No Worries: How to live a stress free financial life

The purpose of volatility is to make people make stupid decisions.

They certainly wouldn’t tip someone 50% on purpose, because they see money as a zero-sum game. If you get less, then I get more. Their sole purpose in life is to accumulate as much wealth as possible, one nickel at a time, until the end, and—then what? What was all that effort for? What was the purpose? They work and save, and work and save, and ne

In fact, all of these things require effort: getting a raise; working more hours; getting a new job. I can tell you one thing for certain—money is not going to simply come to you. You have to go out and get it. You have to take action.

If you invest in an index, you get the returns of the index, which is very good; but you also get the volatility of the index, which is bad. If you invest in the stock market, as represented by a broad market index fund, you will experience all the volatility of the stock market—the ups and downs, the highs and lows. And so will your emotions.

So the ideal portfolio should have stocks, bonds, cash, gold, and real estate. In what proportions? Well, why not keep it simple and give 20% to each? 20% stocks 20% bonds 20% cash 20% gold 20% real estate This is what I call the Awesome Portfolio.

Remember, volatility is the enemy; the purpose of volatility is to make people make stupid decisions. Volatility is also the enemy of your lizard brain. It stresses you out, and makes you feel anxious.

What I am in search of is scalable businesses. An internet newsletter is a scalable business. It takes the same effort to write one copy as it does a million copies. The business can grow rapidly, without much increase in overhead. If you look at all the really profitable businesses out there, they are all scalable, weightless businesses. “Weightle

An asset that goes up 4% in straight-line fashion is potentially more valuable than an asset that goes up 8% with lots of volatility. Why? Because we’re human beings and we have emotions, and we are all hard-wired to be terrible investors.

And the business has suffered. They are no longer dynamic, risk-taking entities. In the 2000s, they would spend money on technology, payroll, and client entertainment—because they always knew they would make more. Now, no more holiday parties. Make sure you work in an industry that still has holiday parties.