A friend asked me if I had any rules for investing, not necessarily in stocks but in other things, and I said that I didn't have hard and fast rules, but thought about it more in terms of principles. What are those principles, she asked? Well... I didn't quite have an answer ready.
I've thought more about it and decided to put it all in one place publicly.
First, I divide investments into "risk" and "no risk" categories. You could argue that everything has some risk, but I consider the no-risk investments to be things where, in my estimation, there is less than a 2% chance of loss. This is arbitrary and subjective, but for my investments there's a pretty clear cut line.
Investments that fall into this category would be CDs, fixed rate return stuff like BlockFi USDC coins, and investing in a friend's real estate development where he pays me a fixed return.
We make hundreds or thousands of subconscious decisions each day, but just because they're subconscious doesn't mean that we have no influence on them. Quite the opposite, they are actually dictated by our principles and the lenses through which we view the world. By changing those things we can automatically and effortlessly make better decisions.
One of the most important lenses through which we make decisions is our time scale. We make decisions to effect positive change in our lives, but WHEN that positive change takes place can vary a lot.
For example, a drug addict makes decisions on a very short time scale, maybe just a minute or an hour or so. Addicts know that the substances or behaviours they use are bad in the long term, but that's not a time scale that they are concerned with. If you want to optimize for the next few minutes of your life, choosing to use heroin makes a lot of sense.
On the other hand, some people optimize for infinity. I dated a girl once who was totally unwilling to spend money on anything (she actually spent tons of time entering sweepstakes so that she could win everything she needed), but had saved up tons of money. Even when the money would have a huge benefit to her life, she would not spend it.
We all want good things to happen in our lives. Sometimes these good things stem from obvious wins that can be picked up easily, like accepting a new job offer or going on a second date when a first date went well. In thinking about which events in my life were most positively impactful, however, I noticed that many of them were not obvious wins. They were maybes, which I turned into wins.
For example, take buying an island with my friends. This is definitely not an obvious win. It could have lead to fights with my friends, it could have turned into a big money pit, or apathy could have left it undeveloped and relatively useless. However, my friends and I worked hard to turn that maybe into a big win. We've had zero fights, have kept costs low, and have built it out to the point of being a great destination for ourselves and our friends and families.
Relationships, particularly marriages, are another one. I got married on the one year anniversary of meeting my wife. People congratulate each other on marriage as if it's an obvious win, but I'd categorize it as a maybe. I've seen people for whom marriage has been a huge negative as well as those for whom it's been a huge win. The marriage isn't a win, but what you do with it can be a big win.
Is dropping out of school or quitting your job a win? Like the other examples, it all depends on you.
Since my last blog post I traveled internationally for the first time in almost seven months. That period of time represents the longest time I've stayed in one country since 2008, I think. It was a weird experience for a number of reasons and made me reflect a lot on travel and being stationary.
In some ways I've been surprised at how much I've liked not traveling. Or, rather, I think that my lifestyle of nearly constant travel caused me to forget about the benefits of staying still. Staying in Vegas I've enjoyed seeing the seasons change, connecting a little bit more with local people, having a rock-solid routine, and doing projects that require longer sustained periods of time.
That said, I have of course been dying to travel.
The first thing that surprised me was what a big deal it felt like to travel. Before COVID I would go all over the place with very little planning, but planning a 3 day trip to Mexico felt like a big deal. It gave me a little glimpse of how most people think of trips as "big deals".
I was one of the very lucky ones, though it took me a long time to understand just how lucky I was. I grew up with loving parents, siblings with whom I never fought, very involved grandparents, and a bunch of cousins who I count as close friends today. I made friends with incredible people as early as kindergarten (one of whom is still one of my closest friends), and continued to have really excellent people as friends for the rest of my life. I thought that this was totally normal and nearly universal for a very long time.
Like anyone I've had big challenges in my life, but none of those challenges came from any sort of childhood trauma. If anything, my childhood helped me get through them.
As time has passed, I've met more and more people with childhood issues that continue to affect their daily lives. This was very surprising to me at first, but when I thought about how I continue to benefit from a good childhood, it made sense that issues from childhood would continue to plague people.
Through coaching, as you might imagine, I've seen a lot more of this sort of thing and have gotten to explore it in depth.