The 12 Best Sentences I Read This Year
Here are 4 finance article excerpts that I think everyone should read regardless of their background in finance. This is similar to a Spotify Wrapped except you won’t be able to see if Show Tunes made it into my top five genres through this.
“Your personal experiences make up maybe 0.00000001% of what’s happened in the world but maybe 80% of how you think the world works” — Morgan Housel, The Psychology of Money
We desire predictability. Life is much safer for us if we know what the people around us are going to do. Often, we search out that predictability by assuming our unique experiences are the foundation by which others will make their decisions. However, each person has their own set of unique experiences that shapes how they perceive the world and how they make decisions. When we forget this truth, we can be confused and even angered if the actions of others differ from what we believe they should have done.
In addition to its investment implications, this 2018 insight from Morgan Housel provides a relevant message for all of us as 2020 draws to a close. Housel reminds us to recognize that our own personal experience is not the shared experience of everyone else. Our time is far better spent trying to understand someone else’s prospective rather than trying to relentlessly convince them that they are “wrong.”
“They say that ‘history is written by the victors,’ well so is most of the financial advice…It’s easy to come up with a story for how you earned your wealth after you earned it.”
– Nick Maggiulli, Of Dollars And Data: “The Problem With Most Financial Advice”
Let’s go back to a simpler time. Imagine you are 5 years old walking through the carnival with your buddies. There’s one of those big glass jars filled with M&M’s and for just 25 cents you can guess how many blue M&M’s are in there. You and your friends each take a turn guessing and as luck would have it — one of your friends gets it exactly right! Walking away from the booth with the prize of their choice, the friend who guessed right suddenly claims to have a simple and foolproof method for how he did it. He says he’ll share it to whoever pays him a dollar.
Seems a bit devious for a five-year-old I’ll admit, but the analogy is helpful to understand Nick’s point. Just because someone currently has money, does not mean that they earned that money through a repeatable process that they can sell to you. Nick mentions that the easiest way to save a lot of money is to make a large income. While this seems obvious, you’d be shocked how many influencers out there are making money by preaching the “70% of your income should go into savings” motto. This method works if you are making $230,000, but for the average American household ($68,703/yr.), this leaves only $1718 per month to live on.
Sure, there are some that may have a great method for guessing how many M&M’s there are. But, there are also those out there who will turn their lucky guess into an opportunity to take your dollar.
“Goal-oriented people exist in a state of nearly continuous failure that they hope will be temporary. That feeling wears on you… If you achieve your goal, you celebrate and feel terrific, but only until you realize you just lost the thing that gave you purpose and direction. Your options are to feel empty and useless, perhaps enjoying the spoils of your success until they bore you, or set new goals and reenter the cycle of permanent presuccess failure”– Scott Adams
From Patrick O’Shaughnessy’s The Investor’s Field Guide: “Growth Without Goals”
My job search during a pandemic has been a frustrating one. I had a goal to get one of the top jobs on my list as early as possible Senior year. I felt an uneasy dread as the time passed and I had not signed anywhere. This unachieved goal hung over my head and occupied any moment of quiet I had.
Since the day I set this goal, I could not feel at peace. That is, until I read Patrick’s article and started to adopt his perspective. Now, I wake up each day and try to learn and grow as much as possible each day — regardless of how cheesy that sounds. I still apply everywhere I can and have the hope of getting a good job, of course. But my feeling of success when I go to sleep each night is no longer contingent on a job offer. It is based off the criteria of whether I learned or grew in some aspect that day.
This Patrick O’Shaughnessy definition of success is sustainable. It will not change as life inevitable changes over the next few years. This definition is about finding success in your personal progress each and every day as opposed to looking up a mountain towards a long term goal and feeling like a failure because you did not reach the top that day.
“When you see someone driving a nice car, you rarely think, ‘Wow, the guy driving that car is cool.’ Instead, you think, ‘Wow, if I had that car people would think I’m cool.’ Subconscious or not, this is how people think. The paradox of wealth is that people tend to want it to signal to others that they should be liked and admired. But in reality…they use your wealth solely as a benchmark for their own desire to be liked and admired.”
The vicious cycle described above is never ending because it is never fulfilling. We often see ourselves as the main character in the story and therefore struggle to imagine a world where we are not constantly at the forefront of everyone else’s minds.
Neither Morgan Housel or I am saying that fancy cars or the pursuit of wealth are bad — in fact they are both great in my opinion. But when we realize we are not the main character; we realize respect is not earned through what you do for yourself, but what you do for others. Therefore, in striving for wealth and financial stability we must remember that wealth is not going to get us that respect we ultimately desire.
If any of this interested you at all, I highly recommend checking out more of what these three have to say. Below are some ways to learn some more from them:
Patrick O’Shaughnessy
https://investorfieldguide.com
Podcast: “Invest Like the Best”
Twitter: @patrick_oshag
Nick Maggiulli
https://ritholtzwealth.com/contact/request-more-info/
Twitter: @dollarsanddata
Morgan Housel
https://www.collaborativefund.com/blog/authors/morgan/
Most Recent Book: https://www.amazon.com/Psychology-Money-Timeless-lessons-happiness/dp/0857197681
Twitter: @morganhousel
