Jason’s review of The Algebra of Wealth: A Simple Formula for Financial Security > Likes and Comments
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Any other book recommendations?
I think you missed the point entirely. As you say yourself, this book is probably not for 50+ year olds who are experienced with investing and business. He is quite specific about this book being meant for young people seeking to establish a moral and mental framework with which to approach life.
As for his ignoring of alternative investing strategies that are common today; it is once again, not the point of this book. This book is designed to help people identify their interests and careers they might want to explore. Once they have discovered that career, they can begin exploring all of the alternatives that you mentioned. He used the classic capital vehicles because they are the classics and good for inexperienced people to begin their investing journey by understanding.
I appreciate your enthusiasm but I just think you missed the point.
Except what buffet did was buy whole companies that he thought he could create value in basically.
Most people cannot do that.
Ahoy, apologies for the tardy reply. All I can add is what worked for *me*; I've done extremely well financially. I'm nothing special, anyone in the US can do it (I wouldn't know compatible this is with, say, Australia).
But I bring you my own financial wisdom of the ages... or at least of a few really smart people who wrote some books.
First things first: if "Rich Dad, Poor Dad" were a meal, it'd be a 12-course Michelin-starred feast. It's basically 95% of the financial nutrition you need. For dessert, sprinkle on some "Thinking in Bets" by Annie Duke. It's like the cherry on top of your money sundae.
Now, buckle up, buttercup! Here's the foolproof, guaranteed-to-work-60%-of-the-time-every-time guide to wealth:
* Diversify like you're planning outfits for a month-long vacation: This shields you from those pesky "Black Swans" Nassim Nicholas Taleb warns about. (No, not the movie with Natalie Portman – the unexpected events that can turn your finances into a swan dive.)
* Treat wealth-building like fishing, minus the smell: Cast your line (product or service) into the pond (market). No bites? Change your bait or find a new fishing spot. Rinse & Repeat until you're reeling in cash like it's the catch of the day. Have no money? We have good friends who are worth +/- $500m (1/2 a billion) and it started with a $20 used lawnmower and flyers in his neighborhood that he'd cut people's lawns. Taking the money from that operation and re-investing it (buying other lawnmowing businesses) and growing his own operation led him to require an office so he bought the building (on credit but has since paid it off) and along the way learned how to make money in commercial real estate. They are also diversified in stocks, residential real estate, etc to provide for upswings when their own businesses are in downswings (most investments are counter-cyclical, but it's too long for a Goodreads post to explain why this is - it's technical but it's not required for wealth building). Warren Buffett did the same thing; he kept re-investing his money. Ignore where he invested it for a second. Bershire Hathaway which is GEICO, Dairy Queen, See's Candies (and others) was simply where he personally found that the fish were biting. You usually have to test it a few times before you end up on one you'll like. This is documented well in Felix Dennis's books on Wealth.
* Use legal protections like you're bubble-wrapping a crystal vase: Set up an LLC or corporation. It's like a financial hazmat suit for when life decides to throw another pandemic-shaped curveball at your face.
* Double down on what works: Found the perfect bait and spot? Fantastic! Now, dump more resources into it than a caffeine addict at a coffee convention.
* Diversify: The Sequel – This Time, It's Personal: Spread your investments across different areas like you're buttering toast. A bit here, a bit there. When your business is doing the limbo (how low can you go?), your real estate or stocks might be doing the cha-cha slide to the bank.
Remember, holding stocks and sharking options is just one french fry in the Happy Meal of wealth. To supersize your fortune, you need to go all in – we're talking Big Mac, large fries, and a McFlurry (if the ice cream machine isn't broken, which it always is, but I digress). Basically, start small keep re-investing your profits. The author of this book explains compounding interest but is too narrow in his prescription. Compounding (carrying profit into more investments) is a power law that's at work here.
So there you have it, folks! Follow this advice, and you'll be well on your way to building a fortune so vast, you'll need a GPS to find your way around your money vault. Just don't forget us little people when you're sipping champagne on your private yacht!
P.S. Results may vary. Side effects may include sudden urges to buy monocles, an inexplicable desire to use "summer" as a verb, and the ability to make it rain on command. Consult your financial advisor if symptoms persist for more than four hours.
P.P.S. Now, I know what you're thinking: "Sure, buddy, next you'll tell me you invented Post-it notes." Well, hold onto your calculators, because here's a little peek behind the financial curtain: Picture this: A nearly 50-year-old guy (that's me) who's been financially independent for the last 15 years. No, I didn't win the lottery or find a genie in a bottle. I just followed the recipe above and whipped up a financial feast.
My family's portfolio looks like a game of Monopoly gone wild:
We've got houses (but no little green plastic ones), we've nabbed some prime commercial real estate (sorry, no Boardwalk, but close), we're running "absentee" businesses (which is a fancy way of saying I can sip piña coladas while the cash rolls in) and yes, we've got stocks (because who doesn't love a good rollercoaster ride?)
Now, I'm not one to brag, but since we're all friends here, a quick Google search might tell you that my net worth is about 8.7 times that of the author of this book. Not too shabby for a guy who still occasionally forgets where he put his car keys.
But here's the kicker: I'm not special. I didn't have a secret map to a buried treasure. I just took the advice I shared above, stirred in a heap of persistence, and voilà! Financial freedom stew.
So, there you have it. Not just theoretical mumbo-jumbo, but real-world, tried-and-tested, "I've-got-the-bank-statements-to-prove-it" advice. Now, if you'll excuse me, I need to go count my monocle collection.
Reader wrote: "I think you missed the point entirely. As you say yourself, this book is probably not for 50+ year olds who are experienced with investing and business. He is quite specific about this book being m..."
Let's agree to disagree - if it's meant for teenagers to early college kids, it wouldn't be in the Personal Finance section of Barnes and Noble, it'd be in the Young Adult section.
If it's a "Young Adult" book as you suggest, it's mis-marketed, and they took $25 and 5 hours from me that I'll never get back. In terms of scale, if that was 100x larger ($25,000 and 500 hours), it'd qualify for a Superior Court suit against the author, the publisher and everyone in between (and the payout is up to 100x on marketing "fluffery" cases so that could be a $2.5m payout).
Reader wrote: "Any other book recommendations?"
Ah, my fellow knowledge-seeker! You've stumbled upon the holy grail of questions: "Got any book recommendations?" Well, hunker down, because I'm about to take you on a literary journey that'll make your bookshelf weep with joy and your wallet sing with potential.
First things first: reading is like eating spinach. Some people love it, some people tolerate it, and some people would rather watch paint dry. But fear not! There's a flavor for every palate in this financial feast of words.
Now, full disclosure: I'm what you might call a "reading addict." I devour books like a hungry hippo at an all-you-can-eat buffet, chomping through 6-8 hours of literary goodness each day. It's mostly non-fiction, with a heavy dose of business and finance, because apparently, I enjoy torturing myself with spreadsheets and economic theories.
But here's the deal: not all books are created equal. Some are pure gold, some are fool's gold, and some are just... well, let's just say they're better off as doorstops. (Looking at you, Algebra of Wealth!)
So, without further ado, let me present to you the crème de la crème of financial wisdom:
"Rich Dad, Poor Dad" - The undisputed heavyweight champion of wealth-building books. It's like the Bible, but instead of turning water into wine, it turns your pocket change into a fortune.
"The E-Myth Revisited" by Michael Gerber - For when you want to turn your lemonade stand into the next Coca-Cola empire.
"The Innovator's Dilemma" by Clay Christensen - Because sometimes, you need to break things to make things. (Innovation, not vandalism. I cannot stress this enough.)
Anything by Felix Dennis or Ray Dalio - These guys are like the Yodas of finance, minus the weird syntax and green skin.
The Incerto series by Nassim Nicholas Taleb - Including "The Black Swan," "Antifragile," and "Skin in the Game." Warning: May cause spontaneous enlightenment and an irresistible urge to use big words at dinner parties.
Books by Annie Duke - Because sometimes, life is just a high-stakes poker game, and you need to know when to hold 'em and when to fold 'em.
Now, are these books absolutely necessary? Well, is whipped cream necessary on a sundae? Technically no, but it sure makes the experience a whole lot sweeter. These literary gems will help you see opportunities where others see obstacles, turn lemons into lemonade, and maybe even figure out why the chicken really crossed the road. (Spoiler alert: to diversify its investment portfolio.)
Remember, my book-loving friend, knowledge is power. And in this case, knowledge is also money. So grab a book, find a comfy chair, and get ready to read your way to riches. Just don't forget to actually implement what you learn, or you'll end up with a very impressive library and a very unimpressive bank account.
Happy reading, and may the financial force be with you!
Shira wrote: "Except what buffet did was buy whole companies that he thought he could create value in basically.
Most people cannot do that."
Ah, the classic "You can't do that, only Warren Buffett can" response. It's like saying "You can't slam dunk, only Michael Jordan can." In the United States, from my direct experience starting life as a very poor kid in a community of underachievers, anyone can do anything.
Some truth bombs that'll make your piggy bank squeal with delight: The American Dream is simply Choose Your Own Financial Adventure. Here in the land of the free and the home of the brave, we're lucky yet we don't like saying it (we complain more than we're patriotic).
But I think a lot of dismay comes from the fact that while anyone can do anything, anyone can't do everything. It's like a buffet (pun intended) - you can't eat all the dishes, but you can stuff yourself silly with your favorites.
Want to build wealth? Great! Want to bench press a small car? Awesome! Fancy collecting enough stamps to wallpaper the Pentagon? You do you, my friend! But remember, each of these pursuits requires the holy trinity of success:
Patience (Rome wasn't built in a day, and neither was Buffett's fortune)
Persistence (Keep going, even when your bank account looks at you disapprovingly)
Perpetual learning (Because knowledge is power, and power is money... or something like that)
The Buffett Blueprint: It's Not Rocket Science (Thank Goodness)
Now, let's talk about our boy Warren. His path to wealth is about as secret as the recipe for water. Here's the Buffett method in a nutshell:
Find a company on life support (Berkshire Hathaway, formerly known for making very fashionable potato sacks)
Use it to reverse-merge with other companies
Leverage like you're trying to move the Earth (Hello, GEICO!)
Rinse and repeat until you're richer than Croesus
See? Easy peasy lemon squeezy! You could do this too, minus the charming Nebraskan accent. Leverage: The Financial Equivalent of Performance-Enhancing Drugs (But Legal!) Here's where it gets juicy. Leverage is like financial steroids - it beefs up your returns faster than you can say "compound interest."
Imagine this:
S&P 500 returns 8% on average
You put half your portfolio on margin (fancy word for "borrowed money")
Boom! You're now making 12% (8% + 4%)
Next year? Even more, because you can borrow against your gains
For the advanced class:
Hit the $100,000 mark
Get a "Portfolio Margin Account" (sounds fancy, right?)
Take an initial 85% margin
Invest in an S&P ETF like VOO
Watch your 8% turn into a whopping 15% in the first year
But wait, there's more! Real estate and small/medium businesses can compound even faster. We're talking wealth creation at Mach 3 speeds here!
The Million-Dollar Question: When Do You Want to Be Rich?
Here's the real kicker: Do you want to be wealthy when you're so old that you are only excited about new denture cream? Or do you want to enjoy your riches while you still have the energy to jet ski and the eyesight to appreciate it?
You could always go the Buffett route - amass a fortune that would make Scrooge McDuck blush, all while living like a college student and eating McDonald's for breakfast. But remember, life is short, and you can't take it with you (unless you know something about the afterlife that I don't).
So, there you have it, folks. Anyone can be Warren Buffett. The real question is: do you want to? I have done well but no way do I want to be an old man on Fortune's Billionaire list.. there's no energy left to enjoy life.
What a poorly framed comment from someone outside the target audience of this book.
I’m an accountant, retired, planned stuff well enough. I agree that it’s 90% wrapper. I’ll be lucky if I can finish this book. Maybe not even lucky.
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I think you missed the point entirely. As you say yourself, this book is probably not for 50+ year olds who are experienced with investing and business. He is quite specific about this book being meant for young people seeking to establish a moral and mental framework with which to approach life. As for his ignoring of alternative investing strategies that are common today; it is once again, not the point of this book. This book is designed to help people identify their interests and careers they might want to explore. Once they have discovered that career, they can begin exploring all of the alternatives that you mentioned. He used the classic capital vehicles because they are the classics and good for inexperienced people to begin their investing journey by understanding.
I appreciate your enthusiasm but I just think you missed the point.
Except what buffet did was buy whole companies that he thought he could create value in basically. Most people cannot do that.
Ahoy, apologies for the tardy reply. All I can add is what worked for *me*; I've done extremely well financially. I'm nothing special, anyone in the US can do it (I wouldn't know compatible this is with, say, Australia).But I bring you my own financial wisdom of the ages... or at least of a few really smart people who wrote some books.
First things first: if "Rich Dad, Poor Dad" were a meal, it'd be a 12-course Michelin-starred feast. It's basically 95% of the financial nutrition you need. For dessert, sprinkle on some "Thinking in Bets" by Annie Duke. It's like the cherry on top of your money sundae.
Now, buckle up, buttercup! Here's the foolproof, guaranteed-to-work-60%-of-the-time-every-time guide to wealth:
* Diversify like you're planning outfits for a month-long vacation: This shields you from those pesky "Black Swans" Nassim Nicholas Taleb warns about. (No, not the movie with Natalie Portman – the unexpected events that can turn your finances into a swan dive.)
* Treat wealth-building like fishing, minus the smell: Cast your line (product or service) into the pond (market). No bites? Change your bait or find a new fishing spot. Rinse & Repeat until you're reeling in cash like it's the catch of the day. Have no money? We have good friends who are worth +/- $500m (1/2 a billion) and it started with a $20 used lawnmower and flyers in his neighborhood that he'd cut people's lawns. Taking the money from that operation and re-investing it (buying other lawnmowing businesses) and growing his own operation led him to require an office so he bought the building (on credit but has since paid it off) and along the way learned how to make money in commercial real estate. They are also diversified in stocks, residential real estate, etc to provide for upswings when their own businesses are in downswings (most investments are counter-cyclical, but it's too long for a Goodreads post to explain why this is - it's technical but it's not required for wealth building). Warren Buffett did the same thing; he kept re-investing his money. Ignore where he invested it for a second. Bershire Hathaway which is GEICO, Dairy Queen, See's Candies (and others) was simply where he personally found that the fish were biting. You usually have to test it a few times before you end up on one you'll like. This is documented well in Felix Dennis's books on Wealth.
* Use legal protections like you're bubble-wrapping a crystal vase: Set up an LLC or corporation. It's like a financial hazmat suit for when life decides to throw another pandemic-shaped curveball at your face.
* Double down on what works: Found the perfect bait and spot? Fantastic! Now, dump more resources into it than a caffeine addict at a coffee convention.
* Diversify: The Sequel – This Time, It's Personal: Spread your investments across different areas like you're buttering toast. A bit here, a bit there. When your business is doing the limbo (how low can you go?), your real estate or stocks might be doing the cha-cha slide to the bank.
Remember, holding stocks and sharking options is just one french fry in the Happy Meal of wealth. To supersize your fortune, you need to go all in – we're talking Big Mac, large fries, and a McFlurry (if the ice cream machine isn't broken, which it always is, but I digress). Basically, start small keep re-investing your profits. The author of this book explains compounding interest but is too narrow in his prescription. Compounding (carrying profit into more investments) is a power law that's at work here.
So there you have it, folks! Follow this advice, and you'll be well on your way to building a fortune so vast, you'll need a GPS to find your way around your money vault. Just don't forget us little people when you're sipping champagne on your private yacht!
P.S. Results may vary. Side effects may include sudden urges to buy monocles, an inexplicable desire to use "summer" as a verb, and the ability to make it rain on command. Consult your financial advisor if symptoms persist for more than four hours.
P.P.S. Now, I know what you're thinking: "Sure, buddy, next you'll tell me you invented Post-it notes." Well, hold onto your calculators, because here's a little peek behind the financial curtain: Picture this: A nearly 50-year-old guy (that's me) who's been financially independent for the last 15 years. No, I didn't win the lottery or find a genie in a bottle. I just followed the recipe above and whipped up a financial feast.
My family's portfolio looks like a game of Monopoly gone wild:
We've got houses (but no little green plastic ones), we've nabbed some prime commercial real estate (sorry, no Boardwalk, but close), we're running "absentee" businesses (which is a fancy way of saying I can sip piña coladas while the cash rolls in) and yes, we've got stocks (because who doesn't love a good rollercoaster ride?)
Now, I'm not one to brag, but since we're all friends here, a quick Google search might tell you that my net worth is about 8.7 times that of the author of this book. Not too shabby for a guy who still occasionally forgets where he put his car keys.
But here's the kicker: I'm not special. I didn't have a secret map to a buried treasure. I just took the advice I shared above, stirred in a heap of persistence, and voilà! Financial freedom stew.
So, there you have it. Not just theoretical mumbo-jumbo, but real-world, tried-and-tested, "I've-got-the-bank-statements-to-prove-it" advice. Now, if you'll excuse me, I need to go count my monocle collection.
Reader wrote: "I think you missed the point entirely. As you say yourself, this book is probably not for 50+ year olds who are experienced with investing and business. He is quite specific about this book being m..."Let's agree to disagree - if it's meant for teenagers to early college kids, it wouldn't be in the Personal Finance section of Barnes and Noble, it'd be in the Young Adult section.
If it's a "Young Adult" book as you suggest, it's mis-marketed, and they took $25 and 5 hours from me that I'll never get back. In terms of scale, if that was 100x larger ($25,000 and 500 hours), it'd qualify for a Superior Court suit against the author, the publisher and everyone in between (and the payout is up to 100x on marketing "fluffery" cases so that could be a $2.5m payout).
Reader wrote: "Any other book recommendations?"Ah, my fellow knowledge-seeker! You've stumbled upon the holy grail of questions: "Got any book recommendations?" Well, hunker down, because I'm about to take you on a literary journey that'll make your bookshelf weep with joy and your wallet sing with potential.
First things first: reading is like eating spinach. Some people love it, some people tolerate it, and some people would rather watch paint dry. But fear not! There's a flavor for every palate in this financial feast of words.
Now, full disclosure: I'm what you might call a "reading addict." I devour books like a hungry hippo at an all-you-can-eat buffet, chomping through 6-8 hours of literary goodness each day. It's mostly non-fiction, with a heavy dose of business and finance, because apparently, I enjoy torturing myself with spreadsheets and economic theories.
But here's the deal: not all books are created equal. Some are pure gold, some are fool's gold, and some are just... well, let's just say they're better off as doorstops. (Looking at you, Algebra of Wealth!)
So, without further ado, let me present to you the crème de la crème of financial wisdom:
"Rich Dad, Poor Dad" - The undisputed heavyweight champion of wealth-building books. It's like the Bible, but instead of turning water into wine, it turns your pocket change into a fortune.
"The E-Myth Revisited" by Michael Gerber - For when you want to turn your lemonade stand into the next Coca-Cola empire.
"The Innovator's Dilemma" by Clay Christensen - Because sometimes, you need to break things to make things. (Innovation, not vandalism. I cannot stress this enough.)
Anything by Felix Dennis or Ray Dalio - These guys are like the Yodas of finance, minus the weird syntax and green skin.
The Incerto series by Nassim Nicholas Taleb - Including "The Black Swan," "Antifragile," and "Skin in the Game." Warning: May cause spontaneous enlightenment and an irresistible urge to use big words at dinner parties.
Books by Annie Duke - Because sometimes, life is just a high-stakes poker game, and you need to know when to hold 'em and when to fold 'em.
Now, are these books absolutely necessary? Well, is whipped cream necessary on a sundae? Technically no, but it sure makes the experience a whole lot sweeter. These literary gems will help you see opportunities where others see obstacles, turn lemons into lemonade, and maybe even figure out why the chicken really crossed the road. (Spoiler alert: to diversify its investment portfolio.)
Remember, my book-loving friend, knowledge is power. And in this case, knowledge is also money. So grab a book, find a comfy chair, and get ready to read your way to riches. Just don't forget to actually implement what you learn, or you'll end up with a very impressive library and a very unimpressive bank account.
Happy reading, and may the financial force be with you!
Shira wrote: "Except what buffet did was buy whole companies that he thought he could create value in basically. Most people cannot do that."
Ah, the classic "You can't do that, only Warren Buffett can" response. It's like saying "You can't slam dunk, only Michael Jordan can." In the United States, from my direct experience starting life as a very poor kid in a community of underachievers, anyone can do anything.
Some truth bombs that'll make your piggy bank squeal with delight: The American Dream is simply Choose Your Own Financial Adventure. Here in the land of the free and the home of the brave, we're lucky yet we don't like saying it (we complain more than we're patriotic).
But I think a lot of dismay comes from the fact that while anyone can do anything, anyone can't do everything. It's like a buffet (pun intended) - you can't eat all the dishes, but you can stuff yourself silly with your favorites.
Want to build wealth? Great! Want to bench press a small car? Awesome! Fancy collecting enough stamps to wallpaper the Pentagon? You do you, my friend! But remember, each of these pursuits requires the holy trinity of success:
Patience (Rome wasn't built in a day, and neither was Buffett's fortune)
Persistence (Keep going, even when your bank account looks at you disapprovingly)
Perpetual learning (Because knowledge is power, and power is money... or something like that)
The Buffett Blueprint: It's Not Rocket Science (Thank Goodness)
Now, let's talk about our boy Warren. His path to wealth is about as secret as the recipe for water. Here's the Buffett method in a nutshell:
Find a company on life support (Berkshire Hathaway, formerly known for making very fashionable potato sacks)
Use it to reverse-merge with other companies
Leverage like you're trying to move the Earth (Hello, GEICO!)
Rinse and repeat until you're richer than Croesus
See? Easy peasy lemon squeezy! You could do this too, minus the charming Nebraskan accent. Leverage: The Financial Equivalent of Performance-Enhancing Drugs (But Legal!) Here's where it gets juicy. Leverage is like financial steroids - it beefs up your returns faster than you can say "compound interest."
Imagine this:
S&P 500 returns 8% on average
You put half your portfolio on margin (fancy word for "borrowed money")
Boom! You're now making 12% (8% + 4%)
Next year? Even more, because you can borrow against your gains
For the advanced class:
Hit the $100,000 mark
Get a "Portfolio Margin Account" (sounds fancy, right?)
Take an initial 85% margin
Invest in an S&P ETF like VOO
Watch your 8% turn into a whopping 15% in the first year
But wait, there's more! Real estate and small/medium businesses can compound even faster. We're talking wealth creation at Mach 3 speeds here!
The Million-Dollar Question: When Do You Want to Be Rich?
Here's the real kicker: Do you want to be wealthy when you're so old that you are only excited about new denture cream? Or do you want to enjoy your riches while you still have the energy to jet ski and the eyesight to appreciate it?
You could always go the Buffett route - amass a fortune that would make Scrooge McDuck blush, all while living like a college student and eating McDonald's for breakfast. But remember, life is short, and you can't take it with you (unless you know something about the afterlife that I don't).
So, there you have it, folks. Anyone can be Warren Buffett. The real question is: do you want to? I have done well but no way do I want to be an old man on Fortune's Billionaire list.. there's no energy left to enjoy life.
What a poorly framed comment from someone outside the target audience of this book.
I’m an accountant, retired, planned stuff well enough. I agree that it’s 90% wrapper. I’ll be lucky if I can finish this book. Maybe not even lucky.
