Book Review: The 4-Hour Workweek

During my five hours of "mechanical delays" on United Airlines this weekend, I read "4-Hour Workweek" by Timothy Ferriss. While I would view some of the book's suggestions as a little impractical, in a way Tim's ability to think outside the box and dream outrageously is what makes the book an inspiration. Despite thinking there is no way I could do some of what this guy suggests, I did find myself thinking about a lot of other things that I could do beyond what he suggested. The four key principles I took from the book were as follows:

1) Dream big-- its ok! Chase those dreams.
2) Retirement is not a dream.
3) When you aren't on track to fulfill your dreams, change direction. This can be scary, but often the costs are way less than you think.
4) Global arbitrage isn't just for corporations. You can benefit by outsourcing some of your work or at least capturing the arbitrage on vacation in low cost geographies (too bad the dollar has weakend so much since he first published the book in early 2007).

At the end of the day I'd say this book was a good read. It will force you to evaluate your life and determine whether or not you are living by the golden rule of happiness: "Do what you enjoy."

Scalable Professions: Big rewards for the same amount of work

I recently read an interesting book called The Black Swan by Nassim Nicholas Taleb. Most of the book centers around the concept of fat tails. It is a bit of a dive into philosophy as well, which in my humble opinion made it tedious in parts. Overall though, it is a great read if you have some spare time. One part that was particularly interesting was a discussion about "scalable professions." Scalable professions are the ones that have big upside for the same amount of work no matter how many zeros start to follow the first $.

As I was browsing the Forbes 400 this weekend John Arnold struck me as the quintessential example of someone with a scalable career. At 33, he was the youngest member of the Forbes 400 this year. He has parlayed some good success in his Enron days and $8 million that came with it into a rather large fortune of $1.5 bil; greater than the GDP of Sierra Leone (population ~6 mil). John is an energy trader and his profession is highly scalable since it would require roughly the same amount of work to run a $100k portfolio as he would to run his $3 billion Centaurus Energy portfolio.

Non-scalable professions include dentists, doctors, and pretty much any profession where the rewards are directly tied to the time you put in. Taleb points out that it is the existence of scalable professions that has led to such a lopsided distribution of wealth in the world. It really does make one wonder. What happens when no one wants to be a doctor, or a lawyer, or a teacher because they could use their time and effort to get into more scalable careers? I don't have any profound answers as to what should be done about wealth distribution worldwide (though Jeffrey Sachs does) or how we keep people motivated to enter necessary but non-scalable professions, but if you do feel free to leave them in the comments. If you have some time read The Black Swan and spend a few minutes thinking about it.

Brain Candy for Economics/Finance Geeks: The Economist

One of my favorite publications is the Economist. I think it is better than the New Yorker, New York Times, Wall Street Journal, or Financial Times. While it isn't cheap at about $100 per year if you get a good subscription deal, I do think it is money well spent.

The top five reasons I like the Economist are:

1. Global coverage. Unlike most US-based publications the Economist reminds me every weekend that we live in a big world with many countries and points of view. George W. Bush would have been well served if someone forced him to read the Economist each week since he has been in office. Or, at the very least, he might not make so many mistakes when giving speeches.
2. A focus on the big picture instead of the day to day (a benefit of being a weekly publication).
3. A balanced mix of poltical and business coverage. I generally hate politics, but these guys usually put an interesting financial spin on what is going on.
4. The Science & Technology and Books & Arts sections which help keep me from being a total economics/finance dullard.
5. The Big Mac Index. Gotta know how much it costs to kill yourself in nearly 50 countries.

So if you are intrigued pop over to their subscription page and sign up for the free 6 week trial they are running right now. You won't be sorry. (Note: Armchair Fiduciary gets no personal financial benefit from you signing up for the 6 week trial; this link is merely provided as a service to my readers.)