Why the book was so easy and enjoyable to read? It has a lot of good examples, data and fun facts to get the point across to the readers. The chapter titles are attention grabbers to get our attention to read more. But the most important thing to learn from this book is "Margin of Safety".
According to the author, it is one of the most underappreciated forces in finance. It comes in many forms: a frugal budget, flexible thinking, and a loose time line - anything that lets you live happily with a range of outcomes. Controlling your time is the highest dividend money pays.
The book is pretty much evolved around the concept of "Margin of Safety." It encourages readers to save money and not spending money lavishly. The key is staying wealthy and not just getting wealthy. We can't be complacent and assume that yesterday's success translate into tomorrow's good fortune. Wealth is what you don't see. Spending money to show people how much money you have is the fastest way to have less money.
Good investing is not about getting the highest returns. It's about getting good returns that you can stick with and which can be repeated for the longest period of time. According to the author, the historial odds of making money in US markets are 50/50 over one-day periods, 68% in one-year periods, 88% in 10 -year periods and (sofar) 100% in 20-year periods.
Forecasting is hard. This is why invetsment guru Benjamin Graham is a strong advocate for margin of safety as the purpose of margin of safety is to render the forecast unnecessary. The author cited the success rate of venture financing from 20024 to 2014: 65% lost money, 2.5% of invetsments made 10X to 20X, 1% made more than 20X return, only 1/2% (~100 companies) earn 50X or more.
According to George Soros, it is not whether you are right or wrong that's important but how much money you made when you're right and how much you lose when you're wrong. You can be wrong half the time and still make a fortune.
The most interesting part of the book is the last chapter: Postcript. Thanks to the internet, the world is more connected than ever. What that means is the talent pool the readers compete with has gone from 100s or 1000s sprang their towns to millions or billions spanning the globe.
The author ended the book with a not so pessimistic note. The era of "this isn't working" may stick around. And the era of "We need something radically new, right now, whatever it is" may stick around.
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There is no reason to risk what you have and need for what you don’t have and don’t need.Highlighted by 32,322 Kindle readers- Having a strong sense of controlling one’s life is a more dependable predictor of positive feelings of wellbeing than any of the objective conditions of life we have considered.Highlighted by 26,977 Kindle readers
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I’m Buying a Copy for Everyone
This book is such a beautiful dive into the psychology of what drives us to overspend, misplace money, good and bad investments, and the lack that the American people have understanding how our relationship with money should be versus how it is. The author does not pander into saying that he has all the answers, but instead connects with the reader on an empathetic level saying he’s been in similar situations. I feel my favorite chapter in this entire book is chapter 8. My personal relationship with money has not been the healthiest. I could not put this book down. I will be buying it as gifts for all of my friends and family.
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François
Must read book with timeless lessons
Reviewed in Canada on December 14, 2023
