costly habit in extreme sports such as skydiving and stock picking. “It’s a very small fraction of people that can value businesses—and if you can’t do that, I don’t think you should be investing on your own,” says Greenblatt. “How can you invest intelligently if you can’t figure out what something is worth?”

These experiences have led him to an important revelation: “For most individuals, the best strategy is not the one that’s going to get you the highest return.” Rather, the ideal is “a good strategy that you can stick with” even “in bad times.”

Charlie Munger

Munger often preaches about the importance of avoiding behavior with marginal upside and devastating downside. He once observed, “Three things ruin people: drugs, liquor, and leverage.”

Asked for career advice, he opines: “You have to play in a game where you’ve got some unusual talents. If you’re five foot one, you don’t want to play basketball against some guy who’s eight foot three. It’s just too hard. So you’ve got to figure out a game where you have an advantage, and it has to be something that you’re deeply interested in.”

Survivorship bias! I would say that one of the dangers of this book is that it may make you want to be a stock picker. All of the people profiled are probably have a net worth of over $50 million if not much more. Many made a few bold bets, and they paid off big. I want an oceanfront house in Newport Beach, my own private jet, and a vintage car to drive across Asia too!

The rewards for investing intelligently are so extravagant that the business attracts many brilliant minds.

Beating the market means being different. Can you make “unconventional bets that the crowd would consider foolish”? Are you a good fit for the “bizarrely lucrative discipline of sitting alone in a room and occasionally buying a mispriced stock”? Do you have enough humility to make a good judgment, mixed with the self-confidence to bet big when you think you have an edge?

Even if you think you do, survivorship bias reminds us that there are many, many highly-intelligent, hard-working people who tried their best to apply these concepts, but did not succeed. They are missing from the pages of this book, and you’ll never read their stories.

The true goal is independence. The good news is that you don’t need be a great stock picker. Even if you just invest in low-cost index funds and can stick with it, you can do quite well and still achieve the ability to be independent and become in control of your time on Earth.

Buffett said, “If you’re even a slightly above average investor who spends less than you earn, over a lifetime you cannot help but get very wealthy.”

Howard Marks: “Most people should index most of their money.”

The pattern is clear. In their own ways, Greenblatt, Buffett, Bogle, Danoff, and Miller have all been seekers of simplicity. The rest of us should follow suit. We each need a simple and consistent investment strategy that works well over time—one that we understand and believe in strongly enough that we’ll adhere to it faithfully through good times and bad.

“You build capital and then you can do whatever you want because you’re independent.” For many of the most successful investors I’ve interviewed, that freedom to construct a life that aligns authentically with their passions and peculiarities may be the single greatest luxury that money can buy.

p.s. Here is a list of the people profiled in this book; I can’t guarantee I got all of them but it’s definitely close. A good source for additional research.

  • Sir John Templeton
  • Irving Kahn
  • Bill Ruane
  • Marty Whitman
  • Jack Bogle
  • Charlie Munger
  • Ed Thorp
  • Howard Marks
  • Joel Greenblatt
  • Bill Miller
  • Mohnish Pabrai
  • Tom Gayner
  • Guy Spier
  • Fred Martin
  • Ken Shubin Stein
  • Matthew McLennan
  • Jeffrey Gundlach
  • Francis Chou
  • Thyra Zerhusen
  • Thomas Russo
  • Chuck Akre
  • Li Lu
  • Peter Lynch
  • Pat Dorsey
  • Michael Price
  • Mason Hawkins
  • Bill Ackman
  • Jeff Vinik
  • Mario Gabelli
  • Laura Geritz
  • Brian McMahon
  • Henry Ellenbogen
  • Donald Yacktman
  • Bill Nygren
  • Paul Lountzis
  • Jason Karp
  • Will Danoff
  • François Rochon
  • John Spears
  • Joel Tillinghast
  • Qais Zakaria
  • Nick Sleep
  • Paul Isaac
  • Mike Zapata
  • Paul Yablon
  • Whitney Tilson
  • François-Marie Wojcik
  • Sarah Ketterer
  • Christopher Davis
  • Raamdeo Agrawal
  • Arnold Van Den Berg
  • Mariko Gordon
  • Jean-Marie Eveillard
  • Guy Spier
My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Greenlights: Why Matthew McConaughey Turned Down A $14.5 Million Paycheck

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Matthew McConaughey was productive during the pandemic, collecting his diaries and reflecting on his life so far to complete the NY Times bestselling memoir Greenlights. This was a highly-enjoyable book containing several great stories and providing a lot of colorful background to my limited view of this actor. I appreciated how he lived his life to avoid the thing that people regret most often on their deathbeds:

I wish I’d had the courage to live a life true to myself, not the life others expected of me.

He wasn’t one of those kids born into Hollywood, but instead a small town in West Texas. When he realized that he wanted to pursue acting, he received a great gift from his father, but it wasn’t money or connections. When McConaughey suddenly wanted to switch his college major from a pre-law to film, with the goal of pursuing acting as a career, his father replied:

“Well…Don’t half-ass it.” Of all the things my dad could have said, of all the reactions he could have had, Don’t half-ass it were the last words I expected to hear and the best words he could have ever said to me. With those words he not only gave me his blessing and consent, he gave me his approval and validation. It’s what he said and how he said it. He not only gave me privilege, he gave me honor, freedom, and responsibility. With some formidable rocket fuel in his delivery, we made a pact that day. Thanks, Pop.


Interestingly, one of the defining moments of his life and professional career occurred after he became a rich, popular actor known mainly for his roles in romantic comedies – EdTV, The Wedding Planner, How to Lose a Guy in 10 Days, Failure to Launch. He started to want different roles, but he couldn’t get them. He wasn’t seen as a serious actor. In order to change his position, he had to turn down multiple lucrative $$$ offers and risk being cast out of Hollywood.

…a year went by. Dozens of romantic comedy offers came my way. Only romantic comedy offers came my way. I read them out of respect but I stayed the course, stuck to the plan, and ultimately passed on them all. Just how puritanical was I about it? Well, I got a $5 million offer for two months’ work on one. I read it. I passed. Then they offered $8 million. Nope. They then offered $10 million. No, thank you. Then $12.5 million. Not this time, but…thanks. Then $14.5 million. Hmmmm…Let me reread it. And you know what? It was a better script. It was funnier, more dramatic, just an overall higher quality script than the first one I read with the $5 million offer. It was the same script, with the exact same words in it, but it was far superior to the previous ones. I declined the offer.

He was voluntarily unemployed for over a year. He passed up nearly $15 million before he finally saw a script that he felt would put him in the right direction. But once that happened, within another two years, he won the Academy Award for Best Actor for his role in Dallas Buyers Club, the most prestigious award in his profession. I personally never noticed this gap before, but you can see it in his filmography taken from Wikipedia.

Here are some book quotes that support the notion that we all have an inner compass to follow:

I went to a voodoo shop south of New Orleans the other day . It had vials of “magic” potions stacked in columns with labels defining what they would give you: Fertility, Health, Family, Legal Help, Energy, Forgiveness, Money. Guess which column was sold out? Money. Yep, money is king currency today. Money is success. The more we have, the more successful we are, right? Even our cultural values have been financialized. Humility is not in vogue anymore, it’s too passive. We can get rich quick on an Internet scam, be an expert at nothing but everything if we say we are, get famous for our sex tape, and attain wealth, fame, rank, and power, even respect, without having a shred of competence for anything of value. It happens every day. We all want to succeed. The question we need to ask ourselves is, What is success to us? More money? Okay. A healthy family? A happy marriage? Helping others? To be famous? Spiritually sound? To express ourselves? To create art? To leave the world a better place than we found it? “What is success to me?” Continue to ask yourself that question. How are you prosperous? What is your relevance? Your answer may change over time and that’s fine, but do yourself this favor: Whatever your answer is, don’t choose anything that will jeopardize your soul. Prioritize who you are, who you want to be, and don’t spend time with anything that antagonizes your character. Don’t depend on drinking the Kool-Aid. It’s popular, tastes sweet today, but it will give you cavities tomorrow. Life is not a popularity contest. Be brave, take the hill, but first, answer the question, “What is my hill?”

An honest man’s pillow is his peace of mind, and when we lie down on ours at night, no matter who’s in our bed, we all sleep alone. The voluntary obligations are our personal Jiminy Crickets, and there are not enough cops in the entire world to police them — it’s on us.

Can we live in a way where we look forward to looking back?

Here are a few more “life lesson wisdom” quotes in his own voice:

…biology and giddyup DNA and work. Genetics and willpower. Life’s a combination. Some get the genes but never the work ethic or resilience. Others work their ass off but never had the innate ability. Others have both and never rely on the first.

You ever get in a rut? Stuck on the merry-go-round of a bad habit? I have. We are going to make mistakes — own them, make amends, and move on. Guilt and regret kill many a man before their time. Get off the ride. You are the author of the book of your life. Turn the page.

I don’t have the physical looks, charisma, or relentless energy that McConaughey exudes, but I do believe that each of us knows the path that feels right for us, that aligns with our soul, that is “true to ourselves”. Each of us has to drum up our own form of bravery to find and choose that path, even when it pays less money or gives us less power/respect/status from other people.

By the way, McConaughey’s pivot is a great example of the power of financial freedom! Before McConaughey started turning down million-dollar offers, he called up with his financial advisor and was told that he was financially solid (at least for a while). He had F- You Money. Without that, he may never have been able to win that Oscar.

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Die With Zero: How to Spend (All) Your Money

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards and may receive a commission. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

You might be saving too much money right now! You need to spend more! That is the unconventional message of the book Die With Zero by Bill Perkins. Some delayed gratification can be a good thing, but it can be a very bad thing if you simply end up dying with a big pile of money. Life is about having as many positive experiences as possible, and dying with more than zero means you wasted potential experiences.

The main problem is that our incomes, free time, and health vary differently with age. Incomes generally rise with age. Yet, our health and physical ability generally drops with age. Free time is a bit different, as you tend to have more free time when you are either quite young or quite old.

Therefore, the idea that we should save all the money we can in order to spend it in retirement isn’t ideal. Certain experiences are best during certain seasons of life, and you should spend your money at the times when it has the most impact. That also means you shouldn’t save much money in your 20s, as that is the best time for many of those “valuable” experiences. Here are some suggestions from the book about how to fill those “time buckets” (click to enlarge):

While I agree with many of the messages in this book, the tone often rubbed me the wrong way. Too put it bluntly, this book felt written by a “really rich guy” for his really rich friends. The author lives in a different world. In one example, he was proud that he threw a party in the Caribbean island of St. Barts which involved flying out all the attendees, renting out an entire hotel, and hiring Natalie Merchant for a private concert. Huh?

When you write a book, you ask your friends to leave an Amazon review. Perfectly reasonable. But read this:

I have to start off by saying that I know Bill Perkins personally, and that is going to make my review biased. With that being said, in my 1 year of knowing Bill, Ive had the most amazing experiences of my life. Everything from travelling around the world to playing chess with Sir Richard Branson on his private island.



My primary criticism is the implicit assumption that “valuable” experiences have to cost a lot of money. Hiring celebrities to sing for you. Dropping $100,000 on a birthday party. Is it really a great tragedy if someone doesn’t end up skiing in the Swiss Alps? I’m pretty sure I’m going to die without sailing the Amalfi coast, because I have no idea where that is!

Today, my three kids went to their great-grandmother’s and great-aunt’s house. My wife spent her youth climbing a large lemon tree in the yard. Her grand-aunt is 93 years old and the kids got to help her pick the lemons and made (very messy and sticky) lemonade together. My wife reminisced about how she used to do the exact same thing (including the messy and sticky part) with her late grandmother. That was also a priceless memory, but it has little to do with money. It was about love and making an effort to spend time together.

My secondary criticism is that the book doesn’t actually teach you how to “Die with Zero”. I was honestly hoping for some insights about spending down an investment portfolio in order to accomplish “maximum spending”. Unfortunately, the book contains little practical investment advice. There is only a quick mention to “look into” annuities, and to use a longevity estimator.

There was no rebuttal to the fact that with nearly every investment, you’ll need to leave yourself some wiggle room because you don’t know how long you’ll live, future expenses, future investment returns, future interest rates, and future inflation. The only safe solution might be a TIPS ladder, which would require a lot more money than what you might need with stocks.

Let’s end on a positive note. Here are the best takeaways from this book.

  1. The most valuable things in life are experiences shared with loved ones.
  2. Each stage of your life is special and unique.
  3. Make a list of truly valuable experiences that you want at each stage. Think about why they are different for each stage (health, free time).
  4. Make them a priority. If it costs money to make it happen, then spend it happily and consciously.

Some things can wait, and others can’t. Maybe you want to learn how to surf, raise a huge family, start a nonprofit, or move somewhere warm and breezy. However, I would reiterate that I do not equate “valuable” with “expensive” or “rare”. Here are the most valuable memories that I can thing of:

  • Early 20s: I met my future wife, who is my best friend and inspires me every day. Finding the right life partner was so important to my happiness.
  • Early 20s: I did backpack around Europe and stay in hostels as a single person. The total cost was probably a couple thousand dollars and I paid cash (no debt). It was fun, but I would have also had amazing memories hiking the Appalachian Trail or teaching English in Japan.
  • Early 20s: I quit a well-paying job to take a risk and try to switch careers. It didn’t work out as I imagined, but it did work out.
  • Late 20s and early 30s: Once we had things lined up, we “spent” our energy mostly on many hours of work and high saving rates. No regrets as it set us up for the rest of our lives.
  • Mid-30s to Early-40s: We “spent” some of our money by choosing to work less and be able to raise our young children. I will never have to say the words “I wish I spent more time with them while they were young, and less time working”. We still work but our saved money gives us flexibility and the ability to choose what we work on. I am able to exercise and socialize regularly.
  • So what’s left? In my 20s, I wish I spent more time with my friends doing simple things like hanging out at bars. Today, I wish I kept in touch with them better as well. This book has strengthened my resolve to take the effort to meet up with them soon. It’s hard with everyone’s work schedules, families, etc. Something simple like go-karts, hiking, or bowling. We probably won’t stumble into Richard Branson, but who knows?

Looking back, it was more about constructing a daily life of purpose and happiness, rather than a bucket list of limited experiences. My “must haves” are based on the components of happiness, where I use money so that I can say things like:

  • I consistently lead a purposeful and meaningful life. I spend my time on things that are important.
  • I consistently become absorbed in what I am doing. Time seems to pass quickly when I am working.
  • I am in excellent health and am satisfied with my level of health.
  • I consistently receive help and support from others when I need it.
  • I am consistently excited and interested in things.
  • I rarely feel lonely.
  • I consistently feel loved.

It’s a good message not to hoard your money forever. We do have some bucket-list items like travel destinations, but honestly checking them off won’t change our lives from “good” to “awesome”. Our personal concept of financial freedom leads to a ideal lifestyle that wouldn’t change much if you were to give me more money to spend. We have “enough”.

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Influence: How Salespeople Use Your Mental Shortcuts Against You

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards and may receive a commission. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

Although not technically a “personal finance” book, Influence: The Psychology of Persuasion by Robert Cialdini should be required reading if they ever create a standardized curriculum for personal finance. In addition to being a professor of psychology, the author was hired into several jobs where sales professionals have carefully honed the ability to use your own psychological tendencies for their benefit:

For nearly three years, then, I combined my experimental studies with a decidedly more entertaining program of systematic immersion into the world of compliance professionals—sales operators, fund-raisers, recruiters, advertisers, and others.

While a NYT Bestseller and on Warren Buffet’s reading list, I put it off as it seemed a little bit stuffy and dry, and besides I’d probably read about all the things discussed already, right? I was wrong! This book contained enough new and valuable information that I plan on making my kids read it as soon as they can. The amount of carefully-targeted marketing being thrown at them is only increasing.

These six psychological principles (mental shortcuts) have been used recently to influence your purchases, donations, and votes. I’ll still do my own brief summary below to help me remember the highlights, and there are many other summaries of the book online, but I recommend reading the entire thing in the original form. The book is older, so there are lots of copies at my library.

1. Reciprocation. If I do a favor for you, then you will feel the urge to repay me by doing me a favor in return. This tendency helps us work together in positive ways, but it can also be exploited.

  • Free in-home trials with “no obligation”.
  • Free samples at Costco.
  • Free custom mailing labels or even a nickel/dime in charity mailer.
  • “Free rewards” if you leave an Amazon product review.
  • “Free” steak dinners when selling expensive insurance products.
  • Upfront sign-up bonuses for trying out a credit card. (Ahem)

As a marketing technique, the free sample has a long and effective history. In most instances, a small amount of the relevant product is provided to potential customers for the stated purpose of allowing them to try it to see if they like it. And certainly this is a legitimate desire of the manufacturer—to expose the public to the qualities of the product. The beauty of the free sample, however, is that it is also a gift and, as such, can engage the reciprocity rule.

The confidential Amway Career Manual then instructs the salesperson to leave the BUG with the customer “for 24, 48, or 72 hours, at no cost or obligation to her. Just tell her you would like her to try the products…. That’s an offer no one can refuse.” At the end of the trial period, the Amway representative returns and picks up orders for those of the products the customer wishes to purchase.

For instance, the Disabled American Veterans organization reports that its simple mail appeal for donations produces a response rate of about 18 percent. But when the mailing also includes an unsolicited gift (gummed, individualized address labels), the success rate nearly doubles to 35 percent.

Defense? Mentally, you must redefine any “trial” or “gift” as a sales device. It is not a gift, and thus you owe them nothing in return. Choose to use a product or service on its own merits only.

2. Consistency. We are strongly wired to be (and to appear) consistent with what we have already done.

If you must leave your laptop in a library or valuables on the beach temporarily, your best bet would be to ask a single person directly “Will you please watch my things?”. Once that person has committed to that responsibility, your stuff becomes pretty safe, as indicated by experiment:

In these incidents, before taking his stroll, the accomplice would simply ask the subject to please “watch my things,” which each of them agreed to do. Now, propelled by the rule for consistency, nineteen of the twenty subjects became virtual vigilantes, running after and stopping the thief, demanding an explanation, and often restraining the thief physically or snatching the radio away.

Once you state something publicly, it becomes very hard for you to back down from it, even if later you realize your statement is wrong and refuted by nearly all evidence. Even worse, small wrong commitments can also open the door to larger wrong commitments. Answering “yes” to something as innocuous as “Are you a spontaneous person?” can get you do later do some stupid and dangerous things. “Why not do [dangerous thing]? You said you were spontaneous!”

What the Freedman and Fraser findings tell us, then, is to be very careful about agreeing to trivial requests. Such an agreement can not only increase our compliance with very similar, much larger requests, it can also make us more willing to perform a variety of larger favors that are only remotely connected to the little one we did earlier. It’s this second, general kind of influence concealed within small commitments that scares me.

Defense? Be very careful before agreeing to anything (even if it is small), especially publicly (like on social media). Don’t let a small commitment automatically lead you to more extreme commitments.

3. Social Proof. We tend to look to and follow the behavior of others, especially if we are unsure and/or they seem similar to us.

  • Infomercials will always have someone else come up and show an enthusiastic response.
  • During a sales presentation, there will usually be “plants” in an audience with a rehearsed response.
  • Immediately after a high-profile suicide, overall suicide rates will rise.

Bartenders often “salt” their tip jars with a few dollar bills at the beginning of the evening to simulate tips left by prior customers and thereby to give the impression that tipping with folding money is proper barroom behavior.

Defense? This shortcut can makes sense at times (Yelp/TripAdvisor/Amazon reviews), but be aware that sometimes it may be artificially generated. Also, be aware of how this tendency will affect others around you:

I have been sufficiently affected by these statistics to begin to take note of front-page suicide stories and to change my behavior in the period after their appearance. I try to be especially cautious behind the wheel of my car. I am reluctant to take extended trips requiring a lot of air travel.

4. Liking. We tend to say “yes” to people we like. We tend to like physically attractive people, as well as people that appear similar and familiar to ourselves, even though those factors may have nothing to do with why you should vote for them or buy a car from them.

The clearest illustration I know of the professional exploitation of the liking rule is the Tupperware party, which I consider the quintessential American compliance setting. Anybody familiar with the workings of a Tupperware party will recognize the use of the various weapons of influence we have examined so far: reciprocity (to start, games are played and prizes won by the partygoers; anyone who doesn’t win a prize gets to reach into a grab bag for hers so that everyone has received a gift before the buying begins), commitment (each participant is urged to describe publicly the uses and benefits she has found in the Tupperware she already owns), and social proof (once the buying begins, each purchase builds the idea that other, similar people want the product; therefore, it must be good).

Defense? Acknowledge this tendency, and try to focus solely on the merits of the situation.

5. Authority. We tend to follow symbols of authority as a mental shortcut, for example titles, uniforms, business suits, and celebrities. The problem is we do this even in situations where it shouldn’t be applicable. Why should an athlete tell me what life insurance to buy? Think of the many instances of abuse and harassment performed by people in positions of authority.

Planes have crashed because the junior pilot didn’t want to question the senior pilot. In one study, nurses were convinced to administer a lethal dose of a drug by an unknown stranger that simply firmly and urgently claimed to be a doctor over the phone.

There were four excellent reasons for a nurse’s caution in response to this order: (1) The prescription was transmitted by phone, in direct violation of hospital policy. (2) The medication itself was unauthorized; Astrogen had not been cleared for use nor placed on the ward stock list. (3) The prescribed dosage was obviously and dangerously excessive. The medication containers clearly stated that the “maximum daily dose” was only ten milligrams, half of what had been ordered. (4) The directive was given by a man the nurse had never met, seen, or even talked with before on the phone. Yet, in 95 percent of the instances, the nurses went straightaway to the ward medicine cabinet, where they secured the ordered dosage of Astrogen and started for the patient’s room to administer it. It was at this point that they were stopped by a secret observer, who revealed the nature of the experiment.

Defense? Don’t shortcut your own thinking and power by allowing the authority figure to take over. Question authority. Sometimes, it is your duty to be a safety check and protect others.

6. Scarcity. Simply being scarce makes something more desirable. This may also be linked to loss aversion – we hate losing something more than we like gaining something. “While supplies last.” “Limited-time offer.” No matter what time you land on the website, the sale will always be “ending in only 23:54 hours!”

For similar reasons, department stores holding a bargain sale toss out a few especially good deals on prominently advertised items called loss leaders. If the bait, of either form, has done its job, a large and eager crowd forms to snap it up. Soon, in the rush to score, the group becomes agitated, nearly blinded, by the adversarial nature of the situation. Humans and fish alike lose perspective on what they want and begin striking at whatever is being contested.

Defense? Question the actual amount of scarcity, especially in high-pressure environments like a live auction, Black Friday, or car sales department. Buy now or lose it forever? In reality, another train may arrive shortly.

Final thoughts. An important point in the book is that these tactics won’t always work, but they will alter the odds of success. The tactics will often be used in combination with each other for added strength. Finally, we are more likely to fall back on these mental shortcuts without thinking when we are stressed, rushed, tired, or hungry. Hopefully, the ability to identify these tactics in action will help us avoid making poor decisions, including financial ones.

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Eat and Run: On Moving Forward and Taking True Risks

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Scott Jurek is a well-known ultramarathoner that I first learned about in the book Born to Run (my highlights) by Christopher McDougall. Jurek later wrote his own memoir, titled Eat and Run: My Unlikely Journey to Ultramarathon Greatness. I’ll probably never have the physical and mental endurance to run 100 miles in a day. But perhaps I could learn how to push myself farther outside of my comfort zone?

As the title suggests, Jurek attributes much of his racing success to his plant-based diet. Some folks still claim that it’s too hard to get excellent nutrition just from plants, but Jurek’s performance is the perfect counterpoint. However, he isn’t overly preachy on the subject, and I appreciated that he sprinkled his favorite vegan recipes throughout the book. The few that I tried tasted pretty good.

He shares about his challenges as a child and teenager, and how that really shaped him. His mother was diagnosed with multiple sclerosis when he was very young, and he had to juggle the responsibilities of being head of his household by the time he was a teenager. In addition to schoolwork and sports, he had parenting and housework duties as well. Yet, he still managed to graduate as the valedictorian of his high school.

In my valedictory speech I said, “I would like to leave you with four messages to help you and others benefit from life.” (I still have the speech.) “First of all, I ask you to be different. “Second, find a way to help others rather than thinking solely of yourself. “Third, everyone is capable of achieving. Never let anyone discourage you when trying to pursue a goal or a dream. “And finally, do things while you’re young. Be sure to pursue your dreams and goals even if they seem impossible.”

He also learned that being physically able should not be taken for granted. He provides some simple, practical advice about taking up running as a beginner:

Running efficiently demands good technique, and running efficiently for 100 miles demands great technique. But the wonderful paradox of running is that getting started requires no technique. None at all. If you want to become a runner, get onto a trail, into the woods, or on a sidewalk or street and run. Go 50 yards if that’s all you can handle. Tomorrow, you can go farther. The activity itself will reconnect you with the joy and instinctual pleasure of moving. It will feel like child’s play, which it should be. Don’t worry about speed at first or even distance. In fact, go slow. That means 50 to 70 percent of your maximum effort. The best way to find that zone is to run with a friend and talk while you’re doing so. If you can’t talk, you’re running too fast and too hard.

On the importance of the journey:

We focus on something external to motivate us, but we need to remember that it’s the process of reaching for that prize—not the prize itself—that can bring us peace and joy. Life, as countless posters and bumper stickers rightly attest, is a journey, not a destination.

On finding your path over time:

It’s easy to get wrapped up in deadlines and debt, victory and loss. Friends squabble. Loved ones leave. People suffer. A 100-mile race—or a 5K, or a run around the block—won’t cure pain. A plate filled with guacamole and dinosaur kale will not deliver anyone from sorrow. But you can be transformed. Not overnight, but over time. Life is not a race. Neither is an ultramarathon, not really, even though it looks like one. There is no finish line. We strive toward a goal, and whether we achieve it or not is important, but it’s not what’s most important. What matters is how we move toward that goal. What’s crucial is the step we’re taking now, the step you’re taking now. Everyone follows a different path. Eating well and running free helped me find mine. It can help you find yours. You never know where that path might take you.

My favorite highlight – On paying respect to the true risk-takers. Jurek is known for staying at the finish line after winning an ultramarathon and cheering on every other single runner until the last one has crossed. Every single one! For an ultramarathon, this could be another several hours or longer. Here is part of his reasoning:

Every single one of us possesses the strength to attempt something he isn’t sure he can accomplish. It can be running a mile, or a 10K race, or 100 miles. It can be changing a career, losing 5 pounds, or telling someone you love her (or him). I can guarantee that no one at the Western States knew they were going to finish, much less win (including me). A lot of people never do something great with their lives. A lot of people never attempt it. Everyone here had done both. Staying at the finish line and greeting those runners, I could pay tribute to the pain and doubt, fatigue and hopelessness, that I imagined they had pushed through.

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Born to Run: Is Running Outdoors Another Deeply-Embedded Human Desire?

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Recently, I’ve been attracted to books that talk about common qualities of all humans (as opposed to their differences) – like how humans became the dominant species because of their ability to cooperate (Sapiens) and our shared need for autonomy, competence, and community (Tribe). I’m not an avid runner, but Born to Run: A Hidden Tribe, Superathletes, and the Greatest Race the World Has Never Seen by Christopher McDougall suggests that running is another link in that story. Perhaps this ability to run for long distances (extended outdoor exercise) is another way we can achieve a better balance of our mental, physical, and spiritual selves.

The specific race tale in the book is also suspenseful and exciting (once you get past the slow beginning), making this is a recommended read for that reason alone. I don’t want to give spoilers, so here are some highlights that focus on a better life – which of course is the ultimate goal of financial freedom.

The Tarahumara are an indigneous people that live a secluded life in the Sierra Madre canyons of Mexico. They are known for their running ability, but perhaps they aren’t special, but just the ones that have managed to keep what was once a common skill? Put another way – Why do so many people love running?

That was the real secret of the Tarahumara: they’d never forgotten what it felt like to love running. They remembered that running was mankind’s first fine art, our original act of inspired creation.

Know why people run marathons? he told Dr. Bramble. Because running is rooted in our collective imagination, and our imagination is rooted in running. Language, art, science; space shuttles, Starry Night, intravascular surgery; they all had their roots in our ability to run. Running was the superpower that made us human-which means it’s a superpower all humans possess.

“And you’ve got to ask yourself why only one species in the world has the urge to gather by the tens of thousands to run twenty-six miles in the heat for fun,” Dr. Bramble mused. “Recreation has its reasons.”

And like everything else we love – everything we sentimentally call our “passions” and “desires” – it’s really an encoded ancestral necessity. We were born to run; we were born because we run. We’re all Running People, as the Tarahumara have always known.

Human bodies are actually well-suited for distance running. Not running fast, but running for an extended time, longer than most other mammals. Some of our ancestors hunted by simply chasing and outlasting an animal until it collapsed in exhaustion. Perhaps ultra-marathoners are not so unusual after all.

Ethnographers’ reports he’d read years ago began flooding his mind; they told of African hunters who used to chase antelope across the savannahs, and Tarahumara Indians who would race after a deer “until its hooves fell off.” Lieberman had always shrugged them off as tall tales, fables of a golden age of heroes who’d never really existed. […] You don’t even have to go fast, Lieberman realized. All you have to do is keep the animal in sight, and within ten minutes, you’re reeling him in. If a middle-aged professor can outrun a dog on a hot day, imagine what a pack of motivated hunter-gatherers could do to an overheated antelope.”

The best shoes are the worst. This book is a bit of an antidote to the memoir of Nike founder Phil Knight Shoe Dog (which I still enjoyed). What if thick-soled wedge shoes aren’t really solving a problem, just prolonging it?

Bowerman’s marketing was brilliant. “The same man created a market for a product and then created the product itself,” as one Oregon financial columnist observed. “It’s genius, the kind of stuff they study in business schools.” Bowerman’s partner, the runner-turned-entrepreneur Phil Knight, set up a manufacturing deal in Japan and was soon selling shoes faster than they could come off the assembly line.

“Every great cause begins as a movement, becomes a business, and turns into a racket.”

The Tarahumara run long distances on thin sandals. Perhaps we need more of the posture-improving feedback and foot-strengthening from running barefoot:

The way to activate your fat-burning furnace is by staying below your aerobic threshold-your hard-breathing point-during your endurance runs. Respecting that speed limit was a lot easier before the birth of cushioned shoes and paved roads; try blasting up a scree-covered trail in open-toed sandals sometime and you’ll quickly lose the temptation to open the throttle. When your feet aren’t artificially protected, you’re forced to vary your pace and watch your speed: the instant you get recklessly fast and sloppy, the pain shooting up your shins will slow you down.

Like many other ancient cultures, the Tarahumara have a strong sense of and hospitality. When we help each other without expectation, it makes everyone’s life better.

“The Raramuri have no money, but nobody is poor,” Caballo said. In the States, you ask for a glass of water and they take you to a homeless shelter. Here, they take you in and feed you. You ask to camp out, and they say, “Sure, but wouldn’t you rather sleep inside with us?”

Also like many other ancient cultures, eating a primarily plant-based diet gives you all the nutrition you need and lets your body’s natural feedback system tell you when to stop eating. Engineered junk food like Cheetos/Doritos dust and super-sweet everything are designed to keep your body always wanting more. Chia seeds are the natural “energy food” of the Tarahumara tribe.

The first step toward going cancer-free the Tarahumara way, consequently, is simple enough: Eat less. The second step is just as simple on paper, though tougher in practice: Eat better. Along with getting more exercise, says Dr. Weinberg, we need to build our diets around fruit and vegetables instead of red meat and processed carbs. Anything the Tarahumara eat, you can get very easily,” Tony told me. “It’s mostly pinto beans, squash, chili peppers, wild greens, pinole, and lots of chia.”

Outdoor exercise just seems to make you happier:

“Such a sense of joy!” marveled Coach Vigil, who’d never seen anything like it, either. “It was quite remarkable.” Glee and determination are usually antagonistic emotions, yet the Tarahumara were brimming with both at once, as if running to the death made them feel more alive.

I knew aerobic exercise was a powerful antidepressant, but I hadn’t realized it could be so profoundly mood stabilizing and-I hate to use the word-meditative. If you don’t have answers to your problems after a four-hour run, you ain’t getting them.

“Just move your legs. Because if you don’t think you were born to run, you’re not only denying history. You’re denying who you are.”

Finding happiness is often about wanting less (which has the nice side effect of spending less). Nothing mentioned in this book requires a brand-name consumer product or a huge net worth. Run or walk, preferably outdoors, preferably with other people. If you have back or knee problems, try switching gradually to something closer to barefoot (thinner, flatter soles) but keep on walking outside with friends. Eat mostly plants, or at least more plants. Look to help other people. I might also try going for a jog…

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Skin in the Game: How Much Do You Have To Lose? (Book Notes)

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The central idea behind the book Skin in the Game: Hidden Asymmetries in Daily Life by Nassim Nicholas Taleb is simple. Never trust anyone without skin in the game. In the real world, behavior changes for the better when you have to pay a price for your mistakes. This is a very handy heuristic to apply in everyday life and applies in many areas. A good example of why we shouldn’t allow people to not have skin in the game is Bob Rubin:

The Bob Rubin trade? Robert Rubin, a former Secretary of the United States Treasury, one of those who sign their names on the banknote you just used to pay for coffee, collected more than $120 million in compensation from Citibank in the decade preceding the banking crash of 2008. When the bank, literally insolvent, was rescued by the taxpayer, he didn’t write any check—he invoked uncertainty as an excuse. Heads he wins, tails he shouts “Black Swan.”

If someone is giving you financial advice, don’t worry about what s/he “thinks”, ask them what they actually hold in their own portfolio. Sure, what is optimal for them may be different than what it optimal for your own situation, but at least put it out there and let the consumer decide. Predictions are cheap without real risk of loss/pain.

In case you are giving economic views: Don’t tell me what you “think,” just tell me what’s in your portfolio.

How much you truly “believe” in something can be manifested only through what you are willing to risk for it.

Conflicts of interest can be good, if it means skin in the game. Taleb argues that while many people think it is better for CNBC “experts” and/or journalists to not own the stocks or companies they talk about, it’s actually better that they do.

There are two types of “talking one’s book.” One consists of buying a stock because you like it, then commenting on it (and disclosing such ownership)—the most reliable advocate for a product is its user. Another is buying a stock so you can advertise the qualities of the company, then selling it, benefiting from the trumpeting—this is called market manipulation, and it is certainly a conflict of interest.

We removed the skin in the game of journalists in order to prevent market manipulation, thinking that it would be a net gain to society. The arguments in this book are that the former (market manipulation) and conflicts of interest are more benign than impunity for bad advice. The main reason, we will see, is that in the absence of skin in the game, journalists will imitate, to be safe, the opinion of other journalists, thus creating monoculture and collective mirages.

In general, skin in the game comes with conflict of interest. What I hope this book will do is show that the former is more important than the latter. There is no problem if people have a conflict of interest if it is congruous with downside risk for themselves.

Bureaucracy too often means NO skin in the game. We allow people elected for only a few years be allowed to bind all of us into agreements that last for decades. We should also look more closely at the former “civil servants” that conveniently land high-paying jobs soon after their terms are over.

Bureaucracy is a construction by which a person is conveniently separated from the consequences of his or her actions.

More critically, people with good lawyers can game regulations (or, as we will see, make it known that they hire former regulators, and overpay for them, which signals a prospective bribe to those currently in office). And of course regulations, once in, stay in, and even when they are proven absurd, politicians are afraid of repealing them, under pressure from those benefiting from them. Given that regulations are additive, we soon end up tangled in complicated rules that choke enterprise. They also choke life.

Employees have skin in the game, but perhaps not in a good way.

A company man is someone who feels that he has something huge to lose if he doesn’t behave as a company man—that is, he has skin in the game.

What matters isn’t what a person has or doesn’t have; it is what he or she is afraid of losing. […] The more you have to lose, the more fragile you are.

It is no secret that large corporations prefer people with families; those with downside risk are easier to own, particularly when they are choking under a large mortgage.

People whose survival depends on qualitative “job assessments” by someone of higher rank in an organization cannot be trusted for critical decisions.

How can you achieve true freedom?

Financial independence is another way to solve ethical dilemmas, but such independence is hard to ascertain: many seemingly independent people aren’t particularly so. While, in Aristotle’s days, a person of independent means was free to follow his conscience, this is no longer as common in modern days.

Intellectual and ethical freedom requires the absence of the skin of others in one’s game, which is why the free are so rare. I cannot possibly imagine the activist Ralph Nader, when he was the target of large motor companies, raising a family with 2.2 kids and a dog.

I have held for most of my (sort of) academic career no more than a quarter position. A quarter is enough to have somewhere to go, particularly when it rains in New York, without being emotionally socialized and losing intellectual independence for fear of missing a party or having to eat alone. But one (now “resigned”) department head one day came to me and emitted the warning: “Just as, when a businessman and author you are judged by other businessmen and authors, here as an academic you are judged by other academics. Life is about peer assessment.”

You can define a free person precisely as someone whose fate is not centrally or directly dependent on peer assessment.

Embrace taking some risk (those that don’t endanger your survival). Starting a business is one way.

Yes, take risk, and if you get rich (which is optional), spend your money generously on others. We need people to take (bounded) risks. The entire idea is to move the descendants of Homo sapiens away from the macro, away from abstract universal aims, away from the kind of social engineering that brings tail risks to society.

Doing business will always help (because it brings about economic activity without large-scale risky changes in the economy); institutions (like the aid industry) may help, but they are equally likely to harm (I am being optimistic; I am certain that except for a few most do end up harming). Courage (risk taking) is the highest virtue. We need entrepreneurs.

By definition, what works cannot be irrational; about every single person I know who has chronically failed in business shares that mental block, the failure to realize that if something stupid works (and makes money), it cannot be stupid.

A final summarizing quote:

Recall that skin in the game means that you do not pay attention to what people say, only to what they do, and to how much of their necks they are putting on the line. Let survival work its wonders.

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Three Pillars of Self-Determination: Autonomy, Competence, and Community

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After reading the book Sapiens about how the history of our species affects our everyday experience, I found the related book Tribe: On Homecoming and Belonging by Sebastian Junger. Again, our genetic material hasn’t had enough time to change much from a human living 10,000 years ago, when all humans roamed together in nomadic bands of around 30-50 people. Humans today still retain a strong instinct to belong to such small, social groups that work together toward a common purpose – “tribes.”

What happens we can’t live in tribes anymore? Why does living in our modern, affluent society actually lead to higher rates of depression and suicide?

First agriculture, and then industry, changed two fundamental things about the human experience. The accumulation of personal property allowed people to make more and more individualistic choices about their lives, and those choices unavoidably diminished group efforts toward a common good. And as society modernized, people found themselves able to live independently from any communal group. A person living in a modern city or a suburb can, for the first time in history, go through an entire day—or an entire life—mostly encountering complete strangers. They can be surrounded by others and yet feel deeply, dangerously alone.

In contrast, when a large-scale catastrophe occurs, rates of depression and suicide actually drop for a while, perhaps because we again feel united and connected with others.

[Researcher Fritz] was unable to find a single instance where communities that had been hit by catastrophic events lapsed into sustained panic, much less anything approaching anarchy. If anything, he found that social bonds were reinforced during disasters, and that people overwhelmingly devoted their energies toward the good of the community rather than just themselves.

The book includes many examples of how this need for true community is behind many societal problems. This also fits in with self-determination theory:

The findings are in keeping with something called self-determination theory, which holds that human beings need three basic things in order to be content: they need to feel competent at what they do; they need to feel authentic in their lives; and they need to feel connected to others. These values are considered “intrinsic” to human happiness and far outweigh “extrinsic” values such as beauty, money, and status.

Here how Wikipedia describes these three pillars:

  • Autonomy – Desire to be causal agents of one’s own life and act in harmony with one’s integrated self. (This does not mean you want to be alone.)
  • Competence – Seek to control the outcome and experience mastery.
  • Relatedness (Community) – Will to interact with, be connected to, and experience caring for others.

We want to help others. We are perfectly willing to sacrifice to do so. But we also want to be in a trusted group that would also risk themselves to help us. These smaller groups that extend past your nuclear family are a common element of Blue Zones.

What would you risk dying for—and for whom—is perhaps the most profound question a person can ask themselves.

A lighter version might be, how many people do you know that would be willing to commit real, significant sacrifice to help each other?

In the big picture, our country is struggling because we don’t feel united as one team. In the small picture, this is a critical part of “retirement planning”. Many people derive both competence and community from their work, and you will have to replace that to create a happy post-work life. (Similarly, if you hate your work, you probably don’t find community and competence there.)

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Sapiens: Are We Happier And Better Off Than Our Ancient Ancestors?

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Financial independence means freedom with your time, as you no longer need to spend it working for money. But the ultimate goal is really satisfaction and happiness in our lives. What do we need to get there? Are humans happier now than when we were foragers or subsistence farmers? The bestselling book Sapiens: A Brief History of Humankind by Yuval Noah Harari weaves together various facts but also adds his own interpretations, resulting in an interesting story of how the human species has evolved from 100,000 years ago until today. There are three major events: the Cognitive Revolution, the Agricultural Revolution, and the Scientific Revolutions. Here are my notes.

The power of cooperation. As Scott Galloway says often, the superpower of the human species is cooperation. We are different from other animals because we are able to work together across a large number of individuals, families, and groups. Bees cooperate, but only between other bees from the same hive. Being able to maintain mutual trust between complete strangers is special. Without it, we wouldn’t have trade, art, science, medicine, corporations, and so on.

Population growth. This cooperation also helped humans take control over their environment through their immense population growth. When we were all foraging for food in small tight-knit groups, we needed a ton of space and our population size was self-limiting. We had to make some big changes in order to create this level of population density. An important observation is that we had to change how we lived in order to support our current population. We can’t go back to foraging, and we can’t go back to all farming all of our own food.

But are we actually any happier? A human forager probably worked less hours per day on average than the modern US citizen. On the other hand, infant mortality was incredibly high and what we consider a minor injury today could quickly lead to death. If a medieval worker couldn’t pay back their debts, they or their children would be sold into servitude. Today, we have low infant mortality and no debtor’s prisons, but we still find ourselves “busy” as ever and filled with anxiety about the future.

The book contains many insights into the psychology of happiness that have been pointed out elsewhere, but it is interesting to view it from the perspective of a nomadic forager (30,000 years ago), a peasant farmer, or early factory worker.

Hedonic treadmill. This quote hits close to home for many seeking financial independence:

It happens to us today. How many young college graduates have taken demanding jobs in high-powered firms, vowing that they will work hard to earn money that will enable them to retire and pursue their real interests when they are thirty-five? […] But by the time they reach that age, they have large mortgages, children to school, houses in the suburbs that necessitate at least two cars per family, and a sense that life is not worth living without really good wine and expensive holidays abroad.

We thought we were saving time; instead we revved up the treadmill of life to ten times its former speed and made our days more anxious and agitated.

Money and happiness. More money does makes you happier, but only up to a certain point where you are safely out of poverty (roughly $75k a year in the US).

One interesting conclusion is that money does indeed bring happiness. […] But only up to a point, and beyond that point it has little significance.

Health and happiness. We actually get used to most physical disabilities.

Another interesting finding is that illness decreases happiness in the short term, but is a source of long-term distress only if a person’s condition is constantly deteriorating or if the disease involves on-going and debilitating pain. […] People who are diagnosed with chronic illness such as diabetes are usually depressed for a while, but if the illness does not get worse they adjust to their new condition and rate their happiness as highly as healthy people do.

Relationships and happiness. Good interpersonal relationships make you happier.

Family and community seem to have more impact on our happiness than money and health. […] An impecunious invalid surrounded by a loving spouse, a devoted family and a warm community may well feel better than an alienated billionaire, provided that the invalid’s poverty is not too severe and that his illness is not degenerative or painful.

Pleasure vs. meaning. Meaning makes you happier.

Another [option] is that the findings demonstrate that happiness is not the surplus of pleasant over unpleasant moments. Rather, happiness consists in seeing one’s life in its entirety as meaningful and worthwhile. […]

A meaningful life can be extremely satisfying even in the midst of hardship, whereas a meaningless life is a terrible ordeal no matter how comfortable it is.

Happiness = Reality – Expectations. Keeping your expectations modest makes you happier. A peasant farmer rarely bathed, but that was their expectation and it is unlikely they dreamt of hot showers and fruit-scented shampoo.

Prophets, poets and philosophers realised thousands of years ago that being satisfied with what you already have is far more important than getting more of what you want. […] Still, it’s nice when modern research – bolstered by lots of numbers and charts – reaches the same conclusions the ancients did.

Mass media raises your expectations, and thus lowers your happiness. Consuming less advertising and unrealistic social media makes you happier.

If happiness is determined by expectations, then two pillars of our society – mass media and the advertising industry – may unwittingly be depleting the globe’s reservoirs of contentment.

Nature vs. nurture. How much of happiness is genetic (as opposed to environmental)? Accept that at least part of it is genetic, but not all of it. We each seem to have a “thermostat set point” for happiness that can change, but we tend to go back our set point.

Unfortunately for all hopes of creating heaven on earth, our internal biochemical system seems to be programmed to keep happiness levels relatively constant.

Evolution does not seem to have optimized humans for happiness. Perhaps we need to be a bit dissatisfied to keep reproducing. However, by understanding our natural tendencies, we can work with and/or around them to create a more content life. We need to find “enough” in terms of consumption, focus on participating in meaningful activities, and maintain good personal relationships. Financial independence isn’t necessary for any of these items, but it can allow you more to time to develop it. Finally, the book warns that given our burgeoning ability to tinker with genetics, the near future may be much different.

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Internet Archive / Open Library: Borrow Hard-to-Find Books For 1 Hour

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The Internet Archive (IA) is a non-profit digital library with the stated mission of “universal access to all knowledge.” They have a lot going on, from the Wayback machine that archives websites (including this one) to old video games to TV shows to books (also through Open Library).

As a regular user of the local physical library, I often read a book but later recall part of an idea or quote but not the entire context. Since I don’t own the book, I can’t just flip through it and look it up. Recently I’ve often been able to scratch that itch by instantly borrowing the book for an hour via IA.

How can I do this? They operate under the Controlled Digital Lending (CDL) theory of copyright law. My understanding is that they obtain a physical copy of a book, scan it, and then lend out that digital copy on a 1-to-1 basis. Using encrypted digital files, they can ensure that only one person is actually “reading” that book at a time. Once that person returns the book, then another person can borrow it, and so on.

Controlled digital lending is how many libraries have been providing access to digitized books for nine years. Controlled digital lending is a legal framework, developed by copyright experts, where one reader at a time can read a digitized copy of a legally owned library book. The digitized book is protected by the same digital protections that publishers use for the digital offerings on their own sites. Many libraries, including the Internet Archive, have adopted this system since 2011 to leverage their investments in older print books in an increasingly digital world.

They either allow a 1-hour or more traditional 14-day loan period depending on their inventory:

Patrons now have a choice in selecting the loan period when they borrow a book. Patrons can choose a short-term access for 1 hour, or a longer 14-day loan. If we only have 1 copy of a book, it is only available for 1 hour loan. If we have more than one copy of a book, it can be checked out for either 1 hour or 14 days, depending on availability. If there are no copies available for 14-day loans, users can join a waitlist.

However, four major publishers are currently suing the Internet Archive over this practice. I am not a legal expert and can definitely understand how they wouldn’t want the latest bestseller distributed this way as they currently charge libraries a much higher price for lendable eBook versions than physical versions. I can also understand that some authors feel that they are losing book royalties. I certainly wouldn’t want unlimited, unrestricted free digital copies everywhere. But one-to-one for books bought when there was no digital version? Don’t traditional libraries theoretically cut into book sales too? Or do they actually help book sales? Or is the public benefit that makes it okay?

In my experience, every scanned book I’ve read on the Internet Archive would be rather painful to read over longer periods and the text is non-searchable, so the site does not replace my local library nor my regular purchases of new and used books. But I can see how if the convenience improves any further, it could soon make a significant impact.

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The Case For Only Looking At Your Portfolio Balance Once A Year

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There are many excellent insights within Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets by Nassim Nicholas Taleb. A useful everyday tip is that you should accept that you have behavioral biases and that they don’t go away even after you become aware of them. (We all think we are more rational than average.) Instead, we should actively construct ways to avoid them.

One example within the book deals with separating noise and signal (meaning) within investing. Let’s say you have a dentist that can invest with a 15% average annual return with 10% annual volatility. For reference, the S&P 500 index has a ~10% average annual return and ~14% average annual volatility. The dentist has good thing going, with the portfolio doubling in value every 5 years on average.

An unexpected factor in his success is the frequency upon which he looks at his portfolio balance. Here’s a chart from the book showing the probability of a positive change in value based on how often the portfolio is checked.

If he were to check his portfolio every minute, he would only see a positive return 50.17% of the time. That is basically indiscernible from a coin flip. The problem is loss aversion.

Being emotional, he feels a pang with every loss, as it shows in red on his screen. He feels some pleasure when the performance is positive, but not in equivalent amount as the pain experienced when the performance is negative.

At the end of every day the dentist will be emotionally drained. A minute-by-minute examination of his performance means that each day (assuming eight hours per day) he will have 241 pleasurable minutes against 239 unpleasurable ones. These amount to 60,688 and 60,271, respectively, per year. Now realize that if the unpleasurable minute is worse in reverse pleasure than the pleasurable minute is in pleasure terms, then the dentist incurs a large deficit when examining his performance at a high frequency.

Again, this doesn’t go away even if you know about the phenomenon:

Regardless of what people claim, a negative pang is not offset by a positive one (some psychologists estimate the negative effect for an average loss to be up to 2.5 the magnitude of a positive one); it will lead to an emotional deficit.

Now, if he were to check that same portfolio only when his monthly statement arrives, he would see a positive return 67% of the time (2 out of 3). Finally, if he has the patience to check only once a year, she would see a positive return 93% of the time. The time scale matters.

Unfortunately, the S&P 500 is not quite that good, but it has posted a positive total return roughly 75% of the time from 1928-2017. (Total return includes dividends. You’ll get a slightly lower number if you just look at the index without dividends.)

This becomes even worse during bear markets when the down days outnumber the up days for a while. Our brains are simply not well-suited to handling that kind of repeated pain. The solution is to block out the noise. Don’t check your portfolio as often and over time, you will hopefully experience a lower likelihood of bailing out during a market drop.

This is the reason why I don’t do monthly asset class returns any more, and only do them annually nowadays. There is too much noise in monthly returns. I wish I could say I only look at my portfolio annually, but that is starting to sound like a good idea too!

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Rational Expectations: Advanced, Specific, Practical Portfolio Advice

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The fourth and final book in the “Investing for Adults” series by William Bernstein is Rational Expectations: Asset Allocation for Investing Adults. In Book 1: The Ages of the Investor, I learned to take advantage of a lucky streak in stocks and stop when I’ve won the game. In Book 2: Skating Where the Puck Was, I learned why it’s so hard to find any “new and improved” asset classes. In Book 3: Deep Risk, I learned about the scenarios that have led to permanent capital loss.

This final book includes the most specific advice about constructing your retirement portfolio. The entire series is great (and honestly not very long even read back-to-back), but this final book is especially dense with additional practical ideas for those that are already comfortable with investing basics. This isn’t at all scientific, but upon counting my Kindle highlights, Book 4 had 75 highlighted passages vs. 33, 25, and 36 respectively for Books 1-3. I’m only going to touch on the few that directly impacted my own portfolio construction.

Stocks. Here is an excerpt regarding how much of your portfolio should be allocated to international stocks.

Deployment among stock asset classes is relatively easier. The obvious place to start is with the total world stock market, as mirrored reasonably well by the FTSE Global All Cap Index, which in early 2014 was split 48/52 between U.S. and foreign equities. From there, we make three adjustments to the foreign allocation, two down and one up. First, the downs: if you’re like most people, your retirement liabilities will be in dollars, so a 52% foreign allocation is inappropriately high. Second, foreign stocks not only are slightly more difficult and expensive to trade but also are subject to foreign tax withholding. This presents no problem in taxable accounts, since those taxes will offset your liability to the IRS, but you lose that deduction if you hold foreign stocks in a sheltered account.

The up adjustment is a temporary one, since foreign stocks, as was discussed in chapter 1, currently have higher expected returns. So at the time of this writing, a foreign stock allocation somewhere in the 30% to 45% region seems reasonable.

Simplifying all that, as of early 2014, the middle recommendation would be roughly 60/40 US/international while the world market cap weighting was roughly 50/50. A little home bias is recommended for US investors.

As of mid-2020, the world market cap weighting is 57% US and 43% International (source), which you might round to 60/40. The adjustments are mostly the same, except that foreign stocks probably have even slightly higher future expected returns as the US stocks keep climbing. If you want to maintain a slight home bias, I would speculate this might change the recommended range closer to 65/35 or 70/30?

Bonds. The recommended list includes short-term US Treasuries/TIPS, bank CDs, and investment-grade municipal bonds. Bernstein is not a fan of corporate bonds.

Sooner or later, we’re going to have an inflationary crisis, and in such an environment, long duration will be a killer. Stick to short Treasuries, CDs, and munis.

Own municipal bonds via a low-cost Vanguard open-ended mutual fund for the diversification. Own Treasury bonds and TIPS directly, as there is no need for mutual funds or ETFs since they all have the same level of risk. Own bank CDs and credit union certificates under the FDIC and NCUA insurance deposit limits.

Asset location. I found this advice about spreading your holdings across Traditional IRAs, Roth IRAs, and taxable accounts to be very useful and practical. Importantly, this may be somewhat different that what you have read elsewhere. I don’t want to summarize incorrectly, so I will just use the excerpts:

To the extent that you wish to rebalance the asset classes in your portfolio, all sales should be done within a sheltered account. If possible, you should house enough of each stock asset class in a sheltered account so that sales may be accomplished free from capital gains taxes. Next, all of the REIT allocation certainly belongs in the sheltered portfolio, since the lion’s share of their long-term returns come from nonqualified dividends.

The real difference made by location occurs at the level of overall account returns. In terms of tax liability, Traditional IRA/Defined Contribution > Taxable > Roth IRA. This means that, optimally, you’d like to arrange the expected returns of each account accordingly, with the highest returns (i.e., highest equity allocation) optimally occurring in the Roth, and the lowest returns (i.e., lowest stock allocation) in your Traditional IRA/Defined Contribution pool. To the extent that this is true, it conforms with the stocks-in-the-taxable-side argument. That said, for optimal tax-free rebalancing, unless your Roth IRA is much bigger than your traditional IRA, you’re still going to want some stock assets in the latter.

It is definitely nice to be able to rebalance and not have to worry about picking stock lots, making sure you have the right cost basis at tax time, and paying capital gains taxes.

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.