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Martinaelikovi
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Speed
1. The hardest financial skill is getting the goalpost
to stop moving.
But it’s one of the most important. If expectations rise with
results there is no logic in striving for more because you’ll
feel the same after putting in extra effort. It gets dangerous
when the taste of having more—more money, more power,
more prestige—increases ambition faster than satisfaction.
In that case one step forward pushes the goalpost two steps
ahead. You feel as if you’re falling behind, and the only way
to catch up is to take greater and greater amounts of risk.
Modern capitalism is a pro at two things: generating wealth
and generating envy. Perhaps they go hand in hand; wanting
to surpass your peers can be the fuel of hard work. But life
isn’t any fun without a sense of enough. Happiness, as it’s
said, is just results minus expectations.
2. Social comparison is the problem here.
Consider a rookie baseball player who earns $500,000 a
year. He is, by any definition, rich. But say he plays on the
same team as Mike Trout, who has a 12-year, $430 million
contract. By comparison, the rookie is broke. But then think
about Mike Trout. Thirty-six million dollars per year is an
insane amount of money. But to make it on the list of the
top-ten highest-paid hedge fund managers in 2018 you
needed to earn at least $340 million in one year.¹⁴ That’s
who people like Trout might compare their incomes to. And
the hedge fund manager who makes $340 million per year
compares himself to the top five hedge fund managers, who
earned at least $770 million in 2018. Those top managers
can look ahead to people like Warren Buffett, whose
personal fortune increased by $3.5 billion in 2018. And
someone like Buffett could look ahead to Jeff Bezos, whose
net worth increased by $24 billion in 2018—a sum that
equates to more per hour than the “rich” baseball player
made in a full year.
The point is that the ceiling of social comparison is so high
that virtually no one will ever hit it. Which means it’s a
battle that can never be won, or that the only way to win is
to not fight to begin with—to accept that you might have
enough, even if it’s less than those around you.
A friend of mine makes an annual pilgrimage to Las Vegas.
One year he asked a dealer: What games do you play, and
what casinos do you play in? The dealer, stone-cold serious,
replied: “The only way to win in a Las Vegas casino is to exit
as soon as you enter.”
That’s exactly how the game of trying to keep up with other
people’s wealth works, too.
3. “Enough” is not too little.
The idea of having “enough” might look like conservatism,
leaving opportunity and potential on the table.
I don’t think that’s right.
“Enough” is realizing that the opposite—an insatiable
appetite for more—will push you to the point of regret.
The only way to know how much food you can eat is to eat
until you’re sick. Few try this because vomiting hurts more
than any meal is good. For some reason the same logic
doesn’t translate to business and investing, and many will
only stop reaching for more when they break and are forced
to. This can be as innocent as burning out at work or a risky
investment allocation you can’t maintain. On the other end
there’s Rajat Guptas and Bernie Madoffs in the world, who
resort to stealing because every dollar is worth reaching for
regardless of consequence.
Whatever it is, the inability to deny a potential dollar will
eventually catch up to you.
4. There are many things never worth risking, no
matter the potential gain.
After he was released from prison Rajat Gupta told The New
York Times he had learned a lesson:
Don’t get too attached to anything—your reputation, your
accomplishments or any of it. I think about it now, what
does it matter? O.K., this thing unjustly destroyed my
reputation. That’s only troubling if I am so attached to my
reputation.
This seems like the worst possible takeaway from his
experience, and what I imagine is the comforting selfjustifications
of a man who desperately wants his reputation
back but knows it’s gone.
Reputation is invaluable.
Freedom and independence are invaluable.
Family and friends are invaluable.
Being loved by those who you want to love you is invaluable.
Happiness is invaluable.
And your best shot at keeping these things is knowing when
it’s time to stop taking risks that might harm them. Knowing
when you have enough.
The good news is that the most powerful tool for building
enough is remarkably simple, and doesn’t require taking
risks that could damage any of these things. That’s the next
chapter.