Wednesday, December 4, 2013

Minimalism, Value Investing and the Meaning of Life ("Synergies")

Investors and Minimalists may not seem to have a lot in common at first. When an investor comes to mind, the first thought may be a derivatives trader living out of a penthouse in New York, working on Wall Street, wearing Tom Ford suits. A minimalist may thought of as a modest, perhaps an impoverished individual. In the Mes Aieux's song Degeneration (a cool Canadian Quebecker folk band, check them out!), it describes a person who's ancestors were poor but eventually became successful, yet the song's protagonist is broke and considering minimalism to cope.

http://sylvanend.files.wordpress.com/2012/03/polish-train.jpg
Polish Train (taken from A Passion for Green Blog)
A Big House
Surprisingly the two have quite a bit in common. Investors, specifically value investors, look to buy less volatile securities that are currently under their intrinsic value to hold for the long run (a great book to read on the topic is the book is The Intelligent Investor by Benjamin Graham). Though these investments do not generally provide large immediate returns, value investors like Warren Buffet have a track record of frequently outperforming the market in the long term. Minimalists make purchasing decisions based on what they need, not what they want. Purchasing necessities does not mean living out of a tin shack and dining off of the dollar menu at a restaurant. Minimalists purchase things that are not the cheapest but items which generate the greatest value. One of the blogs I came across stated that the author bought $300 shoes because they would last him a decade. Travelling need not be an expense when one is exploring new cultures and exposing themselves to new experiences. Travel is an investment in oneself (so is eating vegetables)! You do not have to be poor to be a minimalist either. When I was in Poland, I met a judge on a train who is a minimalist (check out his minimalist blog here). They, like investors, are seeking the highest return on their investment.

Time is a variable that needs to be taken into consideration for investment decisions. Are you getting the highest return? A great example of this was given on the Goldman Sachs Elevator Twitter Feed. When one worker declared that he wanted to watch the whole season of Breaking Bad, his coworker suggested that a pilot's licence can be completed instead. Often is it difficult to quantify the net benefit of free time. People generally know how much money they make an hour at their day job, but it is difficult to determine how high of a return a picnic, spending time with your children, writing poetry, exercising or cooking has.

Thus comes the meaning of life. Determine exactly what you need in life, the absolute necessities. Do you really need a job that pays well but is so draining that you neither have the time nor energy to spend time with family or friends? John Maynard Keynes predicted that in an advanced society, a person should not have to work more that 15 hours a day, though it seems as though work days are getting longer. Do you really need such a big house if you rarely entertain guests? Is a cottage you own worth the cost if you only visit a few times a year? Go out and make wise investments from spending time with family and friends, reading, and riding a bicycle to social and political engagement. Money and time are both finite resources, so budget accordingly.

Are you looking to learn more about Minimalism? Be sure to check out Joshua Fields Millburn & Ryan Nicodemus' blog called The Minimalists. Also, big shout out to Sebastian for helping me set up my domain!

2 comments:

  1. Nice read, Greg. I think the investor/minimalist correlation is very real and well exemplified here as well: http://www.economist.com/node/17929057
    Hope you're doing well.

    -Robert

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