I picked this book up immediately after seeing Phil Town’s appearance in NBC’s Millionaire show. He’s got a pretty good story of how he turned rich from being a river guide, taught by this guy “Wolf.” Basically, his approach is of the value investing but he made it simpler for lay persons and an experienced investor like me. I definitely would love to spend no more than a few minutes watching over stocks. Of course, Rule #1 is “Don’t lose money” or invest with certainty – buying a wonderful business at an attractive price. In essence, be a good shopper.

The author did a comparison against other types of investments to arrive at the advantage of having 15% return with stocks. I believe the author overlooked the benefits of real estate w.r.t. the tax treatments and tax-free cash flow. But I agreed with him that liquidity of stocks with 15% compounded growth rate are pretty good. The trick is to keep it at 15% or more. That’s the tough part. Another lesson learned from the book is the important of the ROIC growth, not the nominal equity value. “The equity growth rate for any business is defined by growing surpluses, and surpluses are what a business makes that’s valuable… Surpluses gives a business the cash to grow, which is why businesses typically growth at about the rate that their surplus grows, i.e. the equity growth rate.”

I think this book beats all the MBA business classes I have taken. Well worth the time. A quick summary below:

Four simple steps:
1. Find a wonderful business.
2. Know what it’s worth as a business.
3. Buy it at 50 percent off.
4. Repeat until very rich.

The definition of a “wonderful” business: 4 M’s
1. Meaning to you. Buy it only if you’d be willing to make this business the sole financial support of your family for the next 100 years. Become a business owner, not just a stock investor. Employ 10-10 Rule. “I won’t own this business for ten minutes unless I’m willing to own it for ten years.” Start with the intersections of the three circles of your Passion, Talent, and Money.

2. Moat (wider the better and sustainable): “durable competitive advantage that protects it from attached, like a moat protects a castle.” Five types of moats: a. Brand: a product you’re willing to pay more for because you trust it. b. Secret: a business that has a patent or trade secret that makes direct competition illegal or very difficult. c. Toll: a business with exclusive control of a market – giving it the ability to collect a “toll” from anyone needing that service or product. d. Switching: a business that’s so much a part of your life that switching isn’t worth the trouble. e: Price: a business that can price products so low no one can compete. The Big Five (must be >= 10%/year for 10 years): 1. ROIC (return on invested capital). 2. Sales growth rate. 3. Earning per share (EPS) growth rate. 4. Equity, or book value per share (BVPS), growth rate, 5. Free cash flow (FCF) growth rate. Rule on debt: if it can pay off debt within 3 years by dividing total long-term debt by current free cash flow.

3. Management (great ones)
Look for CEO’s of the following qualities: 1. Owner-oriented and 2. Drive: look for BAG (big audacious goals), check insider trading, look at CEO compensation,

4. Margin of safety (MOS).
Get a dollar of value for only 50 cents.
Calculate the sticker price with the following 4 numbers: 1. current EPS (TTM EPS: trailing twelve-month EPS), 2. Estimated (future) EPS growth rate (using past equity growth rate), 3. Estimated future PE (2x growth rate, worst of default & historical), and 4. Minimum acceptable rate of return from this investment: 15% of Rule #1 investors.

Future PE * Future EPS = Future sticker price. divide by 4 (15% return for 10 years) to get to today’s price.
Divide by 2 again to get to the MOS price. In other words, divide the future sticker price by 8 to get to a reasonable purchase price.

Trading Tools
1. MACD (Moving Average Convergence Divergence): Consisting of slow EMA (exponential moving average: 26-day), fast EMA (12-day), and a trigger/signal EMA (9-day). Use a more responsive model (8-17-9) MACD.
2. Stochastics: Based on Dr. Lane’s research (how the current closing price sit between the high/low range over 14 trading days). Used to identify overbought (above 80%) and oversold condition (below 20%). MSN link here. Buy line crosses up, buy. Buy line crosses down, sell. The author recommends using 14-trading-day for the first number and 5-day for the trigger point. Crosses up through the 20th percentile, it’s a positive signal and when it crossed down through the 80th percentile it’s a negative signal.
3. Moving averages: Author recommends 10-day moving averages for earlier signal. When the price line crosses above the moving average line, buy. When the price line crosses below the moving average line, sell.

When all three signals are saying “buy,” it’s time to get in. When all three are saying “sell,” it’s time to get out.

On “Eliminating the Barriers” chapter:
Advise on debts: don’t take on debt unless the interest rate of the debt is less the 1/3 of the your expected rate of return. And the debt can be paid off within a year.

Bob Newhart is one of my favorite comedians. I watched him on both Newhart shows as a psychologist and as inn owner. This audiobook, narrated by Bob himself, allowed him to stammer as part of the comedy elements. I don’t know how the book reads but it’s probably hard to stammer in the book. From the book, I got to know how he grew up as the only boy in the relatively poor family in Chicago. He chose the accounting professional out of college, thus the title “I shouldn’t even be doing this.” Amazing. Sometimes the best thing that could happen to a person is to lose his job. Doing standby comedy isn’t easy. And based on his description was difficult to a pro like him as well. I guess he stammered through them and gained popularity through his albums, Button Down Mind. At one time, he was selling more albums than Frank Sinatra as he quipped.

I particularly like his “routines”: driving instructor, submarine commander, Lincoln’s Gettysburg address, and others. The last finale episode of Newhart show of the wake-up-from-dream scenes with Emily in bed was genius and was suggested by his real wife, Gini.

Overall, it was a good audiobook, though at times it was a little to listen to his stammer too long. I wonder he speaks like that all the time or just for the comedy effect.

More details about Bob Newhart click here. His official site is here.

The is a fun book to read and listen to. I enjoyed and learned a few things. Specifically, the chapter on relativity opened my eyes to how people make decisions. The topic on social norm vs. market norm helped me understand how open-source movement worked and their delicate balance. The experiments on how much we’re willing to keep options open sounded silly but realistic. The chapter on the expectations and placebo effect confirmed my belief on many things I encountered in my life like spiritual healing, religious miracle and even use of vitamins. Summary of the book is as follows:

The truth about relativity: We are always comparing one to another (like Economist’ print & web pricing) and we tend to focus on comparing things that are easily comparable (introduction of a decoy) – and avoid comparing things that cannot be compared easily. Comparison causes envies like CEOs’ salaries. To counter this, you can either reduce the circle of comparison or enlarge it. The more we have, the more we want – break the circle of relativity.

The fallacy of supply and demand: Use of anchoring to bring out arbitrary coherence; we tend to stick to the initial price (Social Security number experiment). Anchors we we encountered along the way and were swayed by remain with us long after the initial decision itself. Herding and self herding (habitual, how Starbucks succeeded). We should pay particular attention to the first decision we make in what is going to be a long stream of decisions.

The cost of zero cost: Zero is an emotional hot button – a source of irrational excitement. Most transactions have an upside and a downside, but when something is free, we forget the downside because we humans are intrinsically afraid of loss.

The cost of social norms: vs. Market norms. People tend to be more self-reliant and less willing to help other when operating in the market norms. Market norms takes over social norms if not careful. Money is the most expensive way to motivate people.

The influence of arousal. People turn into monsters (Hyde from Dr. Jekyll) and less cautious when in an arousal state. We systematically under-predict the degree to which arousal completely negates our superego, the way emotions can take control of our behavior as in sexual arousal, driving. We need to explore the two sides of ourselves: the cold state and hot state.

The problem of procrastination and self control: Why we can’t make ourselves do what we want to do.
“Almost everyone has problems with procrastination, those who recognized and admit their weakness are a better position to utilize available tools for precommitments.” Bundling our medical tests, car services so that people remember to do that is far smarter. Author suggests the use of self-control credit card.

The high price of ownership (material or ideas): why we overvalue what we have.
Three reasons: 1. We’re attached to what we have (especially those we have put work into) and we haven’t got yet (eBay or trial ownership) and, 2. we focus on what we may lose (30-day money-back guarantee) rather than what we may gain. 3. we assume other people will see the transaction from the same perspective we have.

Keeping doors open: why options distract us from our main objective.
We have an irrational compulsion to keep doors (opportunities, relationships, jobs, and etc.) open. Choosing two similar options are very difficult (two stacks of hays to a donkey, US Congress) and may be easier to just toss a coin and do away with the opportunity costs.

The effect of expectations: Why the mind gets what it expects
If you tell people up front that something might be distasteful, the odds are good that they will end up agreeing with you because of the expectation. When the coffee ambiance looked upscale the coffee tasted upscale as well. Coke was liked more with the brand was known – the associations were more powerful, allowing the part of the brain that represents these associations to enhance activity in the brain’s pleasure center. We should acknowledge that we are all biased, trapped in our own perspective – may require a neutral third party.

The power of price: Why a 50-cent aspirin can do what a penny aspirin can’t
Two mechanisms shape the expectations that make placebos work: belief – our confidence or faith on the drop, the procedure, or the caregiver, conditioning – the body builds up expectancy after repeated experiences and releases various chemicals to prepare us for the future. Price can change the experience. When it comes to medicines, you get what you pay for.

The context of our character: why we are dishonest and what we can do about it
We care about honesty and we want to be honest. But our internal honesty monitor is active only when we contemplate big transgressions. The only defense we have against this is a rational cost-benefits analysis. Remind people of the 10 Commandments or other vows or honor codes helps to promote honesty. Much of the dishonesty is one step removed from cash. When given a chance, people cheat.

Beer and free lunches: what is behavioral economics, and where are the free lunches?
When people order out loud in sequence (in a restaurant), they choose differently (more varieties) from when they order in private, to convey uniqueness. People are sometimes willing to sacrifice the pleasure they get from a particular consumption experience in order to project a certain image to others.

Picked this audiobook up from the library. There are lots of good well-told bible stories: Joseph and Jeremiah. The author may have been a good preacher or deacon of the sort. I never heard the Bible stories told so well.

The author tries to awake the readers’ sense of urgency by asking this question: “Do we love ourselves more than our children?” That’s a powerful question. Unfortunately, most of the people who caused all these crises in our nation are people who love themselves and probably their children than others’ children. His appeal to the business leaders may be the right call to actions as the politicians are not going to do anything about them.

A couple of good ideas that were presented: 1. 1~2 years of mandatory public services by our young adults. This is an excellent idea to inject a sense of civil service to our society and can help re-program our children away the “poisons.” I like it. But is it political feasible? I doubt it. 2. more use of nuclear power generation – one of the better ways to get us out of the petroleum dependency. 3. Bite the bullet to pay off the debts with a national transaction tax of 2%.

The author covers all aspects of the issues facing this nation: debts, business renewal, social security, medicare, inflation, international relationship, technology leadership or loss, terrorism, environments, energy and etc. Obviously, the author has immersed himself in many of the issues and courageously propose solutions for them. Some of the solutions make sense to me but some don’t. But at least he is presenting solutions.

The author at the end projects two possible scenarios like the movie “It’s a wonderful world”: one without a turn-around when America goes into to a permanent decay, the other with the national debts got under control and a future reborn for the country. I think America will probably end up somewhere between the two extreme cases – a slow decay. I hope not to see within my life time the end of the greatest democracy experiment in human history.

I picked up this audiobook after reading his “Never Eat Alone” book. This is like a sequel to that book. Instead of superficial networking relationship he touted in the “Never Eat Alone” book, the author went deep on finding the lifeline relationships. This is a definitely a more impactful book than the earlier book. I enjoyed listening to it. The summary is as follows:

The 4 mindsets of creating a foundation for lifeline relationships:
1. generosity. Author touched on this in “Never Eat Alone.” Goes both way: give and let give.
2. Vulnerability: letting your guard down. 8 steps to instant intimacy: 1. create an authentic environment around you. 2. suspect your prejudices, 3. project the positive, 4. share your passions, 5. Talk about your goals and dreams, 6. Revisit your past. 7. What’s keeping your up at night? 8. Future fears.
3. Candor: the freedom to be totally honest with those you confide in. 1. Find people you respect, 2. create the opportunity, 3. make it clear any feedback you get is a gift. 4. acknowledge your faults, 5. Tell the other person what you plan to do with the advice. 6. Don’t tell them what you want to hear. 7. Ask specific questions, 8. Take it or leave it – but deliver on safety. 9. Paying them back.
4. Accountability: action of following through on your promise.

Building your dream team:
1. Articulate your vision.
2. Find your lifeline relationships. 4 C’s considerations: commitment, comprehension (know-how), chemistry, and curiosity and diversity.
3. Practice the art of the long slow dinner.
4. Broaden your goal-setting strategy.
5. Create your personal success wheel. consists of deep relationships, professional growth, financial success, physical wellness, intellectual stimulation, spirituality, and giving back.
6. Learn to fight! Sparring ground rules: 1. safety first, 2. owning the process, 3. the Socratic method 101, 4. the receiver owns the process and inputs, 5. Don’t pull any punches, 6. leave ample time for thoughtful listening. 4 R’s of listening: removed (talking over), reactive (heard but not mulling over), responsible (talking to), receptive (empathizing fully).
7. Diagnose your weaknesses. 1. Turn the mirror o yourself. 2. Try to learn lessons from your role models, 3. Ask other people.
8. Commit to improvement.
9. Fake it till you make it – then make it stick.

Make it your life: the tactics, strategies, and structures – from formal organizations to do-it-yourself peer groups – that help you stay the course.
Benefits of formal peer support groups: 1. momentum, 2. structure, 3. peer pressure, 4. self-selection, 5. diversity.
Do it yourself meeting agenda: 1. reaffirm group vows (5 mins), 2. professional/personal check-ins (personal and professional successes and challenges) (3 mins/person, 20 minutes total), 3. spotlight (20 mins), 4. sparring (30 mins), 5. “I might suggest” (15 mins). 6. Group issues (10 mins), 7. Review and setting of commitments (3 mins each, 20 mins total).

The Greenlight Method of building peer-supported teams within companies: 1. make the case. 2. raise the stakes, 3. bond over the Barbarians at the Gates, 4. Dial up the intimacy, 5. Dig deeper in the now. 6. Getting candid.

A good chapter on team selling at the end.

I like the poem given by the author at his dad’s funeral:
To laugh often and much;
To win the respect of intelligent people and the affection of children;
To earn the appreciation of honest critics and endure the betrayal of false friends;
To appreciate beauty, to find the best in others;
To leave the world a bit better, whether by a healthy child, a garden patch or a redeemed social condition;
To know even one life has breath easier because you have lived.
This is to have succeeded.

Not much to learn from this book – just miscellaneous stories of foolishness and sexes due to drunkenness and raw male pleasure. I picked this book from the overdrive library just because it’s been on the best sellers list for a long time. It’s definitely not worth paying for the book. I honestly don’t know how anyone would pay for it.

Some of the stories have exact time stamps on the sequence of events. I doubt at his drunkenness state, he could keep track of the time so well. Suspicious. Also I wonder how lucky he has been alive without getting hurt or acquiring AIDS so far with his and his friends’ reckless behavior. Tucker Max’s lawyer background serves him right with the decent writing skill and his association with horny and yet literate friends (like SlingBlade) make the story reading a bit more tasteful and interesting. I guess this is unlike other books because it’s written by an almost lawyer doing reckless things against his “better” judgment. At least he knows he’s going to hell and he does it eloquently with his insults.

Some of the more memorable stories: vomit during a blow job, burping after swallowing, throwing her clothing out the windows after having sex purposely with a fat girl, being sexually assaulted by an Eurasian woman, Vega trip with Junior, oral sex with a bulimic girl, pepper-sprayed during sex at a stranger’s RV, leaving a long trace of shit in the Embassy Suite’s lobby, sex while taking a dump, being shitted diarrhea while having anal sex followed by vomits, getting a Chlamydia test as a revenge from a girl, peeing in bed and framing the girl, starting a fight with a mascot, being head-tricked by a gay guy about having sex with a post-op transsexual, hospital visit from appendicitis, relationship with a deaf woman, dancing with a mirror, dog’s diarrhea after eating his vomit, and 3-minute dating. The book tour stories are less interesting toward the end.

There are good advises given in the book how to leverage your brain to achieve successes in life. Having some neuroscience behind the reasons and recommendations help to make them sound more scientific but I don’t think they’re less credible purely based on empirical data than physical science. I did learn a few things so people should learn somethings from the book though they’re not earthshaking. Summary below:

The book started out with a quick tour of each brain elements’ function: cerebral cortex with four lobs: occipital (vision), temporal (hearing, language, memory and object and scene recognition), parietal (somatosensory processing, visuospatial processing, attention, visually guided actions), and frontal (motor processing, working memory, decision making). Left hemisphere (language and dealing with symbols) and right hemisphere (visual-spatial processing and recognizing faces) are connected by corpus callosum. Prefrontal cortex: mental multitasking, making predictions based on past experience, evaluating right form wrong. Anterior cingulate cortex (ACC): cognitive and emotion-related functions – detecting errors, balancing emotions, making decision. Insula: perceiving and experiencing certain aspects of emotion, physical and psychological revulsion. Amygdala: associated with emotion, particularly emotionally charged memories that involve learning and responses, like touching a hot stove. Hippocampus: forming the long-term memories, also related to spatial navigation and memory. Basal Ganglia: reward and motivational systems.

Five essential elements of success:
1. Opportunity radar (e.g. Phyllis Diller, George de Mestral who invented Velcro)
2. Optimal risk gauge: Must be good at recognizing what the risks are, determine how much risk you can tolerate and whether or not you are willing and able to pay the consequences if you fail. Taking risks that are substantial enough that they have a personal stake in the outcome, yet more gratifying than if they sat on the sidelines playing it safe.
3. Goal Laser: helps you take aim at what you want out of life without allowing the static of distractions and stressors to interfere.
4. Effort accelerator: possess the self-directed energy inherent that keeps them chugging along.
5. Talent meter: excel at divining that most successful path to take. A finely tuned Talent Meter means being aware of weakness, too. But upon identification of the weaknesses, be fanatical about learning as much to minimize them.

Win Factor #1: Self-awareness: Thinking about yourself to become a winner.
Pay attention to your immediate emotions, thoughts, and body sensations without passing judgment or jumping into action. Ask for advice from people you trust for why you’re unsuccessful at something.

Win Factor #2: Motivation: Cultivating the drive to win.
The critical role that emotional evaluations can play in motivating behavior; find the upside in the ordinary allows you to maximize your everyday life. It minimizes the lack of follow-through that often derails achievements. Feeling the reward in everyday activities is important. When you approach even the small, day-to-day issues with optimism and creativity, the journey is so much more enjoyable. People with an internal point of view tend to value what psychologists refer to as intrinsic rewards like personal satisfaction, better health or happier relationships. Intrinsic interest in a task – the sense that something worth doing for its own sake – typically diminishes when someone is reward for doing it – less enjoyable. To avoid procrastinating, concentrate on concrete rather than intangible aspects of your task. Start with something small; a series of small steps adds up to a whole staircase.

Win Factor #3 Focus: Locking on to what’s important.
A state of narrow focus is the mind’s version of blinkers. Focus reinvestment: in the middle of something that requires a lot of Focus, stop and consciously reorient yourself to critical details. Pay attention to minutiae like sounds, textures and colors you might not ordinarily notice. Avoid the distractions by meditation. It’s necessary to keep a wide focus in a life-or-death pressure situation. The more tasks you can automate and more information you can shift to implicit memory (via practices), the lighter the load on the attention systems and more control you gain over your power of focus and concentration. Try scaffolding, a technique where you practice the individual parts of a skill in a stepwise fashion. Toggling back and forth between narrow and wide focus at appropriate time can be helped by meditation. Winners continuously bring a situation factor to the top of the list, examine it, eliminate it if necessary, and then move the next item to the top of the list. Flow happens when there is balance between level of ability and challenge – seek out situations that are challenging.

Win Factor #4: Emotional Balance: making emotions work in your favor.
How you feel dictates how you react. Winner make a point of directing their emotions in productive ways. Performance increases with emotional arousal, but only to a point. The relation between emotional arousal and performance forms an inverted U. The more accurate we become at predicting and guiding our emotional responses in different situations, the more easily we find joy, happiness, and other positive emotions. Creating distraction (attentional deployment) – directing your attention away from a too-intense emotional event. Changing your perspective (reframing, reappraisal) by working through the issues beforehand until they view them as challenges rather than problems. Take a deep breath.

Win Factor #5: Memory: “Remembering” to have a winner’s brain
The gift of prediction is memory’s most crucial contribution to success. Capitalizes on ways to purposely strengthen memory traces for important information to ensure that it can be efficiently retrieved when it is most needed. “When new information is connected to existing knowledge or when you concentrate on the meaning of that information, you’re more likely to retain it in memory.” Practice allows your brain to expend less effort when it retrieves and processes critical information so it is able to do so more quickly and automatically. Use the Journey technique: mentally picturing a familiar journey, and placing pictures associated to the information you are trying to memorize along that route. A mentally simulated experience can sometimes serve the purpose just as well as a real one – a mental dress rehearsal. Memories can be made more durable by forming them under highly emotional circumstances.

Win Factor #6: Resilience: Bouncing back into success
Battling adversity is something you can intentionally practice and get better at. High-resilient brains were able to temper their emotional response following a potential threat and had the ability to quickly recover when everything turned out all right. When you practice anticipating and accepting failure without fear or judgment, you leave the door open for success. Successful people are able to slow down following an error, just enough to alter their behavior and avoid another mistake. Reframe a failure to find the benefit, even if it’s just a tiny nugget. Shifting your attention for a moment can also boost your Resilience because it seems to actively get your brain busy doing something else besides preparing for disaster.

Win Factor #7: Adaptability: Reshaping your brain to achieve.
Winners take control over plasticity by intentionally making the changes they want and they deliberately take the steps to think and act in ways that fine-tune their brains and help to achieve their goals. Regular yoga and meditation practice increases cortical thickness in as little as 8 weeks. If you find yourself in a slump with something you’re normally good at, try a reboot. Take a few lessons, read a book geared toward beginners, or practice some basic drills.

Win Factor #8: Brain Care: maintaining, protecting, and enhancing your winner’s brain
4 brain-care habits: physical activity, providing your brain with rich and meaningful experiences, eating a brain-healthy diet, and getting plenty of sleep. Omega-3 and -6 are essential fatty acids (EFA). Fish is high in vitamin D. Apples, full of antioxidants help guard against the oxidative damage to brain cells. Blueberries are bursting with flavinoids. Sleep is vital for optimal brain function. A good night’s sleep restores the balance of communication between the prefrontal cortex, and amygdala, and other emotion-related centers. Caffeine provides emotional and cognitive advantages such as improved moon, better memory, and alertness for most people.