Book of the Week: Enough

18 Dec 2016

This week I read Enough: True Measures of Money, Business and Life by John C. Bogle, the founder of Vanguard Mutual Fund Group. He had his first heart attack in 1960, but is still alive today. We focus too much on things that can be counted. You get what you measure. I’m tired of the rat race and wonder when I will have enough? What happens when you don’t have enough? Will I ever have enough? Jack can talk about enough since he clearly has enough already. When you’re rich and retired, you need to occupy your time, writing a book is one of those things. I will keep working until the day I have enough. I hope that day was yesterday

In life, we too often allow the illusory to triumph over the real. We focus too much on things and not enough on the intangibles that make things worthwhile; too much on success (a word I’ve never liked) and not enough on character, without which success is meaningless.

Success and happiness do not necessarily go hand in hand.

Numbers and measurements are as vulnerable as the Emperor’s New Clothes to the incisive, intuitive human question. the closer any of us get to measuring what’s really important, the more it escapes us, yet we can recognize it, sometimes in an instant. Relying on that instant a bit more, and our ability to grasp, is probably the best hope for us all. —David Boyle

One of the problem is that numbers are easy to measure and you end up getting what you measure. We pursue measures on things that don’t really matter. The Relentless Rules of Humble Arithmetic Justice Louis Brandeis summarize our financial system that imposes huge costs with the Relentless Rules of Humble Arithmetic.

• The gross return generated in the financial markets, minus the costs of the financial system, equals the net return actually delivered to investors.
• Thus, as long as our financial system delivers to our investors in the aggregate whatever returns out stock and bond markets are generous enough to deliver, but only after the costs of financial intermediation are deducted (i.e., forever), the ability of our citizens to accumulate savings for retirement will continue to be seriously undermined by the enormous costs of the system itself.
• The more financial system takes, the less the investor makes.
• The investor feeds at the bottom of what is today the tremendously costly food chain of investing.

There are three i’s in every cycle: first the innovator, then the imitator, and finally the idiot —Warren Buffett

It starts out withe innovator, then the imitators who follow. By the time the party is over, the idiot arrives. The smarter people have already moved to greener pastures.

Trust is everything, because success depends upon customers’ trust in the products they buy, employees’ trust in their leaders, investors’ trust in those who invest for them and the public’s trust in capitalism… If you do not have integrity, no one will trust you, nor should they —Bill George

Things world, because of trust. Trust is something more than numbers, but how much does trust go? Bogle talks about outrageous CEO pay, but Vanguard’s CEO pay is a guarded secret. Bogle has a few dreams for the future of the financial system.

1. A Fair Shake for Shareholders
2. Serving the Investor for a Lifetime
3. Long-Term Investment Horizons
4. Serving Long-Term Investors
5. Putting Fund Investors in the Driver’s Seat

Manager vs Leader

• The manager administers; the leader innovates.
• The a manger is a copy; the leader is an original.
• The maanger focuses on systems and structure; the leader focusus on people
• The amanger relies on control; the leader inspires trust.
• The manager has a short-range view; the leader has a long-range persepctive.
• The manager has his or her eye always on the bottom line; the leader has his or her eye on the horizon.
• The manager imitates; the leader originates.
• The manager accepts the status quo; the leader challenges it.

Rules

1. Make Caring the Soul of the Organization
2. Forget about Employees
3. Set High Standards and Values and Stick to Them
4. Talk the Talk. Repeat the Values Endlessly
5. Walk the Walk. Actions Speak Louder than Words
6. Don’t overmanage
7. Recognize Individual Achievement
8. A Reminder Loyalty Is a Two-Way Street
9. Lead and Manage for the Long Term
10. Press On, Regardless

Where is the Life we have lost in living? Where is the wisdom we have lost in knowledge? Where is the knowledge we have lost in information? The cycles of Heaven in twenty centuries Bring us further from God and nearer to the Dust. T.S. Eliot

Entrepreneurship is more than making money, it is about building something. You would think that Adam Smith would be all about capitalism, but Adam Smith’s impartial spectator is about morals. We only remember him for the invisible hand.

A man is incapable of comprehending any argument that interferes with his revenue. —René Decartes

For while our best and brightest are exquisitely trained to pursue false rabbits of success, on the whole they are being poorly training in the intangible qualities that become the virtues that bring real success. There are 3 attributes that determine our happiness.

1. autonomy
2. maintaining connectiveness
3. exercising competence

Do I already have enough? Resources The Cost of Active Investing by Kenneth R. French