Optionality: How to Survive and Thrive in a Volatile World

hating things is not a personality, and will not make for a pleasant bubble. I like Caplan's heuristic, which is to build your friendships on shared passions, rather than joint contempt.

In Fig. 4.5, we see what happens when three friends with identical portfolios retire in quick succession: Alice retires in 1973, Bob retires in 1974, and Carol retires in 1975.

passion is something that emerges over time as a consequence of cycles of exploration and exploitation.

Anyone who takes on more risk than they’re comfortable with is much more likely to make bad decisions. Investors often panic and sell out when the market enters a downturn, ensuring that they not only take a haircut, but miss out on all the sweet, sweet gains during the recovery.

The second rule of thumb is that when there are no consequences for being wrong, or there is no ‘wrong’, don’t be embarrassed to follow the crowd. The reason we dance in unison, or sing together, or march in line, or wear uniform-like fashions, or swap in-jokes and memes, is that it feels pretty great to be a part of the hivemind.

The meaning of life is something like: To trade the constraints imposed upon you by others, for constraints you impose upon yourself. If you fail to design your own choice architecture, one will be assigned to you.

The more of the details of our daily life we can hand over to the effortless custody of automatism, the more our higher powers of mind will be set free for their own proper work. William James

Once you earn enough to comfortably pay the bills, non-financial factors such as good health, relationships, and a sense of purpose become far more important than money. It’s no coincidence that these areas of life also tend to be most resistant to hedonic adaptation.

When the market crashes, it falls for more than a year on average, and loses over 30 per cent of its value. And that’s the average. Sometimes, it’s a lot worse. When this has happened in the past, many otherwise smart people have panicked and sold out with the worst possible timing—including some of those who preach the buy-and-hold approach! So yo