Reasonable Rational

You’re not a spreadsheet. You’re a person. A screwed up, emotional person.

It took me a while to figure this out, but once it clicked I realized it’s one of

the most important parts of finance.

With it comes something that often goes overlooked: Do not aim to be

coldly rational when making financial decisions. Aim to just be pretty

reasonable. Reasonable is more realistic and you have a better chance of

sticking with it for the long run, which is what matters most when

managing money.

Save Money

Let me convince you to save money.

It won’t take long.

But it’s an odd task, isn’t it?

Do people need to be convinced to save money?

My observation is that, yes, many do.

Past a certain level of income people fall into three groups: Those who

save, those who don’t think they can save, and those who don’t think they

need to save.

Wealth is What You Don't See

Money has many ironies. Here’s an important one: Wealth is what you

don’t

see.

My time as a valet was in the mid-2000s in Los Angeles, when material

appearance took precedence over everything but oxygen.

Man in the car paradox

The best part of being a valet is getting to drive some of the coolest cars to

ever touch pavement. Guests came in driving Ferraris, Lamborghinis,

Rolls-

Royces—the whole aristocratic fleet.

Freedom

The highest form of wealth is the ability to wake up every morning and say,

“I can do whatever I want today.”

People want to become wealthier to make them happier. Happiness is a

complicated subject because everyone’s different. But if there’s a common

denominator in happiness—a universal fuel of joy—it’s that people want to

control their lives.

Tails you win

“I’ve been banging away at this thing for 30 years. I think the simple math

is, some projects work and some don’t. There’s no reason to belabor either

one. Just get on to the next.”

—Brad Pitt accepting a Screen Actors Guild Award

Heinz Berggruen fled Nazi Germany in 1936. He settled in America, where

he studied literature at U.C. Berkeley.

Getting wealthy vs. staying wealthy

There are a million ways to get wealthy, and plenty of books on how to do

so.

But there’s only one way to stay wealthy: some combination of frugality

and

paranoia.

And that’s a topic we don’t discuss enough.

Let’s begin with a quick story about two investors, neither of whom knew

the other, but whose paths crossed in an interesting way almost a century

ago.

Comfounding compounding

Lessons from one field can often teach us something important about

unrelated fields. Take the billion-year history of ice ages, and what they

teach us about growing your money

John Bogle, the Vanguard founder who passed away in 2019, once told a

story about money that highlights something we don’t think about enough:

At a party given by a billionaire on Shelter Island, Kurt Vonnegut informs

his pal, Joseph Heller, that their host, a hedge fund manager, had made

more money in a single day than Heller had earned from his wildly

popular

novel Catch-22 over its whole history. Heller responds, “Yes, but I have

something he will never have … enough.”

Luck & risk

Luck and risk are siblings. They are both the reality that every outcome in

life is guided by forces other than individual effort.

NYU professor Scott Galloway has a related idea that is so important to

remember when judging success—both your own and others’: “Nothing is

as good or as bad as it seems.”

Bill Gates went to one of the only high schools in the world that had a

computer.