The Almanack of Naval Ravikant – Eric Jorgenson

The Almanack of Naval Ravikant – by Eric Jorgenson
Recommendation: 9/10. Date read: 11/6/20.

A collection of wisdom from entrepreneur and investor, Naval Ravikant. Jorgenson has consolidated years worth of interviews, podcasts, articles, tweets, and speeches from Ravikant. And he’s assembled the content in a way that’s intuitive, easy to follow, and genuinely helpful in highlighting Naval’s principles for building wealth and long-term happiness. Sections I found particularly insightful focused on Naval’s thoughts on habits, identity, moving with purpose, leveraging meaning as a force multiplier, and the importance of building specific knowledge.

See my notes below or Amazon for details and reviews.

My Notes:

Move with purpose:
Step one, you must know what you’re working towards or you’ll never get there: “Yes, hard work matters, and you can’t skimp on it. But it has to be directed in the right way. If you don’t know yet what you should work on, the most important thing is to figure it out.” Naval Ravikant

“Spend more time making the big decisions. There are basically three really big decisions you make in your early life: where you live, who you’re with, and what you do.” NR

“Choosing what city to live in can almost completely determine the trajectory of your life.” NR

Specific knowledge is key:
Specific knowledge is the key: “Arm yourself with specific knowledge, accountability, and leverage. Specific knowledge is knowledge you cannot be trained for. If society can train you, it can train someone else and replace you. Specific knowledge is found by pursuing your genuine curiosity and passion rather than whatever is hot right now. Build specific knowledge will feel like play to you but will look like work to others. When specific knowledge is taught, it’s through apprenticeships, not schools. Specific knowledge is often highly technical or creative.” NR

Meaning is a force multiplier:
“If you’re not 100 percent into it, somebody else who is 100 percent into it will outperform you. And they won’t just outperform you by a little bit—they’ll outperform you by a lot.” NR

“The way to get out of the competition trap is to be authentic, to find the thing you know how to do better than anybody. You know how to do it better because you love it, and no one can compete with you.” NR

“No one in the world is going to beat you at being you.” NR

“I’m always ‘working.’ It looks like work to others, but it feels like play to me. And that’s how I know no one can compete with me on it. Because I’m just playing, for sixteen hours a day. If others want to compete with me, they’re going to work, and they’re going to lose because they’re not going to do it for sixteen hours a day, seven days a week.” NR

“Look at the kids who are born rich—they have no meaning to their lives.” NR

Ethics:
“Intentions don’t matter. Actions do. That’s why being ethical is hard.” NR

Patience:
“Great people have great outcomes. You just have to be patient.” NR

“Your real resume is just a catalog of all your suffering…the sacrifices you made, the hard things you did.” NR

Simplicity:
“‘Clear thinker’ is a better compliment than ‘smart.’” NR

“When it comes to medicine and nutrition, subtract before you add.” NR

Habits:
“You absolutely need habits to function. You cannot solve every problem in life as if it is the first time it’s thrown at you.” NR

“It’s really important to be able to uncondition yourself, to be able to take your habits apart and say, ‘Okay, this is a habit I probably picked up when I was a toddler trying to get my parent’s attention. Now I’ve reinforced it and reinforced it, and I call it a part of my identity. Does it still serve me?’” NR

“The genuine love for reading itself, when cultivated, is a superpower.” NR

“The number of books completed is a vanity metric. As you know more, you leave more books unfinished. Focus on new concepts with predictive power.” NR

“A calm mind, a fit body, and a house of love. These things cannot be bought. They must be earned.” NR

“Easy choices, hard life. Hard choices, easy life.” Jerzy Gregorek

Identity:
Danger of ideologies: “Any belief you took in a package (ex. Democrat, Catholic, American) is suspect and should be re-evaluated from base principles.” NR

Allow yourself to evolve: “Facebook redesigns. Twitter redesigns. Personalities, careers, and teams also need redesigns. There are no permanent solutions in a dynamic system.” NR

“The fundamental delusion: There is something out there that will make me happy and fulfilled forever.” NR

Sustainability: “Don’t hang around people who constantly engage in conflict. I’m not interested in anything unsustainable or even hard to sustain, including difficult relationships.” NR

Impermanence: “Everything is more beautiful because we’re doomed. You will never be lovelier than you are now, and we will never be here again.” Homer, The Iliad

The Laws of Wealth – Daniel Crosby

The Laws of Wealth – by Daniel Crosby
Date read: 5/19/20. Recommendation: 8/10.

If you’re looking for a book on finance or investing (especially in today’s market), you could do worse than picking this one up. Crosby gives an accessible overview of behavioral finance and offers principles for managing your own investing process and behavior. I always find books like this incredibly insightful and an important reminder that developing greater self-awareness and managing behavioral risk is the best chance you have to avoid falling victim to irrational or emotional financial decisions. Crosby emphasizes that investor behavior—rather than fund selection or market timing—is the best predictor of wealth creation. And patience levels the playing field.

See my notes below or Amazon for details and reviews.

My Notes:

Patience:
“Individuals have to understand that no matter what innovations we see in the financial industry, patience will always be the great equalizer in financial markets. There’s no way to arbitrage good behavior over a long time horizon. In fact, one of the biggest advantages individuals have over the pros is the ability to be patient.” Ben Carlson

What’s within your control?
“The investor’s chief problem—and even his worst enemy—is likely to be himself.” Benjamin Graham

Investor behavior is a better predictor of wealth creation than fund selection or market timing.

“Emotions are the enemy of good investment decisions.” Ben Carlson

“Investors who own their mediocrity are able to rely on rules and systems—they do what works and reap the rewards. Investors mired in a need to be better than average insist on flaunting the rules in favor of their own ideas and pay a steep price for their arrogance.” DC

“Investing isn’t about beating others at their game. It’s about controlling yourself at your own game.” Jason Zweig

Complexity is far easier than simplicity. Simplicity demands discipline, first principles thinking, and a deep understanding of the biases that you might be prone to.

Financial advisors:
Chief benefit to most people is not that of an asset manager, but as a behavioral coach. 

Value investing:
“Paying an appropriate price is the single greatest thing that you can do to ensure appropriate returns and manage risk.” DC

Two ways to profit from variability in stock prices—1) timing the market or 2) pricing. 

“The riskiness of an asset can never be divorced from the price that you pay for it; paying a fair price is the best friend of the risk-averse investor.” DC

“Value investing makes you rich over time, but growth investing can make you rich overnight.” DC

“Value investing requires us to overcome our fundamental tendency to attribute greater quality to things that are more expensively priced. Value investing requires us to sacrifice short-term opportunities at fantastic wealth for longer-term consistency of returns. Being a value investor requires us to ignore the positive stories surrounding glamour stocks.” DC

Avoid expensive stocks. 

Successful investing:
“Successful investing relies heavily on buying socks that have good prospects, but for which investors currently have low expectations.” James O’Shaughnessy

Average investors conduct postmortems to understand what went wrong and leverage those lessons in the future. Create investors conduct pre-mortem to challenge assumptions, anticipate gaps in logic, and make adjustments.

“Indeed, I have found that a large percentage of my winning trades begin with a rehearsal of negative, what-if scenarios in which I mentally invoke my stop strategy. Conversely, I have found that my worst trades begin with an estimate of my potential profits.” Brett Steenbarger

The Geometry of Wealth – Brian Portnoy

The Geometry of Wealth – by Brian Portnoy
Date read: 7/4/18. Recommendation: 9/10.

A look into the relationship between money and meaning. Portnoy suggests that wealth and investing are about funding contentment and underwriting a meaningful life, as defined by you. Not about getting rich, having "more," and losing yourself on the hedonic treadmill. He explains that simplification is the path towards effectively managing expectations in money and life–and the trajectory of a happy life is shaped by expectations. The Geometry of Wealth is as practical as it is philosophical. À la Charlie Munger, Portnoy emphasizes individual behavior, mainly self-control and self-awareness, as the most important factor in investment success. He suggests we focus on being "less wrong" over being "more right," in the sense that asset allocation is far more important than security selection and market timing. But he also takes a deeper look at experienced happiness, reflective happiness, expectations, and human nature, which adds an entire extra dimension to this fascinating book.

See my notes below or Amazon for details and reviews.

My Notes:

"Do not hurry; do not rest." -Johann Wolfgang von Goethe

Examines the relationship between money and meaning, and how wealth figures into a joyful life.

Difference between rich and wealthy
-Rich is having "more" - hedonic treadmill on which satisfaction is fleeting
-Wealth is funded contentment, ability to underwrite a meaningful life, as defined by you
-Wealth is only achievable when purpose and practice are calibrated

Simplification is the smart path toward effectively managing expectations. In general terms, met expectations lead to temporary happiness and unmet ones lead to temporary sadness.

A "good" investment is one that meets expectations. And when expectations of the future don't match reality, we end up with dismal outcomes–not only financially, but emotionally. 

Dual Process Theory: "System 1" versus "System 2" (as popularized by Daniel Kahneman)
System 1: Fast brain loves consistency, biased to confirm beliefs and see patterns even when they don't exist. Avoid ambiguity and doubt.
System 2: Specializes in effortful mental activities, slow brain requires significantly more energy (glucose and other chemicals)

Three factors which determine lifelong happiness:
-Genetic disposition ~ 40%. This is your set point, return to this level (features and attitudes you're born with).

-Circumstance ~ 10%. Only a slight impact (and these are the attributes many of us define ourselves by). Where you live, what type of house you have, physical appearance, family dynamic, job, etc.
How can these have such a small impact? The brain is wired with an ability to adapt to whatever situation we find ourselves in, and it does it so much more quickly than we anticipate. It's a remarkable defense mechanism, for it allows us to transcend most setbacks in life. 

-Intention ~ 40%. Conscious decision-making and deliberate actions have significant impact on our quality of life experiences. Empowering, while you can't get around biological set point, still have capacity to make a big difference through personal drive and self-improvement.

"[Those who far better in life] have better coping strategies in the face of adversity–they confront problems rather than avoid them, plan better for the future, focus on what they can control and change, and persist when they encounter obstacles instead of giving up." -Timothy Wilson

Prepared mind = better life outcomes

When it comes to money, simplicity means having a limited number of clearly articulated concepts that both make sense of a noisy world and drive sharp, reasonable decisions.

Experienced Happiness: Maximize pleasure, narrower in scope, shorter in duration, hedonic, daily mood.
*Impact of money on experienced happiness caps out around $75k/year. Life's basic comforts met (which we become quickly accustomed to). Good and bad moods come at same pace for someone making $100k vs. $1m.

Reflective Happiness: Maximize contentment, broader in scope, longer in duration, eudaimonic (human flourishing), purpose, deeper sense of fulfillment.
*Reflective happiness does not cap out a specific income level. Does not diminish, keeps growing. But it always remains relative to your current position ($1000 raise for new college grad has larger impact than it would for CEO). When money is spent to underwrite sources of contentment, money buys happiness. 

Contentment = control (afford better nutrition, healthcare, more independence, time, flexibility), competence (invest in skills, potential), connection (sociality of experience, networks, memberships, access), context (time to find purpose). 

The "good life" is not the tweak of ephemeral pleasure, but the engagement with more meaningful, virtuous pursuits. Momentary pleasures are distinct from the enduring gravity of meaningful experience. 

"[Success stems not from] beating others at their game. It's about controlling yourself at your own game." -Jason Zweig
*Your own behavior far most important factor in investment success.

Much of what humans are good at does not center on weighing consequences of a possibility many years in the future.

Getting the restaurant right is more important than picking the right dish. Choosing investments works similarly. Big choice at hand is asset classes. Don't fetishize precision. Get it roughly right. Save yourself time and mental energy.

Asset allocation = far more influential than security selection and market timing. 
*90% of performance differences among investors are explained by asset allocation

Prioritize being "less wrong" over being "more right."

Only a handful of basic principles needed to achieve good investment results (but we crave complexity so we fail to execute):
-Buy low and sell high
-Diversify
-Stick to your plan

Crave complexity because we crave choice, which is a proxy for the control we perceive to have over our lives. More choice translates into a greater sense of safety (however false it might be).

A "good" decision is one that leads to a reasonable and appropriate outcome, not one that achieves other arbitrary goals like beating the market or trumping others. A "bad" decision starts with either vague or unrealistic expectations.

Accept the uncertainty of this game, remain humble in the pursuit of better things, and there's a decent chance that things will be okay.

"To achieve satisfactory investment results is easier than most realize; to achieve superior results is harder than it looks." -Benjamin Graham

The trajectory of a happy life is shaped by expectations. When the future meets or exceeds our expectations, we tend to be happy' when it doesn't, we're not.

Assessing annualized returns -- the longer the time frame, the narrower the range of outcomes (+/-10%). Shorter time frame, large (and more erratic) range of outcomes (170 to -70%). 

When we say that stocks make about 10% per year, it would be a mistake to assign the outcome of the entire group to any one member. Individual stock can be a dud or rocket ship. Best bet is to own a broad swath of the market.

With true diversification, there will always be something in your portfolio that sucks (and that's okay).

Compounding is the quiet protagonist in more tales of progress than nearly any of us has considered. Einstein supposedly called it the most powerful force in the universe.

Charlie Munger: "The first rule of compounding: Never interrupt it unnecessarily."

"Approximately 99% of the time, the single most important thing investors should do is absolutely nothing." -Jason Zweig

"The authentic individual is neither an end nor a beginning but a link between ages, both memory and expectation. Every moment is a new beginning with a continuum of history. It is fallacious to segregate a moment and not to sense its involvement in both the past and future." -Abraham Heschel

Our ability to think through time and see our future selves has limitations. Most profoundly, we discount the future: we value today more than tomorrow. Time discounting is an evolutionary instinct. We didn't pass on killing the small animal right in front of us in hopes of maintaining our energy to attack a larger herd of fatter animals that may or may not come later. We tend to live in the now because it seems the safer thing to do.

"Human beings are works in progress that mistakenly think they're finished." -Daniel Gilbert

Narrative of the book: Stoic playbook for navigating money life, moving from perception to action to will. Self-awareness and self-control are key principles. Embrace adaptive simplicity.