Tuesday, April 24, 2018

The Art of the Good Life #20 : Your Two Selves

[ My pal 15 Hour Work Week has also started a regular series on this Rolf Dobelli book as well ! I read his blog here because he has a different take on this book and I read it to revise its concepts. ]

You have two selves.

The first self is the experiencing self. This is part of the consciousness that is in the present, taking in all sensory perceptions real-time. This part of the self has to sift through millions of data points just to retain a few of it for storage in long term memory.

Which leads us to the concept of the second self also known as the remembering self. The remembering self  gathers, arranges and evaluates all the data captured by the experiencing self.

These two selves evaluate events differently. In fact the remembering self tends to over-emphasize peak events and the also the things which occur right at the end of the event itself. This is the reason why some people who suffer during BMT tend to see it more positively in retrospect.

This idea may explain the behavior of the folks who reach Financial Independence.

It does not matter how long it takes for  someone to reach financial independence. In retrospect, the triumphs in a person's career will determine how he assesses his journey to reach cross-over point, where passive income exceeds expense.

This further means that, without an extremely unpleasant event that actually ends a person's career, folks will generally not voluntarily end a career journey after reaching financial independence. We often get out because we get retrenched or meet very toxic people in the workplace.

We can extrapolate some useful insights from this realization beyond the Rolf Dobelli book.

Those who first reach Financial Independence and then pull the trigger to Retire Early will always tend towards Introversion. This is because the workplace will always be a place of over-stimulation. Endless meetings, presentations and chats next to the water cooler.

Which leads to a deeper realization.

When you read the articles of a financial blogger, invariably you will encounter someone who is heavily biased towards advising readers on what best to do with their money and life and that this advice would actually work against extroverts.

This is where we see the extrovert minority struggle to understand why people are so eager to retire even within this community.

I don't see a problem for extroverts trying to reach financial independence. The trick is to get there first, and then ask yourself how can this financial independence be used to make a bigger dent in the Universe.

Failing that, more money may just mean bigger parties and louder music speakers.


  1. Hi Christopher,

    Is there any optimal margin ratio you use for your margin account.

    Currently I am having a 2.23 margin ratio.

    Based on calcs, this would allow only for a 35% drop in share price and 35% drop in collateral before a margin call is made. I use a combination of cash and securities as collateral .

    Thank you sharing and any information you can provide on this.

  2. I think 2.23 is great. I'm currently at 1.85 even though my target is 2.0.

    Safety first.

  3. I think 2.0 should be rather safe . Any idea how you came up with the ratio ?

    Just wondering if there is a black swan event like 2008. Equities falling 40-60% is a possible scenario though we can never really model for this possibility based on frequency, probably every 8-40 years or so (major recessions in 1929-1939, 1979, 1987, 1997, 2007) , and as you advised, its always safe to have some cash to pay down the margin call or even take up more margin for the depressed stocks.

  4. Ratio came from Ian Ayre's book called Lifecycle Investing. 200% is the furthest you can go to stay safe.

  5. Thank you so much for the info, will pick up that book