274: 10 Questions to Master Successful Investing

Welcome to Money for the Rest of Us. This is a personal finance show on money, how it works, how to invest it, and how to live without worrying about it. I’m your host David Stein. Today is episode 274. It’s titled, “10 Questions to Master Successful Investing.”

Just over 2 years ago, I received an email from Paul Lucas of the literary agency Janklow and Nesbit. He had been listening to my podcast for 6 months or so, was a fan. His father used to be a Wall Street analyst, so Paul mentioned that he found many of the topics on the show both familiar and engaging. He wrote, “One of my dreams is to represent a useful book that could live forever, a modern version of The Only Investment Guide You’ll Ever Need. I was wondering if you were interested in pursuing a book and if it is something you’d like to discuss with me?”

The Only Investment Guide You’ll Ever Need came out in 1978. It was written by Andrew Tobias. It’s a good book, but it’s 40 years old. It’s a classic investment book. So this idea of a useful book that could live on for decades, I admit, it piqued my interest. So, had some calls with Paul, and I decided to write a book.

The right book at the right time

I was reminded recently how the right book at the right time can change your life. My daughter and I were recently in Ohio to visit family and we attended my 40th-year reunion for my 8th grade graduating class from St. Margaret Mary in North College Hill, OH. One of my friends was there, and I don’t think I have seen him, maybe since I left school. Because most of my friends went to private, Catholic high schools and I went to public school. He might have been at the 10th year reunion, but as soon as I saw him, I thought of the sled.

My mother had a sled growing up. It was a Flexible Flyer. We used it as kids. When I was 10 or 11 it was snowing, I went out with my friends, we’re going sledding. I happened to leave the sled at my friend’s house in his storage shed. I didn’t think about it for several weeks, and then it was a month. And by then it was spring, there was no snow. And I was embarrassed to go walk the 3 blocks to his house to get the sled. Because I didn’t want anyone in my neighborhood watching me walk down the road in spring with a sled. Now that’s pretty pathetic, but that was my mindset as a 10 or 11-year-old.

But then, my mom began to sell real estate. And all these books started coming into my life. Classic books, they had been around for decades. And I read them. Think and Grow Rich by Napoleon Hill, came out in 1937. How to Win Friends and Influence People, Dale Carnegie, 1936. Richest Man in Babylon, G.S. Clason, 1926. The Magic of Thinking Big came out in the ’50s. The Greatest Salesman in the World, Og Mandino, 1968. A newer one, Zig Ziglar, See You at the Top. We had tapes about Zig Ziglar. And we also had tapes from Steven R. Covey, who hadn’t published 7 Habits of Highly Effective People, but he had tapes about it. And he actually came to Cincinnati a few times when I was in my teens, or early teens, and had a profound influence.

Those books changed my mindset. I don’t even remember what most of them were about. Zig Ziglar said, “don’t kick the cat,” I do remember that. But it instilled in me a greater sense of confidence and a greater understanding, to some extent, of money and how you network to earn money. I haven’t touched those books since. I sort of overindulged on self-help sales training books and tapes as a 12-14-year-old. So much so, I just don’t partake anymore.

Writing vs. speaking

But could an investment book be a classic like that? And how would I go about writing such a book? How would it be different from a podcast?

I’m reading a fascinating book right now by Joe Moran titled First You Write a Sentence. It’s a book on writing. Here’s a quote, “Writing exists, not to be wasted on the air like speech, but to be committed to permanence.” Now that doesn’t say a whole lot about podcasts. Lots of speech committed to air, but certainly, at least in my case, well-crafted speech, given the number of hours I put into each episode.

Another quote, Kurt Vonnegut, novelist. “Writing allows the mediocre who are patient and industrious to revise their stupidity to edit themselves into something like intelligence.” Writing. It’s carving, it’s crafting. Permanence. It’s timeless. One sentence at a time. And that’s how a book differs from a podcast. A book can live on for many, many years.

Now many of you go back and listen to older episodes of the show, but the idea of a book on how to invest. People ask me all the time, “Do you have any books on how to invest that you recommend?” And there are a lot of great investing books out there and personal finance books  I’ve mentioned a lot of them on my show. But they’re not how I, necessarily, approach investing. And they don’t teach the principles that I believe are the foundation for how we invest as portfolio managers.

You and I are portfolio managers. And a portfolio manager compares different investment opportunities and allocates their money among them. Many of the investment books are very niche, in terms of focusing on real estate or picking individual stocks or cryptocurrencies. But in analyzing the market, there really wasn’t a book that I looked at and said, “Well should you be investing in real estate or cryptocurrency or value stocks? And how do you decide that?”

Back in episode 203, we covered Annie Duke’s book. She is a former professional poker player and decision-making strategist. Her book is Thinking in Bets. She wrote, “what makes a decision great is not that it has a great outcome. A great decision is the result of a good process.” A great investment decision isn’t because it has a great outcome, it is the result of a good investment decision process, an investment philosophy. And that’s what I wanted to put in a book. An investing framework. Something to help you decide where to invest and how to invest.

Annie Duke—I asked her if she would endorse my book. She said she would consider it, but she had to read every single page. So I sent her the draft, she read it. She liked it and she endorsed it. On the front cover it says, “This is a high impact framework for making any decision, not just investing.”

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