Today’s compliment: you know when to take a break.
Reader survey results & market reactions
Thanks to those who’ve voted on newsletter topics (you can still do that here). These were the most popular topics, in this order:
- how to make money
- financial psychology and investing (tied)
- personal finance, which scored the most 4 out of 5’s.
My takeaways: I’ll survey on these topics individually (what’s within personal finance?) But I was most surprised to see how to make money as the winner. So you want me to become the next Tai Lopez, eh? I’m here in my shitty garage writing newsletters…
Market updates I’m paying attention to:
- Downbeat: Biden’s “American Families Plan” may lead to free community college and paid family leave, which may be funded by doubling the capital gains rate tax to 39.6% for households earning $1 million+. The S&P lost almost 1%, and will probably sell off more if the rich feel like Biden’s plan will pass.
- Upbeat: The CEO of BlackRock, the world’s largest asset manager, is incredibly bullish on the stock market. His annual letter has more nuance: “climate risk is investment risk.”
- Stocks: Automation leader UI Path popped 20%+ on its huge IPO, while my precious Coinbase shares dropped about the same % since last week’s debut. SoFi bought a bank, which allows it to accept deposits and make loans using customers’ money rather than the high cost of issuing loans as a non-bank. Software continues to eat the world.
- Fools: Thanks to an Amex card offer, I got a free annual subscription to Motley Fool’s Stock Advisor. I’ll let you know in the coming weeks how good it is.
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Ditch the hedonic treadmill; try hedonic cycling
Hedonism comes from the Greek word hēdonē, meaning pleasure. In psychology, the hedonic treadmill refers to the idea that people generally stay at the same level of happiness despite how hard they try to increase it.
🏃🏻♂️ The hedonic treadmill explains why happiness doesn’t keep increasing after certain income levels, or why the joy of revenge spending can feel so fleeting. But what if you can hack the program?
⏰ Some researchers found that taking breaks while listening to music, or during a massage, increased the pleasure subjects received. Their words: “interrupting a consumption experience can make pleasant experiences more enjoyable and unpleasant experiences more irritating.”
☕️ I’m glad this is the case, because my caffeine habit got the hedonic treadmill treatment. Coffee is one of my daily pleasures, but something weird happens every 3 months: the caffeine doesn’t kick as much and the coffee starts tasting bland.
I read about caffeine resets and found varying bits of advice, like halving your coffee intake every few days. I decided to go cold turkey, taking a full-on coffee break (heh) by drinking water and tea instead.
When I finally drank coffee again, I was on fire. One cup of black gold fueled me for the rest of the day. Take that, treadmill.
Generally, taking breaks from anything is a viable life hack. Fasting from food, doing a digital detox, or even just napping throughout the day can help tons. This also applies to breaks from things we enjoy, even if it sucks temporarily. Everything in moderation—even moderation itself.
So if you find yourself on the hedonic treadmill, try the hedonic cycle: occasionally abstain from pleasure to allow for sustained, long-term pleasure.
Stocks as experiential purchases
Psychologists say “buy experiences, not things” because experiential purchases may provide more satisfaction.
Which makes me wonder—can stocks be experiential purchases?
If you buy a stock, forget about it, and then sell it, you could argue that it’s a material purchase just like any asset.
But most investors aren’t emotionless robots. These are some experiential outcomes from buying stocks:
- Ongoing entertainment value, buying into the story and drama of a company
- Learn about an industry by buying a stock, e.g. buy Tesla and learn about the EV industry
- Feel good owning a stock because it represents the change you want to see in the world
- Connect with friends on this topic*
*I’ve reconnected with several friends in just the past months by realizing that we have a shared interest in the stock market. Making and losing money is more fun with friends! 🤑
Reframing investments as experiential purchases helps me balance rationality with emotions. It’s a gentle reminder of the all-important investing question: what am I buying this for?
Will people be happier after Covid?
If anything I learned about hedonic adaptation is true, then I bet that people will be momentarily happier after Covid—then quickly regress back to the baseline.
I don’t say this to be a Debbie downer, but rather marvel at the resiliency of human nature. Some surprising stats:
Ipsos study: “Globally, happiness is as common in 2020 year as it was in 2019, dipping…from 64% to 63%”
That one took me by surprise. Despite a once-in-a-century pandemic, global happiness only dipped 1%.
2021 World Happiness Report: “Although there were significant increases in average sadness and worry, we found that overall life evaluations, and happiness rankings, were surprisingly stable.”
I find this hugely comforting. Humans have the tendency to return to relatively stable levels of happiness despite major positive or negative events.
If you’re having a bad day or going through a rough season, then have confidence that you’ll return to your baseline happiness eventually.
There’s nothing like marking the end of the pandemic with a party. I’m going to the Same Same But Different festival in September. It’ll be a cozy, hippie-ish camping festival by the lake with only 2500 attendees. You should come.
I do have mixed feelings about the reopening though. Joy and worry. Hope and anxiety. That’s why Jensen McRae’s Immune has been on my heavy rotation lately.
💸 Money tip of the week: Ask Help from Older Adults
In elementary school, they’d sometimes have students do
child labor donation drives to raise money. I could always count on the grandma neighbor across the street to buy some whacky wallpaper from me.
Maybe this new research from University of Birmingham explains why: older adults (55-84 in the study) are most likely to make the effort to help others, while younger adults (18-36) were more selfish and put in higher levels of effort for self-benefit.
We wanted to focus simply on people’s willingness to exert effort on behalf of someone else, as this shouldn’t depend on your wealth or the time you have available. Our results showed very clearly that participants in our older age group were more likely to work harder for others, even though they would gain no significant financial reward for themselves.Dr Matthew Apps
So it’s just not only that older people have more resources, but perhaps their experience in life (e.g. kids) makes them more empathetic.
How is this a money tip?
If you’re in a bind or seeking financial help, you’re more likely to get a response from older adults compared to those selfish young mofos.