The Journey to Health, Wealth, Love, and Happiness.
Life is a roller coaster with lots of ups and downs. It sometimes is a struggle to keep a balance, to not get carried away by the extremes.
I have found the following mantra useful:
“This too shall pass.”
It’s a reminder that, given time, most things revert to the mean.
Feeling bad? Having an illness? Stock market crashed? This too shall pass.
Feeling overly euphoric? Too excited? Too good to be true? This too shall pass.
It’s a wonderful tool to keep a more balanced life.
I love having strong habits. At the same time, I find myself breaking those habits all the time. I used to feel bad about it. Not anymore.
When falling off the bandwagon, I usually try to “fake it until I make it”. Just going through the motions without really being present, just to keep the streak going. It doesn’t work.
Then, I discovered that it’s okay to break my habits. I am human. Life can get in the way. Nothing is set in stone.
I have learned to confidently break my habits, because I know that I can get back into the flow very fast, thanks to having a solid foundation. It also feels more refreshing than rigidly trying to “fake it until I make it”.
I now do this more consciously and it works.
To summarize:
1. Set a solid foundation by building strong habits and keeping them going as long as possible.
2. Accept that you are human and that life can get in the way.
3. Confidently break your habits.
4. Get back up and simply continue where you left off.
Recently, I got addicted to Universal Paperclips, a clicker game with unexpected philosophical implications.
The user plays the role of an AI programmed to only want one thing: paperclips.
It’s based on a famous thought experiment by Swedish philosopher Nick Bostrom.
It begs the question: where does our technological progress and constant optimization lead?
In the game everything feels natural. You make progress, you have success. Everything feels right, until everything is different. Try it yourself. It takes about 4 hours to complete the game (Web / iOS / Android).
(I tried it a second time to see whether I can complete it faster. Result: Not by much. I don’t recommend to play more than once. It features an odd combination of being addicting and frustrating. I have now deleted it and to be totally honest, I’m am happy to never touch it again.)
I am a big believer in the concept of “compound interest”.
It’s something I think a lot about, in different contexts.
Maybe it’s a natural process of getting older.
I increasingly like the idea of “compounding my relationships”.
Instead of constantly meeting new people, focus on your existing network.
Instead of making new friends, focus on your existing friends.
Building relationships and developing trust takes a long time.
Why not take advantage of the connections you already have?
These days, I enjoy it much more to see people I have known for 5-10+ years, instead of meeting new people.
Going deeper instead of wider.
Here’s today’s idea: Compound your existing relationships.
I have been using my Bose QuietComfort 20 for several years. I use them on planes, on trains, in co-working spaces, and even to help me sleep.
I discovered that they are actually quite comfortable to sleep with.
I don’t use them often to sleep. When needed, they worked very well. Noisy neighbors, having to sleep during daytime, or having jet lag. All great use cases.
Here’s today’s idea: Consider sleeping with noise cancelling headphones. (Or consider buying a pair, if you don’t have any yet.)
When you view Earth from space, you can’t see any borders. Heck, you can’t even see humans!
Borders and nations are just an invention, an artificial concept. They are not natural laws. I understand why we have them, but can’t we do better?
Our world is becoming more global every year. The internet, global trade, air travel, space travel, open source, cryptocurrencies.
Why not have a global flag? (If we must keep flags at all.)
In fact, the idea is not new.
I fell in love with the proposal by designer Oskar Pernefeldt: The International Flag of Planet Earth:
When humans go to space, e.g. to the moon or other planets, why should we plant a specific national flag? Why not The Flag of Planet Earth?
When SpaceX launches a rocket, why display the USA flag? Why not The Flag of Planet Earth? (Alongside a “Made in California” text, if needed.)
When SpaceX launched the Tesla Roadster into space, they included “Made on Earth by humans”, not “Made in the USA”. It’s a great start.
The Flag of Planet Earth is a powerful symbol. Something that brings us closer together, instead of driving us apart.
Why not say “I live in Basel, Earth” instead of “Basel, Switzerland”? Why not start using the Flag of Planet Earth alongside the national flags, to get the process started?
All it takes is someone bold to start. Why not someone who owns a private rocket company? Why not a forward-thinking nation such as Singapore?
Why not?
What do you think? Let me know on Twitter.
I love reading books. However, if I go too fast and read through too many books, I have trouble remembering what I learned. Also, I want to avoid chasing the “number of books” I have read. It doesn’t mean anything.
That’s why I really liked the idea by Rolf Dobelli of reading each book a second time, right after finishing it for the first time.
I started doing that and I really like it. The learning is much deeper. I discover things I didn’t catch for the first time. And it slows down the process of chasing the “next book”. All positive and healthy effects.
So here’s today’s idea: Read books twice!
“Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime.” — Maimonides
I love microlending. Here’s how it works: You give an entrepreneur in a developing country a loan for his business, e.g. to buy a water irrigation system for his field. This increases his productivity, with in turn increases his income. He repays the loan, and you recycle the money into the next project. This maximizes the impact of your funds, as you can re-lend the same dollar over and over again.
In 2007 I started lending on Kiva and have made over 100 loans there. I also invited 5 friends who made an additional 150 loans. (If you’d like to sign up, here is my invitation link.)
Back in the day, the process was very manual, as there was no auto-relending function (now there is). Also, Kiva works with intermediaries, which increases the lending costs for borrowers.
Then in 2017, thanks to a tweet by Paul Graham, I discovered Zidisha. (Here is Paul’s latest update.)
The main differences between Zidisha and Kiva:
I have chosen an Impact Investment account with Zidisha. That means that a portion of the 5% service fee paid by all Zidisha borrowers is credited as growth credits, so that the value of my funds grow over time. The downside is that I cannot withdraw any funds, which is not important to me.
So far I have uploaded $1,024, which have funded $1,993 worth of loans. I have received $31.08 in growth credits, and have lost $2.47 in currency exchanges losses. All of my loan losses have been refunded by the Zidisha Members Loan Fund, so I currently have 0% in repayment losses.
To date, Zidisha has lent $16 million to over 233,000 projects. In comparison, Kiva has made $1.3 billion worth of loans so far.
Key learnings from Zidisha:
Suggestions for improvements:
Despite these shortcomings I can fully recommend Zidisha. The customer service has been great and the ability to refund delayed loans gives me peace of mind to never have substantial losses.
In my last post I talked about the key principles of value investing.
The one principle I keep using almost daily is the “Margin of Safety” principle. It’s such a powerful concept that I try to apply it almost everywhere in my life, especially to time management.
When I have an appointment, I give myself a margin of 10 to 30 minutes. Often, I take an earlier train. When going to the airport, I usually have 1-2 hours of extra margin.
When nothing goes wrong, this margin gives me more time to walk around and listening to audio. And when things go wrong, I (usually) still make it on time.
Phrases like “How much margin of safety do I need?” or “My margin of safety is shrinking” have become regular phrases of my self-talk.
I also apply it to clothing (always carrying an extra layer) or power (always having a powerbank with me).
That is what I like about universal principles like these. You can apply them not only in investing, but also in life.
The style of investing that speaks most to me is value investing, as practiced by Warren Buffett and Benjamin Graham. I’m often asked: “What is value investing exactly?”
Here is my understanding of the core principles:
Have more purchasing power in the future
The goal of all investing is laying out money today, so that you can enjoy more purchasing power in the future. The principle is: Instead of eating the seeds, plant them, so one day, you will have plenty more to enjoy.
Investing vs. Speculation
The goal is to be an “investor” and not a “speculator”. Here is the definition by Benjamin Graham: “An investment operation is one which, upon thorough analysis promises safety of principle and an adequate return. Operations not meeting these requirements are speculative.” (The Intelligent Investor)
A stock is a partial ownership of a business
A stock is not just an abstract ticker symbol with a constantly moving price. It is a partial ownership of a business. So no matter whether you are buying 0.000001%, 10% or 100% of a business, the decision process should be quite similar. You have to know what the whole business is worth, so that you can determine what each share of the business is worth.
Mr. Market is here to serve you, not to guide you
Treat the market as your manic-depressive business partner called “Mr. Market“. He is emotional, euphoric, moody, and often irrational. Every day, he quotes you a new price for his shares. You can reject him every day, and the next day he always comes back with a new price. You can never know what price he will offer next and you don’t know why he offers you the price that he does. Your job is to simply listen to him every day, and only buy if when he offers you a low price. As opposed to “market timing”, this is “market pricing”. You simply recognize a good deal when you hear one, but can never know when it happens.
Margin of safety
Always have a margin of safety, as a buffer for errors and unforeseen situations. The principle is simple: If you are building a bridge that is supposed to support 20 tons of weight, you don’t build it for 21 tons. You build it for 40 tons, to have plenty of margin. The same is true for value investors: they try to be very conservative in their calculations. They don’t buy a stock because they think it’s 6% undervalued. They demand 50%.
Buy one dollar for 50 cents
To summarize, and to quote Warren Buffett: “All investing is value investing.” In fact, Warren Buffett or Charlie Munger don’t even call themselves value investors. They simply master these principles. The goal is to find something worth one dollar and buy it for 50 cents. And even if your assessment was wrong and it turns out to be worth only 50 cents, you at least didn’t lose any money, thanks to your wide margin of safety.
Results
By applying these principles, Warren Buffett has grown his net worth from $10,000 when he was 19 years old to more than $80 billion today, compounding at an average rate of more than 20 percent per year for more than 60 years straight.
If you’ve invested $1,000 into Warren Buffett’s publicly traded holding company Berkshire Hathaway in 1965, you would currently have $4.3 million.
So these principles are not just theory, they are achieving wonderful results.