The Daily Update
Today: How the top 1% keep getting richer, the worst call of an era, work-life balance?, compounding knowledge, and 9 things to pay top dollar for.
Hello friends, the publishing schedule has been quite erratic. I need to explain myself. The most precious asset we have in the world is time. I don’t want to waste your time on content I think is sub-par.
The only content I put in this newsletter is content that I think will inform and educate you and I try to keep it related to business and investing.
I would like to publish 2–3 times per week, but some weeks will be slow and I will not waste your time with filler content that isn’t compelling.
Anyway, on to the update:
QUOTE OF THE DAY
I remembered that the best way to reinforce your knowledge of a subject is to share it
-Phil Knight from Shoe Dog
INVESTING
How the Top 1% Keeps Getting Richer
From the article:
The wealthiest invest less in housing and more in stocks, generating higher returns.
Also,
Broadly speaking, rich people own the upside of the economy in the form of stock, while the middle class’s gains are limited by the slow growth of housing wealth. Wolff finds, unsurprisingly, that the collapse of the housing bubble exacerbated wealth inequality, because stocks recovered more strongly than real estate did.
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High net-worth investors fall into the same behavioral biases as the rest of us.
From the article:
Tiger 21 has more than 500 members who collectively manage more than $50 billion in personal assets. The group helps its members “improve their investment acumen” through access to “the best minds and resources in the world.”
Spoiler alert: Despite access to the best minds in the world, their returns are likely no better than a low-cost index fund. Need hard data to be certain, but the article and others like it, seem to infer that is the case.
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The worst call of an era. Maybe not the worst, but one of them. Back in January of 2016, RBS said this:
Then this happened:
The point is not to make fun of RBS but to realize that our ability to forecast future asset prices is limited and probably a waste of time.
A better use of our time is to find ideas that are non-consensus and use our judgment and assess the probabilities as best we can. I keep the chart below handy when thinking about potential investments.
We won’t know if we will be right in advance, but that is why it pays so much if you are right.
The only way to earn above average returns is to be in the upper right quadrant.
LIFE IMPROVEMENT
Maybe We All Need a Little Less Balance
From the article:
Nearly all of the great performers I’ve gotten to know — from athletes to artists to computer programmers to entrepreneurs — report a direct line between being happy, fulfilled and at their best and going all-in on something
To be top 5–10% of your chosen field, I believe you have to be all in for some portion of the time. Maybe 5–10 years? Of course, this choice has trade-offs, less time with family and friends, less time to spend on health and wellness.
All depends on how you want to spend your limited time. We only get 1 bat in life. I personally like Jeff Bezos regret minimization framework. Check it out below.
“The framework I found, which made the decision incredibly easy, was what I called — which only a nerd would call — a “regret minimization framework.” So I wanted to project myself forward to age 80 and say, “Okay, now I’m looking back on my life. I want to have minimized the number of regrets I have.” so,I knew that when I was 80 I was not going to regret having tried this. I was not going to regret trying to participate in this thing called the Internet that I thought was going to be a really big deal. I knew that if I failed I wouldn’t regret that, but I knew the one thing I might regret is not ever having tried. I knew that that would haunt me every day, and so, when I thought about it that way it was an incredibly easy decision.”
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Why Successful People Spend 10 Hours A Week On “Compound Time”
From the article:
Ben Franklin once wisely said: “An investment in knowledge pays the best interest.” Perhaps the source of Buffett’s true wealth is not just the compounding of his money, but the compounding of his knowledge, which has allowed him to make better decisions. Or as billionaire entrepreneur, investor, and philanthropist Paul Tudor Jones has eloquently said, “Intellectual capital will always trump financial capital.”
This rings true for me. The more I read, the more I remember from previous things I read. Over time, you build up a storehouse of knowledge and muscle memory. This especially rings true in investing.
A fun game
This website will let you see how much you would have made if you would have invested in X stock on X date. It is fun to play around with and daydream about all the money you would have made if you had “only” invested in Apple in 2003.
Endnote
9 Things to Pay Top Dollar For
www.artofmanliness.com
9 items you should be especially willing and happy to pay top dollar for, with explanations and some general pricing guidelines included.
The first one on this list is a mattress. Having just got a new one, I can attest to the importance. From the article:
You’ll spend an average of 24 years(!) of your life sleeping. So there’s no investment that yields a better ROI than a mattress that helps you slumber soundly. And while the best mattress isn’t always the most expensive one, it’s definitely not going to be the cheapest either. And for goodness sake, don’t buy one from Craigslist.
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Have a great day,
Caleb(SAM)
