5 wise books about money

By Daniel Wilcock

A lot of financial media aimed at the general public are little better than carnival barking. Now that the Dow and S&P are back at pre-recession levels, the carnival has returned to town.

Like many wiser than myself, I think it’s best to ignore the noise and stick to a fundamental strategy: living below one’s means, acquiring a balanced portfolio of appreciating assets, minimizing fees.

Short of hiring an enlightened advisor (on a flat fee rather than commission basis), which is probably the preserve of more affluent individuals, I think most people are best off schooling themselves with some basic books that inspire wisdom and good choices.

I’d love to hear your suggestions for this list. Here are my five favorites, with a few words about each:

MNDThe Millionaire Next Door by Thomas J. Stanley and William D. Danko

At the top for the laser-like precision with which it cuts through illusions about wealth. In a few words: persons whose net worth rises above $1 million in a single generation are usually frugal and self-sufficient. The authors back this up with a lot of data. This runs counter to what marketers, particularly those who sell luxury, would have us believe.

YMOYLYour Money or Your Life by Vicki Robin, Joe Dominguez and Monique Tilford

This is unashamedly a self-help book, and a very good one at that. The authors observations about how our money decisions have lifelong impacts on our well-being (at each level from individual to global environment) are compelling and, for most people, life changing.

InfInfluenceluence: The Psychology of Persuasion by Robert Cialdini

This book is a skeptic’s delight. Not a book about money per se, but nonetheless an indispensable guide to the mental minefield in which we live. Were you ever curious why surveys are so often deployed by people who want our money or our votes? Ever feel the need to reciprocate a token gift? Ever wondered why the higher-priced item is more alluring? Cialdini’s book exposes the mechanics or persuasion and helps us step back from money traps.

RandomA Random Walk Down Wall Street by Burton G. Malkiel

A manifesto aimed squarely at investors who might otherwise be ripped off by Wall Street profiteers. Malkiel claims that a monkey throwing darts at the markets page could make the same quality picks as most fund managers, and backs the assertion up nicely. His book made me a proponent of low-fee “no-load” index investing. Like John Bogle, the founder of Vanguard who helped invent index investing, Malkiel’s the little guy’s friend.

BabylonThe Richest Man in Babylon by George Clason

Humans love stories. As Joseph Campbell taught us, our culture is infused with parables. These are parables that feature characters in ancient Babylon and teach timeless wisdom. Admittedly, some of the language, such as “Start thy purse to fattening,” is kind of corny. Yet simple stories stay with us, and this is about as simple as it gets.

P.S. To get a head start on actualizing the lessons in these books, check them out from the library!

Market’s back, but people aren’t

Dow high
The Dow hit its highest point since December 2007 this week. (Image: Google)

By Daniel Wilcock

The American stock market, as measured by both the Dow Jones Industrial Average and the S&P 500, closed yesterday at its highest level since December 2007.

Ordinarily, as a low-cost index investor, I agree with market sages such as Burton Malkiel and John Bogle, who caution investors not to pay much attention to the daily soap opera of market fluctuations. But somehow this particular milestone means something to me.

In April of 2008, I relocated to the States from Japan, where I’d been living the previous two years. Luckily, I found a nice writing job at Georgetown University (a relatively safe harbor within stormy seas) shortly before the markets went to hell and employers started shedding their payrolls. When the Lehman collapse happened, I can clearly recall the indexes going down 5% each day for several consecutive days.

Those dark days always made me flash back to the summer of 2007, when my wife and I took a honeymoon in Finland and Denmark. Each day, I had the luxury of perusing the International Herald Tribune in a leisurely way. That splendid summer, the financial news was filled with warnings of a coming market catastrophe, evidenced by the failure of some mortgage-related funds at Bear Stearns.  Yet the market continued to go up in the following weeks.

We may be approaching a conclusion to those days of frozen credit and a hemorrhaging housing market. In my opinion (which I admit is quite different from Wall Street types), The Consumer Financial Protection Bureau is leading our housing and credit economies to a brighter future. In this regard America may be learning something from Canada, which didn’t have a mortgage crisis.

But what about the 8% of workers in America and more than 50% of young people in countries like Spain who wish to enter the workforce, but can’t find their way? I’m looking for ways to be optimistic about the future of labor in the new era we’ve entered. B corporations and the GIIRS index inspire me, as do companies and organizations that take environmental and community sustainability seriously.

The market’s return is an indicator of our collective wealth. The unemployment problem is an indicator of our collective poverty. My hope is that our markets will evolve and bring their productivity to bear on the social and environmental problems we face.

Idealistic, yes. Naive, perhaps. But optimists live better lives.

‘Baseball’ by George Vecsey

Babe Ruth
Babe Ruth, baseball’s savior (Library of Congress via Wikimedia Commons)

By Daniel Wilcock

Book review: ‘Baseball: A History of America’s Favorite Game’ George Vecsey  (2006, Modern Library, $14)

“Brevity is the soul of wit”—William Shakespeare

A simple idea runs through much of literary history: concise writing is harder, but better. Attributed to a wide range of writers, from Cicero to Mark Twain, this concept is best exemplified by Lincoln’s Gettysburg address.

For the last few decades, baseball has inspired a steady stream of 700-page tomes, many of which focus exhaustively on a single player or season. George Vecsey’s 2006 book Baseball boils the lot down to a scant 200-some-odd page collection of editorial-style vignettes.

Vecsey, a New York Times columnist, doesn’t hide his opinions. He grew up a Brooklyn Dodgers fan, though he adores their nemesis Stan ‘The Man’ Musial—about whom he recently wrote a 400-page biography. He considers the steroid-ball of the 90s and early 00s a catastrophe, but still has admires grudgingly the villains (erstwhile heroes) of the era.

Baseball by George Vecsey

Despite his love for the Brooklyn Dodgers and Musial, it’s Babe Ruth who for Vecsey personifies baseball. Here’s part of his paean to the Great Bambino:

 “Babe Ruth saved baseball—and saves it still, truth be told. With Barry Bonds and other latter-day sluggers permanently tainted by steroid suspicions, the good old Babe looks better and better.

Ruth was not only the greatest player in the history of the game but he was also a rollicking, likable, outsized character who arrived at precisely the right moment. He dominated the nation during a decade devoted to change (women gained the right to vote in 1920) and avoidance (Prohibition was enacted that very same year, and promptly bypassed by a huge swath of the country). Who better to personify this coming-of-age decade, the Roaring Twenties, than a barrel-chested, pigeon-toed hedonist known as the Babe.”

If you like the above passage, its commentary rendered elegantly from a 10,000-foot vantage point, you’ll probably like the rest of the book. I certainly did. Just as the Gettysburg Address stood in contrast to the two-hour oration that preceded it, this short book is a keeper among baseball books.

I say it each winter: Can’t wait until April.

The high human cost of cheap sourcing

By Daniel Wilcock

This devastating New York Times story about last month’s factory fire in Bangladesh, in which 112 workers perished because they were trapped by both the flames and their managers, is a wake up call.

I think it’s time to purchase fewer “brand” goods produced in places where almost none of the high purchase price commanded by the brand makes it into workers’ hands.

Granted, it’s hard to tell these days which products are produced sustainably. I’d be very curious to know how the Nike running shoes I typically buy, which are made in China, break down in terms of who receives what. My guess is that if I’d like to live by the above axiom, I’d have to find some different sneaks.

The b corporation model is the way forward. Consumers can affect change incrementally with their choices.

My hope is that what happened at Tazreen Fashions Ltd. in Bangladesh is also wake up call for those with the power to make macro changes, from heads of state to brand CEOs.

The master of the dip gets all the chips

the dip
(Image: Amazon.com—No, I did not read this in French)

By Daniel Wilcock

Book review: The Dip, Seth Godin (Portfolio, 2007)

Grabbing The Dip from the library shelf, I almost chuckled. I’d previously come across the author, Seth Godin, in a TED talk where he appears to be channeling Steve Jobs (black long-sleeved shirt, blue jeans, lack of hair). I thought that the book’s title might be eponymous.

I checked out the book anyway because my professor spoke so highly of Godin’s work. Plus the text looked like it could be digested in two or three hours. I’m glad I persisted (though some reservations are listed at the end of this review). Godin is a good conceptual thinker, and this little book contains a powerful heuristic approach for becoming “the very best in the world,” an accomplishment he claims is “seriously underrated.”

“The dip” refers to the difficult stage of any project in which the pros put significant distance between themselves and their competition. It’s the period of time characterized by apparently diminishing results when quitting and settling for mediocre results are far more tantalizing than “leaning into” the dip and breaking through.

People and companies that become the best in their field don’t quit in the dip, rather they recognize it as an opportunity to break away from the herd. Knowing that things are much easier on the other side of the dip, they push through trials and establish themselves as the best. Having made it through the dip, established pros are in the enviable position of being able to call the shots.

Seth Godin (Image: Wikimedia Commons)

Godin says that dips can sometimes turn out to be cul-de-sacs (AKA the dead end job), in which there’s no upside to additional effort, or cliffs, in which business is looking up until you find yourself hurtling into a ravine. It takes foresight, self-awareness and coup d’oeil to recognize these trap patterns and differentiate them from the dips in which you can show your stuff.

And what do you do when you recognize a trap? Quit.

A lot of this book is about quitting decisively. Godin writes that most of the things we learn in school about life are wrong, especially the focus on being well-rounded (you need to get at least a B in all of your classes). In the free market, Godin implies, it’s ok for adults to get an A+ in one subject and drop all the others. To him, it’s admirable to be a quitter. The most successful people generally quit the things that don’t count (and they are very good about choosing what does count). I think this is a wise observation which most professionals should at least consider, even if the idea of quitting being valuable doesn’t sit well.

Yet, I have reservations about this book. Godin’s talent as a writer who straddles the line between business analysis and self-help is amply evident. This book is fun to read and its message is infectious. It gave me that warm “now I understand the world a bit better” feeling that characterizes the very best self-help books. To me that feeling is always a bit of a warning sign that I may be buying into too many assumptions without thinking through implications.

Questions arise: Should look out for ourselves first when quitting hurts others?  Is a relentless drive to be “the very best in the world” just egotism? By becoming the king of the hill, should you push newcomers back into the dip or pull them up behind you?

I think most of my reservations center around Godin’s choice to focus on being best. He’s on far firmer ground when he discusses things in terms of success. Of course, “the very best” sounds a lot better than successful, but successful is a far bigger and happier cosmos in which your star can shine.

Action items:

Buy the book

Read the blog the author created for the book.

The power of 10,000 steps

By Daniel Wilcock

“A journey of a thousand miles begins with a single step” — Lao Tzu

(Image: Wikimedia Commons)

In Japan, large numbers tend to be counted in units of 10,000.  America’s $100 bill loosely equals Japan’s 10,000-yen note. When buying a car, Japanese think in terms of how many “man,” or 10-000 yen notes, they will pay.

This tendency, combined with the nation’s love of gadgets, created a perfect opportunity in post-war, pre-bubble Japan to market a gizmo that counts paces.   A research paper in the journal Medicine & Science in Sports & Exercise recounts this history:

“A value of 10,000 steps is often associated with a healthful level of PA [physical activity] and is commonly promoted… This increasingly popular index can be traced to the 1960s when Japanese walking clubs embraced a pedometer manufacturer’s (Yamasa Corporation, Tokyo, Japan) nickname for their product: manpo-kei (literally translated, ‘‘ten thousand steps meter’’). Subsequently, Dr. Yoshiro Hatano studied typical steps per day of various lifestyles and established that 10,000 steps translated to approximately 300 kcal for an average middle-aged Japanese man.”

In recent years, 10,000 steps have become globally understood code words.  Millions of people have been exposed to the number as the ideal daily walking goal.  Yet making it to the 10,000 mark each day can be tough as for most adults.  It means about 5 miles as the crow flies.

But anyone who simply can’t cram such a lofty goal into their busy lives can take heart. The study referenced above concludes that 3,000—4,000 steps over a 30 minute period, when added to the number of steps normally taken in a day, lead to better health. This conclusion has been massively popularized by the YOU: On a Diet book by Michael Roizen and Mehmet Oz, which I’d recommend to anyone who wants to understand the scientific mechanics of weight gain and how to reverse it.

I’m convinced that adding almost any amount of extra walking to one’s routine adds a certain zest to the day.  I also think it helps maintain focus during working hours as walking can be a powerful form of meditation.  Walking without headphones, I believe that my mind begins to process and sort all of the riddles, both conscious and subconscious, that have been stacking up over time.  I also think many of our best heuristic approaches, our strategies for living well, come to us while we are out for a walk.

Finally, knowing how powerful the number 10,000 is in Japanese culture, I think this may be one of the nation’s least recognized but most powerful exports. Since westerners tend to think in units of one thousand, adding an extra zero provides a slightly higher target at which they can aim.

But no matter how high the aim, as Lao Tzu said: the journey begins with a single step.

Long strange trip: 8 marketing strategies the Grateful Dead deployed to lasting success

Image: Hubspot.com

By Daniel Wilcock

Marketing Lessons from the Grateful Dead: What Every Business Can Learn from the Most Iconic Band in History (2010, John Wiley & Sons).

Marketing and the Grateful Dead are  two nouns that don’t sit well in the same sentence—like sticking the positive poles of two magnets together. But do our stereotypes deceive us? Could the suits upstairs learn a lot from the longhairs and bearded iconoclasts of Uncle John’s Band?

Answering affirmatively are authors and lifelong Deadheads David Meerman Scott (who also wrote The New Rules of Marketing & PR) and Brian Halligan (Founder and CEO of Hubspot, a marketing software company).

In this enjoyable pocket-sized volume, they posit that the Grateful Dead were decades ahead of the curve in terms of how B2C businesses should relate to customers.  Their marketing-guru careers have been inspired by the Dead and their passion for both subjects shines through.

Jerry Garcia of the Grateful Dead (image: Wikimedia Commons)

The band’s actions, from their encouragement of bootleg recordings to their liberal brand licensing practices, foretold today’s social-media-driven world of sharing and consumer empowerment.

By raising a freak flag for millions to follow, they pioneered “inbound” marketing (Hubspot’s specialty), where customers and clients drive themselves to the information they seek.

Throughout the book, the authors use examples of current companies such as New Belgium Brewing and MySQL that demonstrate how such actions can lead to real success in today’s business world.

Meerman Scott and Halligan keep things light and entertaining . They team up with longtime Grateful Dead artist Richard Biffle, who contributes some nifty illustrations throughout.  You can sense the authors’ internet design expertise spilling over into this neatly designed little text.

On Amazon.com, the book ranked #77,450 in books on Oct. 30, 2012. Out of 38 customer reviews, it averaged four out of five stars. The biggest beef of negative reviewers is that, in their opinion, the ideas presented are a simplistic rehash of another writer, business professor Barry Barnes, who one year later published his own book on the same topic, Everything I Know About Business I Learned from the Grateful Dead: The Ten Most Innovative Lessons from a Long, Strange Trip.

Some folks think that Barnes is the true expert on this subject and that Meerman Scott and Halligan scooped him by quickly putting out a book first. Since I’ve never read Barnes, I don’t know where I stand on that issue. But the discussion does make me want to read Barnes’s book too.

The greatest value of Meerman Scott and Halligan’s book can be found in the counter-intuitive strategies it presents. Below is my distillation of 8 of these strategies, which are exemplified by the Dead’s long  strange career:

1)      Be yourself and do what you love – by following their own “Dark Star” and indulging their musical (and other) passions, fans came to view the band as not only talented, but also authentic and honest.

2)      Create and nurture a community –  Deadheads often use the word “kind.”  The band encouraged a massive following by putting fans first in many ways. That community soon took on a life – and a momentum – of its own, following the band endlessly around the world.

Grateful Dead fans at Red Rocks (image: Wikimedia Commons)

3)      Don’t control people – one of the best examples of how fans came first was the band’s attitude toward bootleg recording at concerts. Their openness to this practice turned casual fans into evangelists, a precedent for success in today’s file-sharing social media marketplace.

4)      Judge not – this openness extended to the ‘everyone’s welcome’ vibe at their concerts. Eccentric and straight-laced music lovers alike could feel at home (as long as they didn’t mind a bit of wafting smoke).

5)      Don’t rip people off, they are your best customers – The Dead set up their own ticketing system to help ensure that their fans would not be price gouged by profit-driven companies. This gave them a mysterious degree of control to reward the biggest fans (who would mail to the band postal money orders in elaborately decorated envelopes) the best seats. This  built intense loyalty.

6)      Let others riff on your brand  – liberal licensing agreements with vendors using their artwork to sell merchandise at concerts allowed a diverse community of artists to strengthen, refine and redefine the brand. The authors argue that today’s companies should encourage their employees to do the same.

7)      Ride the technological wave – The Grateful Dead were famous for their custom-engineered sound systems, mixing-board recordings and encouragement of sharing. As a result, their business transitioned seamlessly to the web and then web 2.0.

8)      Remain open to all kinds of innovation – the living band members still perform together and are not afraid of pushing the envelope — from creating cutting edge tour apps to selling concert goers live recordings of the performance they just heard only minutes after the show.

If you’d like to experience Meerman Scott and Halligan’s message directly, here are some action items:

Buy the book.

Watch the author’s free webinar on Hubspot (registration required).

Fellow Georgetown University students: Read a digital copy of the book for free online through Georgetown’s library website.