Flow, Stories, Mastery & Bad Advice

A boy once asked Charlie Munger, “What advice do you have for someone like me to succeed in life?” Munger replied: “Don’t do cocaine. Don’t race trains to the track. And avoid all AIDS situations.” It’s often hard to know what will bring joy but easy to spot what will bring misery. When trying to get ahead it can be helpful to flip things around, focusing on how to not fall back. Here are a few pieces of very bad advice:

  • Allow your expectations to grow faster than your income
  • Envy others’ success without having a full picture of their lives.
  • Mimic the strategy of people who want something different than you do.
  • Automatically associate wealth with wisdom.
  • Assume a new dopamine hit is a good indication of long-term joy.
  • Assume people care where you went to school after age 25.
  • Assume that what people can communicate is 100% of what they know or believe.

__________________________

Progress often happens in leaps, not steps. Most of us assume that learning happens in a nice, steady curve: put in effort, get results. We think:

  • More effort = more reward
  • More time = more progress

But real learning doesn’t usually follow that path. Instead, we often hit long plateaus, followed by sudden breakthroughs.

If we’re expecting constant progress, those plateaus can feel like failure. But they’re not failure. They’re part of the process.

This is where a lot of people give up. When you’ve been practicing, trying, doing the work, and it feels like nothing’s happening, it’s tempting to walk away.

But you may be much closer to a breakthrough than you think. Sometimes, just around the corner, something clicks—and you’re suddenly at the next level.

It’s not always a flat line before a breakthrough. Sometimes you make slow, steady gains. Sometimes it feels like you’re backsliding. Sometimes it gets messier before it gets clearer. But underneath the surface, your brain is making connections. Your understanding is deepening. The dots are starting to line up. Eventually, that invisible progress becomes visible.

__________________________

There is a reason why people find the financial markets endlessly fascinating. They haven’t been solved. The complexity of markets is dizzying, and in complex situations even the iron laws of physics can produce surprising, unstable results (think of airplane turbulence). More important still, finance is ultimately driven by people, not particles, and they do not always respond to similar stimuli in similar ways. They look at what happened last time, try to do better, anticipate what other traders will do and seek to outfox them. The absence of fundamental laws in markets is frustrating, disorientating—and what makes them so interesting.

There is certainly plenty to learn about the markets. But there is a case for learning as much as you can about finance and the markets and then easing back. There’s this weird dynamic in personal finance where you have to go deep at first. You need to learn enough to protect yourself. To build a plan. To avoid getting fleeced. But once that plan is in place, ideally you should be able to step back.

Check in once a year. Rebalance when necessary. And focus on everything else in life that matters more than your asset allocation. But here’s the problem: after doing all that work, learning all those concepts, following all those market narratives… can you actually let go?

__________________________

One of the main reasons people make behavioral mistakes when investing: the power of stories. Humans interpret the world through stories, and financial markets are narrative generating machines. When we make poor investment decisions, they are inevitably deeply intwined with a story we are using to interpret a complex and chaotic environment. It is easy to look at historic financial market events with equanimity because we know how these stories unfolded; it is an entirely different proposition when we are in the midst of an event – because we don’t know how the story will end.  So, we make up our own ending and invest accordingly.

__________________________

Modern neuroscience distinguishes between two mental states: one of striving, where a surge of dopamine keeps us laser-focused on external goals like winning, perfection or achievement – and another of serene presence, where we hover in the moment, simply being. In this latter state, our neural chemistry shifts; endogenous opioids and endocannabinoids fill the brain, bringing feelings of deep satisfaction, fulfillment and joy in the now.

Motivation psychologists distinguish these two states as extrinsic and intrinsic motivation for what we’re doing. The former takes hard work and discipline to keep us going. The latter propels us forward, as by magic: flow.

Repetition: the repeated movements of our craft – the physical routines we practice over and over – follow us everywhere. Whether we call it practice or technique, these repeated actions shape our brains in powerful ways, often without us even realizing it.

They form unique connections in the brain – linking movement, memory and emotion. These connections stretch across the parts of the brain that control movement, wrap around the areas responsible for memory, and reach deep into the emotional core of the brain – the limbic system. That includes the insula, a region that helps manage both our physical health and our inner sense of self.

‘Muscle memory’ doesn’t live in our hands or legs. The real control centre is in the brain. This is where movement begins, guided by systems that plan and initiate what we do. From there, messages travel through long chains of nerve cells – from the brain down the spine and out to the rest of the body. Millions of tiny electrical signals, known as action potentials, move back and forth, telling our muscles, organs and even the tips of our fingers what to do next.

The idea is to ‘program’ the right moves in our brain so they become so automatic we can use them to, yes, feel, and to find flow. The prefrontal cortex part of our brain matures last in our individual development, with restructuring continuing well into our 20s. These parts of the brain are very ‘plastic’, meaning that they are easily shaped by experience and learning. So they are also key to the development of technique in our craft – be that in science, the arts or other fields – because they are suited to rule-based learning.

Neuroplasticity is our brain’s capacity to learn; to forge new connections between neural systems, as we practice something with our body. Professional singers and actors do daily vocal exercises, dancers do daily barre exercises – the same moves over and again – and musicians are known for their never-ending scales practice that drives neighbors up the wall. What may seem a strange, repetitive, even boring activity that artists, scientists and other creatives engage in daily is in fact doing magic to their brains.

Repeating something consciously – in this context meaning exercising those prefrontal systems of the brain – is quite effortful, and it needs a lot of energy and attentional resources. Therefore, our brain starts to forge connections that let the movements we’re practicing pass from explicit, effortful memory systems into implicit, almost automatic memory systems.

This works a bit like learning a new language. First, we learn the words, the basic grammar, and we make many mistakes. It is effortful and we have to think before uttering any sentence at all. But as we repeat the words, practice verbal tenses and vocabulary over and over, our brain realizes the repetition and transports the skill of that new language from explicit to implicit memory systems. 

That’s why the advice to ‘just let go’, ‘be in the present’ and ‘feel it’ are unhelpful to find flow. When flow happens to you, it may well feel magical, it might feel like you’re ‘letting go’. You feel a strange fusion of your movements and your awareness, and you’re somehow entirely entrapped in the present. It’s still early days to say exactly how this works, but it has to do with those low-level, implicit memory systems that encode movements that we internalize with technique practice. Then, the prefrontal systems deactivate while we let the implicit motor memory systems do their job. That’s when you use that skill to express and find flow.

But this is a neural process that happens outside of your conscious awareness, you can’t do this at will. Repetitive movement practices have a wonderful side-effect if used well: they remove uncertainty from our brain. Uncertainty is part of all our lives to a larger or lesser extent; and it is among the chief killers of our calm. Being in flow makes us escape from the unpredictability of life.

Life is unpredictable, and our senses can’t always find something recognizable to cling to. When our ability to predict is weakened and our brain is put on alert, this mind-absorbing state can make us feel miserable. We can regain our footing by controlling our surroundings or other people, but if flow is what we seek, we’ll fail. What we need instead are routines in our day to create habits of well-being in our mind, because our brain will, during those periods of routine, know exactly what’s going to happen next.

Place the pathway prompts strategically in your surroundings – and off you go, flow.

________________________

The age-adjusted death rate in the US for cancer has declined by about a third since 1991, meaning people of a given age have about a third lower risk of dying from cancer than people of the same age more than three decades ago. That adds up to over 4 million fewer cancer deaths over that time period. Thanks to breakthroughs in treatments like autologous stem-cell harvesting and CAR-T therapy, cancer isn’t the death sentence it once was. The dramatic bend in the curve of cancer deaths didn’t happen by accident — it’s the compound interest of three revolutions:

  1. While anti-smoking policy has been the single biggest lifesaver, other interventions have helped reduce people’s cancer risk. One of the biggest successes is the HPV vaccine. Cervical cancer deaths in US women under 25 fell about 62 percent, a decline researchers attribute largely to the HPV vaccine.
  2. The next revolution is better and earlier screening. It’s generally true that the earlier cancer is caught, the better the chances of survival.
  3. Most exciting of all are frontier developments in treating cancer. From drugs like lenalidomide and bortezomib in the 2000s, which helped double median myeloma survival, to the spread of monoclonal antibodies, real breakthroughs in treatments have meaningfully extended people’s lives — not just by months, but years. Perhaps the most promising development is CAR-T therapy, a form of immunotherapy. Rather than attempting to kill the cancer directly, immunotherapies turn a patient’s own T-cells into guided missiles. 

__________________________

There is so much we don’t know about the deep ocean, but what we do know is astonishing. The ocean’s deepest point extends approximately 36,000 feet below the surface. Beyond 600 feet, light no longer penetrates, making photosynthesis impossible, yet 98% of marine life resides on or near the sea floor. Life at these depths depends almost entirely on “marine snow”—organic matter drifting down from the ocean’s upper layers.

When a whale dies, its massive body sinks to the seabed and sets off an extraordinary chain of events. A single whale fall can blanket an area of 50 square meters, roughly 538 square feet, on the ocean floor. In that single moment, it delivers a bounty of food equivalent to what small particles would provide over 200 to 2,000 years. It’s an enormous input of organic matter that sticks around for centuries.

________________________

The math and odds are against you to be able to make enough money to survive as a professional tennis player. Employing a bottom-up analysis of the top 100 junior players from 2008, research examines their career trajectories, rankings, and financial outcomes. The findings reveal that you need to be ranked in the top 150 in the world in order to break-even financially. It’s even tougher for females because male players tend to sustain longer careers, potentially due to higher earnings in the ATP circuit outside Grand Slam events.

______________________

U.S. small cap stocks are much less expensive relative to U.S. large medium and large cap stocks, but they are still more expensive relative to almost all foreign stocks:

The U.S. as a whole remains much more expensive than all foreign markets:

The gap in price to earnings from the U.S. vs. the rest of the world has narrowed slightly in 2025 but remains enormous:

_______________________________

Only a third of five-to-10-year-old kids frequently read for fun, compared to over half in 2012. This could be in part because their parents are less likely to read to them before they turn five: 41% of parents of all ages reported doing so, a steep drop from the 64% in 2012.

_______________________

Barry Ritholtz and Paul Krugman interview: On Art as an investment: If you go back to the old masters in the 15, 1600s and buy one of their paintings for $100 and it sells centuries later for tens of millions, it’s about a 3% return rate. It’s just the magic of compounding over centuries that are just outside our comprehension.

_____________________

__________________________

The largest stocks dominate market caps in most countries, not just the U.S. (with the Mag 7):

Success Addicts, Individual Stocks & Best Places To Work

Imagine reading a story titled “The Relentless Pursuit of Booze.” You would likely expect a depressing story about a person in a downward alcoholic spiral. Now imagine instead reading a story titled “The Relentless Pursuit of Success.” That would be an inspiring story, wouldn’t it? Maybe—but maybe not. It might well be the story of someone whose never-ending quest for more and more success leaves them perpetually unsatisfied and incapable of happiness.

Though it isn’t a conventional medical addiction, for many people success has addictive properties. To a certain extent, I mean that literally—praise stimulates the neurotransmitter dopamine, which is implicated in all addictive behaviors. success also resembles addiction in its effect on human relationships. People sacrifice their links with others for their true love, success. They travel for business on anniversaries; they miss Little League games and recitals while working long hours. Some forgo marriage for their careers.

People willingly sacrifice their own well-being through overwork to keep getting hits of success. I know a thing or two about this: As I once found myself confessing to a close friend, “I would prefer to be special than happy.” He asked why. “Anyone can do the things it takes to be happy; going on vacation with family, relaxing with friends … but not everyone can accomplish great things.” My friend scoffed at this, but I started asking other people in my circles and found that I wasn’t unusual. Many of them had made the success addict’s choice of specialness over happiness. They (and sometimes I) would put off ordinary delights of relaxation and time with loved ones until after this project, or that promotion, when finally, it would be time to rest. But, of course, that day never seemed to arrive.

We are not only gregarious animals, liking to be in sight of our fellows, but we have an innate propensity to get ourselves noticed, and noticed favorably, by our kind. And success makes us attractive to others (that is, until we ruin our marriages).

Unfortunately, success is Sisyphean (to mix my Greek myths). The goal can’t be satisfied; most people never feel “successful enough.” The high only lasts a day or two, and then it’s on to the next goal. Psychologists call this the hedonic treadmill, in which satisfaction wears off almost immediately and we must run on to the next reward to avoid the feeling of falling behind. This is why so many studies show that successful people are almost invariably jealous of people who are more successful.

They should get off the treadmill. But quitting isn’t easy for addicts. For people hooked on substances, withdrawal can be an agonizing experience, both physically and psychologically. Anxiety and depression are very common after one quits alcoholic drinking. Success addicts giving up their habit experience a kind of withdrawal as well. Research finds that depression and anxiety are common among elite athletes after their careers end.

American culture valorizes overwork, which makes it easy to slip into a mindset that can breed success addiction. What can you do to retrain yourself to chase happiness instead of success, no matter where you are in your life’s journey?

  1. Admit that as successful as you are, were, or hope to be in your life and work, you are not going to find true happiness on the hedonic treadmill of your professional life. You’ll find it in things that are deeply ordinary: enjoying a walk or a conversation with a loved one, instead of working that extra hour. This is extremely difficult for many people. It feels almost like an admission of defeat for those who have spent their lives worshipping hard work and striving to outperform others. Social comparison is a big part of how people measure worldly success, but the research is clear that it strips us of life satisfaction.
  2. Start showing up and being present for relationships you’ve compromised in the pursuit of success.
  3. Find the right metrics of success. If you only measure yourself by the worldly rewards of money, power, and prestige, you’ll spend your life running on the hedonic treadmill and comparing yourself to others. Better metrics include faith, family, and friendship. I also include work—but not work for the sake of outward achievement. Rather, it should be work that serves others and gives you a sense of personal meaning.

Success in and of itself is not a bad thing, any more than wine is a bad thing. Both can bring fun and sweetness to life. But both become tyrannical when they are a substitute for—instead of a complement to—the relationships and love that should be at the center of our lives.

___________________________

I stopped buying active investments (individual stocks, etc.) a few years ago. I’ve gone through different justifications for why too. Originally, I stopped buying active investments because of the performance argument. If 85% of active stock managers can’t beat the market over 10 years, what makes you think you can? It’s also too hard to know if you’re actually good. Because there is so much luck involved (especially over shorter time periods), you are better off not wasting your time trying to figure it out.

But there’s an even better argument:  I don’t make active investments now because you can’t put a price on mental freedom. What I’ve realized about myself (and many others I’ve spoken to) is that when you buy an active investment like an individual stock, that investment consumes a lot of your attention.

I don’t identify with the S&P 500. I don’t identify with index funds. When they drop by 10% or 20%, it’s no big deal because it’s out of my control. But that not true with individual stocks. It’s a personal decision that you’ll likely start watching much closer. If you log in to check your pick (or picks) multiple times per day, that is time you could be doing more valuable things like focusing on work, friends and family.

____________________

The antisocial century, in three parts:

1. 1960-2000: Robert Putnam sees associations and club membership plummeting, writes “Bowling Alone”

2. 2000 – 2020s: Face to face socializing falls another 25%, as coupling rates plunge

3. Now this…

_____________________________

Forbes surveyed more than 217,000 employees working at companies within the U.S. that employ more than 1,000 people. The organizations were stratified so that companies with 1,000 to 5,000 employees were deemed midsize, while companies with more than 5,000 employees were considered large employers.

Survey respondents (who remained anonymous so they could answer freely) were asked if they would recommend their employer to others and to rate it based on a range of criteria, including salary, work environment, training programs and opportunities to advance. Participants were also asked if they would recommend their previous employers (within the past two years) and the employers they knew through their industry experience or through friends or family who worked there.

Ultimately, each employer was given a score, and the 1,199 organizations with the highest scores landed on one of the two final lists—498 companies on America’s Best Midsize Employers 2025, and 701 organizations on America’s Best Large Employers 2025. The top 50 large employers are below:

________________________________

The Art Of Spending, 1% Earners & Small Cap Stocks

Barry Ritholtz spoke with Morgan Housel about his new book, The Art Of Spending Money: Simple Choices For A Richer Life:

Barry: You’ve covered human behavior and human nature, what led you to say, I wanna write a new book about the art of spending money?

Morgan: I didn’t call this book The Science of Spending Money because I don’t think that exists. Science implies that there is like a, a one size fits all rule for, for you and I, and that’s not the case. I call it the artist spending money because art is subjective. It is often contradictory. It is different from person to person, and that’s really what spending is. So much good ink has been spilled on how to invest, how to grow your career, how to earn more money, but very little on spending money.

Barry: There’s been a lot of academic research: Does money make you happier?

Morgan: What a lot of the research shows is that if you are already a happy person, money can make you happier. But if you are a depressed person – or a miserable person, whatever it might be – that it will not, and it’s easy to just kind of contextualize this into a real person’s life of if you are in a bad marriage and you hate your career and you have a two hour commute and just go on down the list, you’re an alcoholic, you’re obese. If you take that person and you give them more money, will they be happier? The answer is no, of course not, because all of those other aspects of their life are gonna override whatever money can do for them.

But if you also take somebody who’s in a great marriage loves their career, they’re happy, they’re healthy, they sleep eight hours, they have a good set of friends – and you give that person more money, there’s a good chance that they’re gonna use that money to just leverage what they’re already doing. To spend more time with the friends who they already love, to spend more time getting healthier and eating good food.

Barry: One of the interesting things in the academic literature that I recall seeing a few years ago was when they draw these charts of money potentially making people happier, Divorce is a giant red flag. People in the middle of a divorce or people who have recently been divorced, that’s a really challenging road to haul, isn’t it?

Morgan: I think what it comes down to is that having more money is so quantifiable that we use it as a crutch for all of our problems. For example, if I said I would have a better life if I was a 10% better dad. What does that even mean? What does a 10% better Dad mean? There’s no way to quantify it, but if I said I would have a better life if my salary went up by 10%, you can easily quantify that, wrap your head around it. So we chase that and we assume that that’s gonna be the solution to all of our ills. Becoming a better dad might make me a happier, better person, but since it’s impossible to quantify, I just ignore it and pretended that it doesn’t exist.

Barry: You alluded to impressing others. How should people avoid spending money for status and symbolism as opposed to bringing themselves satisfaction and happiness?

Morgan: It is so easy to overestimate how much other people are looking at your stuff, your house, your cars……they’re not paying any attention. They’re busy worrying about themselves and thinking about themselves. And so when you frame it like that – it’s not to say don’t use your money to gain attention – it’s use it to gain attention from the very small core group of people who you want to love you. There’s a great quote from Warren Buffett where he says, “The definition of success in life is when the people who you want to love you do love you.”

Barry: The person driving down the street in the loud Lamborghini or the person around the corner from you with a giant house? You are only seeing one half of the balance sheet. You’re only seeing their assets. Did they pay cash for that or did they go deep into debt in order to buy a house or a car to show off for the neighbors? Talk about that a little bit.

Morgan: Wealth is what you don’t see. Wealth is the cars that you didn’t purchase and the giant house that you didn’t buy. That’s what wealth is. It is money that you didn’t spend that you can now save for either for future consumption or for independence today. I can see your car, I can see your house, I can see your watch and your clothes. I cannot see your bank account or your brokerage statement. So the most important part of wealth – literally in my view, the definition of wealth is invisible to everybody.

Think about physical fitness. You can see somebody’s physique, it’s right there. And so you know who to admire and who to chase. “Oh, that, that person’s in great shape. I should ask them what they do. I should ask them their diet and try to mimic what they do.” But if you see somebody with a mansion or a Ferrari or whatever it is, you don’t know they got that by success. That may be the picture of a leverage. It’s possible they haven’t slept in two weeks because they’re wondering how they’re gonna make their next Ferrari lease payment. And so we have a fake view of who we’re chasing and what we should do, because wealth that we’re chasing is invisible.

_____________________________

The reason why Trump caved on his tariff threats was due to the response of the financial markets. Throughout history they have had the ability to force immediate policy changes from politicians.

Another good example occurred in October 2008:

During the month following Lehman Brothers’ September 2008 implosion, then Federal Reserve Chairman Ben Bernanke testified to the House Committee on the Budget on Monday, October 20, 2008. He reminded members that the Federal Reserve’s charter was to maintain high employment and low inflation. The Fed, he also reminded, was not authorized to manage the stability of the financial system or keep credit markets flowing; it was not the FOMC’s charge to address any of the myriad issues that had endangered the financial system’s functioning.

A fiery speech from someone (maybe Rand Paul?) led to a vote against Bernanke’s funding and authority request. He would not be getting the tools necessary to unfreeze credit and keep the banking system operating.

Sayeth Mr. Market: “Hold My Beer.”

The sell-off began immediately after the vote; over the next five trading days, from recent highs, the S&P 500 fell 13.9%, the Nasdaq was right behind it at 13.5%, and the Russell 2000 crashed 18%. MOSTLY IN ONE WEEK. Congress reconvened and passed both the necessary authority and the dollars that the Fed chairman had requested. By November 4th, all of the losses had been made up and then some.

Don’t fix the credit markets, and put corporate revenue and payrolls at risk? FAFO.

______________________________

Behind a paycheck, the largest source of income for the 1% highest earners in the U.S. isn’t being a partner at an investment bank or launching a one-in-a-million tech startup. It is owning a medium-size regional business. Many of them are distinctly boring and extremely lucrative, like auto dealerships, beverage distributors, grocery stores, dental practices and law firms.

The analysis of anonymized tax data from 2000 through 2022 suggests the importance of such business ownership to the U.S. economy has grown. The share of income that ownership generates has increased to 34.9% in 2022 from 30.3% in 2014 for the top 1% earners. It has increased even more at the topmost levels. The top 0.1% highest-earners saw 43.1% of their income come from such business ownership in 2022, compared with 37.3% in 2014. (The minimum income threshold in 2022 to qualify for the top 0.1% of earners was $2.3 million).

The growth of this growth can be attributed in large part to tax cuts in recent decades for such business owners and low interest rates that have boosted company valuations. The number of such business owners worth $10 million or more, adjusted for inflation, has more than doubled since 2001, to 1.6 million as of 2022. The growth has been in S-corporations and partnerships, where the profits and losses of the business flow through to the owners or partners; the business itself doesn’t pay taxes. The typical medium-size business they studied has annual sales of $20 million and 100 employees.

_____________________________

Despite their recent struggles, U.S. small cap stocks aren’t dead — they’re just misunderstood. After eight consecutive years of under-performance relative to U.S. large caps, some investors are ready to write them off entirely, even calling for exclusion from portfolios. History, valuation metrics, and macro conditions suggest a different story – one that points to an approaching comeback, for three key reasons:

  • Small-cap underperformance has historical precedent — but cycles turn. We’re in the 12th year of a small-cap lagging cycle, longer than average. Historical data suggests a reversal is near.
  • Higher interest rates are reigniting migration. With rates expected to stay elevated, small-cap stocks are more likely to graduate to large caps — boosting overall performance potential.
  • Valuation and quality favor small caps. Compared to the weakest segment of large caps, small-cap stocks offer stronger return on assets and more attractive price-to-book ratios, contradicting the view that only low-quality names remain in the space.

_____________________________

The MSCI ACWI index includes large and mid-sized companies from 23 developed countries (like the U.S., UK, Japan) and 24 emerging markets (like China, India, Brazil). It covers about 85% of the available stocks around the world. The number of stocks in the MSCI ACWI that do business globally has risen to 80% (which is why the global stock market did not respond well to the recent tariff announcements).

Within this group of global firms, the ones located outside the United States currently trade at a massive valuation discount relative to U.S. companies.

_____________________________

The U.K. has overtaken China as the second largest holder of U.S. treasuries (behind Japan):

___________________________

Over the past 50 years, the U.S. has created, from scratch, 241 companies with a market capitalization of more than $10 billion, while Europe has created just 14. A big reason why Europe is now behind can be summed up as a lack of speed. Entrepreneurs complain that everything takes longer in Europe: raising money, complying with local regulations, and hiring and firing workers.

_____________________________

America’s national legislature has the oldest median age compared to dozens of wealthy democracies:

Inversion, Eudaimonia & Workplace Skills

Happiness, it turns out, is more Rorschach than road map. Is it found in the ultraluxe wellness center or the austere monastery? Does it come from getting what you want or wanting less?

By the early 20th century, utility maximization — happiness writ small — emerged as a linchpin of economic analysis. Public happiness, in turn, became a matter of optimizing the sum of individual welfare. The mathematics could be complex, but the premise was simple: Getting what you want in life — that’s happiness, bro.

The notion of happiness as choice-making swiftly migrated from economic models into the marrow of the broader culture. What was once a lifelong project shrank into a sequence of transactions. As the midcentury economy boomed, it didn’t just build wealth; it reconstructed desire. The good life, formerly the province of philosophers, was now a mainstay of the marketers: happiness packaged as the perfect lawn, the gleaming automobile, the immaculate kitchen with its humming refrigerator. We became, almost without noticing, what we bought.

And if you still felt empty? That’s where the therapy culture of the 1970s and 1980s came in — not as a remedy for consumerism but as an extension of it. The older vocabulary of life-defining commitments and meaning-making projects continued to wither while a new lexicon took hold: self-acceptance, self-esteem, self-love.

By the 1990s, happiness had acquired a personal brand. Oprah Winfrey presided over a daytime academy of self-care, empowerment and curated aspiration. Then came the next wave: the life-hacking, self-quantifying, habit-stacking era of optimization gurus like Tim Ferriss, whose first book, published in 2007, was “The 4-Hour Workweek” — “a toolkit,” in his words, “for maximizing per-hour output.”

Excitement is the more practical synonym for happiness, and it is precisely what you should strive to chase,” Ferriss wrote. “It is the cure-all.” Amid the excitement, the happiness concept kept getting miniaturized. With the rise of the algorithms, decision-making became a series of bite-size transactions. If you liked this, you’ll like that. Every swipe, click and purchase was an act of preference revelation, the digital cookie crumbs of personal identity.

In today’s social media ecosystem, happiness even threatens to become a ring-lighted aesthetic: matcha lattes, artisanal candles, sage-smudging, captioned reminders to just breathe. Once again, happiness is work — but now the work of packaging moods and moments for validation, with a tiny dopamine hit for each “like.”

“So long as you’re happy,” parents tell their kids. In reality, they want to see their children engaged in something worthwhile, contributing to something beyond their own fleeting satisfactions. 

If you’ll indulge the philosophers’ habit of conjuring characters to illustrate their abstractions, imagine a young person — let’s call her Julia — who left community college after a semester and has bounced between gigs ever since: dog-walking, cafe shifts, warehouse nights. Her life is messy, but she has learned how to show up for people. When her neighbor’s mother gets sick, Julia brings groceries. When her cousin gets out of rehab, she’s the one who texts every day. She doesn’t have a wellness routine or a five-year plan. But people trust her. She holds lives together in small, invisible ways.

Or imagine a middle-aged man named Daniel, a product manager with a smart fridge and an Optimal Morning Routine. For years, he has chased happiness through upgrades — to his apps, his appliances, himself. But lately, the returns feel thin. When his niece’s soccer team needs a coach, he volunteers, awkwardly at first, then with growing investment. Daniel has started showing up at town meetings, fighting to save the field from developers. Now his calendar includes something he cares deeply about that doesn’t come with a progress bar.

Daniel still wears a Whoop band. Julia hasn’t found her “calling.” But they’re living into a broader idea of happiness — less about what they have, more about what they give, who they’re with, what they’re part of.

Is it possible that happiness stayed big, and it’s only our way of talking about it that got small? Surely the old understanding, in which the pursuit of happiness is inseparable from shared commitments, hasn’t gone anywhere. On some level, we still know the difference between feeling good and flourishing, between the hedonic and the eudaemonic, between the algorithm’s next suggestion and the difficult and uncertain path toward a meaningful existence. Yes, we often speak as if feelings are all that count, but maybe that’s because the language of the “good life” has been hollowed out.

____________________________

Inversion is a mental model that flips the script on traditional problem-solving. Rather than look at a problem in a linear, forward, logical manner, you think about it in reverse. Well, there is one complex, foundational problem that is truly universal: How do you live a good life? Using inversion to address it: Here are some ways to live a miserable life…

  • Allow idleness to dominate your life – Stress and anxiety feed on idleness. They take hold while you sit and scroll on your phone, while you overthink your situation, while you compare yourself to others, while you try to create the perfect plan. When you take action, you starve them of the oxygen they need to survive. 
  • Allow optimal to get in the way of beneficial – Ambitious people have a bad tendency to think like this: “I don’t have an hour to work out, so I just won’t go. I don’t have two hours for deep work, so I’ll do email instead. I don’t have 30 minutes to call my mom, so I won’t call at all.” When you allow optimal to get in the way of beneficial, you ignore the most powerful principle in life: Anything above zero compounds. A little bit is always better than nothing. Tiny wins stack over long periods of time. Small things become big things.
  • Obsess over speed – Life is about direction, not speed. It’s much better to climb slowly up the right mountain than to climb fast up the wrong one.

____________________________

More police officers kill themselves every year than are killed by suspects. At least 184 public-safety officers die by suicide each year, while an average of about 57 officers are killed by suspects. Law-enforcement officers are 54 percent more likely to die by suicide than the average American worker.

Most officers are required to pass psychological and physical screenings before they are hired. But many struggle after chronic exposure to trauma. Police officers have higher rates of depression than other American workers. Shift work, which disrupts sleep, and alcohol use, long the profession’s culturally accepted method of blowing off steam and managing stress, further compound health issues. 

______________________________

A survey of 1,000 managers across America revealed the reasons that 8 in 10 managers said newly hired college graduates did not work out during their first year on the job:

  • 78%: Excessive use of cell phones – the top pet peeve of managers
  • 61%: Entitled or easily offended
  • 57%: Unprepared for the workplace
  • 54%: Lack of a work ethic
  • 47%: Poor communication skills
  • 27%: Lack of technical skills

Other concerns managers had about the graduates included lateness, failure to turn in assignments on time, unprofessional behavior, and inappropriate dress and language.

Colleges don’t teach students how to behave in the workplace, and there is a lack of transitional support from both universities and employers. Most students graduate with little exposure to professional environments, so when they arrive at their first job, they’re often learning basic workplace norms for the first time.

______________________________

Where the number of homes for sale is growing. Fast.

___________________________

The Russell 1000 is a stock market index that represents the 1,000 largest companies in the U.S. by market value (also called market capitalization). The graph below shows the number of stocks within that 1,000 that fall by a certain percentage over a 1, 3 and 5-year time frame. While over time most major indices like The Russell 1000 go up, the odds are very high that any individual stock is going to fall by a lot.

___________________________

Lead characters were far more likely to die in the 1960s and 1970s than they are today. Across the 1970s, almost one in three protagonists died by the end of the film. That rate has steadily declined since. The drop has been particularly sharp since 2010. In the last five years, the share of lead characters who die has averaged just 17%. This is one of the lowest rates in almost a century of film history.

_________________________________

____________________________

Only 21% of American college revenues come from tuition:

__________________________

The average age of the global population is up from 26.5 years in 1980 to 33.6 years in 2025. Meanwhile, the average growth rate of the global population has also halved, from 1.8% in 1980 to 0.9% in 2025. The growth rate is expected to hit zero by 2084, and the world’s population is expected to begin declining by 2085, with the average age rising to 42. At the end of the 21st century, the average age is projected to be 43 years.

A.I. In College, Sea Floors & Batting Stances

  • “College is just how well I can use ChatGPT at this point.”
  • “I think we are years — or months, probably — away from a world where nobody thinks using AI for homework is considered cheating.”
  • “It isn’t as if cheating is new. But now, as one student put it, ‘the ceiling has been blown off.’ Who could resist a tool that makes every assignment easier with seemingly no consequences?”
  • “Massive numbers of students are going to emerge from university with degrees, and into the workforce, who are essentially illiterate.”
  • “The humanities, and writing in particular, are quickly becoming an anachronistic art elective like basket-weaving.”
  • “Many teachers now seem to be in a state of despair.”
  • “Every time I talk to a colleague about this, the same thing comes up: retirement. When can I retire? When can I get out of this? That’s what we’re all thinking now.”

______________________________

______________________________

The High-School Juniors With $70,000-a-Year Job Offers. Companies with shortages of skilled workers are looking to high school shop classes to recruit future hires.

  • Employers are increasingly recruiting high-schoolers in skilled trades due to worker shortages as baby boomers retire.
  • High schools are revitalizing shop classes and teaming up with businesses that offer students opportunities for part-time work and academic credit.
  • Welding students are getting job offers paying $50,000 and above, with no college debt.
  • More businesses are teaming up with high schools to enable students to work part-time, earning money as well as academic credit.
  • Employers say that as the skilled trades become more tech-infused, they anticipate doing even more recruitment at an early age, because they need workers who are comfortable programming and running computer diagnostics. 

_____________________________

“The hardest thing to teach a student—and the hardest thing to believe consistently—is that there is nothing ‘out there’ to go and get. There is no part, no career, no opportunity for which you should be searching and scrounging and coveting. All of the preparation is within, and you keep yourself mentally and physically fit; you remain generous with yourself and others; you stay deeply in study about your craft. Whatever is yours will then arrive.” — ​Marian Seldes

_____________________________

AQR released an excellent paper this week discussing U.S. vs. foreign stock markets.

_____________________________

Finland, the happiest country on earth, has things going for it that have been widely discussed in the past:

  • Universal healthcare and education
  • 320 days of paid parental leave, split equally between mothers and fathers
  • Freedom of the press, trust in institutions, and a culture of low corruption
  • Prioritization of community engagement, including frequently dining in groups, participating in civic life, and trusting the government to mostly take care of its people.
  • And a national character trait they call sisu—roughly translating to grit, resilience, or quiet inner strength

But it also has two others that are less widely discussed:

  1. There are 3.3 million saunas in Finland—roughly one for every 1.67 people. Finns drop by the sauna after work to relax, catch up with friends, or just sit in silence and sweat out the stress of modern life. There are even rules to encourage peaceful conversations – like no discussions about politics.
  2. Finland also scores high on the “lost wallet test.” This is a study from 2019 in which Stanford researchers dropped almost 19000 wallets in 355 cities/40 countries, to get a measure for whether people are generally honest. Scandinavia scored at the top of the lost wallet test: the Finns, for example, returned 90% of the wallets. And that’s not even the number that’s important. The report suggests that a strong predictor of the happiness of a country is whether the majority of people believe others would return their wallet. Finns trust their fellow Finns to do the right thing.

What can we learn from them to be happier?

  • Find people to break bread with
  • Go outside. 
  • Aim for “satisfied,” not euphoric. 
  • Cultivate a belief that most people are basically kind and trustworthy.

________________________________

Humans still haven’t seen 99.999% of the deep sea floor. Bizarre creatures like vampire squid and blobfish make their home in the dark, cold, depths of the deep sea, but most of this watery realm remains a complete mystery. Maps created with tools like sonar can show the shape of the seafloor, but it’s much harder to send cameras down beyond 200 meters, or more than 656 feet, where sunlight begins to fade rapidly and the waters turn cold and dark. This is the region of the ocean that’s considered “deep.”

______________________________

The 18 Degrees That Turned Aaron Judge Into the Next Babe Ruth. On May 5 of last season, Judge was mired in one of the worst slumps of his career. So when he stepped to the plate for the first time, he decided to try something different. Up to that point, Judge had always used an open batting stance, which angled his left foot toward the third baseman. Against Detroit Tigers ace Tarik Skubal that afternoon, Judge moved the placement of his front leg ever so slightly back toward the pitcher. He promptly blasted a home run into the right-center field bleachers, followed by a booming double a few innings later. The change to Judge’s setup was almost imperceptible at first, but it had an unimaginable impact: In the year since, he has put together one of the greatest stretches of hitting that baseball has ever seen.

Trade, Jobs, Saunas & Music

Lyn Alden delivered an absolutely masterful letter this month, offering deep insights on U.S. trade, deficits, and their impact on asset prices.

Many people assume that the trade deficit works like this: Americans send slips of paper to the rest of the world, and the rest of the world sends us real good and services. That sounds like a pretty sweet deal for Americans, right? The problem is that this common description misses the next step. What does the rest of the world do with that paper (or more realistically, electronic digits) that they receive?

The answer is that they buy American assets, including stocks, bonds, private equity, and real estate. Stocks and bonds represent the bulk of what they buy. As a result, over time foreigners own a larger and larger share of US stocks in particular. So, in practice we are not selling worthless papers for real goods and services. We are selling stakes in our valuable appreciating capital assets to buy depreciating goods and services.

That asset accumulation by the wealthier parts of the foreign sector is what gives them a lot of ammo to hurt US markets when they run into dollar shortages. They’ve got a big stockpile of assets that they can sell to get dollars, and they own increasing shares of our companies’ dividend payments and voting rights.

_____________________________________

Labor conditions for recent college graduates have “deteriorated noticeably” in the past few months, and the unemployment rate now stands at an unusually high 5.8 percent. Even newly minted M.B.A.s from elite programs are struggling to find work. Law-school applications are surging—an ominous echo of when young people used graduate school to bunker down during the great financial crisis. What’s going on? I see three plausible explanations, and each might be a little bit true:

  1. The labor market for young people never fully recovered from the coronavirus pandemic—or even, arguably, from the Great Recession.
  2. College doesn’t confer the same labor advantages that it did 15 years ago.
  3. There are early signs that artificial intelligence is starting to transform the economy.

When you think from first principles about what generative AI can do, and what jobs it can replace, it’s the kind of things that young college grads have done” in white-collar firms. They read and synthesize information and data. They produce reports and presentations.

Today’s college graduates are entering an economy that is relatively worse for young college grads than any month on record, going back at least four decades.

____________________________________

More on the World Happiness Report for 2025 from a reporter who went to see what was happening in Finland, the country that has ranked highest in happiness for 8 consecutive years.

The first World Happiness Report, summarizing the state of its research, drew a distinction between two concepts: “affective happiness” and “evaluative happiness.” Affective happiness captures emotions, immediate responses to events, whether we are experiencing joy or sadness at one moment or another. Evaluative happiness is a more contemplative or systemic matter, mapping a person’s overall appraisal of life and whether they are satisfied with theirs. Affective happiness is the realm of laughter, fun, picnics, parties, sex. Evaluative happiness is tied to good health, sufficient income, social cohesion, safety.

A crude synonym for evaluative happiness — and so much of this research flounders on the crudeness of synonyms! — would be “contentment.” That is what the Cantril Ladder measures, and it should surprise no one that the Nordic countries, with their long life expectancies, highly redistributive tax regimens, functional governance, low corruption and shared norms land at the top of the charts. The type of happiness that tourists go to Finland to find isn’t even the sort of happiness the country is accused of possessing.

A second area of confusion is that the two concepts of happiness, affective and evaluative, can operate independent of each other. A woman in the midst of extruding a baby might suffer from labor pains (low affective happiness) but feel profoundly satisfied or purposeful (high evaluative happiness). The “happiest country in the world” label seems to imprint on the American mind as a never-ending carousel of delights, but in Finland’s February chill, the reality is more modest.

At home in Brooklyn, the library is papered with reminders to “Please keep your voice down.” In contradistinction, the signs at Oodi said, “Please let others work in peace!” The two commands are almost — but meaningfully not — synonymous. The Brooklyn version is a plea for self-control. The Finnish version is a request to acknowledge the existence of other people. You see the difference.

A friend called and I rambled about my sorrow at watching the Finnish children rove and play, and told her about how mothers of all ages gathered spontaneously in the library to chat or rest or idly massage their feet. I explained that one of these mothers had placed her baby, a child of no more than 9 months, in a highchair at a library cafe table and handed him a vegetable purée to consider, then left for 20 minutes to fetch books. When the mother returned she told me, “every few years there’s a crisis where a baby is stolen but then it is returned or found 15 minutes later. Nothing severe.”

All government buildings in Finland have a sauna on-site. Nationwide, there is more than one sauna for every two Finns. In Finland, sauna is not a means to an end. It will not make a person richer or more attractive or more focused. The point is not to sweat out “toxins,” though that may occur — I’m not a scientist. The point seems to be the act itself: sitting in nude serenity among family, friends and strangers, safe in the bone-deep sense of trust that such an idyll both requires and reinforces.

____________________________________

The internet has caused a Cambrian explosion of creative expression by allowing artists to execute and distribute their visions with unprecedented ease. More than 500 scripted TV shows get made every year; streaming services reportedly add about 100,000 songs every day. We have podcasts that cater to every niche passion and video games of novelistic sophistication. Technology companies like to say that they’ve democratized the arts, enabling exciting collisions of ideas from unlikely talents. Yet no one seems very happy about the results.

The problem is particularly acute in music. In 2024, new releases accounted for a little more than a quarter of the albums consumed in the U.S.; every year, a greater and greater percentage of the albums streamed online is “catalog music,” meaning it is at least 18 months old. Hoping to remonetize the classics, record labels and private-equity firms have spent billions of dollars to acquire artists’ publishing rights. 

Music is turning into a rights-management business. There are vested interests now that don’t want new music to flourish. The private-equity funds just want you to listen to the same songs over and over again, because they own them. The ultimate effect, he thinks, is to discourage true, daring artistry. If Bach were alive today, he’d spend a few weeks trying to break into the L.A. music scene and say, ‘Ah, I’ll be a hedge-fund manager instead.’

__________________________________

Morgan Housel put together a list of questions we should probably be asking ourselves, like:

  • Who do I envy that is actually less happy than I am?
  • How much have things outside of my control contributed to things I take credit for?
  • Which of my strongest beliefs are formed on second-hand information vs. first-hand experience?
  • If I could not compare myself to anyone else, how would I define a good life?
  • Which future memory am I creating right now, and will I be proud to own it?
  • What kind of lifestyle would I live if no one other than my immediate family could see it?
  • How much of what I do is internal benchmark (makes me happy) vs. external benchmark (I think it changes what other people think of me)?

____________________________________

The Global Flourishing Study, based on a survey undertaken by a consortium of institutions including my Harvard colleagues at the Human Flourishing Program. This survey also uses self-reporting, but it collects much more comprehensive data on well-being, in about half a dozen distinct dimensions and in 22 countries, from more than 200,000 individuals whom it follows over five years.

What does it show? A decline in the happiness of young people, and although young people’s emotional and psychological distress is more pronounced in wealthy, industrialized nations such as the United States, it is occurring across the world.

Scholars have long noted that happiness tends to follow a U-shape across the lifespan: Self-reported happiness declines gradually in young and middle adulthood, then turns upward later in life, starting around age 50.

But that has changed. The flourishing scores don’t fall from early adulthood, because they now start low; they stay low until they start to rise at the expected age later in life.

That’s the bad news, which is plenty bad. But there is some good news. The flourishing survey discovers one notable exception to this global pattern: a more traditional U-shaped curve among those young people who have more friends and intimate social relationships.

___________________________

This week, U.S. GDP data for the first quarter of 2025 (January through March) was released. The data showed that the U.S. economy shrank at an annualized rate of 0.3%, but almost every economics journalist and columnist reported that this decline was due to a surge of imports, as American companies rushed to stock up on foreign-made goods ahead of Trump’s tariffs. This is incorrect.

GDP is a measurement of everything produced within a country’s borders. Imports are produced outside a country’s borders. So imports don’t add to or subtract from GDP. Imports simply aren’t counted in GDP at all.

Suppose an American buys a TV made in China for $1000. Remember that GDP can be calculated as the sum of consumption, investment, government purchases, and net exports:

GDP = Consumption + Investment + Government Purchases + Net Exports

When the American buys the $1000 TV from China, U.S. consumption goes up by $1000. And U.S. net exports go down by $1000, since “net exports” means exports minus imports. The increase in consumption exactly cancels out the fall in net exports. So the total contribution of the imported TV to U.S. GDP is zero.

Let’s take another example, which is more like what actually happened in Q1. Suppose an American company, Best Buy, decides to buy a Chinese TV and put it in a warehouse, because it knows that tariffs are coming soon. That purchase counts as inventory investment. So investment goes up by $1000. And just like in the previous example, net exports go down by $1000. The two cancel out, and the total contribution of the imported TV to U.S. GDP is zero.

Here’s a simple analogy: Does putting on shoes make you lose weight? No, it doesn’t. And yet when you weigh yourself with your shoes on at the doctor’s office, and you want to know your actual body weight, you subtract the weight of your shoes afterwards. Imports are to GDP what shoes are to your weight on the scale at the doctor’s office — just something superfluous that gets added in for the sake of measurement convenience, and which has to be netted out again later to get the true number.

_____________________________________

____________________________________

Horror movies are having a good year:

Sleep, Forecasting & Life Stages

Life can be divided into three stages:

  • Stage 1: Youth – You have time and health, but not much money (unless you have a trust fund).
  • Stage 2: Mid-Life – You have money and health, but little time, career/family consume most of it.
  • Stage 3: Old Age – You have time and money (hopefully), but your health begins to deteriorate.

But there’s a magical stage between Stage 2 and Stage 3 where you have all three: time, health, and money. Some people extend Stage 2 for too long, chasing promotions, accumulating wealth, and missing this precious window to live fully and intentionally.

_________________________

Six common sleep myths:

  • “You need 8 hours of sleep every night” (7 hours is ideal)
  • “We sleep to rest our bodies” (Sleep restores your brain much more than your body)
  • “Waking up in the middle of the night is bad”
  • “Light and sound will ruin your sleep”
  • “Sleeping pills will help you”
  • “You need to time your sleep cycles to leverage REM”

There are two ways sleep helps the brain:

(1) Sleep helps us learn and remember important things. When we’re awake, our memories seem to go into a sort of short-term bank. Then, when we’re in certain stages of sleep, our brain culls through these memories. It puts the most important memories in long-term storage and deletes the useless ones.

(2) Sleep “cleans” our brain. The brain is like an engine that does a lot of work during the day. Engines emit smog—in the case of the brain, this smog is called “metabolites.” But because our brain is tightly sealed off, it can’t seem to get rid of these metabolites as it’s up and running while we’re awake.

Picture this as a car running idle in a garage. But pretend the car’s engine can’t run with the garage door open. So across the day, the engine runs in the closed garage, and smog builds and builds in the brain. Run the engine too long with the garage door closed, and you get a dangerous smog buildup. As we sleep, it’s like the engine turns down and the garage door opens. During certain sleep phases, some areas of our brain expand by 60 percent, which allows the previous day’s metabolites to clear. This also lets in enzymes that repair and rejuvenate receptors in the brain. Sort of like having a mechanic come in to tune the engine while the garage is open and the engine is “off.”

_________________________

When Do People Want Their Inheritance (And When Do They Get It)? When you ask people whether they would prefer $250,000 at age 30, $500,000 at age 40, or $1 million at age 50, people overwhelmingly wanted the lower amount earlier in life. 70% of respondents who answered this question chose $250,000 at age 30.

The average age at which someone receives an inheritance has been increasing over time. In 1989, the average age of inheritance was 41 and today it’s around 51.

You can provide up to $19,000 per year to each of your children tax-free (as of 2025). While the IRS allows you to gift $19,000 per child per year tax-free, technically you can gift far more than this without paying federal taxes. The catch is that any gift above $19,000 counts against your lifetime gift limit, which is $13.99 million (as of 2025). In other words, you can give away $13.99 million across your lifetime without having to pay the federal gift tax.

_________________________

Why Macro Forecasting Is Impossible. Think about global trade — large, complex interrelated economies, driven by everything from policy to consumer sentiment, geography, innovation, employment, inflation, natural resources, etc. Besides all of those massive complexities, everything affects everything else. You have initial acts, second-order effects, 3rd, 4th, 5th order effects, reflexivity, and dynamic interactions. It quickly scales up to billions of incalculable odds.

This is why forecasting market prices or macroeconomic data is so challenging: There are simply too many variables, each dependent on and reflecting even more variables, to pretend we truly know what will happen next.

_________________________

Modern-day cannabis is simply not the same as the plant used in the 1960s through the 1980s or even as recently as 10 years ago. New strains of cannabis are highly potent, making them more addictive and potentially more dangerous, and we are still trying to understand what the drug does to developing adolescent brains.

All cannabis products contain a mix of delta-9-tetrahydrocannabinol (THC), the intoxicating component of the cannabis plant, and cannabidiol (CBD), which may have anxiety-reducing properties. In the 1990s the marijuana in a typical joint contained about 5 percent THC.

But genetic modification has drastically increased THC potency; from 1995 to 2022 its content in the average cannabis plant increased by 307 percent. And it’s not just joints or pot brownies; with the expanding legalization and commercialization of cannabis, there are few limits on the levels of THC in products such as fast-acting vape pens and edibles. What teens can buy today is nothing like what their parents used in college.

Higher-potency THC, marijuana use starting at a young age and more frequent use all increase the risk of psychosis.

Behavioral Tendencies & Life Expectancy

If you’re regularly having arguments with well-informed people of goodwill, you will probably ‘lose’ half of them–changing your mind based on what you’ve learned. If you’re not changing your mind, it’s likely you’re not actually having an argument (or you’re hanging out with the wrong people.) While it can be fun to change someone else’s position, it’s also a gift to learn enough to change ours.

____________________________

Stocks, on average through every bear market since the inception of the S&P 500 in 1957, bottom in price a full 9 months before the earnings do. This is why stocks are referred to as an anticipatory vehicle. By the time earnings are reaching their cycle low, stocks have already been rallying for three quarters of a year in advance of that low.

___________________________

In an era when a select group of U.S. tech behemoths have dominated market returns, investors are growing increasingly wary of the concentration risk they pose. With asset owners now exploring various avenues to diversify their equity allocations, U.S. small-cap stocks have emerged as more than just a diversification tool—they represent a compelling investment opportunity. In fact, the “Magnificent 7’s” dominance have driven small-cap stocks to trade at a historically wide valuation discount to large-caps. The potential for mean reversion to narrow this valuation gap creates an opportunity for small caps to outperform the narrowly focused large-cap indices over the next decade.

___________________________

About 70% of Nevada gaming revenue is from slot machines and the majority of players are locals. In 2024, Nevada casino games won $15.6 billion from players with $10.5 billion coming from slot machines. It’s a jarring figure when put into perspective with other forms of entertainment (here’s a comparison: the entire US box office in 2024 was $8.5 billion).

Slot machines are the new crack cocaine of high-tech gambling. The most addicted players don’t even play to win. Rather, they play to be in a trancelike state called the “machine zone” where daily worries, social demands, and even bodily awareness fade away.

Meanwhile, the North Star metric for casinos is maximizing the players “time on device” by designing technology with a deep understanding of human psychology. If this all sound somewhat familiar, it’s because the exact same playbook has been used to make our smartphone apps as addictive as possible.

Let’s walk through the details……

___________________________

A review, with examples, of the more popular behavioral tendencies investors exhibit, especially in volatile times:

  • Recency bias – When you give more weight or importance to recent events.
  • Loss aversion – The most important concept in finance. Losses hurt twice as bad as gains feel good.
  • Confirmation bias – Seeking opinions or data that agree with one’s pre-existing beliefs.
  • Anchoring – When a default starting point influences your conclusions.
  • Hindsight Bias – The assumption that the past was easier to foresee than it actually was.
  • Endowment Bias – When you place a higher value on something you possess.
  • Gambler’s Fallacy – When you see patterns where none exist in sequences of random events.
  • Illusion Of Control – The belief that you have control over uncontrollable outcomes.
  • Sunk Cost Fallacy – When your decisions are determined by investments that have already been made.

___________________________

Studies show that decision makers exhibit a “memory premium:” they tend to things they can remember vs. ones they can’t, even when the latter are objectively better. The memory premium is associative, subject to interference and repetition effects, and decays over time. Even as decision makers gain familiarity with the environment, the memory premium remains economically large. The ease with which past experiences come to mind plays an important role in shaping choice behavior.

____________________________

How American’s life expectancy compares to 11 other major developed countries:

___________________________

When you go to the doctor, you’re probably the one answering most of the questions. Yet it’s essential to make sure you’re asking plenty of your own. We need to get someone to fund a bazillion-dollar PSA to tell people to be bolder when they talk to their doctors. I see this over and over again: People aren’t asking any questions, never mind the right ones. We asked experts to share the questions you should ask your doctor to help you get well or stay that way:

  • “What are my treatment options, and how do they compare?”
  • “If this were your family member, what would you do?”
  • “What should I do if my symptoms get worse or don’t improve?”
  • “How many people with my condition have you treated?”
  • “Are there any new treatments, clinical trials, or emerging research that apply to my condition?”
  • “What screenings should I get?”
  • “What vitamins and supplements might be helpful?”
  • “When can I expect my test results, and how will I receive them?”
  • “Can you explain that in a way that’s easier to understand?”

____________________________

How a Secretive Gambler Called ‘The Joker’ Took Down the Texas Lottery: A global team of gambling whizzes hatched a scheme to snag the jackpot; millions of tickets in 72 hours.

In the spring of 2023, a London banker-turned-bookmaker reached out to a few contacts with an audacious request: Can you help me take down the Texas lottery? Bernard Marantelli had a plan in mind. He and his partners would buy nearly every possible number in a coming drawing. There were 25.8 million potential number combinations. The tickets were $1 apiece. The jackpot was heading to $95 million. If nobody else also picked the winning numbers, the profit would be nearly $60 million.

Marantelli flew to the U.S. with a few trusted lieutenants. They set up shop in a defunct dentist’s office, a warehouse and two other spots in Texas. The crew worked out a way to get official ticket-printing terminals. Trucks hauled in dozens of them and reams of paper. Over three days, the machines—manned by a disparate bunch of associates and some of their children—screeched away nearly around the clock, spitting out 100 or more tickets every second. Texas politicians later likened the operation to a sweatshop.

Trying to pull off the gambit required deep pockets and a knack for staying under the radar—both hallmarks of the secretive Tasmanian gambler who bankrolled the operation. Born Zeljko Ranogajec, he was nicknamed “the Joker” for his ability to pull off capers at far-flung casinos and racetracks. Adding to his mystique, he changed his name to John Wilson several decades ago. Among some associates, though, he still goes by Zeljko, or Z.

______________________________

The Disease Of More & Short-Term Thinking

The “disease of more” was a phrase coined by National Basketball Association (NBA) coach Pat Riley to describe how, following a successful season, players can become entitled and want more of everything, including money, playing time, and media attention, which starts the onset of the team’s demise.

Needless to say, it’s not just NBA players that are affected by wanting more. Everyone wants more of everything, more so than ever before. Never in human history has there been such an overwhelming abundance of food, clothing, and material goods. Beyond necessities, consumer goods of all kinds—electronics, furniture, and household items are more accessible and affordable than ever, filling stores and warehouses to the brim.

In addition to the explosion of physical goods, the world now overflows with the non-physical. The digital age has brought an endless supply of information, entertainment and convenience.

Suppose you invented an incredible new passenger plane that reduced aviation fuel consumption by 50%, and every airliner worldwide adopted your aircraft. In that scenario, it’s a natural assumption to think that aviation fuel across the globe would reduce dramatically and be good for the environment. However, the opposite is true, and fuel consumption would increase because flying has become more efficient, which means more flights, lower prices and more demand for flying. This is known as the Jevons paradox.

Instead of digital communication making our lives easier with how we communicate with friends and family in a similar way to the workplace, the reduction of friction has made us do more of it than ever before to the point where it has become all-consuming. As things become easier — we just do more of it, and in spades. It’s been an evolution of deliberate and reflective communication to text speak, forwarding cat videos and memes.

News has become like a drug. We hear what is going on instantly all of the time. It becomes impossible to avoid. Every hour on the hour, the radio stations give us our fix. Social media was originally meant for discovering what your friends and family were doing, and now it’s just another news outlet keeping us transfixed.

In a roundabout way, we all fall into the chronic busyness category. Even if we’re not running around with packed diaries and overflowing work schedules, we’re all swamped with communication, news, things to buy, pings, breaking news alerts, and vibrations. We’re overloading our nervous system, which means we don’t have time to think, reflect, and consider. Being bored is invaluable thinking time to ponder what to do or change about your life.

One of our deepest evolutionary instincts—believing that more is always better—no longer serves us. Our ancestors struggled with scarcity; we struggle with excess. The way forward isn’t more, it’s less. Less news, less noise, less busyness, less mindless communication, fewer endless choices. More slowness, more presence, more clarity.

I love the title of a book by a financial market analyst named Walter Deemer: “When the Time Comes to Buy, You Won’t Want To.” The negative developments that make for the greatest price declines are terrifying, and they discourage buying. But, when unfavorable developments are raining down, that’s often the best time to step up.

To paraphrase Mark Twain, there are themes that rhyme throughout history. For that reason, just as I recycled the title of my post-Lehman (Sept 2008) bankruptcy memo for this one, I’ll also borrow its closing paragraph: Everyone was happy to buy 18-24-36 months ago, when the horizon was cloudless and asset prices were sky-high. Now, with heretofore unimaginable risks on the table and priced in, it’s appropriate to sniff around for bargains: the babies that are being thrown out with the bath water. 

_______________________

Measures of retirement preparedness often suggest a substantial share of U.S. households are not on track to maintain their standard of living in retirement (financially). And many retirees report regret for not saving enough. Yet, when asked about their life satisfaction, the overwhelming majority (92%) of retired households say that they are “very satisfied” or “moderately satisfied.” In fact, gerontologists and psychologists have found a weak correlation between older Americans’ financial circumstances and retirement satisfaction.

_________________________

I think the thing that doesn’t get talked about is that no one wants to admit they’re a short-term thinker. We fool ourselves into believing we’re committed to something for the long haul, but we’ve been trained since childhood to be tactical, to chase the short-term win, to have a short attention span.

We emphasize who just scored a goal in soccer instead of asking, Does this kid have perseverance? Do they have good sportsmanship? Those qualities are much more useful for who they will become. But instead, we reward the kid who cheated or played dirty to score a goal. And that sticks with us.

I don’t judge people based on job interviews. That’s a false proxy — unless I’m hiring a talk show host, being good at a job interview doesn’t matter. Shielding ourselves from false proxies is really hard. Some people just can’t do it. They need immediate feedback, they need to know what’s happening right now.

__________________________

Despite the existence of an arsenal of medications that target the neurotransmitters in the brain thought to be responsible for mood disorders, about 30% of individuals with major depressive disorder remain treatment-resistant. This points to other possible factors that may contribute to the condition.

Research to date has implicated impaired energy metabolism as a potential culprit, as the brain requires enormous amounts of energy to function normally. This, in turn, would suggest that interventions known to boost cellular energy production might offer some relief for those suffering from depression, and attention has turned to one such supplement in particular: creatine. Well known for its role in muscular energetics, might creatine have additional benefits in the treatment of depression?

__________________________

Where people are happiest in the Americas, from the 2025 World Happiness Report.

Where people are happiest in Europe, from the 2025 World Happiness Report.

_____________________________

The odds of getting audited by the IRS are low:

_________________________

America Has Never Been Wealthier. Why Doesn’t Feel That Way? A 10 percent boost to the middle and especially higher incomes is money that feels real, like you can do something with it. For someone making $100,000, that means a $10,000 raise. But a 10 percent increase at the bottom, perhaps to an hourly wage of $16.50 from $15, means you’re still living hand-to-mouth. If we define someone as living paycheck to paycheck if they either say they do not have three months of emergency savings or say they cannot afford a $2,000 emergency expense, then 59 percent of American adults are “living paycheck to paycheck.

___________________________

1Hawaii13.9%
2New York13.6%
3Vermont11.5%
4California11.0%
5Maine10.6%
6New Jersey10.3%
7Illinois10.2%
8Rhode Island10.1%
9Maryland10.0%
10Connecticut9.9%
11Minnesota9.7%
12New Mexico9.6%
13Massachusetts9.6%
14Utah9.5%
15Ohio9.4%
16Kansas9.3%
17Iowa9.2%
18Indiana9.1%
19Mississippi9.1%
20Oregon9.1%
21Louisiana8.9%
22Kentucky8.9%
23Virginia8.9%
24West Virginia8.9%
25Nebraska8.8%
26Colorado8.7%
27Nevada8.6%
28Washington8.6%
29Arkansas8.6%
30Pennsylvania8.6%
31Georgia8.5%
32Wisconsin8.3%
33Michigan8.3%
34Arizona8.2%
35North Carolina8.2%
36South Carolina8.2%
37Alabama8.0%
38Montana7.9%
39Missouri7.8%
40Texas7.8%
41Idaho7.5%
42Oklahoma7.0%
43North Dakota6.6%
44Delaware6.5%
45Florida6.5%
46South Dakota6.5%
47Tennessee6.4%
48New Hampshire5.9%
49Wyoming5.8%
50Alaska4.9%

Q2 2025 Global Price-To-Earnings (P/E) Ratios

A higher price to earnings ratio means a country’s stock market is more expensive. A lower number is less expensive. It’s the price you are paying for the earnings of the companies.

  • United States Stock Market: 33
  • Average of Foreign Developed Stock Markets: 19
  • Average of Foreign Emerging Stock Markets: 14
*Abbreviations:
CAPE: Cyclically Adjusted Price Earnings – a valuation measure that uses real earnings per share (EPS) over a 10-year period to smooth out fluctuations in corporate profits that occur over different periods of a business cycle.
CAPD: Cyclically Adjusted Price Dividends – a valuation measure that uses dividends over a 10-year period to smooth out fluctuations in corporate profits that occur over different periods of a business cycle.
CAPCF: Cyclically Adjusted Price Cash Flow – a valuation measure that uses cash flow over a 10-year period to smooth out fluctuations in corporate profits that occur over different periods of a business cycle.
CAPB: Cyclically Adjusted Price Book – a valuation measure that uses book value over a 10-year period to smooth out fluctuations in corporate profits that occur over different periods of a business cycle.

h/t Meb Faber and The Idea Farm