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The Last Safe Investment by Bryan Franklin and Michael Ellsberg - Summary and Book Notes

May 15, 2016

Booknotes

The Last Safe Investment offers great advice about spending wisely and investing in yourself.

Review

A quick note: some people are put off by the authors’ dismissal of investing in the stock market. I don’t agree with their suggestion that stock market investments are worthless. The authors’ only argument is some hand-waving and a few cherry-picked examples of bad years. Maybe I would could have been convinced if the authors shored up this argument a bit more.

Despite a weak start, there’s plenty of great advice in this book. The authors suggest that investing in yourself is the best path to success. They give you solid strategies for doing so, like systematic spending, learning super skills, developing advisor equity, and building tribe. Plenty of actionable items and clear examples make this book a useful read.

I’d recommend this book for anyone interested in personal development, or in providing more value to the world, but who isn’t quite sure where to focus their efforts.

Buy The Last Safe Investment on Amazon

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Quick Summary

The following are rough notes I took while reading. These are mostly paraphrased or quoted directly from the book.

Authors claim that the traditional investing model doesn’t work anymore.

Traditional Model: Earn, save, invest in things outside of your control, retire, be happy via delayed gratification

Most people can’t even follow this plan, and recommended advice just isn’t enough

Authors made the SAFE plan:

Earn
Develop Disciplines:
- Spend systemically
- Increase your value to others
- Increase your happiness exchange rate
Develop Assets:
- Advisor Equity
- Tribe
- Savings

Spend Systemically

Most people evaluate purchases only based on the surrounding context

Think about every purchase’s effect on all areas of your life (health, relationships, money, culture, purpose, ability to provide value)

Happiness Exchange Rate

Humans are really bad at knowing how much happiness a purchase will bring

Develop the skill of being happy

Pay attention to factors that contribute to rewarding experiences (and the ones that don’t)

Be careful of goal setting: easy to forgo the system to achieve the goal (giving up freedom to get freedom) don’t value the tangible evidence of interior state more than the actual interior state

Rather than a single metric, want a complex array of different goals and values

One way: watch those around you and the ways you approve or disapprove of their choices

When evaluating purchases, ask high-quality questions
low quality: “do I deserve it?,” “Do I lack self-control if I buy this?”
high quality: “How will this purchase affect all the contexts of my life?,” “what are the probable long-term effects of buying this item?”

Use systemic spending to get a discount on the circumstances that make you happy find your pain points and invest there, even if its considered ’luxury spending’ (therapy, workshops; these can be a huge leverage point for your system)

Get good at predicting what makes you happy Treat each purchase as an experiment to figure out what really makes you happy

Improve your ability to enjoy the experiences you’re already having

Learn to treat negative feelings at the root, not with retail therapy

Focus on finding and living your purpose, not on comfort Shift focus from ‘how much can I get’ towards ‘what do I have to give?’

The Super Skills

Super skills are any skill with a virtually guaranteed return on investment regardless of profession

They have a positive systematic impact on all of your professional skills

Choose to work on skills that increase your near-term income potential and/or skills that systemically enhance the value other people get from you

Abridged list of Super Skills:

Interpersonal: Leadership, Public Speaking, Selling

Creative: Writing, Storytelling, Design

Technical: Mental models, systems thinking, direct marketing

Physical: Mental focus, clean and organized environment, clean appearance

for the vast majorrity of readers, investing in active earning potential requires less knowledge, less risk and results in more gains than investing in passive income

Interpersonal Super skills

Being influential is not about getting people to follow your personal agenda, it’s about understanding the motivaations of each individual or group within a system

drop any associations you have between leadership and ‘authority’, won’t help you develop this skill

Leadership: Understand why people choose A, identify a motivation consistent with B, and communicate the connection between their motivation and point B

Combine honest empathy (A) with a vision of a collective future you believe in (B)

‘command and control’ style leadership is being phased out in knowledge sectors

you need only sit in on a few typical corporate preseentations to see how rare investment in public speaking is

visioning: if influence is leading people from A to B, visioning is applying clarity to point B

list all of your negative judgements about a situation and evaluate them, you can see what you want by eliminating everything that it’s not

new leaders think visioning is in their own minds, and if it’s clear to them it must be enough. The vision that matters is the collective vision of everyone you hope to lead

You may never be in a position of formally selling something to a customer, but but improving your sales skills is likely to be your most lucrative self-investment

sales isn’t about getting someone to do something they don’t want to do, it’s about discovering what path they want to be on and figuring out if your product is on that path or not

Anytime you find yourself blaming an outside force (“the economy”), it should serve as a signal that it’s time to invest in more interpersonal super skills.

hold paradox: believe both contradictory statements simultaneously. it’s an expression of faith in a greater truth that is currently invisible to you, but resolves the paradox. (You are insignificant on a cosmic scale but profoundly significant to those you love)

when you sense paradox, you’ve found a key to a doorway

Any leader who can fuly acknowledge the perfection of the present moment and fully endorse our evolutionary drive to grow and change can unleash inspiration and motivation among followers on both sides of the paradox

Creative super skills

Value depends on context. You can often increase the value of something by importing it into a different context.

Creativity is not a fixed trait, you can increase your own creativity

Creative value comes from applying your creativity, not merely from being born with talent

Creativity occurs at the edges, the boundaries, the borders. It’s what pushes the edges, the boundaries, the borders.

The Four conditions of creativity

Spaciousness, constraints, models of inspiration, loving your ideas into existence

Give yourself mental time and space

Sequels usually suck because the filmmakers have fewer constraints

Observe others (learn the language of your field). Then use contextual importing. Write like monet. crane-style kung-fu. Love like Bobby Fischer.

Keep working on your craft until what comes out sounds like what was in your head.

Read books and web sites that you disagree with. Read books that infuriate you.

Improv: The higher the levels of body sensation you can hold whill still maintaining access to your creative and reasoning facilities the better

Writing: The unclear writer is indistinguishable from the unclear thinker

Nobody feels comfortable writing, ‘Boy meets Girl.’ The system requires ‘A romantic relationship is ongoing between Boy and Girl.’ Cut the lard

Copywriting: if writing is representing your interior thoughts, copywriting is like ‘inside out’ writing, representing the interior thought of the reader

If you add storytelling to any piece of communication it will have more impact

Design

Convert impulses to met needs Remove anything unessential Evoke the intended meaning

Recommends going to burning man

Technical Super skills

Building Mental Models - you don’t need the technical know-how to learn the overall process Begin at the end Discover the processes, inputs, and outputs Draw boxes and lines (action, inputs, outputs) Get the chunk size right Focus on the critical path (Remove everything else)

Some people are more comfortable learning in order to do, others vice versa. Best path is to use both at once–get more comfortable with your weakest path

Visualize yourself walking through the process

Systemic thinking looks for leverage points that have a positive net effect on an entire system, not just a positive local effect

Marketing Crank - most profitable technical super skill

turn people who don’t know about your business into customers

confused business owners often want their direct marketing to look like Nike’s brand marketing

Marketing cranks output as much as you put into them (linear input/output)

Word-of-mouth isn’t a marketing crank

3 parts to marketing crank: clear story, assets, offers

clear story: you think X, but really Y, And if you just Z, then you’ll get A Geico example

Assets: Lead Source, initial message, lead capture, prospect list, lead nurture, sales message, lead conversion (sales)

lead nurture: people who have received a lot of value for free don’t walk away with a full belly–they have an even greater appetite to buy from you because they trust your quality (see barbell shrugged)

Physical Super Skills

body, brain, health, fitness, sleep, energy levels, focus, mental capacity, concentration

Extending productive work life can bring greater returns than 401k (ex: 5 extra years at $100k)

These areas are hard to quantify so they are rarely mentioned

Improve the quality of your mental focus and productivity at work Get to a point where you don’t need to coast by on caffeine. don’t get distracted by web or office gossip

Ignore cultural programming that slowing down, taking care of your body are ‘indulgences’

There is cultural bias towards attractive people. (Its unfair, but you’re in the game, play it) Basic hygiene, smile more, wear clothes that fit, eat more vegetables.

Maintain a clean, organized environment Most messy people think it’s their personality type but really they just lack a few organizational systems organizational consultant or a maid can be worthy investments

Develop a healthy relationship with alcohol and other substances

Develop an empowering and liberating relationship to sexuality

Adviser Equity

Most original ideas are unique because they are bad ideas

Find people who need your skill but can’t afford to pay you cash

equity can be in cash or other forms

can be informal and later become formal

build human friendships that allow you to overcome roles and titles

it’s okay to be the one to suggest it

missing piece is worth more than the whole

A dedicated person with average intelligence and the internet should be able to develop one or two super skills enough to offer exchange for adviser equity in no more than 3 years

business income tends to be limited by marketing, sales, and product strategy, quality, and consistency. Very rarely limited by time, capital, or staff size

about others you might want to advise: pay attention to the ratio of say to do