5 of the best books I read in 2019

 

1. Range – David Epstein.

Range is my 2019 winner. It was the best book I read last year, and one of my favorite books related to personal development ever. By range, Epstein refers to a set of broad experiences, inputs, interests, experiments, etc. In a world that values specialization and highlights the ‘10,000-hour rule’ (which says you must dedicate 10,000 hours to something to achieve mastery), Epstein argues that hyper-focus is actually not the path to success, far more often those who have range win. Epstein encourages us to pursue hobbies and interests, to be unafraid of making a change, to never feel behind, and not because life is more fun that way, it’s actually a more effective way to live. I can’t recommend it highly enough, read Range.

2. Atomic Habits – James Clear.

There are few personal development/self-improvement books that I consider must-read, but Atomic Habits is one of them. James Clear notes that winners and losers have the same goals, what sets them apart is their systems (habits). Humans operate by default and we relentlessly fail at improving ourselves because we fail to address our default behaviors. Goals are fine, they help give direction, but only our systems can take us where we want to go. Clear guides us through how habits operate and how to make meaningful and lasting changes by changing our defaults. It’s a fascinating and fun read, and one that has had a profound impact on how I think about behavior and pursue change.

3. Factfulness – Hans Rosling.

Hans Rosling made it his life’s mission to reinform commonly help misconceptions about our world. He penned Factfulness as he battled the cancer which would eventually take his life. Through ten chapters he addresses ten fascinating topics that we routinely misunderstand (world population, poverty, bias, etc.). He emphasizes the fact that the world can sometimes be bad, while still being significantly better than it was before. By offering clarity, thoughtfulness, and objective facts, Rosling helps us to see things they way they are. It’s occasionally mind-bending, which is a good thing, and always enjoyable.

4. Born a Crime – Trevor Noah.

Born a Crime is an autobiography. Trevor Noah takes us through his wild, funny, and unlikely childhood in one of the more engaging books I’ve ever read. It’s at times hilarious (I literally laughed out loud more than once), sentimental (his relationship with his mother is remarkable), thoughtful (interacting with apartheid in South Africa), and ultimately a completely rewarding read.

5. Billion Dollar Whale – Tom Wright.

Billion Dollar Whale consistently made my jaw drop as I read it. The story is absurd, unbelievable, scandalous, incredible, and completely true! It’s about a young Malaysian fancier/businessman (Jho Low) who cons billions of dollars from the Malaysian government in a stream of devious business deals and spends it on some of the most extravagant partying the world has ever seen. The story involves Hollywood actors and actresses, world-leading finance companies, even the president of the United States. Another interesting part of this story (as if it wasn’t interesting enough) is that it hasn’t concluded yet. Jho Low is currently a wanted man hiding out, most believe, in China, but is certainly still active. In fact, his team of lawyers aggressively campaigned to ban Billion Dollar Whale from being sold, and succeeded to keep the book off British bookshelves for a year! Truly, a remarkable read.

3 Questions to Ask your Financial Advisor

Your investment advisor is a very important person. You rely on this person to help you navigate your lifelong financial journey, and hopefully guide you to a successful outcome. There are obvious characteristics we want in an advisor: integrity, honesty, diligence, etc., all good things. But there are other, almost equally important things most of take for granted in an advisor: What’s their investment strategy? What’s their view on the market? How do they expect to help you capture returns? These are questions we don’t tend to ask, after all, they’re the professionals, but the answers to these questions will have a profound impact on your future.

  1. Do you think the market is efficient or not?

This is a simple question with massive implications. Basically, you’re asking whether or not your advisor thinks he/she can consistently get you better returns than the market by actively buying and selling stocks (stock picking), moving in and out of different market sectors (market timing), and using funds with the best recent return history (track-record investing). If the market is not efficient then these are valid exercises. An inefficient market means that stock prices could be underpriced or overpriced and assumes that smart advisors should be able to figure out which stocks are which and pick the ones that will outperform all of the others. Unfortunately, advisors don’t consistently beat the market, they can’t consistently pick the winners. The results of choosing stocks and timing the market have been overwhelmingly negative and research has resoundingly supported the assertion that the market is actually efficient (Efficient Market Hypothesis). An efficient market means a stock is never overpriced or underpriced, its current price is always the best indication of its current value. If the market is efficient, that means it’s impossible for anyone to consistently predict or beat it, in fact, attempts to do so are more like gambling than investing. Instead of trying to outperform the market, the goal should be to own the whole of it as efficiently as possible. This brings us to the next question.

2. What Asset Classes Do I Own?

In order to efficiently own the market, you need broad diversification. That means you want to own many companies, but more importantly, you want to own many companies in many different asset classes (large companies, small companies, value companies, international companies, etc.). When you ask, most advisors are going to tell you that the large majority of your money is in Large US Growth companies (S&P 500), which is unfortunate because the Large US Growth company asset class is one of the lowest returning asset classes in history. That’s not to say the asset class is a bad investment, it’s great for diversification, but it’s certainly not where you want most of your money. Small and Value asset classes return better over time, so you want to ensure you’re broadly and significantly invested in those asset classes.

3. How will you help me capture returns?

There are three important components to successfully capturing returns: 1) diversify, 2) rebalance, 3) remain disciplined. Diversification (1) means you’ll have ownership in companies of all different shapes and sizes all over the world. Good diversification does two things for an investor: it reduces risk/volatility and increases return. Since we don’t know which sectors or stocks will do best this year, we own all of them, and then we rebalance, which brings us to point 2. The goal in rebalancing (2) is to keep an ideal percentage of each of the different asset classes in your portfolio. Since stocks and asset classes don’t all move the same way every year when one asset class is up and another is down your portfolio percentages get out of whack. That’s where rebalancing comes in. In order to rebalance your portfolio, your advisor will sell some of the asset class that went up and buy some of the asset class that went down, bringing the percentages back into alignment. This must happen systematically, for example, it could be every quarter, in order for it to be effective. The end result is that you’re automatically selling high and buying low. There’s no gut instinct, no guessing, no market timing, it’s committed disciplined rebalancing, which brings us to point 3. Discipline (3) isn’t something that comes naturally to most of us, but it’s extremely important in capturing returns and planning for your future. There’s a behavior element that all of this hinges on, if an investor doesn’t have the discipline to ride out the ups and downs in the market they can’t be a successful investor. The average investor switches advisors and funds and strategies every 3.5 years, that’s a losing game. So how will your investor help you stay disciplined and on track to capture those returns and achieve your goals?

Since I’m writing this and I’m an advisor, you probably assume I’ve got answers to these questions, your assumption is correct. But this isn’t just a sales pitch, good answers to these questions are critical for successful investing, and far too many people simply have no idea what their advisor is doing for them, whether good or bad. So ask a few questions!