The Psychology of Money (book review)

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The Psychology of Money by Morgan Housel is a book of twenty money lessons but really it’s about two things.

Thing 1: How the world works.

There is the world and there is how we think about the world. The more these ideas overlap the happier more calibrated the person. People follow stories (chapter 18), pessimisms sells (17), and tails drive everything (6) are all explanations about the world.

It’s through a combination of evolution, social pressure, and a history of this-worked-for-me that we drift. Sure, we think, Tom lost so money in crypto but he didn’t listen and get in when I told him the candlestick fed cycle jump was coming (luck, chapter 2). When something bad happens to us we’re unlucky. When something bad happens to them they’re idiots (1).

Things 2: How you work.

So it’s not just outside that we misunderstand. It’s inside too. We move the goalposts (3), confuse consumption (8), and aim for the rational rather than reasonable (11).

Asking what do I really want out of this big trip is not easy.

So we don’t.

Thankfully Housel is here to help. Think of time as freedom (7), just save (10), and don’t confuse consumption for wealth (9).

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The Psychology of Money is a difficult book to review because it’s personal. It’s how you see the world and understand yourself. Oof.

While the chapters are short, don’t spend little time on them. Read them. Stop. Think. Reflect. Note. The book is a refreshing break from the digital cycle. You’ll read this and think: Oh yes, this is a breath of fresh air and one I needed.

That “start young” advice

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“If you want to do better as an investor, the single most powerful thing you can do is increase your time horizon. Time is the most powerful force in investing. It makes little things grow big and big mistakes fade away.”

— The Psychology of Money

Start investing young was the advice I got. At 22 I opened a Roth IRA.

But there was a nuance I failed to note. It’s not just about time horizons but also how to get there.

Young Mike opened a Roth knowing it should compound for a long time. But he didn’t think about how that might happen.

Save 3-6 months of living expenses was another piece of advice. This is an average lie. It’s not enough or too much. We should call them “repair funds” because emergencies are not covered.

Emergencies need a year or more.

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In Nomadland, Jessica Bruder writes about “house-less” Americans. With RVs and campers, these ‘nomads’ travel the country for work. Do you know how busy Amazon gets at the holidays? It’s these people working there. Seasonal National Parks? That’s them too.

Generally, four events precede someone becoming nomadic: health, house, job, spouse. Mary Smith or her significant other lost their _____ and now she’s nomadic. Three months of savings for that? Get out.

But that’s tough. So much time horizon is eaten up by savings accumulation – which an individual may never need! In hindsight I see all of Young Mike’s mistakes. But he didn’t think they were mistakes at the time.

This balance is what makes Morgan’s book so good. It’s not black and white numbers. It’s messy. It’s color. It’s holistic, it’s an ecosystem. You never do just one thing.

I didn’t read The Psychology of Money when it came out because I’ve read a lot of Morgan’s memos, followed him online, and written about personal finance. But the book is good. It’s not about money as much as it’s about morals.

Outlive (book review)

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What’s the point of reading this book?

Peter Attia’s Outlive starts with the medicine: biology, physiology, chemistry and so on. There’s an excellent explanation on arterial plaque. I did not know that cardiovascular diseases were caused by the body trying to heal itself from within, dealing with LDL cholesterol as best it can. There’s also good explanations about our synapses and cancers.

But what’s the point?

Information does not change action.

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Attia’s book is about the four modern horsemen of human mortality: cancer, heart disease, type two diabetes, and neurodegenerative diseases.

Like other areas of discovery, medicine follows the pattern: identification, react, ‘proact’. The Ghost Map tells the story of choleras identification in 1854. Covid-19’s cadence meanwhile was within a year: sequence, treatment, and bundled with the flu shot.

According to Attia, there is a lot more room to proactively address the four horsemen.

Channeling Michael Pollan, switching from hundreds of pages to a few words that address the action, the advice might be:

Get stronger. Eat your best foods. Sleep well.

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The book is thick. Parts are dense. Even now, days later, I can’t explain parts.

But that’s okay.

The main point of the book is to be intentional. Like the vegetarian experiment and as good bayesians we should tinker. Attia is rarely absolute: Do this but not that! Instead it’s about you getting to this point of heart rate or insulin sensitivity or sleep.

One takeaway from Covid-19 was our heterogeneity (see: The End of Average). Outlive fits in this line of thinking. It’s your healthspan, it’s your lifespan, it’s your choice.

So get stronger, eat your best foods, and sleep well.

Heat Culture

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“Erik Spoelstra takes it upon himself to hide a player’s weaknesses and not judge them on their weaknesses. He takes stuff guys don’t do well and creates a game plan that protects them. Whether it’s handling the ball against pressure or certain defensive matchups.”

Tim Legler on the Lowe Post podcast, June 2023

There’s no consistent recipe for culture. It’s cooking, not baking.

But there are things worth doing. Culture can be intentional.

In their book, Uncommon Service, Frei and Morriss use a four-part model to explain good (service) organizations.

  1. Great service is a trade-off. Something has to give.
  2. Great service isn’t free.
  3. Great service is designed for employees to succeed regularly, not act heroically.
  4. Great service is designed for customers to succeed, though they vary.

That third point is where Legler lauds coach Spoelstra. He puts his people in situations where they can succeed.

Frei and Morris give the example of a bank that wanted great customer service. To do that the bank hired people with more interpersonal than professional skills. The bank also simplified their product line. It was kind people dealing with limited options helping customers.

That’s not what a basketball team is but the spirit is the same: We have people who do this better than that so we choose to do more of this and less of that.

So maybe one culture recipe is honesty. We are honest with our skills, honest with our goals, and honest with the situation.

“Box” Thinking

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I only failed one obstacle and fortunately the penalty was a loop through muddy slop rather than burpees.

It was a dumb mistake.

One of our human tendencies is that we think we’re pretty good about solving related but different problems. But we often overrate our skills. Someone makes a lot of money but that doesn’t mean they can make more money in a different way. Doctors are not good investors.

But there’s an easy solution.

My mistake at the Spartan Super was The Box. The “deceptively simple” obstacle is an eight foot wall one pulls themself over.

Or so I thought.

And here’s why it was a dumb mistake.

For another obstacle, the Rope Climb, advisors teach the j-hook. A certain ankle swoop, lift, and step makes a rope climb like walking up stairs. I was worried about the rope climb – a not “deceptively simple” challenge – so I practiced the j-hook with a blanket while laying on the couch.

And it worked. The Rope Climb was easy.

But did I use the j-hook for The Box? Nope.

Why not? Because it was a box, not a rope climb.

How we frame a situation sets how we see the situation – and how narrow we can be! During the same race, maybe 25 minutes apart, I didn’t connect the dots. I was stuck thinking in the wrong box.

Another point-of-view can be worth forty IQ. So the next time I’m stuck, I’ll get out of the box, and try to see things differently.

thanks Brad!

Thanks Brad.

Why do I hire seltzer

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Why do I hire seltzer?

Why do I hire seltzer? After experimenting, these are the reasons.

A switch to refrigerated bottled water preserves the temperature and convenience but lacks the bubbles and taste.

But a Nalgene (filled the night before, designed into the evening routine), provides temperature, taste, and psychic income!

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Jobs as a theory is like any other theory – use it or lose it. Apply it. Reflect on actions, choices, tradeoffs, and context.

There are so many podcasts, books, and articles. So many ideas, oh that’s a good one.

But without using it, it’s like we never knew it.

The 11th Commandment

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You don’t go to church to learn the 11th commandment.

Posts written. Tasks completed. Books read.

It feels good. It looks good. It makes sense.

But it’s not always right.

New and more feels like progress.

New clients. More calls. New products. More sales.

But sometimes it’s not.

Sometimes we have what need, we just need to use it.

You don’t go to church to learn the 11th commandment.

Visualizing Tradeoffs

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In Uncommon Service the authors note that customers want businesses to suck at something. It’s a Never Split the Different vibe. Or in terms of a karaoke bar: Play the hits!

A visualization from the book:

Restaurants have different attributes: food quality, pacing, pricing, ambiance, and so on. For a celebration, people are willing to trade price for service. This is the sort of “context” at the heart of JTBD.

“Our business,” listings read, “has 100 years of combined experience.” Well, that sounds like a lot. But is it two people with fifty years or ten people with ten? Then again, is fifty years of experience good? Do you want a doctor who went to medical school in the 70s?

20,000×1 != 1×20,000

There’s no answer, it’s all contextual.

But we do make trade-offs and must be honest about what they are and what that means.

How to Fly a Horse (book review)

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How to Fly a Horse is one of the best books you haven’t read. It’s part inspirational (like Rosling) part instructional (like King) and part historical (like Dan Carlin). 

Simply, we are capable but more importantly, we are responsible for the world we want. “Everything around you that you call life,” Steve Jobs said, “ was made up by people that were no smarter than you.”

But this ain’t influencer stuff. 

Everyone has creative potential, Kevin Ashton writes, but it takes work. “Time is the raw material of creation.”  As Steven Pressfield noted, put your ass where your heart wants to be. 

That’s just Insta-advice. 

The world does not want creation. The system is designed against it in two ways. 

A me problem. 

We block our creations. There’s the genius myth: Creation is for a select few. That’s just not right. The End of Average explains this nicely. ‘Genius’ (or ‘athletic’ or ‘industrious’ or ‘lazy’ and so on) are collections. There’s no genius metric because there’s nothing to have. 

Ya got it or you don’t is not true. 

But this isn’t enough. It takes work, work, work. For a species designed for ease, work is hard. 

There’s a paradox too: The better we get at something the more efficient we get and the less likely we are to see novelty. Think of “expertise” Ashton writes, as “efficiency”. There is nothing more deceptive, wrote Arthur Conan Doyle, than an obvious fact. Tyler Cowen calls this “once and for all-ism.” Experts have been rewarded for seeing the world a certain way, why change? 

The solution to the paradox is to bring experience but not beliefs. To have a light identity footprint. To see the unexpected, expect to see nothing. 

A them problem. 

They, the others, those folks don’t want to see it. Or they can’t see it. It’s helpful to remember Demings, “Every system is perfectly designed to get the results it gets.” People don’t randomly red-pill, laissez le bon temps rouler!

The status quo is humanity’s default (this is an assumption of JTBD). 

‘Different is bad’ is evolutionarily good. Our ancestors were the ones who didn’t try the new berries. 

Rejection, hesitation, and reluctance are good things. First creators must expect it. Knowing first drafts suck, progress is slow, and TK takes the sting out. Second, creators must use this for guidance. Feedback presents the soil to sew, the path to plan for, the itinerary to travel. Ashton advocates for the creator to utilize not internalize rejections. Ask, okay, so how could this be better?

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The book is full of pithy quotes. Let’s end with two: 

“We sell our soul when we waste our time. We drive neither ourselves nor our world forward if we choose idling over inventing.”

“The math of time is simple: you have less than you think and need more than you know.”

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This book was mentioned in Bob Moesta’s Learning to Build.

Learning to Build (book review)

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Rather than a traditional review, think about Learning to Build in the context of jobs to be done. 

We believe there’s no such thing as a bad book so much as bad timing. In some version of the multiverse, you need any given book right now! 

Similarly, jobs theory is about finding the pushes and pulls, habits and anxieties, and contexts for when people act. 

In that spirit, here are the Jobs books for this multiverse. 

Learning to Build is an introduction to someone who wants to learn more about Bob Moesta’s work. It introduces the five skills: empathetic perspective, uncovering demand, causal structures, prototype to learn, and making tradeoffs. 

Demand Side Sales is for someone in sales who wants a fresh idea. Never Split the Difference, Start with No, and The Sandler Rules also build the “talking to people” skill. 

Competing Against Luck is for someone with a strategic angle. It’s for someone asking: What should we do here? The Mom Test is a faster, less academic path with similar idea vistas. How to Fly a Horse is a bigger and wider picture, with more history. 

How Will You Measure Your Life is for someone who’s seen these ideas and needs a fresh – and personal! – perspective. 

26 Jobs to be Done is my short e-book about grokking jobs. 

Keep learning. Keep building. Keep growing.