Category: Book Review

I had been coming across references to Tim Ferriss’ “The 4-hour Workweek” when a friend was good enough to send me a copy. Its a very quick read, and I tore through it over the last week’s commute.

There were parts of this book I really liked, parts I didn’t buy, and parts I found rather distasteful.

The Good: One of Tim’s central idea is to focus on your “competitive advantage” (he doesn’t put it this way). Hire people to do anything that you can get them to do cheaper then it would be to do it yourself, then focus on the higher paying elements of your life. He presents this as the 80/20 rule (20% of what you do provides 80% of the benefit). I definitely agree with this idea. I had a relative in England who was an insurance executive and he HATED to do yard work. I told him to hire a neighborhood kid for 5 quid a week to do the yard work then work a bit more on the job to pay for it (he was paid far more then what the yard work would cost). He agreed with the principle, but wasn’t willing to do it.

Tim suggests doing this to your ENTIRE life constantly. He suggests things like virtual assistants from India to deal with all the little irritant in your day so that you’re free to concentrate on what you do to make money. I’ve spent 45 minutes some days trying to sort out billing problems with my phone or internet, and its a great idea to outsource this very frustrating experience. How funny it’ll be if we hire people to argue with the people business have hired to talk to us.

Tim also talks about the fears of not working 9-5 and the spiritual angst of doing the same. I’ve worked on starting a business, and taken time to “smell the roses” in my life, and he’s dead-on that the puritan work-ethic kicks you hard for not being a good corporate drone like everyone else (plus friends and family don’t like it too much that you aren’t a wage slave the same as them).

The Bad:

Tim suggests financing all this with “financial muses” which are basically small products or services that you test market until you find one that you can sell for a big markup. You then automate the entire process of manufacturing, advertising and distributing the product/service and just let the money trickle in and fund your lifestyle. Nice idea, but I have the feeling its not quite so easy.

He suggests costing out “adventures” as motivators for setting up these muses (e.g. figure out how much it’ll cost to study Spanish in Buenos Aires for 6 months, then keep trying different ideas until you find one that can fund it). Again, not so sure its as easy as all that (or wouldn’t everyone be doing it?).

The Ugly:

Quite a few of the choices Tim makes in his life seem quite unethical to me. He brags about winning a marital arts competition by dehydrating himself down 2 weight categories (then re-hydrating back up to his proper weight before competing) and using a rule-technicality (basically shoving his much smaller opponent off of the mat) to win. Doable, and he apparently has the trophy, but has he actually accomplished anything?

He also seems to have made most of his money from selling “BrainQUICKEN” and “BodyQUICKEN” which are “supplements” (in my opinion snake oil).

I’d have trouble selling stuff that didn’t work (in my opinion – hopefully dropping that in will save me from being sued :-)) even if it made me a lot of money.

Interesting ideas and a quick read, but not quite the radical life-changing book its being billed as.

I decided to read this book because I’ve seen it referenced in numerous finance books, one of which is the Four Pillars of Investing by William Bernstein. Canadian Capitalist has posted a list of the recommended readings from Bernstein.

This book written by Fred Schwed is a fairly light-hearted look at the investing game. The author, who worked in the industry as a trader, does not take the industry or himself seriously at all. Although it’s not a serious academic study, the author lays the groundwork for the efficient market hypothesis (EMH) although he never uses those words in the book. Interestingly enough, having read both “Four Pillars of Investing” and “A Random Walk Down Wall Street”, this book was clearly the genesis of those two books. Some of the same stories, analogies and even jokes are shared among the three books. Since Schwed’s book came out in 1940, obviously the latter two books copied some material from it.

Unlike most finance books which tend to have lots of studies, graphs and the like, this book offers no proof whatsoever of his theories. Schwed doesn’t even explain how he came up with his version of the EMH. What he does do is explain how various market professionals are more or less useless, with a lot of Mark Twain type comments mixed in. The book is somewhat dated which makes for some amusing reading, in particular the section about investors who sell short entitled “The Short Seller – He of the Black Heart”.

My favourite paragraph from the book is about speculators (traders) and how the only thing they know of the companies they trade is the stock symbol:

This inability to grasp ultimate realities is the outstanding mental deficiency of the speculator, small as well as great. He is an incurable romantic and usually egotistical. His mind is fast, active, and resourceful, and, in a peculiarly limited way, shrewd. That is, he is shrewd in everything save that he is constantly, day by day, laying himself open to the possibility of being ruined. He seems to believe, with Mother Goose, that a treetop is the proper place for a cradle.

Bottom line: This book is interesting, funny and easy to read. If you’re like me and like reading a lot of finance books then I recommend this one for a change of pace. If you’re just getting started as a DIY investor then I would suggest something more recent such as the other two books I mentioned earlier.