The Geometry of Wealth by Brian Portnoy
I finished this book in January 2023. I recommend this book 4/10.
This book is not bad. But I couldn't help thinking, "A broke individual reading this book would get nothing, and a rich individual would nod his head till it fell off." To sum up the book, there are many Americans financially struggling. Those who don't struggle, learn the lesson that money solves money problems but doesn't provide happiness.
Get your copy here.
My thoughts and notes:
P16. The data on retirement preparedness is troubling. Nearly 40% of American workers have not saved for retirement. Let me repeat: Tens of millions of Americans do not have a dime saved for retirement. Slightly more than half of workers are currently saving for retirement, but most of them haven't saved much: 24% have saved less than $1,000, 47% have less than $25,000 socked away, and 65% have less than $100,000. Keep in mind that even when invested reasonably, $100,000 in savings provides just a few hundred dollars a month in retirement income.
P33. In life, we begin just once, but we begin again countless times. Resilience is where many great things are born. Adaptation recognizes the need to respond to life's events, including those which are unforeseen and unwanted. To use Wilson's felicitous phrase, it is "changing the stories we live by."
P44. Consider this somewhat odd list of American inventions from the last century: The song Happy Birthday, the Happy Meal, the Happiest Place on Earth, The Power of Positive Thinking, the "self-help" industry, and the modern advertising industry (including the yellow smiley face, invented in 1963 by ad man Harvey ball). These, among other factors, popularized a particular form of happiness, one with human-as-consumer at its center.
P48. Based on that, I've come to believe that there are four enduring sources of a joyful life. I call these Connection, control, competence, and Context.
Connection is the need to belong.
Control is the need to direct one's own destiny.
Competence is the need to be good at something worthwhile.
Context is the need for a purpose outside of one's self.
P59. Carol Dweck writes, "Effort is one of the things that gives meaning to life. Effort means you care about something, that something is important to you, and you are willing to work for it. It would be an impoverished existence if you were not willing to value things and commit yourself to work toward them.
P 70. Why is our daily mood largely unrelated to money, past a threshold income level, but our quest for happiness appears to benefit from more and more money? Three dynamics deepen our understanding of this finding:
We become quickly accustomed to most of the comforts in our life.
Money is more effective at diminishing sadness than increasing happiness.
If allocated wisely, money can underwrite Connection, Control, Competence, and Context, which constitute reflective happiness.
P74. Imagine waking up on a cold morning and finding your car battery has died, making it impossible to get to work, or coming home to a leaky roof and waterlogged floors. With enough funds, these nuisances are solved quickly or never happen to begin with. Some of life's more serious difficulties can be solved, in part, by writing a check. We can devote resources to help aging parents, support a wayward child, or deal with personal strife. Money gives us options for dealing with adversity. At lower incomes, being unable to address these means that not only do misfortunes persist, but we take on feelings of helplessness and victimhood. Ultimately, having less income speaks to a deeper issue of the control we have over our lives.
P80. Equally, if not more profound, having more money can alleviate the pain and distraction of sadness. That's valuable in both the obvious sense but also in that by sidestepping misfortune; we preserve the mental energy to engage in more contemplative pursuits.
P94. "Winning the Loser's Game," money sage Charles Ellis argued that most investors should win by not losing. He used the game of tennis to illustrate his point. For novice tennis players (which is nearly everyone), victory usually stems from avoiding errant shots and keeping the ball in play. We patiently capitalize on a competitor's mistakes; we let the game come to us. Professional tennis players do something entirely different. They hit the ball with power and pinpoint accuracy. In tennis, like investing, professionals strive to be more right, while most others should focus on being less wrong.
P112. Based on a $100,000 portfolio, the difference between the "set it and forget it" strategy versus the "let people be people" strategy is $233,093. (You can adjust the starting amount however you'd like, but what won't change is the nearly 2x difference.) If you start this exercise at age 45 and stay with it until 65, better behavior "buys" additional years of a comfortable retirement.
P127. More complex is often more interesting; simplicity—in work, love, art, leisure, and everything else—can be boring. We want to enjoy the richness of life and avoid dreary sameness. We desire the "museum effect": You'd like to view your favorite painting in an environment where there are many other things to observe and enjoy. You want your favorite pair of blue jeans or that one great Thai restaurant down the street, but you also want a full closet and the Yelp app. Variety is indeed a spice in life, and variety rarely maps to simplicity. Thus complexity sells. Complain as some might about the aisles at Ikea or the menu at the Cheesecake Factory, the crowds never stop coming. This is true in finance as well. Only a handful of basic principles are needed to achieve good investment results—big examples include buy low and sell high, diversity, and stick to your plan—but we fail to execute on these partly because of a bias for complexity. From cryptocurrencies to hedge funds, much of what is most exciting in the money world is widely complex. "Invest for the long run" is wise advice, but talking about Bitcoin sire is more fun.
P170. Literally, thousands of books have been written about how Warren Buffet built his fortune. Some of them are quite interesting, but blogging savant Morgan Housel makes the very clever point that nearly all of them missed what's likely the most transportable lesson of the Buffet story: He started very young and compounded his wealth from there.