分類彙整：書評

What I’ve learned from the book “The Most Important Thing” by Howard Marks

the most important thing: uncommon sense for the thoughtful investor
the most important thing: uncommon sense for the thoughtful investor

The author, Howard Marks, is known in the investment community for his “Oaktree memos” to clients which detail investment strategies and insight into the economy.

Quotes From The Most Important Thing:

  • What distinguish successful investors from normal ones is how they behave in circumstances to which their style is not mostly well-matched.
  • Avert mistakes that are usually led by other investors’ lack of caution, laborious effort, and the stock’s swift pendulum move.
  • Top investors sometimes misjudge things; however, they do right most of the time.
  • People often think they could predict the future, assuming the world can be modeled by merely using sequential steps. Fewer people know what lies ahead, but we could know where we are by observing the people around us. Therefore, devoting your time to learn things others don’t.
  • When speaking to risk management, we avoid doing the wrong things rather than doing the right things.
  • The well-known quote “Don’t put all your eggs in the same basket” does not imply that holding different elements are better. Diversification works only if they react differently to a given circumstance.
  • It takes time to prove your decision are right.
  • Resisting excessive profits is an imperative attribute for a lot of successful investors.
  • Critical thinking must overcome emotional feelings.
  • Something about contrarianism: Contrarianism can help prevent risks, but it doesn’t make a profit all of the time. Standing against the crowds is not enough. You must  figure out why the crowd is mistaken based on reasons and make a profit from the mistakes the crowd is making.
  • It can be dangerous to use leverage to buy more assets that provide low returns and narrow risk spreads.

Book review of The Essential Retirement Guide

Book review of The Essential Retirement Guide
The Essential Retirement Guide

This is a financial planning book focused on middle-income or upper-income workers. Low-income people, defined here as at the bottom of 30 percent or so of the workforce, definitely need retirement target income exceeding 70 percent of their final pay. They’ve already been well taken care of with pensions from government programs. 

The keynote of The Essential Retirement Guide:

  1. Financial plans must be taken before we are getting older.

When coming to the financial abilities, people in their 80s were generally more confident than those in their 60s, even though the older ones scored barely half compared to the highest. While older test subjects scored quite poorly by any absolute or relative measure, their confidence in their financial abilities was actually higher than that of their younger counterparts. Preemptive measures need to be taken. We should handle this while we are still young enough to use whatever insights we have at our disposal.

2. Your financial strategy should be simple. 

Keeping your financial strategy simple may not be an optimal choice, but it is better than varying the mix for the wrong reasons. There is no correlation between high fees and high returns.

3.Exposing yourself unduly to downside risks is irrational if the only upside is to produce a windfall gain that you do not really need.

4.Long-term care insurance is not an effective choice

Insurance is most effective when 

  • The potential losses from which you are seeking protection are easily understood and quantifiable. 
  • The cost of the insurance seems reasonable relative to the coverage.
  • Any losses over a given threshold would be fully reimbursed by the insurance

However, Long-term care insurance  doesn’t meet the criteria. 

5. Don’t overspend

In a consumerist society, our reach tends to beyond our grasp. If you make $80,000 a year, pretend as if it were just $70,000 and save the rest. 

In summary, the author, Frederick Vettese, specializes in actuary and has spent his whole career in retirement consulting and workplace pension plans. He provides a lot of insights about retirement planning using his actuarial expertise. In addition, he uses a lot of contextual scenarios in explaining concepts such as wealth target and workplace pension plans. It’s a highly recommended book.

Deep Living(book review of Digital Minimalism)

Digital Minimalism: Choosing a Focused Life in a Noisy World

Will spend more time on social media make us live a meaningful life?
If not, we should better off considering to use it seriously.

The best-selling author of “Deep Work” proposes a philosophy of digital minimalism. Simplicity gives us the ability to think clearly in a focused way and select activities we value most in a noisy world. This kind of living style is not a whole new concept which has existed for a long time.

There’re three core principles behind the idea of digital minimalism.

  1. More could be less.
  2. Effectiveness is imperative.
  3. To live deliberately.

In the 19th century, Henry Thoreau made an experiment of making a living by cultivating the farms. The research showed he could live what he wished with fewer desires even the earnings were below the average. However, Henry Thoreau observed that his neighbor farmers gained little profit that could not help them escape their poor condition.

The same situation occurs today. While we think we could acquire more values from using lovely mobile application, we waste more time and attention compared to the amount we receive. Could we select tools intentionally and optimize our digital life, you will reach more meaning life. This book contains much practical advice everyone could implement.