Category Archives: Books



How I Stumbled into a 26 Week Veteran’s Day Challenge

Flag-Helicopter

It’s funny how sometimes, without any planning, things just fall into place and you end up doing something really awesome.

It all started  a couple weeks ago when I recorded a bunch of movies off a free preview weekend for one of those premium movie channels on cable that I’m too cheap to actually pay for.  Last week, I decided to watch one of them – American Sniper.  I loved it!  In fact, I enjoyed it so much, I decided to pick up the book and read it.  Mrs. Pennypacker can attest to how rarely a movie motivates me to read the book.

In case you haven’t seen the Academy Award nominated movie or read the best-selling autobiography, American Sniper is about the life of Navy SEAL Chris Kyle who ends up becoming the most successful sniper in US Military history.  You learn how he grows up and what he goes through to get to that pinnacle.  I gleaned from Kyle’s story three guiding principals that I think can apply to almost anything anyone is trying to accomplish in life.

1. Give yourself the best chance to succeed

During a couple of his deployments in Iraq, Chris Kyle was assigned to be the sniper for teams of Marines assigned to go door to door looking for the enemy.  It was a dangerous job. He could see that the Marines were getting hit almost every time they stormed a building. Kyle felt like the Marines would be more successful if he could accompany them on the ground and teach them some of the advanced building clearing techniques that he learned as a SEAL.  So he left the relative safety of his sniper’s hide and helped the Marines.  Others feared that his superiors would pull him right out of the fight if they knew what he was doing.  But, Kyle didn’t care.  He knew that what he was doing gave those Marines (and himself) the best chance to succeed.

2. Love what you do

Kyle truly believed in what he was doing and loved doing it. He was born to help people, to protect people from evil. As Chris’s father put it in the movie, there are three kinds of people in this world: sheep, wolves, and sheepdogs. Chris, of course, was a sheepdog watching over his fellow soldiers and the American people, protecting them from the wolves.  In his mind, it wasn’t so much that he was taking lives as a sniper, but it was more that his actions were saving the lives of his fellow soldiers.

3. Seek out tough challenges

Chris Kyle joined the Navy so he could be a SEAL – one of the most difficult and demanding jobs in the military. Only 20% (sometimes less) of the prospective SEAL candidates that get into BUD/S actually make it through and become a SEAL. That was just the kind of nearly impossible challenge he was looking for.

How often do most of us face challenges in our lives? I mean difficult challenges.  Challenges that most people fail at.  Probably not all that often.  We generally like easy cake-walks that come complete with the promise of guaranteed success.  But, if we were to run a marathon, climb a tall mountain, or maybe take on a project at work that most people aren’t able or willing to do, we might see things a little differently. These are the kind of difficult challenges that, when completed, can give you some of the best satisfaction ever.

My 26 Week Challenge

So, Monday I started a 26 week physical fitness program geared towards preparing for BUD/S. This fitness program involves mostly push-ups, sit-ups, pull-ups, running, and swimming – ratcheting up the distance, intensity, and reps of each as the weeks progress. Since my toe is still questionable, I’m substituting biking for running and since I don’t like swimming, I’m hitting the rowing machine instead.  My goal is to experience what it takes to meet the physical fitness demands of a SEAL.  Since I’m not actually going through BUD/S, I’ll miss out on some of the mental challenges SEAL candidates face such as having a fire hose sprayed in their faces, getting yelled at and berated by their instructors, and the non-stop torture that is Hell Week.

Fast forward to today and lo and behold it’s Veteran’s Day.  I didn’t really plan this, but all these events just kind of worked out as a great way to honor our military veterans.



Thank You Dr. Thomas J. Stanley for Unmasking the “Millionaire Next Door”

Sadly, Dr. Thomas J. Stanley died in a car crash last weekend.  For those who may not know, Dr. Stanley was a retired marketing professor at Georgia State University famous for thirty years of researching the rich.  I read three of his books, each presenting a unique flavor of his findings.

Dr. Stanley wrote several books about the affluent including his most famous best seller, The Millionaire Next Door.  In it, he describes the typical American millionaire.  Far from the bling encrusted rappers or haute country clubbers you might imagine, Dr. Stanley found the typical millionaire lives a frugal and inconspicuous life.  They live in the same houses and drive the same cars that most people do.  The difference is, the wealthy live well below their means, they focus on building wealth instead of displaying it, they typically own their own businesses, and they are good at finding opportunities in the marketplace that no one else sees.

Dr. Stanley’s follow up book, The Millionaire Mind, came in 2000.  Instead of your typical millionaire, this book focuses more on multimillionaires and the factors they attribute to their monetary prowess.  These fundamentals include a high level of integrity, discipline, good social skills, a supportive spouse, strong leadership abilities, and hard work.  Most are self-made millionaires who did not inherit their wealth and luck had very little to with their success.

The final book of his that I had the privilege of reading was Stop Acting Rich…And Start Living Like a Real Millionaire.  This time the target is the non-rich.  Dr. Stanley looks at why so many of these people spend so much time and money collecting luxury toys.  He explains that millionaires live frugally.  They don’t seek these treasures, even in times of economic prosperity.  He demonstrates that it’s not a high income that makes you happy.  Instead, it’s living below your means that leads to the greatest satisfaction in life.

These book are by no means specific blueprints on how to become rich, but instead offer a glimpse into the real life of a millionaire.  It’s hard to argue with Dr. Stanley’s findings since they’re based on his own research conducted on actual wealthy people.

Dr. Stanley will be sorely missed.  Not only for the books he wrote but for the books he had yet to write.



Zero to One: An Unconventional Look at What it Takes to Build a Company

Copying something that already exists is like going from 1 to n, but creating something completely new and different means going from 0 to 1.  In order for a company to succeed, it has to create something the world has never seen.  This is the core idea behind the new book Zero to One: Notes on Startups or How to Build the Future by Peter Thiel and Blake Masters.

The book is based on notes taken by Masters, a student at Stanford in 2012 who took a class about startups.  That class was taught by Peter Thiel, the “don” of the famed PayPal Mafia – the name given to the founding group at PayPal who each later went on to start and invest in several other successful tech companies.  Since selling PayPal to eBay in 2002, Thiel himself has gone on to start Palantir and invest in many other startups including Facebook and SpaceX.  It is the lessons learned from these experiences that fill the pages of this book.

As I read Zero to One, I found myself bookmarking and highlighting in my Nexus more times than I wanted count.  The text flowed easily, but the nuggets of golden wisdom that shined through were sharp and, at times, jarring.  My mind had to pause at the more radical ideas like competition is bad, monopolies are good, and don’t invest in a tech CEO that wears a suit.

Throughout the read, Thiel acknowledges conventional wisdom and then kicks it to the curb.  One fundamental myth that Theil picks apart is the idea that success is like winning the lottery.  He calls out Malcolm Gladwell on this point, but to be fair, many of us have bought into the idea that luck is the main factor in determining who succeeds.  Thiel shrewdly responds, “if you believe your life is mainly a matter of chance, why read this book?”  There’s no reason to find a winning strategy if it’s like the lottery, and everyone has an equal chance of succeeding.  “You are not a lottery ticket.”  You control your own destiny.

Most of us are familiar with the theory of evolution – the idea that living things randomly mutate and the best mutations win.  There is no plan.  It just happens.  There are companies out there that operate under this same premise.  Adapt to a changing world, be nimble, listen to your customers.  These are all phrases that, if adhered to, Thiel says will spell a company’s doom: “Darwinism may be a fine theory in other contexts, but in startups, intelligent design works best.”

Thiel argues that the many startup failures that came out of the dotcom bubble of the late 90s and, more recently, out of the cleantech bubble the began around a decade ago are the result of failing to answer one or more of his seven questions every company must ask itself.

In Zero to One, Theil serves up a refreshing glass of thirst-quenching knowledge on how to put together a successful company.  Some of his ideas are the polar opposite of what today’s companies embrace.  But if you stop, listen, and think about them, they make sense.

Whether you’re thinking of building a startup, currently running a startup, or maybe working for a startup, I would highly recommend this book.  Even if you’re affiliated with a more established company, this book might just get you thinking about where your company is headed.



There’s a lot to Like About the Total Money Makeover

I just finished reading Dave Ramsey’s The Total Money Makeover and I have to say, it was better than I expected.  It’s more than a how-to book.  It’s a book that gives you an action plan along with motivational success stories from people who have followed the plan and come out on the other side as winners with money.

The first half of the book focuses on honestly assessing where you’re at with money, dispelling some of the common money myths, and challenging the stereotypical beliefs of what a wealthy person looks like.

The second half of the book lays out Dave Ramsey’s plan: The Baby Steps.  A plan that he admits comes from the 1980s Bill Murray movie called What About Bob? (Which, by the way, is one of my favorite comedies of all time)  The steps Mr. Ramsey outlines for becoming wealthy are in fact small, bite-sized steps designed to change your behavior.  The steps are not a get-rich-quick scheme, but a get-rich-slow plan.  To use a weight loss metaphor (which Mr. Ramsey sprinkles liberally throughout the book), instead of opting for the magic pill of gastric bypass surgery, the Baby Steps direct you to struggle and suffer to realize change.  If you opt for the quick fix, you miss the behavior change and it’s easy to fall right back into old habits.

There’s lot’s to like about the Mr. Ramsey’s financial principles:

  • Pay off all consumer debt smallest amount to largest.
  • Build an emergency fund of 3-6 months of expenses or around $10k.
  • Save 15% of your income for retirement.
  • Start a college savings account if you have kids.
  • Pay off your mortgage if you own a home.
  • Once you’re wealthy, be healthy with money – have fun with some, invest some, and give some.

There are, however, a few quibbles I have with Mr. Ramsey.  For one thing, he advocates getting off credit cards completely.  For some that have a true addiction to cards, shredding the plastic might be the a necessity.  But, I think for most people, credit cards are useful tools that provide an added element of convenience and security over say cash or debit cards.

The other area in which Mr. Ramsey seems a little off-target is investing.  He encourages his readers to invest in growth stock mutual funds that have at least a 12% return and at least a ten year track record.  The ten year track record is a good quality in a mutual fund and a 12% return isn’t all that unreasonable since, as Mr. Ramsey points out, “the S&P 500 has averaged 11.67 percent per year for the last eighty plus years…”  The problem though is he encourages finding mutual funds that beat this S&P average return.  I think you’d be better off buying the average and sticking with cheap, low-risk index mutual funds.

Bottom line, The Total Money Makeover is one of the most complete and easy to understand personal finance guides that I’ve read.  While I have a couple minor disagreements, the overall plan seems sound.  It’s a book for anyone starting from square one who needs some motivation and a plan of attack.  It’s also a book for anyone who might be pretty good with money and just needs some fine-tuning   If you complete the marathon that is Dave Ramsey’s seven Baby Steps, I have little doubt that your behavior will change and you’ll become wealthy for life.



How Bogle Inspired me to Cleanup my Investments

In case you haven’t heard of John C. Bogle, he’s the founder of the Vanguard Group and a pioneer in mutual fund investing – he started the first publicly available index mutual fund in 1975.  I just finished reading one of his more recent books, The Little Book of Common Sense Investing.  I’ve never actually read any of Bogle’s books, but from mentions on the web here and there, I thought I had a general grasp of what his philosophy entailed.  I just didn’t realize the details of how he invests could be so interesting and compelling!

Bogle’s message is simple.  To win at the investment game, own every single publicly held company at a very low cost, and own them forever.  Impossible.  But, the next best thing is to own an index mutual fund.  An index mutual fund is a basket of stocks that represent the entire stock market.  They hold stocks that closely follow an index such as the S&P 500 or the Dow Jones Wilshire Total Stock Market Index.  Unlike actively managed funds, the stocks within index funds are not traded.  They simply sit there and grow in value along with the market.  Because the stocks are not traded, the fees and taxes associated with index funds are very low.  Meaning, you get to keep more of your returns.

It’s a fairly short book, that would probably get repetitive if it were much longer.  Not because Bogle is a boring writer, but because much of what he says is so simple and to the point.  He does a great job of sprinkling in memorable one-liners such as “Don’t look for the needle in the haystack.  Just buy the haystack!” and “The miracle of compounding returns is overwhelmed by the tyranny of compounding costs.”

Throughout the book, conventional wisdom is turned on it’s head.  At the end of chapter 8, he reminds us that the prospectus for every mutual fund contains the following warning in fine-print: “Past performance is no guarantee of future results.”  Yet, this is how mutual funds are rated.  The famed Morningstar rating system is “based on a composite of a fund’s record over the previous 3-, 5- and 10-year periods.”  Those funds that stand out from the rest sporting a badge of 5 stars are not guaranteed to continue winning.  In fact, they are more likely to fall back to earth over the next few years as the law of averages catches up with them.  Index funds on the other hand make no promises of future performance other than they will faithfully stick to the market.

Bogle ends each chapter with a “Don’t Take My Word for It” segment in which he quotes various investing experts touting the positives of long-term index fund investing.  Mark Hulbert is one of those he quotes.  Bogle mentions Hulbert’s aptly titled New York Times Article, “Buy and hold?  Sure, but Don’t Forget the Hold.”  When many people think about long-term investing they think about 10 to 20 years.  But, Bogle reminds us we need to hold on to our investments forever.

Needless to say, this book was a great read.  It inspired me to cleanup an old IRA account I’ve had for years – a dumping ground, if you will, for ghostly 401k’s from former employers.  I haven’t really paid much attention to what investments I have in there.  But, after reading Bogle’s common sense message, I cracked open my online account and started shuffling.  I consolidated the seven different actively managed mutual funds I had in there into three simple index funds – a S&P 500 fund, a small-cap index fund, and a foreign index fund.  My portfolio is much cleaner now and should yield quite a bit more return in the long-run.  Or, at least as much as the stock market.



I’m Not Really a Rich Dad Poor Dad Kind of Guy

I finally got a chance to read the first book in the Rich Dad Poor Dad series sub-titled, What the Rich Teach Their Kids About Money-That the Poor and the Middle Class Do Not!  It’s about the author, Robert Kiyosaki, and his experience growing up in Hawaii with two dads.  One dad is his own dad who went to college and had a secure, well-paying job with the state government, but always seemed to be struggling with money.  The second dad was actually his friend’s dad, who dropped out of school at 13 to eventually become a wealthy business owner.

The premise of the book seems to be that society and the US education system emphasize finding a secure, well-paying job working for someone else.  And, according to Kiyosaki, this will not lead to wealth.  Instead, you should work for yourself, either as a business owner or as an investor so you can acquire assets that generate passive income.

I agree with Kiyosaki that kids don’t get enough of a personal finance education in school or from their parents.  Most people I know (including myself) had to self-educate themselves by reading books or taking classes outside of school.  However, I think you can become wealthy working for someone else.  You just have to spend less than you make and save or invest the rest.  It’s very simple and yet most people don’t do it.  They live in debt for most of their lives trying to keep up with the Joneses.  If you have the desire and the ability to run your own business or become a full-time investor, you should do it.  But, don’t think that ahs to be the only path to wealth.

I appreciate that Kiyosaki talks about what he’s done personally to get where he is.  He describes how he took a variety of different jobs early in his life to gain broad experiences.  He joined the Marines because he wanted to travel the world and learn how business works abroad.  He took a job as a sales person at Xerox because he hated selling, but knew it was a critical skill to have.  I also like that he put in extra hours at Xerox to give himself extra money to invest.  But, once he starts talking about his investment strategies, I cringe.

I strongly disagree with how Kiyosaki’s invests his own money.  He describes one real estate deal in which he borrows $2,000 from his friend to put down on a house that he finds at a bankruptcy attorney’s office.  The house was worth $75,000 and he buys it from the attorney for $20,000.  He puts an ad in the paper offering to sell the house for $60,000.  He quickly finds a buyer and convinces them to write him a check for $2,500 as a “processing fee.”  Now he can pay back his friend and he’s now sold the house making a $40,000 profit in 5 hours.  And all without using any of his own money!   It just sounds too much like one of those get-rich-quick ads on the street corner: “Our seminar will show you how to buy real estate without using any of your own money!”

Throughout the book Kiyosaki sprinkles in some great advice such as, “profits are made when [investors] buy, not when the sell” and when building wealth, “be willing to not go along with the crowd.”  But, he also mixes in some questionable, or rather, poor advice.  He talks about borderline tax fraud when he discusses taking tax deductions for restaurant meals, health club memberships, and vacations because they are business expenses.  He also hints at insider trading when he recommends making friends with the right people to get information about a company that no one else knows about.

Overall, the book is hard to recommend.  I feel like a good chunk of the general philosophy is sound and there are some bits of practical instruction on how to find real estate deals hidden towards the end of the book.  But, how Kiyosaki applies his philosophy and knowledge is high-risk and get-rich-quick.  I prefer the long term approach to investing as recommended and practiced by people like Benjamin Graham and Warren Buffett.