I Can’t Show Up to Work Sweaty!

When I used to work, I would commute for 4 miles by bike and then walk up 11 flights of stairs to get to my office. No big deal, this was normal for me.

Every once in a while, bike commuting would come up in conversation. Inevitably, I’d hear the “I don’t want to show up for work sweaty” argument for driving instead of biking. Every single time I’d look around and think, where do you think we are? You’re not out on a first date, man. We’re sitting in cubicles in our shitty office. We’re doing Internet marketing here. Whatever stink is coming from you is no doubt overpowered by the stench of rotting souls.

Maybe I should consider this from another angle. Perhaps the real issue is that you haven’t thought hard enough about what to do with the sweat when you get here. Were you thinking about just wiping it off with a towel? What a waste! You know where your boss’s potato salad is in the fridge. Open that shit up and hold it under your pits for a few seconds. Put some in the coffee. When you pass Greg from accounting in the hallway, rub up against him ever so gently with your bare arm, and return to your desk, content with the idea that Greg has been smeared with your fluids.

The Book of Lessons

I want to share with you my mantra:

From each experience, take either joy or a lesson.

Ideally, every experience would bring me joy, but that obviously isn’t possible, no matter how enlightened I become. However, I can try to learn something from every joyless experience. In fact, I have become something of a compulsive lesson learner, and it’s one of my favorite habits.

At the very start of a bad outcome, right when I see things going wrong, I pull out my Blackberry (hey, I like keyboards) and type in a lesson for the future me. Though it does nothing to provide a solution to the current mess, it gives me instant comfort. A lesson is a type of win. I’ve done this enough and have seen enough positive long-term effects that I get a dopamine release right there in heat of the moment. So nice.

Here are some examples of lessons I’ve written down over the years:

  • When you buy something, always keep the box longer than you think you should, in case you need to return it.
  • Don’t lift even moderately heavy stuff by yourself. It’s not worth the risk of hurting your back.
  • Don’t buy things that require batteries.
  • Completely novel activities always have more hidden costs than you think, so be wary of entering new territory.
  • When making big decisions, talk to a wide range of people, including subject experts and people who know you really well.

Notice that these lessons vary widely in terms of generality. The key is just to find a good lesson somehow.

Of course, it’s possible to learn the wrong lessons, so you want to be aware of that. You need to recognize when an outcome was just dumb luck. If you invest in the stock market and lose some money the first month, it obviously doesn’t imply that investing in the stock market is a mistake.

Also, you’re going to want to review your lessons every once in a while, so that they can be fresh in your mind. Personally, I go through my list every three months.

I keep them written in a fancy book, and when I hold the book in my hands, I can feel its power. Try it out, and I think you’ll feel the power too.

Perspective of a Hardened Gambler

It’s a high-stakes poker game and a big hand is going down. A pile of chips worth over $10,000 sits in the middle of the table. Players from all over the room have gathered around, and the anticipation is palpable. My opponent flips over his cards to reveal a straight. I turn mine up.

Full house.

I rake in the mound of chips and start stacking them. While I stack the chips, I look around and listen. I hear Bob in seat 3 make a comment about how he would never play a straight that way. I see Jim in seat 5 staring into space, still clearly steaming about the big pot he lost twenty minutes ago. I notice people in the crowd looking at me funny and whispering. They are puzzled by my silence and the almost bored look on my face.

Their confusion arises from the fact that they can’t see the universe in the way I do. We are like two different species, with completely distinct perceptual systems. They see noise, and I see signal. They are fooled by randomness, and I am not. It’s a superpower I have, and I have worked for years to develop it.

Suppose someone offers to play a game with you where they flip a coin repeatedly. If it lands on heads, you win $100, and if it lands on tails, you lose $50. You know that you will win money in the long run, so do you care about the result of the next coinflip? Many people can’t help but care. Some people don’t care. An even smaller group don’t even perceive the result of the coinflip. It barely exists to them. They just see themselves being handed $25 over and over, and they sit there with a calm, content look on their face.

It is a long journey for a human being to reach this stage of enlightenment. We can understand the truth, but our emotions take years to catch up, and they tend to sabotoge us along the way. But this road-less-traveled is worth following, especially if you want to take risks in your career.

The way to get there is to be a freak. Ignore the confused looks that people give you. Change the frame. Change the language. Instead of celebrating your friend’s promotion at work, celebrate them asking for the promotion. Instead of being upset that you got a parking ticket, know that you already lost once you decided not to feed the meter. Look at people funny when they tell you how well their portfolio is doing this year (sample size too small!). Be equally happy winning and losing pots in a poker game, as long as you have an edge over the competition.

If you do all this, then you will start to see the real reality, and money and power will follow. Probably. Or maybe they won’t. Maybe the moron down the street will win the lottery, and you’ll get hit by a bus. Sometimes luck can’t be denied, but you should ignore it whenever possible.

Boss on the Wall

Here is some advice for anyone out there who has a job and a boss. Find a picture of your boss’s face. Ideally, it will be a picture from some kind of company outing where he is wearing a casual shirt and has a big smile on his face. Crop just the head part, print it out at size 8″ x 10″, and frame it.

Next, hang that fucker up on the wall in your dining room, or wherever you typically eat dinner. The picture should be at your eye level when you are standing up. You’re going to leave it there forever.

You’re probably asking yourself, why the hell should I do this? In the short term, it’s just plain funny. Imagine word getting back to your boss that you have his head on your wall, and all the awkwardness that would ensue. It would be this weird thing between the both of you that he can never ask about because he is too confused and embarrassed.

In the long term, the picture will begin to take on more meaning. Some day, you’ll escape from the rat race. You’ll quit that job, and for a while you’ll look at Bob on the wall and laugh. “Ha, Bob! You’re still stuck in that office, and I’m free. You may make more money than me, but I use my time as I wish. Who’s the boss now?”

Eventually, you’ll tire of this. The picture will fade into the background and you won’t notice it. This is where we get to the good part. Even years later, every once in a while, the picture will catch your eye. You may not even remember the guy’s name any more. You certainly won’t remember any details of what you did at the job.

You’ll look at the picture and get a vague, distant reminder of something unpleasant that happened long ago. You won’t dwell on it for more than a few seconds though. “What was that guys name? Bruce? Wonder what he’s up to these days. Hope he’s doing something he enjoys.” Then, you’re off to crack open a beer, put on some tunes, and cook some dinner.

He may be the CTO of Products International, Inc. by now, but you’ve made it.

How I Invest

Imagine that you’ve been invited to participate in the world championships of rock-paper-scissors (RPS). You have one week to prepare. What do you do? I’ll tell you what I would do. First, I would think about what it means to be one of the best RPS players in the world. These guys are on a whole other level. Lots of the time, they’re probably going to know what I will throw even before I do. They can size me up and know that I am the type of guy who will attempt, say, the rock-rock-paper combination. With this in mind, the goal becomes minimizing damage.

Game theory tells us that the strategy of randomly choosing among rock, paper, and scissors each time cannot be exploited, even by the best player in the world. Therefore, I would use some kind of random number generator to make my choice, and it wouldn’t be my own brain because I don’t trust it to be random enough. Of course, I could still give off some tells when I’m in the midst of my throw, so I would need to practice giving away as little information as possible.

When you are faced with the question of how to invest the bulk of your money, you are in a very similar situation. You are about to get involved in a game with the best in the world, and you need to be ready. I cannot overstate how harsh and uncaring the world of finance is. The banks, brokerages, insurance companies, wealth managers — they are mostly sharks. If you slip up, they will eat you in a matter of microseconds. Do not believe for a second that anyone in finance is your friend. And please do not think that you can beat them.

Let me tell you how I deal with this conundrum. I use the permanent portfolio for my investment strategy. This is a simple approach to investing developed by Harry Browne a few decades ago. The strategy is to put one quarter of your money in a low-fee stock index fund, one quarter in gold (at least some in the form of gold coins), one quarter in 30-year U.S. Treasuries, and keep the last quarter in cash.

Smart people have written about the principles behind this approach, and I encourage you to read up on it. I understand some of the theory behind it, but I don’t claim to understand it all. I also don’t believe that the people who have written about it necessarily understand it all. But rather than diving deep into economic theory here, I want to list the reasons why I personally trust the bulk of my wealth to this strategy.

  1. Browne makes a reasonable-sounding argument that this portfolio will protect my wealth under many conditions, including inflation, deflation, prosperity, and recession. I don’t know if this will hold true in the future, but at the very least, it’s nice that the focus is on protection, rather than predicting where the markets are headed.
  2. When I buy in, I may be getting a bad price on one of the asset classes (e.g. maybe the stock market is way overvalued), but it seems less likely that they will all be overpriced together.
  3. Each of the asset classes is relatively simple. We’re not dealing with actively managed funds or annuities here. A hunk of metal won’t suddenly start charging me secret fees out of the blue. Call me paranoid, but I like this.
  4. I can keep the taxable income generated by the portfolio under control. There are some dividends from the stock fund, and interest payments from the bonds. Put as much of this stuff as you can into tax-advataged retirement accounts, and you will be in good shape. The gold and cash can go anywhere.
  5. This is a portfolio that I can see sticking with until the day I die. (Well, this may be a bit of a stretch. Things change, after all.) You are supposed to rebalance whenever one asset class crosses the 35% or 15% threshold, but I don’t see this happening too frequently. Mostly, you just don’t touch it.
  6. Because of the large allocation to cash, I always have a nice chunk of cash lying around for unanticipated expenses or gambling opportunities. It’s a good feeling.
  7. I know a smart, rich guy in quantitative finance who recommends this investment strategy to people.
  8. In the 70s, Harry Browne made a big bet on gold and it paid off nicely. Later, he admitted that his bet was a mistake, and he started advocating for the more balanced permanent portfolio, which doesn’t attempt to time the market. It is very hard for a person to make a mistake, get a good result, and then admit that they simply made a mistake and got lucky. I make it a point to listen to the few people who can do this.

I must add the caveat that everyone’s situation is different, and in some circumstances this approach requires modification. For example, you may need to adjust for the fact that you own a home with a mortgage. A professional financial planner can help you to find an investing strategy that fits their unique goals, risk tolerance, and current situation. However, with no further information, I recommend this portfolio.

Notice that I didn’t mention anything about expected returns. The returns have been good in the past, and some people expect this to continue. Maybe they will, maybe they won’t. I think it has a decent shot at yielding decent returns, and that’s good enough for me. If I want higher returns, I’m going to rent out a room in my condo, or start growing my own food, or start a tutoring business. I’m not going to swim with the sharks by trying to time the markets.

In 2013, the permanent portfolio returned -2.4%, while the S&P 500 returned +29%. I was perfectly content. In fact, I was quite pleased at the line of thinking that led me to choose the permanent portfolio. If this kind of thing would bother you, then you are in good company. I bet it would bother 99% of people. It’s something to consider before diving in. Personally, I’m going to be OK with whatever happens in the short term because I feel like I’ve found a way to play the completely random rock, paper, scissors strategy. That’s the best I can do.

Bought Myself 2,000 Good Weeks

I want to describe to you what a typical week is like for me these days. It’s going to sound a little braggy, but I think it’s important to present an example of the type of free life I’d like to see people working towards. I suspect that some people will read this post and immediately say “I can never do what he did for reasons x, y, and z”. I certainly would have said that ten years ago. But please bear with me. In future posts, I will make the case that I’m not just a lucky bastard. I’ve spent many years thinking differently from those around me. I’ve made deliberate choices, and I promise you I’ll let you in on my decision-making secrets soon enough. But for now, I present to you a week in the life of Daniel S. Bernstein.

On Monday, I drive down to the casino to play poker. I like to play a long session, stay over, and then take my time getting back the next morning. The hotel room is comped, and they pay for my gas and meals too. Oh, and there is a seemingly unlimited supply of suckers handing me their money the whole time I am there. The games aren’t what they used to be, but they’re still pretty juicy! I may sometimes skip my poker session if I’m more excited about something else, but it’s usually nice to start the week with a little gambling getaway.

The first thing I do on Tuesday when I get home is soak some beans. They will be a key component of my fuel for the week. With the beans soaking, I move on to my abundance meditation. I remind myself that I have far more resources than I need for myself alone. I picture myself taking a loss, and realizing that I still have more than enough. I repeat this a few times, with the goal of awakening my giving spirit. (Yes, I do see the irony of doing this exercise after I have just finished taking money from people in a zero-sum game. Humans have complex needs, and I am no exception.) For the rest of the day, I take it slow because I’m usually tired. I cook food, do laundry, get organized, easy stuff like that.

Wednesday is when I dig in and work on some more substantial projects I am excited about. I may do some financial planning work, read books on topics that interest me, or develop systems to improve my life and the lives of those I care about. Of course, this all depends on the weather and my overall mood. If it’s summer and nothing in particular is gripping me, then a long bike ride with the wife might be in order. Yeah, she’s home too, so we can play while the kid is at school.

I usually have some momentum going into Thursday, so I keep chugging away at my projects. However, I always take a break at some point to get out on my bike for an exercise/errands combo. The library and grocery store are mandatory stops. In the summer, I also have to stop by the farmers market to get my pastured chicken eggs. I don’t think a free man should be eating eggs from a chicken that did not live freely.

There is often still momentum leading into Friday, but things do start to slow down. Friday is a day of reflecting on the week, wrapping things up, and getting excited for a weekend of activities with my family. I understand that most people don’t have a reflection day, but I also think that is kind of crazy.

We almost always kick off the weekend by having people over for dinner on Friday night. We eat great-tasting healthy food while listening to pleasing dinner music. (One thing I really like to do is find a highly-regarded album that none of us has heard before and play it in its entirety while we eat.) After dinner, the kids play while the adults drink wine and converse.

On Saturday morning, the family adventures begin. My wife, son, and I all like to get out, explore, and create. Sometimes we spend money, but there is really no need. There are far too many exciting free things to do to ever get through them all. In fact, I prefer to end the weekend with a profit. It doesn’t happen often, but I’m working on different strategies and expect it to start happening more.

On Sunday night, I usually get an excited feeling because I’m going to play poker the next day, and my competitive juices are flowing. And the cycle continues from there.

So that’s how things go for me. I take it slow and keep it simple. I don’t buy much stuff. There is little stress and an abundance of free time. I manage to keep the pile of money growing. To me, it’s the good life, but I’m sure some would disagree. There is no place for Xbox Live, fancy dinners out, or trips to Disneyland in this life. Some may consider that a bad thing, and to them I respond with a quote from the classic Linklater film Slacker: “I may live badly, but at least I don’t have to work to do it!”

Get That Money

Let’s start this blog off right by talking about one my favorite things in the world: money. We all want money. No matter how much we have, it’s nice to have more. Personally, I think about money all the time. I dream about it. And right now I’m going to share with you one of my advanced approaches to making money.

Usually, when people want more money, they “get a job”, “invest in the stock market”, “start a business”, “rob a bank” — stuff like that. All of these approaches can work, but the problem is that the very act of adopting these phrases restricts your thinking. Really, you just want to get money, and there are infinitely many ways to do this. If you only consider money-making approaches that can be given a standard label, then you’re looking at the tip of the iceberg.

Some of the most effective money-making strategies are the ones that are so novel, so out of left field, that there don’t yet exist words to describe them. They elicit strange looks, confusion, laughter, or fear when you tell people about them. That’s OK. While they talk about the “bad economy” and “lack of jobs”, you are busy visualizing the vast amounts of money that exist all over the place. You’re almost literally seeing it right there, and you’re brainstorming all the creative ways to get your hands on some of it.

Consider this guy. He went on Kickstarter, asked for $10 to make a potato salad, and got people to give him $50,000 (so far). Was he lucky? Of course. But he also had the sense to go ahead and do what he did. He saw that there was money flying around on Kickstarter, and he decided to go there and get some. He recognized that potato salad is a particularly funny dish, and that the contrast with all the other projects on Kickstarter would be hilarious. He also realized that he only needed to risk a tiny bit of his time, and all of that time was probably spent giggling about what he was doing anyway.

One of my personal successes along these lines was buying bitcoins early on. Bitcoins are all over the mainstream media now, but when I was first looking into them, everyone around me thought I was crazy. After all, they are just virtual money, backed by nothing. There was no regulation, and some of the exchanges were outright stealing peoples’ money. Also, they were mainly being used for buying drugs on the Internet, which added an element of fear. On top of all that, people didn’t even have language to talk about these things, since they were so new and strange. None of these criticisms really mattered to me. Bitcoins were truly novel and had some very interesting properties, so I used a small fraction of my money to buy some. I got lucky and made a nice score, but that’s not really the point. The important thing is that I wasn’t afraid to venture into weird and scary territory.

Here’s one more weird one that I should have capitalized on, but missed. When the Twitter IPO was announced last year, the stock was listed as TWTR. This was very similar to the symbol TWTRQ for the bankrupt Tweeter company. It was so similar, in fact, that some people bought Tweeter when they wanted to buy Twitter, and this drove the price of TWTRQ up 700% in a day. Now, it’s easy to dismiss this as one of those freak occurrences that cannot be predicted, but I don’t see it that way. This is exactly the type of thing that people can notice and take advantage of. You just need to be on the lookout at all times.

I must emphasize that this way of thinking is quite advanced. You must tread carefully and know the basics of being a good risk taker, lest you get yourself into trouble. By this, I mean that you need to have a good grip on risk versus reward. You need to understand when your emotions are getting in the way of rational thought. You also need to understand when you have an edge and when you don’t. Without any special knowledge or insight, you probably won’t find success. Fortunately, we all have our little things that we are good at or pay extra attention to.

So if you think you are ready, you may want to take a jaunt into the realm of the unnamed. Know that fortunes can be made from software glitches, misunderstandings, loopholes, and jokes. Take your own personal quirks and go exploring with them. Visit far corners of the Internet. Travel to foreign lands. Shake up your neurons and create altered mental states. Pay attention. See if there is money to be found. Practice this on a regular basis, and some day you may have your own “potato salad” moment.