Favorite Books 2020: Non-Fiction

5-stars:

Range: How Generalists Triumph in a Specialized World– inspiring stories of people succeeding after a late start or in fields outside their speciality, with theories of why this happens. Many examples from sports and science, argues that good generalists will become more important in science as there are more siloed specialties that could benefit from connections. The irony of economics: economists emphasize the value of specialization but economics itself is, according to the author, one of the best forms of “generalist” training.

Reality Ahead of Schedule: How Science Fiction Inspires Science Fact– shows the power of imagination and inspiration, and the ability of some generalists to forecast scientific developments

The 10,000 Year Explosion: How Civilization Accelerated Human Evolution– perhaps this should be 4 stars, because it was written in 2009 and historic genomics has moved very quickly since then (see Who We Are and How We Got Here for an excellent and more up-to-date book on the subject). But there are so many cool facts I hadn’t heard, and powerful general theories that are used to explain these facts and to make speculative predictions- some of which, like Homo Sapiens interbreeding with Neanderthals, have since been proven correct.

Murder-Bears, Moonshine, and Mayhem: Strange Stories from the Bible to Leave You Amused, Bemused, and (Hopefully) Informed– Crazy stories you might have missed, and digging in to stories you have heard of to show key details you might have missed. For instance, people have generally taken the story of Onan to mean one thing, but if you read the actual verse they are referring to it means something else, then if you read the story in context it means something different still. Funny but not just funny.

The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution– Math professor gives up tenure, becomes a codebreaker, then starts one of the most profitable hedge funds of all time. Book is excellent on both the personal stories of Simons and the people around him, and on explaining as much as possible of how Simons did what he did when he goes to great lengths to keep it secret. Makes it clear just how far you have to go to consistently beat the market, getting data that no one else had and analyzing it with supercomputers and quant PhDs at the top of their fields.

The 4-Hour Chef: The Simple Path to Cooking Like a Pro, Learning Anything, and Living the Good Life– I finally started really cooking this year, and I credit this book more than the lockdowns

4-Stars-

The Millionaire Next Door; I Will Teach You to Be Rich; and Rich Dad Poor Dad– See my full review of these 3 personal finance books here

10% Less Democracy: Why You Should Trust Elites A Little More and the Masses a Little Less– Its an academic book, more convincing but less interesting/provocative than you’d think from the title

Dignity: Seeking Respect in Back-Row America– Physicist-turned-finance-quant Chris Arnade turns into a photojournalist who talks to people in ‘the bad part of town’ and in out-of-the-way towns that many have left. 5-star book for anyone who hasn’t heard of the author; I give it 4 stars because I’ve followed him on Twitter for years and had seen much of the material.

The Revolt of The Public and the Crisis of Authority in the New Millennium– Martin Gurri wrote this in 2014 and it has been incredibly prescient about politics around the world. As I said in a tweet liked by all 3 authors, if 10% Less Democracy is a thesis (trust elites) and Dignity is its antithesis (trust the public), Revolt of the Public is the synthesis of the two- describing from a neutral point of view how the relationship between elites & the public is being changed by the internet (Gurri doesn’t think either group is handling this well). Why just 4 stars when the book successfully predicted so much? Gurri lays out his theory early on but for whatever reason I kept losing interest before finishing the book.

The Complacent Class: The Self-Defeating Quest for the American Dream– Another book from a few years ago (2017) that looks especially prescient in 2020

How To: Absurd Scientific Advice for Common Real-World Problems

Science: Abridged Beyond the Point of Usefulness

Shakespeare’s Sonnets: Abridged Beyond the Point of Usefulness

SCIENCE: Ruining Everything Since 1543

RELIGION: Ruining Everything Since 4004 BC

Zillow Talk: The New Rules of Real Estate

The Hard Thing About Hard Things: Building a Business When There Are No Easy Answers

As you can see, one thing I tried to do this year was to read books in clusters- personal finance, elites vs the public, and books by the best webcomic writers were the big clusters this year. This worked well for getting a better sense of a subject and I’ll likely continue this with new subjects, though I see now that all the 5-star books were 1-offs. Overall I’d say Range was my favorite book of the year while The 4-Hour Chef is the one that most obviously made my life better.

The Best Personal Finance Books: A Portfolio

Economics is often mistaken for personal finance. They are different, but enough people ask me about personal finance that I decided to read all the books I’ve seen many smart/rich people recommend: The Millionaire Next Door, I Will Teach You to Be Rich, and Rich Dad Poor Dad. My goal was to pick the one best personal finance book to recommend to everyone who asks. If I have to pick I’ll say The Millionaire Next Door, but like with investments, its better to pick a diversified portfolio than to put all your eggs in one basket. Some of these books are better at teaching the basics of how to avoid costly mistakes, others are more aspirational; some focus on details, others the big picture; some focus on sure things, other on riskier big bets.

In principle I see 4 ways people get wealthy (not mutually exclusive):

1. Get a big chunk of wealth all at once, like through inheritance or lottery.
2. Earn a high income for years.
3. Save an unusually high proportion of your income.
4. Invest your savings unusually well, so that it grows quickly.

In practice #1 depends on luck, and #4 does too (or if you really are that good, you start a hedge fund and this shades into #2). Therefore, these books focus mostly on numbers 2 and 3: earning lots of money and/or saving a lot of what you earn.

I Will Teach You to Be Rich

The title sounds a bit scammy; it is misnamed, but not in the way you might think. Rather than offering bad or high-risk advice on how to become rich, it offers good advice about how not to be poor. “I will teach you not to be poor” “I will teach you reasonable financial practices” or at most “I will teach you to be upper middle class” would be appropriate. The advice about how to get out of debt, save for retirement, and manage credit is good, and the writing style is engaging. But the advice is all of the saving/investing sort, with nothing about how to increase earnings. No one is going to get rich by following the advice in this book unless they already have a high income. This makes the book good but not sufficient by itself; pair it with something that focuses more on the earning side. The material is stuff I have mostly figured out for myself by my early 30’s, but its a nice presentation and all in one place- would be nice for a college student or someone at their first real job.

Most distinctive key idea: as long as you are hitting your overall savings goals (e.g. maxing the 401k and paying bills on time) you shouldn’t feel guilty about spending on things that make you happy. “Spend extravagantly on the things you love and cut costs mercilessly on the things you don’t…. get the Big Wins right and you can order as many lattes as you want”

Rich Dad, Poor Dad

Almost the opposite of I Will Teach You To Be Rich- focused on an inspring big picture of high earning instead of the details of saving. Great storytelling but high-risk advice. Kiyosaki wants people to go into business and “make money work for them” rather than focus on earning a salary. Taking this book literally increases your odds of becoming very rich, along with your odds of becoming bankrupt. I’m sure some people have read the book and started flipping / renting houses and built a real estate empire, while others quit their job to join a multi-level marketing scam and lost their savings and their friends. To get the most out of the book, read it for inspiration rather than specifics and take it “seriously but not literally”.

Most distinctive key idea: Focus on cash flow. “An asset is something that puts money in my pocket. A liability is something that takes money out of my pocket…. if you want to become rich, simply spend your life buying assets. If you want to be poor or middle class, spend your life buying liabilities. It’s not knowing the difference that causes most of the financial struggle in the real world”

The Millionaire Next Door

The book is built around surveying millionaires and finding the commonalities in what they did to get wealthy. The core idea is that Americans with millions saved tend to have moderately high incomes but very high savings rates. Someone with a normal income can become a millionaire- income is different from wealth. The key is to live frugally and let the compound returns on your savings work for you. The original version of the book is inspiring but with out of date numbers; the author’s daughter recently updated it (The Next Millionaire Next Door) with more current numbers though it loses some of the inspiring voice.

Some of those updated numbers from the survey of millionaires:

• Median net worth: $3.5 million
• 94% married (69% to first spouse)
• 87% male (not sure how it makes sense to talk about individual net worth when 94% of the sample is married and 80% said their spouse was a critical factor in their economic success; survey sampling strategy is not described in book)
• Median age 61
• Median income $250k (but was 89k when first became millionaire)
• 93% w college degree, 60% w graduate degree. Common careers: business owner, manager, attorney, physician, consultant, engineer

Tries to downplay the importance of education and intelligence, but their own data shows that 60% of millionaires have a graduate degree (compared to 13% of adults generally) and the average SAT of millionaires was 1190 (which they seem to think is low but in fact is the 68th percentile of test-takers, and the pool of test-takers is likely smarter than average). Yes it is possible to get rich without much intelligence or education and they have nice anecdotes about this but their data show it is rare and becoming more so.

Most distinctive key idea: The author hates the idea of fancy cars. Notes that people often confuse high income and high consumption with high wealth; but if you see someone with a fancy car you should think not “they must be wealthy” but instead “they put their money in a depreciating asset instead of an appreciating one, and so are becoming poorer”. Notes that the median millionaire spent $35k on their last car. “The most popular brands among millionaires are Toyota, Honda, and Ford, followed only then by BMW” “Only a minority of millionaires has ever owned a vacation home, boat, plane, wine collection, prestigious make of motor vehicle, or expensive suit.”

Other books?

I welcome more recommendations. I tried to stay away from pure “how to invest” books, which is its own large genre. I almost included Think and Grow Rich here, but decided it was like Rich Dad Poor Dad only more so: focused on the big picture of inspiring people to earn more but short on details and long on risk. Its key idea- “riches come from persistent determination to achieve a definite goal”- seems likely to push some to great success and others to stay stuck in failure.

Of the 3 books I reviewed here, I think The Millionaire Next Door is the safest to recommend to everyone. Rich Dad Poor Dad is good for those capable of taking it seriously but not literally. I Will Teach You To Be Rich is good for anyone under 25 or who feels like they have yet to get a good handle on how to manage their credit and saving.