Category: Book Review

I was surprised recently when the Canadian Capitalist posted a “first impressions” review of Derek Foster’s new book, “Stop Working too:  You Still Can!”  I was surprised because I’ve reviewed two of Derek’s previous books (Lazy Investor and Money for Nothing – which includes an interview) and have mentioned him favourably a number of times on the blog.  In spite of this, I wasn’t on his e-mail announcement or press release for the new book (and, worse, wasn’t offered a free review copy).  If you’re reading this Derek:  You hurt me.  You hurt me real bad.

Never one to let a simple obstacle like not getting a free copy force me to pay for a book, I camped out for a few hours at Chapters and read the new book there.  The table of contents isn’t posted on-line anywhere, and I don’t have a copy to refer to, but in spite of this I think I can give a decent overview.

The Canadian Capitalist hit the nail on the head with each of his first impressions from flipping through the book.  This book is focused on the fundamentals of personal finance, and does a good job conveying some of the basic principles.  Derek comes out entirely against debt, which I don’t agree with, but he’s in good company (Squawkfox and Dave Ramsey).  He presents some basic ideas for paying off your mortgage more quickly (such as negotiating for a better rate, switching to bi-weekly payments, adding small extra payments whenever possible, etc).  He comes out in favour of TFSA and gives an overview of this (fairly) recent new vehicle for retirement.

I was shocked when banks started trying to sell principal-protected notes, PPNs (and at a very expensive price).  Derek spends a chapter explaining how to roll your own, which has been covered elsewhere a number of times, but is useful for anyone who feels drawn to this investment vehicle.  He presents three possible 10-year scenarios (the entire stock market goes bankrupt, the stock market stays the same value and it goes up) and illustrates how an investor 100% in equities would fare compared to someone investing in PPN.  I somewhat felt that he should have gone to greater lengths to convey that the first two scenarios are VERY, VERY improbably.  As he lays it out, someone who isn’t reading carefully might infer that the three scenarios are equally likely and make a very poor investing decisions (get married to the “benefit” of PPNs).

Towards the end Derek presents an “advanced idea” of using an RRSP to move income to the next year when your going to drop to a lower income bracket (such as when you retire).  I talked to Mike about doing the exact same thing when I went back I went back to school (so it was kinda cool to read about an investment strategy I’d come up with on my own before), however I didn’t feel this was worth inclusion in what was already a pretty short book (this would be useful to a small number of people VERY infrequently during their life).

Derek defended selling his portfolio and continuing to promote his earlier “buy and hold forever” books.  I’ve never been as offended by this as other bloggers / readers were, but I didn’t think his justification would sway many of his critics.  As the Canadian Capitalist mentions, he also acknowledges the risk of option trading, which is a good thing (although he still recommends it as a strategy a little more broadly than perhaps he should).

I think Derek may have rushed this book to the printers a bit, as there were a number of glaring typos (send me an early review copy next time Derek and I’ll even proof read it for you!).

Overall, I think this is an interesting, introductory personal finance book targeting Canadians.  In many ways this book does a better job than any of his previous books for providing a broad perspective on Derek’s view of Canadian personal finance and his recommendations for everyday (would be) investors.

“Stop Working Too: You Still Can” can be purchased from Derek Foster’s website (http://stopworking.ca) or from most major book chains.

A friend gave me a copy of “The Alchemist” by Paulo Coelho and it’s one of the few books that I’ve liked well enough to keep in my personal library (I move a lot, so I try to keep the weight to a minimum). I’m not usually into “personal motivation” style books, however this book is the odd exception that I greatly enjoyed it (and have re-read it a couple of times and loaned it to friends).

The book centers on the shepherd Santiago, who has happily tended his flock of sheep and felt quite content for the lifestyle he has chosen. One night he dreams of a treasure buried at the base of the pyramids. Unsure what to do with this information, he eventually embarks on a quest to find this treasure (his personal legend) and encounters a host of people who help him, hinder him and provide insight on his journey.

As an allegory, the book explores the author’s views on the meaning and purpose of life, and how we get sidetracked from doing what we truly desire (and value). At one point he meets a Muslim man who has dreamed of traveling to Mecca his entire life, but has always found excuses why not to go. Eventually, after his interactions with Santiago, the Muslim man realizes that he has not gone to Mecca because he fears realizing his life’s dream, and losing his reason to live:

“Because it’s the thought of Mecca that keeps me alive. That’s what helps me face these days that are all the same, these mute crystals on the shelves, and lunch and dinner at that same horrible cafe. I’m afraid that if my dream is realized, I’ll have no reason to go on living.

“You dream about your sheep and the Pyramids, but you’re different from me, because you want to realize your dreams. I just want to dream about Mecca. I’ve already imagined a thousand times crossing the desert, arriving at the Plaza of the Sacred Stone, the seven times I walk around it before allowing myself to touch it. I’ve already imagined the people who would be at my side, and those in front of me, and the conversations and prayers we would share. But I’m afraid that it would all be a disappointment, so I prefer just to dream about it.”

Other characters have similar obstacles that prevent them from pursuing what they desire in life. Conversely, some characters are in pursuit of their personal legends, and their interactions with Santiago help them both on their journeys (he meets an Englishman trying to learn how to turn lead to gold, and falls in love with a woman whose personal legend was to find and love him).

Other concepts include paying to pursue our legends (he promises a gypsy 1/10th of his treasure to interpret his dream, and gives a king 1/10th of his flock of sheep for information about how to find his treasure. Between them they teach that everything in life has its price.

Allegorical Structure

This book probably wouldn’t have worked if it was presented as a literal guide to getting what you want in life.  I’m not sure if this is a good thing or a bad thing.  Perhaps the structure gives the impression of meaning to ideas that are tired clichés?  Perhaps it is the best vehicle to convey ideas about universal human experiences – as soon as you become concrete, you lose the ability to convey your ideas to some readers?  I have trouble pulling out specific strategies that I got from the book, and I’ve been hard in past reviews on other books that are short on specifics.  This book did a good job of getting me reflect about what I want to do in life and what’s holding me back from doing it (conveying knowledge and a fear of failure respectively for the record).

How To Get It

The author doesn’t mind having his books pirated, however he doesn’t own the copyright for foreign translations (the original is in Portuguese) so you can decide for yourself if you’re comfortable finding and downloading a copy.  It’s a very fast and easy read, and while some of the ideas are quite meaty, it’s digestible at multiple levels.

In your heart of hearts, what do you think you should be doing with your life?  Or, if you don’t mind the theological overtones, what do you think is the purpose of your life?  If you’re not actively pursueing this, what’s holding you back?

To order this book:

I recently finished Atul Gawande’s “Better” and found it interesting and relevant to the personal finance world.

Dr. Gawande is a practising surgeon and in this book discusses how to improve (get “better”) as an individual, organization and industry.  He uses medicine as the domain of discussion, but manages to generalize his insights to universal ideas and approaches (or at least presents them clearly enough that it’s easy to “translate” them to your own life).

The book is made up of three parts (diligence, doing right and ingenuity) each of which is broken into 3 chapters.  Each chapter explores a different domain in medicine and illustrates where the field could do better and an example of a practitioner who is doing so.

As an example, the first chapter talks about how infections spread WITHIN hospitals, and how often doctors unintentionally spread these infections (going from patient to patient without properly sanitizing in between).  He discusses this from a historical perspective (when the first doctor realized that washing up before surgery was important) and how it’s still a problem today.  He discusses how many times they’ve tried different approaches to get hospital staff to be more diligent about hand washing and how each approach has failed.  The approach that SEEMS to have worked was undertaken at a Pittsburgh veterans hospital.  Inspired by research into malnutrition in developing regions, instead of dictating a new “approach” to sanitation at the hospital, they began organizing groups where they would ASK the hospital staff how they could reduce infections, identify employees who had been most successful at avoiding infections and helped them communicate good ideas to the rest of the staff, published the best and posted the results on a month-to-month basis.  They’ve managed to get the MRSA wound infections (the one responsible for most deaths in hospitals) down to 0.

Extrapolating an idea like this to an organization (or family) that keeps struggling with a well defined problem would be fairly straightforward.  Talk to the people involved and ask them why a problem keeps happening.  Ask them for suggestions on how to improve it.  Publish the results.  Repeat until you hit the desired outcome.

The other 8 chapters are along the same lines, talking about:  fighting infectious diseases, how mobile military surgical units work, patient nudity during examinations, malpractice lawsuits, doctor’s salaries, medical personnel involved with executions, when to let a patient die, the benefits  (and drawbacks) of using a metric to measure your success, where you are on the bell curve of performance (and how to move toward the higher end), and how to not use difficulties as an excuse to not perform (and instead work around them).

I was particularly impressed by the author’s willingness to acknowledge the other side of issues (such patients suing their doctors or participating in executions).  He was able to state his opinion, yet still express the other viewpoints in a respectful manner, admitting which arguments did support the other side.  His suggestions, taking these into account seemed very well thought out and reasonable.

One thing he doesn’t discuss is when it makes sense to focus on improvement.  With medicine as your domain, HOPEFULLY the view is that it’s always good to be better (people’s lives are at stake after all).  If you look at his ideas in the context of your own life, it’s a judgement call when its worth focusing on getting better and when it isn’t.  As an example, Mike is good at what he does for a living, but it isn’t the core of his identity.  If he was going to focus on “improving” his career it’s going to come at the expense of his homelife or his blogging empire.  He has the three balanced in a way that works for him, and most of the ideas from this book would only be relevant if he was trying to shift his focus more heavily to one area (e.g. say he wanted to pull back to part time at work and spend more time blogging).  There is a cost to improvement (which the author acknowledges in passing, but dismisses as the stakes in medicine are so high).

I would certainly recommend this book, both as an interesting read and as something that might give you ideas on how to get better at something that is important to you.  Where Malcom Gladwell’s Outliers focuses on performance from a high level perspective (put 10,000 hours into something and you’ll get good at it), this book focuses on a similar issue but close up to the problems and dealing with immediate concerns.

“Sway” by the brothers Ori and Rom Brafman is about “the irresistible pull of irrational behavior”.  It was passed along to me after a friend enjoyed it and thought I would as well (which I did).  It’s a fast, easy read in the style of a Malcolm Gladwell book or Freakonomics.  The authors talk about the many reasons why we do irrational things, from both anecdotal and research-based perspectives.

As an example of the type of ideas it covers, they consider NBA draft picks.  While it isn’t a perfect system (Michael Jordan, considered by some to be the best basketball player of all time, was the 3rd pick in his draft year), drafting players is an important part of putting together a competitive team.  Researchers found that players’ draft selection order pick was the variable most responsible for their court play time.  So even if one player objectively outplayed another, if the weaker player was picked earlier in the draft they tended to get more time playing (and also tended to have a longer career).  They call this diagnosis bias, where we find it hard to shake an initial assessment of a person or situation, even after we get objective evidence that we were mistaken.  The halo effect is another description of the same phenomena.

The rest of the book is set up in a similar way.  There’s an engaging story (such as a plane crash, cultural effects on “Who wants to be a millionaire?” or Ferris Bueller), they point out the irrationality of the behaviour in the scenario, cite research into that area, and sometimes offer a counter to it.

One of the suggestions that seemed very reasonable to me is a better approach to hiring employees.  They make a convincing case that the unstructured interview (where the hiring manager chats with the potential employee to figure out if they’d be a good fit at the company) is a very bad way to evaluate if someone will be a good employee or not.  They suggest that instead you select your employees using aptitude tests.  For those who are most successful, use the “interview” to sell them on the company (and get them to agree to come work for you).

In Malcolm Gladwell’s books he fits interesting tidbits into a larger model he develops over the course of the book.  In Freakonomics they jump around unconnected, but interesting, facts and domains.  This book, in between the two, wasn’t executed as well.  While each element was connected to irrational behavior, it was hard to connect the ideas beyond that (and anyone could fill a book with anecdotes about irrational behaviour).  I kept hoping there’d be a higher level insight that evolved, but there wasn’t.

At the beginning of each chapter they give an obfuscated summary of the ideas to be presented (e.g. the preface was “Little house on the Tel Aviv prairie -> Asbestos and open-heart surgery -> Ignoring the O-ring -> Diagnosing the wrong patient -> Where psychology and business collide”).  I thought this was a clever way to capture the reader’s attention (and you had an “a-ha” moment when you got to that part and understood what “Little house on the Tel Aviv prairie meant”).  I wondered if maybe the authors mapped out the book using bullet points for the ideas then decided to keep their framework to hook the reader.

There are certainly elements of this book that are very relevant to personal finance.  For example, it talks in one place about continuing to hold a stock as it drops to $0.  However, I’d recommend this more as a pleasure read than something that will make you a better investor.

“Stumbling on Happiness” by Daniel Gilbert provides an accessible overview of Dr. Gilbert’s work at Harvard in the field of psychology. It is written in a style similar to that of Malcolm Gladwell or Steven Levitt, taking interesting concepts and playfully exploring the consequences and justifications of them.

Gilbert’s central idea in the book is that we don’t really know what makes us happy and are remarkably bad at remembering what made us happy in the past or predicting what will make us happy in the future.

One amusing example he gives is on the “joys of parenthood”. He explains that people looking forward to having children envision playing with toddler, being proud at their graduation ceremony and feeding candy to beautiful grandchildren. People with children look back and remember the good times and do the best to forget the bad. When housewives are interviewed about the activities in their daily routines, taking care of the children is one of their least favourite, right at the bottom only slightly above doing housework. When the happiness of parents is charted over the course of a marriage, marital satisfactions decreases dramatically with the first child’s birth and doesn’t increase until the last child leaves home.

He explains that people still have children because it’s a belief system that propagates itself. A culture that believes it’s a joy to have children will exist longer than one that feels children are a burden (he gives the example of one religious group that was completely opposed to sex and now only a few elderly members remain).

He gives an example in the opposite direction of living with a major disability (being blind, deaf or in a wheel chair for example). Many people think that living such a life would be as bad as (or perhaps worse than) dieing, but when people who actually live with such disabilities are interviewed, they’re pretty much as happy as anyone else. Gilbert explains that we imagine the instant we first find out about the disability, and extrapolate that instant of horror and disappointment as what the rest of our lives will be like. Instead people with disabilities get used to their new capabilities, and derive satisfaction from all the things people normally do (time with friends and family, a good meal or the satisfaction in the completion of a major accomplishment).

In the book he proposes a solution to the problem of making choices that will lead to happiness (after he has shown that we’re miserable at doing so ourselves). He suggests talking to people who have made the choice we are considering and are currently living with the consequences. Gauge how happy (or unhappy) it is making them and use their experience as a predictor of your experience.

For example, if I was thinking about going to live in Costa Rica to live the cheap life of an expat in a developing nation, the best approach to figuring out if I’ll be happy there is to try to find and interview other expats who have done the same (ideally a number who have been there for the same length of time, perhaps a month). When I was a teenager I wanted to be a medical doctor, and the MDs I talked to discouraged me from pursuing this career (each one told the negatives of the profession). One told me that if I wanted to make lots of money and play around with blood, I should be a dentist and at least have regular hours. Years later I switched from pre-med into computer science when I finally convinced myself that they were right and I wouldn’t be happy in a career in medicine.

The author claims people won’t actually follow this strategy, even when it’s shown to them how effective it is, because we’re all so convinced that we’re special and that our experience is unique.

Overall I think this is an interesting book with some engaging concepts. The friend who gave it to me had the criticism, which I agree with, that it was one neat idea that had been padded to book length. I think Gilbert’s ideas could have worked better as a long article, rather than a book (it got fairly repetitious at points). If you think you might try to adopt the strategy of predicting your future happiness by talking to people who have already done what you are considering, or if you just have a general interest in psychology and what makes people happy I’d recommend reading it. Otherwise there are probably better books you can spend your time with.

Mr. Cheap is on vacation this week but eagerly looks forward to reading your comments when he’s back in town.

In John Reed’s “How to Write, Publish & Sell Your Own How-To Book” he refers to Dan Poynter’s work repeatedly. In my review of that book, Tim from Canadian Dream also directed me to Poynter, so when my local library had a copy of his “Writing Nonfiction: Turning Thoughts into Books” I had to check it out.

Writing a book fits with the audience of Four Pillars in a number of ways. It is an often cited example of “passive income“. Blogging in many ways is the evolution of publishing newsletters, columns, articles and books (I suspect most bloggers harbour a secret desire to write a book). It is also an excellent component of any business development strategy (either blogging or publishing a book).

While Reed clearly makes a decent living from writing, he also isn’t getting as fabulously rich as his level of fame might suggest. I imagine it’s similar with Poynter. Two articles I read recently that made a lot of sense to me are: “A Reality Check About Blogging For Money” and “Reality check: You’re not going to make money from your blog“. These articles present a fairly convincing case that blogging will rarely lead directly to “living wage” level income. Instead it’s a way (like writing a book) to establish your expertise in an area, which can then be leveraged for something that actually will make money.

I’ve been really impressed with Squawkfox and how she’s taken her blog to the level that she got a publishing contract (and is now appearing on every Canadian media outlet – I’m just waiting until they get her to announce “Hockey Night in Canada”). I’m not sure where this will all lead for her, but I hope it’s somewhere great and lasting. She showed her “writing chops” on her blog and got noticed by a publisher, which has lead to a book that has gotten her noticed by Canadians. Maybe she’ll become the Canadian version of Suze Orman… Writing a book can be a deliberate attempt at creating the same sort of exposure for a project. I imagine it would also be quite powerful for career building: if you’ve published a known book in the field you’re working in, there should be little doubt about your expertise in potential employers.

Getting back to the review, while in theory they cover the same topic (writing a nonfiction / how-to book) Poynter’s book is very different from Reed’s, and the two compliment each other quite well. This book provides a “nuts-and-bolts” guide to get from a general desire to write a book to having a published book sitting on your desk (and in bookstores, which is also a different objective than Reed’s self-publishing book).

At the start of the book Dan Poynter iterates all the benefits of being a published author. This leads in to a discussion of how technology has changed the publishing process and presents a convincing picture that it is worthwhile to write and publish a book, and it has never been easier. He gives detailed advice on how to select a topic for a book, how to research the market (and evaluate competing titles). This is followed up by an explanation of all the parts of a published book (such as ISBN numbers and forwards), which are necessary, and how to produce each.

While Reed’s book glossed over the actual writing (he basically said just write it), Poynter has some great suggestions for getting the content in shape and for the revision process. One of my favourite ideas is to use a binder as a “working version” of your book. While you’ll obviously do the writing and typesetting with a computer program (like Microsoft Word or Open Office), you also print out a working copy and assemble it in a binder (separating out chapters). This even has a cover, spine and back page which are all mock-ups of the current version of your book. The suggestion is to carry this wherever you go, and use it to make revisions. You get to see your book coming together as the parts of the binder get filled in.

Another excellent part of this book is his treatment of enlisting help from others. He recommends that you get experts to review a CHAPTER of your book, rather than dumping the whole thing on them (he claims many more people are willing to provide feedback on a portion of the work, if they don’t have to read the whole thing). This has the added benefit of being able to target very specifically who you ask for what. If I was writing a personal finance book, and if there was a chapter dealing with RRSP, the first person I’d go to would be Preet (he, literally, wrote the book on RRSPs [non-affiliate link]). He may or may not have time to read through it and provide feedback, but he’d probably be a lot more willing to look at 18 pages than 144.

Poynter strongly suggests 144 pages as the length for a book (apparently printing is typically done in multiples of 48). Our blog posts are often around 1000 words, (and each page of Poynter’s book looks like it’s around 500 words), which makes a book seem a lot more doable (it would be about the equivalent of 72 blog posts).

He also provides good advice on how to solicit “celebrity blurbs” for the back cover and ad copy (the basic idea is to take a risk and ask, and to write a first draft to make it as easy for them as possible).

There is a bit at the end about finding an agent or publisher. This boils down to his suggestion not to send unsolicited manuscripts, and instead to try to talk to a publish or agent who specializes in your type of book (and if you’re talking to one who doesn’t, try to get a referral to one who does).

Overall I’d highly recommend this book for anyone thinking about writing nonfiction. It has a large amount of useful information that isn’t in Reed’s book (and vice versa) and, as stated above, the two compliment each other quite well.