A lot of people tell me that there’s nothing new in my book.
I know they’ve read it, because that’s true.
Other people tell me that there are lots of different ways to invest.
Also true (but doesn’t mean they’ve actually read my book).
So why is my book important?
Because of the human element of investing. The emotional component. It’s not about the technique, but does the technique work with or against human behavior. Especially the behavior of people who can’t seem to stick with their plan.
I was reading Radical Focus (my new company likes OKRs). A few passages caught my attention and reminded me of the message I’m trying to share. About why having a simple plan, one that motivates and makes investing fun, is important.
You need a process that helps you make sense of the work you need to do, and keeps you on track even when you are tired. The process reminds you what to do, even when you don’t feel like doing it.
That helps you understand why you need a blueprint for investing. It is also important though to have fun. To get coached positively. When something is fun or rewarding (and we realize it in the moment) it requires less willpower to participate in.
When people want to lose weight, they do better with Weight Watchers than willpower. When people want to get fit, they do better with personal trainers than willpower. That’s because willpower is a finite resource. This was shown in a famous 1996 study by Roy Baumeister, in which subjects forbidden to eat a bowl of radishes were able to work twice as long on unsolvable math problems than those who had been forbidden to eat freshly baked chocolate cookies. (I also learned that it doesn’t take much willpower to skip eating radishes.) After a long day of not quitting your job, killing your coworkers or hitting Reply All on that email chain, trying to turn down a slice of birthday cake is beyond anyone’s will. You need a process that helps you make sense of the work you need to do, and keeps you on track even when you are tired. The process reminds you what to do, even when you don’t feel like doing it. The original OKR system was just a way to set smart stretch goals. But the system around it—commitment, celebrations, check ins—makes sure you continue to make progress toward your goals even[…]
Notice the comment about celebrations and check-ins. They’re not just coincidental to the investing activity. They’re the point about the practice. You should read the book if only for the metrics you can track that make investing feel rewarding in the moment, and encourage the behavior by cheering you on with short-term wins along the way to your long term wealth.