February’s Great Reads
Your portfolio is probably down right now, and I don’t want to minimize the worry some of you are feeling, especially those of you who are about to start, or are already relying on withdrawals from your investments for income. It’s no fun, but it’s also not something you can control. These market cycles are why I use conservative rates of return in my projections and build retirement income plans with sequence of return risk in mind.
If you’ve already got a retirement plan, try to take my friend John Robertson’s advice: “use that fear to learn something...about your risk tolerance, or how to manage fear.”
And that’s all the ink I’m going to spill on market moves. Instead, the reading list this month includes a really deep look at what may be the true significance of the blockchain, using a regret minimization framework to make decisions, and taking the broken bond crisis record off of the turntable.
Why Willpower is Overrated
From Brian Resnick
What we believe about using our will to change our circumstances is probably wrong. Resisting the temptation to overspend, for example, is more about avoiding the temptation in the first place than about exercising iron self-control.
“The students who exerted more self-control were not more successful in accomplishing their goals. It was the students who experienced fewer temptations overall who were more successful when the researchers checked back in at the end of the semester. What’s more, the people who exercised more effortful self-control also reported feeling more depleted. So not only were they not meeting their goals, they were also exhausted from trying.”
Read the full article here.
How Perception Shapes Reality
From Brendan Mullooly
If you’ve been checking your portfolio daily...don’t.
“If somebody has the mental fortitude to look at their investments every single day without acting impulsively or affecting their mood, more power to them. However, I don’t think most of us fall into this category. We’re more likely to become slaves to our daily investment update, allowing it to dictate our mood and making us second-guess every position we hold. This habit applies a short-term feedback loop to long-term assets, which is a noisy mismatch, prone to misinform.”
Read the full article here.
The Actually Helpful, Nuanced, Non-Bullshit Way to Choose a Future Career
From Kitty
This career advice is hands down the best, at any age. Read it all, but especially this part:
“Some financial experts advocate for pursuing the highest-earning option, no matter what. We are not of that school. Our perspective is that life is too short to spend a third of it doing something lame. You have more options than just “engineer.”That said, money should play into the decisions you make. If Job A and Job B are equally intriguing, and Job B pays $35,000 more on average, you should probably go with Job B. Especially if you can use that extra $35,000 to fund the hobbies that are your true passions.Picture your perfect life. The life that would make you feel content down to your core. What does the budget for that life look like? “
Read the full article here.
You can read this month's entire list below:
Making History by Doing Nothing | Morgan Housel
Morgan Housel on the art of patiently doing nothing:
“People want to make history and do something. It’s mental torture to match hands-off patience with decisive action. They are opposite skills, even if they rely on one another”
“If this doesn’t deter you from making rate bets, I don’t know what will…”
Beyond the Bitcoin Bubble | NYTimes.com
Best. Blockchain. Article. Ever.
Complexity Bias: Why We Prefer Complicated to Simple | Farnam Street
So true in finance.
“People without the requisite knowledge to understand it feel alienated and removed from important conversations. It leads people to believe that they are not intelligent enough to understand politics, or not educated enough to comprehend economics.”
The Market Can Go Down? | John Robertson
“If you are feeling emotional about the markets then try to use that fear to learn something — either about your risk tolerance, or how to manage fear when markets are erasing years of gains instead of weeks.”
Minimizing Regret | Dirk Cotton
“I imagine myself at some point in the future long after having made the decision and I imagine that it turned out very badly. My future self then asks, ‘Do I still think it was a good decision? Would I make it again?’ If my future self answers no, then my present self doesn't make that decision.”