25 Mar RadReads n°164
This week: Lifestyle creep and personal finance, the trouble with optionality, profiles on Tim Scott, Marie Kondo, SZA, and Whitney Tilson, Who are Logan and Jake Paul
This week’s postscript:Don’t confuse options with safety nets
You may remember Harvard Professor Mihir Desai from his similarly named piece (and one of the most read stories ever on RadReads). He wrote The Wisdom of Finance where tries to demystify and rehabilitate finance. He uses uses stories from George Orwell to Kanye West to explain concepts such as options, leverage, and herd behavior, then extrapolates them into broader life lessons. For example, blindly following society’s expectations is a form of the principal-agent problem. And how professionals love “collecting options,” but forget that for options to work, you need to take risks. We cover Wall Street’s culture of fear, his “a-hole theory of finance,” and the industry’s lack of diversity. We talk more broadly about higher education’s “crisis moment”and if credentialing is important in the face of technological innovation (such as cryptocurrencies and social), and why the “free-agent economy” may be overhyped. (Some more notes on optionality.)
5 mins | Peter Lazaroff | HT: @abnormalreturns
During my interview with longtime hedge fund investor Ted Seides he shared that the key to wealth was “not how much money you make, but how much money you spend.” I’d never heard it expressed that way but it’s something that I had seen and experienced during my finance career. This resetting of baseline expenses isn’t a bad thing – but there’s a fine line where consumption become blind, or even worse, motivated by keeping up with the Jones’. And then it hardens. This gets nasty in high growth industries, particularly when the growth stops. This article also introduced me to the interesting concept of reverse budgeting.
5 mins | Aeon | HT: @azeem
I love digging into new and complicated topics. But it’s impossible (and not prudent) to be an expert in many things. Take climate change, for instance. It would take me decades to develop the knowledge base to truly understand both sides of the issue. So instead, I must rely on other experts and gatekeepers. Hence emerges the new skill of “critical appraisals [which] should be directed not at the content of information but rather at the social network of relations that has shaped that content and given it a certain deserved or undeserved ‘rank’ in our system of knowledge.” The author argues that this new competence would constitute a “second-order epistemology, preparing us to question and assess the reputation of an information source.”
4 Minutes | The New York Times | HT: @emikolawole
I rarely read the NYT’s Modern Love section but this piece came highly recommended. Just ruminate on the title before you start reading. It’s fantastic, raw, and viscerally human contemplation on love, marriage, and uncertainty. And there’s the silence in a relationship that every single one of us has experienced at some point. I got to speak to the writer (ahem, upcoming pod guest) and naively asked “Modern Love is fiction, right?” … ummm…
28 Minutes |YouTube | HT: @eugenewei
I didn’t know a dang thing about Logan Paul until he made the front page of the WSJ (for some really messed up videos). It’s easy to dismiss these vloggers as fads or inconsequential pop culture icons. But that’s a naive view, as they are upending media, ecommerce, advertising, and activism (i.e. today’s marches). And if you’re a Gen Xer, it’s not too dissimilar to Tom Green, Jackass, or Puck from the Real World. It’s all about the MOOK – Masters of Kool. This video is so weird (both format and ideas), but after almost stopping within two minutes, I could not stop watching until the very end.
Below the Fold
🇺🇸 God Made Me Black on Purpose:Tim Scott (32 mins, Politico Magazine): What responsibility does the only black republican in the senate have in this administration?.
🏠 How I Get It Done: Marie Kondo (7 mins, The Cut): The decluttering expert shares her workflow techniques.
💸 Whitney Tilson: The last days of Kase Capital (18 mins, Alpha): He’s done with the hedge fund industry and now relishing his new role as teacher (for hedge fund managers).
🎶 SZA thinks she can do better (22 mins, The Fader): How SZA brushes off criticism and deals with trolls.
FROM THE #RADFAM
✏ How to be a better writer (2 mins): Our favorite resources on this leverage-creating skill.
🤑 Why are so many successful people scared of being broke (4 mins): Once again, risk is such a tricky psychological issue to navigate
LAST WEEK’S MOST READ
☑ 17 apps and Chrome extensions to boost your productivity and focus (4 mins): In a Cambridge Analytica world, these tools (esp the News Feed Eradicator) are even more important!
Ready for a personal finance tune-up? Download our most popular Guide to Lifestyle Creep.