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Page numbers taken from the following print edition: ISBN 9780063464582

Dedication

For my wife

Contents

Cover

Title Page

Note to Readers

Dedication

Introduction: Go Ahead!

Part I: Your Money and American History

1. Getting Ahead Is Easier than Ever

2. Fast Time, Slow Time

3. Crypto Isn’t the Future; It’s the Past

4. Financial Advice: Inflation’s Oops Baby

5. Gurus Are Selling Something; You Should Buy

6. Your Net Worth Is Wrong (So I Made Myself a Billionaire)

Part II: Investing Then and Now

7. The Next Big Thing Is a Bad Idea

8. Compound Interest and Passive Income Are Overrated

9. Diversification Won’t Make You Rich

10. You Can Beat the Market; You Probably Shouldn’t

11. Women Were Always Active Investors

12. Stocks Used to Be Bad for the Long Run

Part III: Financial Freedom the American Way

13. Financial Independence Isn’t What You Think

14. Real Estate Is a Terrible Way to Make Money

15. House Hacks and Side Hustles Before Uber and Airbnb

16. Yes, People Retired Before Social Security

17. Immigrants Make the Best Capitalists

18. Scams: The Nigerian Prince Is Actually from Spain

Part IV: The Feds and the Family

19. Budgets Are New; Hating Them Isn’t

20. Debt Isn’t (Necessarily) Dumb

21. The Government Was Always Involved

22. Going Broke Is Better than Ever

23. Marriage (and Dual Incomes) Mattered . . . a Lot

24. Generational Wealth Doesn’t Last Long

Part V: It’s Getting Better; Much, Much Better

25. People Really Did Get Ahead, and You Can, Too

Conclusion: The Real Lessons of Financial History

Acknowledgments

Notes

Index

About the Author

Also by Joseph S. Moore

Copyright

About the Publisher

Introduction

Go Ahead!

Where I was brought up, we never talked about money.¹ There was not enough money in the place to furnish a topic of conversation.

Mark Twain

Financial advice has a past.

It doesn’t teach what you might think. The real lessons of history can change your financial life . . . they profoundly transformed mine.

From Benjamin Franklin to TikTok influencers, what “everyone knows” about money rarely stayed the same. Parents once taught youngsters not to save. Debt, meanwhile, was normal, necessary, and sometimes even a moral obligation. Before they were “good for the long run,” stocks were mostly for suckers and considered terrible long-term investments. Everyone says career comes first today, but marriage was the top money tip for most of American history. Timeless truths about wealth rarely lasted long.

One thing stayed the same. In each generation, loud voices assured Americans that no one gets ahead anymore.² Yet, from crisis to crisis, century to century, using made up money to greenback dollars to digital currency, Americans figured out how to move forward anyway. Some failed. Many more succeeded.

Today we say someone is “getting ahead,” but in the past their verb was bolder: “Go Ahead!” It was a common phrase, like a nineteenth-century internet meme. Go Ahead meant move, now, specifically to a better place than you began. Sometimes that meant physically going where the opportunity was, other times to grow where you were planted. But it always meant ending with a better life than you started with.

Go Ahead rarely had a number. It meant rich in the way everyday people mean it today—to rise from always needing more to having more than you ever needed. People worked, read, and dreamed about how to Go Ahead for 300 years.

Go Ahead was never easy, but it has gotten easier. There was no golden era when getting rich was a cake walk. If that era existed, you may be living in it now. The central argument of this book is that getting ahead has never been easier than it is today.

You won’t hear that from any social media or political campaign telling you everything, everywhere is getting worse. They’re wrong.

I know. It happened to me.

* * *

Where I come from, things got better every day. My mother was the sixth child born into a house with no toilet. Her parents eventually installed one ordered from the Sears catalogue, paid for by planting an extra field of peas. My father universally hated rich people, which was odd because he didn’t like other poor people, either. Both parents shared a healthy skepticism of those who tried to get ahead. They focused on not falling backward.

In the pre-NAFTA working-class South, everyone I knew existed one generation removed from farming. To have any good job was to stand apart from the “lintheads,” many related to us, working the ubiquitous small mills. A simple hierarchy was embedded in mundane architecture. At the bottom, people lived in mobile homes or clapboard “shotgun cabins,” so-called because a shotgun shell fired through the front door wouldn’t have time to expand before exiting the back one. Who tested this I do not know. At the other end of the success ladder were those who had two-story houses.

That was it. The rich lived across town in two-story houses and their kids had their own bedrooms. My father was brought home from the hospital to a mobile home. I grew up in a stick-built ranch sans garage precisely seven houses from where the gravel turned to dirt and the dirt turned to trailer parks. Three houses the other direction was a county road dotted with shotgun cabins. Whichever way we turned, we were a few very important steps from the bottom.

My father inspected buildings for the county, crawling beneath houses to examine electrical wiring. My mother was a secretary. The whole family story was one of inching ahead. After all, we peed in a flush toilet.

The person who made sense of this was my grandmother, ubiquitously called Maw Maw, pronounced like two cat’s paws, and in all ways the true wielder of family moral authority. “There are good poor people and bad poor people. We are good poor people,” she explained more than once. “The bad ones aren’t worth the cost of the gunpowder it would take to shoot ’em.”

My family is what Hillbilly Elegy would be if no one used drugs or drank booze. Moralistic? Maybe. But when you live on $14,000 per year, which is what my dad made, there are compounding returns to living without addictions. In the rush to label the Scots-Irish people of Appalachia³ as a Born Fighting dysfunctional clan of rednecks ready to drink liquor and settle scores, we’ve forgotten the born-praying Presbyterians like Maw Maw with no patience for such shenanigans who, with white knuckles, held the social fabric of the poor South together for 200 years.

Parents didn’t dream of getting rich. They prayed their kids would stay out of trouble. The marginal gains from morality could boost your chances of not falling backward. Of my two best buddies at graduation, one joined the Marines and the other went to federal prison. Tiny tailwinds gave me my on-ramp to academia, while friends hit the turbulence of drugs, drunkenness, and divorce.

I never had money, so I didn’t care much about it. After high school, I left home and lived in a singlewide with a rotted floorboard in front of my bedroom. We took a staple gun to the carpet and secured it to the wall, providing an extra second of warning before falling four feet to the ground below. I wasn’t ashamed of this. It was an ingenious use of a staple gun.

From the ages of eighteen to thirty-four, I rarely made more than $30,000 a year, usually while working two jobs. I was almost old enough to run for president, with a negative net worth and no idea it mattered. I loved history, and history loved me back. I became a professor. The doors of archives across the globe opened for me, and 300-year-old ink smudged my fingers. Me—a kid from Nowhereville, South Carolina—managed to get a college degree, make friends with winners of illustrious awards, and visit the flush toilets of some of the world’s most prestigious universities. Student loan debt seemed like a reasonable price to pay.

I came to study financial history by accident, largely because I lived through, and narrowly escaped, the 2008 financial crisis. While starting my doctoral dissertation, my wife and I were offered a no-money-down mortgage to buy a tiny townhome. Back then the “lesson of history” was supposedly clear: renting was throwing your money away. So, we took it. Who in their right mind approved such a loan never occurred to me. This was 2006.

Two years later, we agreed to take a financial class hosted by a local church. I only went because the teacher, a friend, was scared no one would show up. The next night, I could not sleep. Even with no formal training about money, I could tell we had none, owed more, and somehow owned . . . a house? We immediately put our townhome on the market, and it sold—for a profit. Our neighbor listed her home for sale one week later. It was too late. The housing crash was here.

We were the last people off the financial Titanic in 2008. As the world collapsed around us, friends lost jobs, and families tightened belts, I wrestled with how I knew so much history, but it helped so little. Saved instead by sheer luck and the commonsense rules of thumb taught in church basements, I had to know more.

The first financial book I ever read was Dave Ramsey’s The Total Money Makeover. The second was Rich Dad, Poor Dad. The third was on getting rich in stocks. The fourth was about how to buy houses with no money down. The benefit I had was reading these during the 2008 financial meltdown. It felt like watching the wedding video of a couple who dies on their honeymoon. I found it darkly fascinating that so many people believed so much of this stuff.

I became obsessed, reading gimmicky get-rich-quick ads of the Gilded Age, land brochures from the 1700s, boring insurance pamphlets from World War I, really anything I could get my hands on. I traveled to hotel lobby seminars late at night, where would-be wealth gurus told folksy tales of their success and promised people desperate to believe that they could, too. I watched in horror as people rushed, rushed to tables and fought for places in line to pay—often with credit cards—for courses on how to change their family tree forever. I signed up for online classes, traveled to no-money-down real estate trainings in trailer parks, met with Avon ladies and multilevel marketers, interviewed famous radio and tv hosts, and generally made it my life’s work to understand all the ways Americans tried to get by and get rich. I am proud, and my wife is ashamed, that I own one of the world’s largest libraries of obscure financial books like How to Buy God’s Mutual Funds and Profitable Mobile Home Investing Made Easy.

Anthropologists know there is a danger in immersive research. Study cocaine long enough, and you just might sniff a line. I certainly did. I have tried (with small sums) nearly every stock market trick there is. In my favorite experiment, I simply shorted every stock that CNBC’s Jim Cramer suggested buying on his show. I nearly broke even. Usually, I lost money on these exercises, which I thought proved the point.

I began as a pious cynic, documenting the rich stealing from the poor. It felt good to be a sanctimonious Robin Hood, mocking the wealthy with my research. A decade, though, is a very long time to argue against the evidence. Everyday people really did get ahead. The more successful people I met—in person and in the past—the less sure I became. The age-old question ate at me: If you’re so smart, why aren’t you rich? So, I stopped playing games and decided to use what I knew about history to make a million dollars.

To everyone’s astonishment, it worked. Along the way I founded a cryptocurrency, picked a fight with Thoreau, invested in moon land, nearly faced bankruptcy, made millions of dollars, retired early . . . and did this, ladies and gentlemen, without a single instance of using the word unprecedented.

To this day, no one is more surprised than me.

* * *

In the chapters that follow, we’ll explore financial concepts in the past and the present—how financial ideas changed, what they looked like in the lives of everyday Americans, and how so much of what we think is long lasting is surprisingly new. These insights are practical, so each chapter ends with takeaways making their past useful for building your future.

The point of this book is to share everything I discovered researching the Go Ahead American story. To show you what worked and what didn’t—for them, for me, and more importantly, for you—I experimented with each idea on myself, with hair-raising and occasionally hilarious results. In the end, it was worth it.

Go Ahead is as real today as it was back then, so why not give it a try? If we’re going to explore this legacy, we might as well learn how to get rich in American history.

Part I

Your Money and American History

1

Getting Ahead Is Easier than Ever

Everyone says you can’t get ahead these days.

That’s a lie that’s been told for 300 years. It wasn’t true then. It’s even less true now. Getting ahead is easier than ever.

Notice, I did not say “Everyone can get ahead.” That is not true. I said you. Doing what it takes requires less, pays out more, and the payments last longer than at any time in history. You, however, must be willing to do all those Go Ahead things that actually worked when others won’t. Take the right risks, and the odds are ridiculously in your favor.

Let’s start with being in America. I assume if you have this book you either live here or want to. You should. The United States is the wealthiest large nation on earth. Just 10 nations are wealthier, all very small: Monaco (39,000 people), Liechtenstein (23,000), Luxembourg (645,000), Bermuda (61,000), Ireland (5 million), Switzerland (9 million), Cayman Islands (67,000), the Isle of Man (85,000, and not a real country), Norway (5.5 million), and Singapore (6 million). Size matters for opportunity. The third-largest town in Alabama is more populous than five of those wealthier nations. Switzerland is smaller than Michigan.

Global wealth is wildly misunderstood, mostly by Americans. Mississippi, the poorest U.S. state¹, is wealthier than Britain, France, Italy, Spain, and Japan. The sheer scale of wealth surrounding Americans gets obscured because it is just life’s backdrop. Not so for all the people who want to live here. Tyler Cowen, the panoptic economist who identifies the globe’s most talented young minds, notes nearly all his award winners want to work in the United States. “I have written so many letters for O-1 Visas,” Cowen observed of the immigration designation reserved for Individuals with Extraordinary Ability. “It’s stunning to me how few say, oh, could you help me get into Denmark?” Assume if you can’t find opportunity here, you probably won’t find it anywhere else.²

Nor would you have found more opportunity in history.

The good old days sucked, no matter when those days were. Do you have a fondness for Colonial Williamsburg and scrappy immigrants with rap skills? Great. Me too. But early America was a terribly hard place to get ahead.

About a third of colonists arrived as indentured servants or convicted felons, and another third as slaves. Contrary to popular misconception, indentured servants obtained the right to land³, rarely the land itself. They still had to buy it. Then they needed tools to plow, seeds to plant, and livestock to graze, all of which cost more money. Money was what the landless poor didn’t have. So they moved forward renting for another seven years. It often took nearly fifteen years to truly own their American dream. Few lived that long.

American colonists were pretty grumpy about how hard it was to Go Ahead. The Governor of Virginia could barely sleep at night. “Oh how miserable is that man who must govern a people who six parts of seven are poor, in debt, discontented, and armed⁴!” Armed indeed. They burned his colonial capital to the ground 100 years before the Revolution. Americans were angry about not getting ahead from the very beginning.

You could take risks, but if they didn’t work out you might find yourself in jail. Yes, jail. People went to prison for being broke in the 1700s, and this happened regularly. Worse, if a man went bust, his wife and kids were imprisoned, too. They forgot to put that in Hamilton.

Or maybe you prefer your nostalgia from the 1800s? In 1870, food, rent, and clothing⁵ took 91 cents of every dollar made (today it’s under 40 cents). The typical American owned just one and a half shirts. That is an actual historical statistic. To make money to buy this expensive food and the other half of that shirt, the typical man worked sixty hours per week. Women worked more. And the dollars people were paid in could lose their value overnight, making them no more stable than cryptocurrency today.

If you could find work, that is. Newspapers regularly proclaimed the death of American opportunity in the twenty-four recessions that century. One in four years was bad, and some were really bad. Rather than the age of getting ahead, “Ours is the age of suicide and mysterious disappearances⁶,” which were so common New-Yorker ran an article dedicated to studying suicide notes in 1839. Why all the drama? Until late in the century, there was very little insurance to cover losses. If your bank collapsed, house burned, crops failed, or spouse died, you just lost everything.

No, the 1800s were not better and they certainly weren’t easier.

What about the twentieth century? The Greatest Generation. Leave It to Beaver. One-income households. Golly, gee, what a great century! Or not. Let’s bust some myths, shall we?

Teen pregnancy was nearly 10 percent in the late 1950s. Today it is barely 1 percent. It’s hard to get rich as a single teenage mom. But the wages were better, right? No, that’s not true either. Since the 1970s, the median income has risen⁷ by around 50 percent (yes, adjusted for inflation). Even left-leaning groups admit wages are up⁸ at minimum 29 percent. But working-class wages went down, right? No. The median weekly earnings of high-school graduates⁹ (no college degree) is up since the mid-1990s. In my birth state (North Carolina, which lost all those furniture and tobacco jobs) the bottom 10 percent of earners make 33 percent more than they did twenty years ago. It’s up in every other state, too.

Poverty rates, meanwhile, were horribly high. By some estimates, about half of Americans were poor during the Roaring Twenties, which was before the Great Depression. By 1950 it was nearly a third. Today it’s barely over one in ten.

You can make more money, working less hours, spending less to survive, while buying more luxuries than any one of your ancestors. You can marry whomever you want. As we’ll see, that’s a big deal; marriage is one of the largest predictors of financial success. Side hustle platforms are everywhere. Your savings are safe. Mortgages don’t involve questions about your sex life (they used to), and you don’t have to pay them off in five years. Debtors’ prisons are abolished, bankruptcy laws give second chances, and Social Security offers a built-in retirement annuity. You’ve got it harder than “back then”? Puh-leeze!

Moving is easier, too, and mobility matters a lot. Go Ahead starts with an action verb. Success belonged to those who went where the opportunity was, and getting there is easier than ever. Your ancestors climbed aboard crowded, hot, stinky ships. For 15 percent of Americans, those ancestors were forced onboard. Scottish immigrants spent nearly two months in wooden hulls. Travel from China took thirty days. Italian immigrants endured two weeks. Leaving the Dust Bowl for southern California lasted weeks if your truck didn’t break down, which you’ll know if you’ve read your Steinbeck. Driving cross-country took the U.S. Army two months. But you could, today, rent a U-Haul and arrive with everything you own anywhere in the country in under forty-eight hours. You probably know someone who has.

Here’s a big difference no one has told you: finance is simpler than it used to be. An army of advisors gets paid to convince you that this crazy financial world is complex beyond imagination. Let the professionals handle this. But that’s not true. Early Americans had to figure interest rates with pencils where you have spreadsheets. Individuals regularly issued mortgages to local homeowners that included payment tables and civil law procedure. Could you do that? The price of any security in the world is available, accurate, and on your phone. Nineteenth-century investors had to go to seedy bucket shops that served liquor at the bar—and pornography in the bathrooms—just to see what the ticker tape said. Moving money involved dangerous and expensive stagecoaches with two drivers, one quite literally in the shotgun seat. Now you wire it and pay the bank a small fee. Even 100 years ago, most budgets were vague guesses by families who might be math illiterate. Today software tracks spending down to categories like “kids’ sports.” There is nothing about modern personal finance that is harder than it used to be. If your great grandmother could issue mortgage documents, you can do this.

Here is the last, and perhaps most important difference. You live longer. Life expectancy was forty-five years in the Old West. You are already an adult, which means you are probably going to hang on to about eighty-four¹⁰. Your income and investments have longer to grow. You live two lifetimes compared to early Americans. Don’t waste them.

* * *

Starting in the 1970s, a cottage industry of academics published research bemoaning the lack of real “get aheadism” in the so-called land of opportunity. The basic summation of those scholars is as follows: despite our national myths, most people stay in the same income class as their parents. Born poor, die poor. Born middle class, die middle class. Born wealthy, die in a Tahoe skiing accident. This line of reasoning has been absorbed into a media narrative feedback loop, especially on social media. Nearly 60 percent of young people today say the American Dream is no longer possible.¹¹

Our culture swallowed a pessimism pill, and it isn’t doing you any good. If you scream at people that their lives are terrible for five decades, they may start to believe you. There is real—and really persistent—wealth inequality in America. We will tackle that in later chapters. For now, remember this: the question is not what type of economy you would build, but what you will build in this economy.

For everyday people, the goalposts are set where they are and it’s best to get the ball moving. The clock is twice as long as it used to be, but it is ticking.

Take More Risks

Risks today are less risky than they used to be. Your savings, health, home, car, and life can all be insured. The currency you use won’t evaporate overnight. You may go broke, but you won’t go to jail. And, if you succeed, the payouts last longer than ever.

You live in the least risky age for everyday people in the history of the world. Sure, a black swan can wipe you out. But most of the risks left in the financial world would wipe you out whether or not you open the business, take the job out of state, get the master electrician’s license, make the movie, flip the investment property, or start the 3-D printing hustle in your basement. “My venture failed” and “I got laid off by a business that failed” end in roughly the same place.

I’m terrified of risk. Like Bilbo Baggins, I was happy in the academic shire. We have lectures from leading thinkers, interlibrary loan, and air conditioning there. But I knew that if I was going to study people risking everything, from climbing aboard creaking wooden boats crossing oceans to making their own money to creating companies in their garages, I must go on the journey, too. I determined that, within reason, any interesting idea I found in the past I would try on myself. The boundaries of “within reason” were set by my wife saying “under no circumstances.” Within the bounds of what the family could tolerate, I have tried nearly every strategy I’ve uncovered in the past, many of which you’ll read about here. That started with me doing what you should consider, too. Leave your comfort zone.

Tim Ferris stole an idea from the Stoic philosopher Seneca and made it better, which is hard to do. He calls it “Fear-Setting¹²”; Seneca just called it being stoic. The idea is that as you come up to a risk, take a day to clearly label out the worst-case scenario. You took this chance, and it blew up in your face. Fact by painful fact, what would it look like to live that failure? Write it down.

What you often find staring over your greatest fears on a yellow legal pad is, “I could survive that.” Yes, you could, especially in a country whose poorest state is wealthier than the one from Downton Abbey.

If you don’t succeed it isn’t because life is so hard. You can Go Ahead if you define where “ahead” is, how you plan to get there, and don’t squander your American life. Both of them.

2

Fast Time, Slow Time

Your financial life moves in Fast Time and Slow Time.¹

In Slow Time, things shuffle along. You hear good news and bad. New inventions will revolutionize the world! They mostly make you switch charging cables. Big changes are coming from D.C.! You drive on the same bumpy road to work. Most of life is lived this way. Lots of talk, but it’s noise. Slow Time.

Fast Time is different. The effects of money decisions, both wise and foolish, suddenly happen all at once like a flood. Financial life (from the value of a 401(k) to your uncle wanting his money back) changes under the pressure of all the other financial activity happening rapidly. Time went slowly, then all at once.

Most of your financial work is done in Slow Time. Most of your gains or losses appear in Fast Time. Life happens in Slow Time, and when Fast Time comes, you won’t remember you read this book. You’ll be too busy telling the kids everything is okay. Or, if you are lucky, job offers, business sales, or other payoffs from wise choices will come in swift batches over the space of a few weeks or months. A lifetime of work and investment will pay out big. Either way, the pace of change won’t last. Soon, life will return to Slow Time in a new equilibrium that feels better or worse than before.

You live most of your life in Slow Time. You get rich in Fast Time.

This is the opposite of today’s money guru advice, that the way ahead is by steadily accumulating savings for fifty years. In history, and today, most people who got rich worked slowly, but their paydays came suddenly.

The distinction is vital for you to absorb and apply. In Fast Time, prices, job openings, and debt start to move together; everyday people are not in control of their own destiny. They are along for the ride. You can certainly make it worse, but most of what happens in Fast Time is done to you.

For everyday people in America, Slow Time matters most.² What you set in motion during Slow Time is what confronts the whirlwind in Fast Time. This may be the opposite of what is true for stock traders, where huge fortunes are made and lost in the heat of battle. But for you and me, Slow Time is where the real work gets done, and where you can act on the world. The right decisions in Slow Time (who to marry, which career paths to take, what you get addicted to) are what prepare you to survive, or thrive, in Fast Time.

* * *

Mistaking Slow Time for Fast Time changed my town forever and, as a bonus, inspired the Netflix hit series Schitt’s Creek. I live today in Braselton, Georgia, a tiny town outside of Atlanta once owned by superstar actress Kim Basinger³. Depending on your generation, you know her as a Bond girl (Never Say Never Again), Viki Vale (Batman), Eminem’s mom (8 Mile), or that really old Fem-dom (Fifty-Shades Darker). She owned the town. As. An. Investment.

Her plan was to put a tourist attraction in the empty mills and build a movie studio . . . in Georgia . . . in the 90s. But building a dream happens in Slow Time. Taxes mount. Investors get anxious. Investments take more investments, and soon you run out of cash. Basinger declared bankruptcy. Actor Eugene Levy found the story in a Google search, and the rest was pandemic-era comedy gold starring himself as a failed businessman whose final remaining possession is a backwater town with a funny name.

But who gets the last laugh? Today, the fastest growing movie production studios in the world, bigger than New York and soon to overtake California, are in “Y’allywood,” a district just outside Metro Atlanta⁴. The town Basinger bought is home to one of Atlanta’s largest tourist attractions, a winery and resort called Chateau Elan. They sell accessible French luxury on Georgia clay. It’s surrounded by the mansions of pro athletes, famous rappers, C-level reality stars, and (oddly enough) me. And it works. It’s profitable. You should visit. Basinger, bless her heart, just didn’t understand that she couldn’t speed up Time.

A British journalist observed “delusion lies in the conception of time⁵” because dreamers seek “to condense the future into a few days.” The Brits are better with words than we are. Most Americans just say, “hold your horses.”

An American who held his was Norman McGhee⁶, one of the first black stockbrokers and a Midwest business titan. Born in the rural South in 1897, he worked his way through Howard University as a railway porter, studying banking law. He learned business from the bottom up with the headwinds of Jim Crow blowing in his face. By his mid-thirties, he knew much, but was worth little.

Then came the Great Depression. While others felt the crush of Fast Time and lost their homes, McGhee made his first fortune. Seventy years before the 2008 bubble burst, before Blackstone and corporate-landlord–gate, McGhee took what he knew about borrowed money and bought over 100 foreclosed homes, turning them into rentals. Possessing little money but a keen sense of opportunity, he became one of America’s first $0 down real estate investors, buying with 100 percent borrowed funds, renting to pay the mortgages, and holding on for dear life for values to rise. That move eventually helped him break the race barrier on Wall Street. When Fast Time came, Norman McGee became one of the most important black businessmen of his generation—because he knew how to think about Time.

Neither of these stories—the beautiful bankrupt or the Jim Crow millionaire—is what we think happened in their respective eras. The 90s were when Ace of Base saw the signs of a booming economy, and it opened up everyone’s eyes. The Depression was filled with Woody Guthrie songs and faces of failure. Basinger, though, mistook Slow Time for Fast, thinking the future would be willing to get here quickly. McGhee, who labored patiently watching and learning through Slow Time, turned history on its head.

Be Careful How you Read History

Reading history distorts time. It makes everything seem Fast. This is important; understanding it can save your financial hide from applying the wrong lessons. Reading history and living history are not the same thing.

Most financial history is Doom or Boom. Everything is always in crisis and everyone should have seen “it” coming, whatever “it” was: tulips, overindebted railroads or houses, tech businesses with no customers, Beanie Babies, or Bored Apes NFTs. Everything feels Fast. A day goes by in a word, a week in a paragraph, and a month on a page. Entire years of financial ups and downs take up less space than a credit card in bestselling books and viral stories. (For future readers, a credit card is a thin piece of plastic people used to pay for things before using their phones.)

The real role of such histories is to give the reader a thrill. It’s a murder movie, where we scream at the characters, “Look behind you! The sub-prime mortgage lender is behind you!!!” For the real characters, though, history was boring. Everyone who should have seen it coming lived those years in Slow, laborious Time. The change wasn’t a page away for them. It was a thousand days of kids and marital spats and the flu and sports teams breaking their hearts again. The end didn’t seem right around the corner because it wasn’t. The bull markets didn’t feel close, either. It is hard to see bust OR boom coming when you are in Slow Time.

Want to see how seemingly Slow (but important) Time can be? Try tractor trailers. In 1956, shipping changed forever⁷ when a crane gingerly loaded fifty-eight truck containers onto a rusting World War II-era tanker ship in New Jersey. The whole thing was a crazy experiment to see if it would be cheaper to ship in simple metal boxes what normally took hundreds of men immense effort to load, item by item, at the docks. It was . . . a lot cheaper. Before that moment in Newark, shipping things across long distances, much less across the oceans, was massively expensive. All manufacturing occurred close to home, and a lot of it occurred in New England. Now, you could ship anything, dirt cheap, all over the globe by putting it in a trailer, loading the trailer on a boat, and plopping the box onto the back of an eighteen-wheeler at port. The world would never be the same.

Except the world looked very much the same for quite some time. A young investor named Warren Buffett was so sure Fast Time wouldn’t come that he bought a struggling textile mill called Berkshire Hathaway, assuming clothes would always be made in the USA. Nearly a decade after the shipping container revolution started, he wasn’t worried in the least about competition from China. Shipping containers required ships that didn’t exist yet (the World War II ship had to be retrofitted for the experiment). New ships are crazy expensive to build. It would take generations for foreign competitors to creep in on good old American manufacturing.

Then Vietnam happened. The U.S. government needed to haul weapons and supplies across the Pacific quickly and cheaply, so the military subsidized building lots of those new ships and their containers. By 1973, the war was over, and all those ships were looking for something to do. Cheap metal boxes saying “Now Hiring Drivers” and “Wash Me” meant you could make something anywhere in the world and have it on I-95 three weeks later. Berkshire Hathaway hasn’t made a garment in over fifty years. When Fast Time arrives, it can take money even from Warren Buffett.

Honing your awareness that change, though certain, comes Slow then Fast is like a Spidey-Sense for the financial soul. Knowledge of history, real history, develops a profound awareness that the future is likely to look different than the present, but not when or how everyone is expecting. “A historical sense⁸,” said one famous historian, is “an intuitive understanding of how things do not happen.” Those who can live in the present while building in the expectation for change—even if they aren’t always sure just how or when it’s coming—have a leg up on those who presume the brave new world of tomorrow will actually arrive tomorrow (or, on the flip side, never).

Most of the strategies in history that worked are Slow Time strategies that paid out in Fast Time. The idea is ancient: there is sowing and reaping, but the reaping part often comes suddenly. Fast Time comes for us all, but it rarely comes when we expect it. It rewards the prepared.

3

Crypto Isn’t the Future; It’s the Past

Everything about money has changed.

Financial advice today is shockingly different than in the past, in no small part because money itself is different, too. Dollars in history bore no resemblance to those today. Generations lived their lives in a strange financial world. When they finally arrived at ours, no one wanted to go back.

No one, that is, until the cryptocurrency craze. Cryptos are a variety of digital monies, kept by computers constantly sharing information. There are many, many cryptos—currently over 9,000. The most famous, Bitcoin, has a market cap of over $2 trillion. Dogecoin, created as a joke to make fun of Bitcoin, is worth almost $25 billion. These “coins” all share one important trait. They are proudly created by people, not governments.

Leading theorists, tech titans, gorgeous celebrities, and everyday waitresses speak of an exciting new world of self-made money. Before plunging us headlong into the future, they should take a long look at the past. As it turns out, we’ve been here before.

* * *

In 1835, a runaway slave created money from nothing. Arriving in the tiny town of Monroe, Michigan, broke but determined¹, William Wells Brown went door to door asking for work. A landlord offered Brown space to start a barbershop, a fabulous idea but for the fact he owned no scissors and had never cut hair. Undeterred, the young man borrowed shears and painted a large sign: “Fashionable Hair-dresser, from New York, Emperor of the West.” He reminded everyone that the town’s other barber had never seen the latest fashions in New York. Neither had this runaway slave from Kentucky, but no one thought to ask.

Brown quickly ran into problems. His customers couldn’t pay. In the early United States, there wasn’t enough money to go around. Everyone, rich and poor, was strapped for cash.

Brown improvised. He asked the local printer to create $20 of paper money in small denominations between 6 and 50 cents. They were good for a haircut. He traded these tickets for food, lodging and—critically—real cash. Before long, the people of Monroe were paying for beer, groceries, and rent with cash from New York’s fashionable hairdresser. After all, brewers and grocers need haircuts, too. If they had more of Brown’s bucks than they needed trims, they traded them to others.

In the early United States, that was all it took. If a runaway slave said his printed paper was money, it was—until it wasn’t. A year later, William Brown really did move to New York. The Emperor’s dollars crashed to zero. Cash was, very literally, trash.

* * *

Financial life was mind bogglingly complex² throughout the 1700–1800s. There just wasn’t enough money. To fill the gap, nearly anything counted as cash, sometimes even counterfeits. The values of “real” currency changed regularly. If you could manage to find money, know it was legit, and discern its worth, there was still next to nowhere to safely keep it. Every citizen tracked hundreds of variables. A mistake could cost your life’s savings.

The strongest money had something behind it that banks and governments wanted: good land or gold. This limited the supply, since there was only so much of either. But folks still had to pay for the seeds, tools, dresses, and beer that made life livable, so they improvised. A bewildering array of currencies arose. Tobacco Inspector’s Notes, postage stamps, Native American wampum beads, and a half-dozen foreign currencies were viable tender in early America. Coins from the defunct Holy Roman Empire stuck around in the United States for decades after the empire collapsed, since money from a dead empire was better than money from no empire at all. In total, over thirty valid payment methods coexisted.

The most common wasn’t even a dollar bill, but a “bill of exchange” that looked like a modern-day check. It was simply a written promise: You can get this amount of money if you take it to my bank in the future. Checks still have dates on them for this very reason. I’m not paying you. I am promising to pay you. Hopefully, by then, it won’t bounce.

Individuals could create their own funds, too. You could write “bills obligatory,” a kind of personal IOU for $9 in purchases that paid out $10 later. There were also personal pledges, secured by your belongings, that went around town like a floating pawn ticket for your silverware. Neighbors could buy bread with a paper claim to your wife’s wedding ring.

These worked in the best of times. In the worst, when even bad money proved hard to find, Americans survived on “Hard Times Tokens,” called shinplasters. Composed of cheap tin or paper, shinplasters were business ads doubling as store credit. Since you could use them at one store, you could usually trade them at others. If we still had that economy, you could buy gasoline with Chuck E. Cheese tickets. This is how William Wells Brown thought his way out of Monroe, Michigan.

If you’re confused, so were they. Mistakes led to dramatic losses. Philadelphia merchant William Pollard was livid when his ship’s captain accepted the wrong type of payment in another city because he “did not know a Set of Bills of Exchange³ from a Bill of Lading.” It cost a fortune.

* * *

A dollar wasn’t even worth a dollar.

Some were worth more than others. To be redeemed, the dollar must be traded back to the original bank that printed it. You could hold a Bank of Detroit dollar or a Planter’s Bank of Mississippi dollar, but it was only worth a dollar if it got back to Detroit or the Delta. If you held a Bank of Cape Fear dollar, which sounds risky, it might be worth $0.98 in town, $0.95 across North Carolina, or less than $0.90 out of state. No one in Boston was sure it was worth a dime, since that meant knowing that a bank two weeks away would still exist by the time the money returned.

Most banks weren’t good for much, anyway. About 25 percent of dollars hailed from busted banks, and it was thus utterly worthless. Another 20 percent of banks lived at the brink of failure, commanding just ten cents on the dollar. Nearly half of U.S. currency required a deep discount, and only around 5 percent got full value.

By the Civil War, the country had 10,000 unique notes issued by over 1,000 banks, stores, and municipalities, each worth a different amount. To make it worse, tornados of counterfeit money⁴ regularly swept into the supply. So many fakes floated around that, today, 20 percent of the Smithsonian’s historic money collection are counterfeits.

Most Americans understood this cauldron of confusion shockingly well. Newspapers printed discount rates. Publishers sold guidebooks depicting real, counterfeit, and broken bank dollars. To the bafflement of European visitors, Americans took it in stride. Every time they saw money, a U.S. citizen went through a mental process, honed since childhood, determining a) if it was real, b) how much it was worth, and c) how fast they could spend it.

The principal money advice in early America was not to save it. Hoarding cash, even in banks, invited disaster. Horror stories abounded, especially for immigrants unadjusted to this financial wild west. A poor Irish woman in 1840s Baltimore discovered too late that her years’ savings was in useless shinplasters. Those who knew encouraged spending as quickly as possible. Seven-year-old Frederick Seward’s family taught him the trick was velocity. They “might prove worthless any day,” his grandfather explained, so “get rid of them as speedily as possible⁵.” Family letters advised buying land quickly to get rid of cash. Workers in cities tried to spend pay fast. Food in the belly or clothes on the body beat useless paper.

Ponder that. A kindly grandfather passes on the financial lesson that responsible people always spend quickly. Cash was bad, saving naive. In a world of shinplasters, counterfeits, and bad banks, wisdom looked decidedly different from today. Something obviously changed. What?

* * *

Why did a saner system take so long to materialize? Because no one was sure it would be legal. In 1863, Congress birthed the first stable U.S. currency, the greenback. The Supreme Court promptly declared it unconstitutional. A counterfeiter arrested in Ohio staked his defense on arguing that the original notes were unconstitutional anyway. A jury of his peers agreed. He went free.

A year later, the Court surprisingly reversed itself⁶, and the federal government was now in the money making game. The Treasury eliminated competitor currencies through taxation. The green ink confounded false fabricators, increasing trust. Most importantly, the new money was good for paying all government and bank obligations; you could pay your taxes and debts with it.

Financial life changed forever. Growing faith in this new single currency changed banking, too. In 1860, far more money circulated than banks held, because only a fool would hold cash. In just ten years, deposits and circulating currency became roughly equal. From there, the unthinkable happened. By 1880, there were more dollars inside of banks than outside, and by 1900 the ratio was four to one. Americans loved their new dollars, and they wanted to save them. The era of teaching kids to get rid of money as soon as possible was over.

* * *

What is money, anyway?

Libertarians say gold. Modern Monetary Theorists say public monopoly. Crypto believers say consensus. Econ 101 professors show the same PowerPoint for twenty years running: medium of exchange, unit of account, store of value. This will be on the exam.

What money is in political theory and what it was in American life differed. In practice, money was whatever Americans could use in the moment. The problem was that moments weren’t all the same. In low volatility, when things more or less behaved as normal, many things counted as currency. But when volatility struck, when everything and everyone grasped for safety in the storm, what used to be money suddenly wasn’t. As you know, I call these changes in volatility Slow and Fast Time.

In Slow Time, while sowing seed, brewing booze, and buying hair ribbons, shinplasters from runaway slaves’ barbershops worked just fine. Without Slow Time money, no one could have lived.

What everyone wanted, though, were Fast Time funds. When bill collectors came, the most stable money was what paid debts and taxes. If I could settle my mortgage with Virginia Tobacco Inspector’s Notes, I would. But I can’t. The argument that it was good enough for George Washington so it should work for me won’t fly.

In Fast Time, money is anything you can use to pay your debts and taxes⁷. At a functional, life-living level, this is all you need to know. Debates between theorists are silly when your spouse forgot to withhold their payroll deductions, and you find out in April.

Is Bitcoin money? In Slow Time, or if the economic avalanche of Fast Time is moving uphill, sure. But in a crisis, can you pay your taxes with it? I don’t mean can you trade it for dollars to pay your taxes. Stocks can do that. I mean, can you keep the county from taking your house with it? Today, three states accept crypto. Interestingly, though, not one municipality credits you in crypto. A third-party website exchanges digital for dollars. They are accepting your used bitcoin trade-in for a shiny new (electronic) greenback model.

Crypto is not the future, it’s the past. Your digital wallet is filled with blockchain shinplasters—digital wampum—which is why it plummets or rises with the stock market. We’ve tried this before. All American currencies were decentralized units of account before the greenback. Like non-fungible tokens (NFTs) and Fartcoin (yes, a real thing), anyone could issue them. Thousands did. But all shinplasters eventually go to zero.

There is one critical difference with the past. Your ancestors created money because they had too little and what they had barely worked. Our generation made crypto because it had too much money and it worked so well. The value of Bitcoin today comes from the sheer volume of dollars available to invest. The dream of online independence is a protest of just how powerful modern governments are. I’ve met two people who lost millions in digital wallet hacks. Both went to the FBI to get it back. So much for subverting the state.

Don’t Confuse Assets with Money

Be careful confusing assets with money. They are not the same thing. Bitcoin’s anonymous founder, Satoshi Nakamoto, believed he had created a decentralized currency for a new digital reality that was better than the old. He was wrong. In a world inundated with Bitcoin Ads and crypto-branded stadiums, remember that Americans rejoiced to hold a centralized currency. Anyone telling you otherwise hasn’t read the history. We are driving into a future we’ve already visited.

What Satoshi actually created was an asset, not money but a place to put your money.

I first tried crypto around 2016. I say tried because I failed. I couldn’t figure the thing out. Major exchanges were rare, and besides they ruined the game. If the point was to buy something outside governments’ control, getting year-end tax forms felt like atheism in church.

I would need a crypto wallet, a digital address around twenty-six alphanumeric characters long, derived from a public key sixty-six characters long, and controlled using a private key sixty-four characters long and known only to me. I was already lost. Not being especially tech savvy, and thoroughly confused, I just gave up. This was no currency. This was a hazing ritual.

Abandoning that gambit meant I missed the Bitcoin Boom. On paper, the $1,000 I was going to invest would be worth around $100K today. It was my generation’s most historically transformative investment, and I stepped away.

Was I right or wrong to miss the tech money train? It depends. I didn’t log in trying to buy investments. I went looking for a currency and, as a currency, I had seen something like this before—200 years worth.

I wanted no part of this as money and still don’t. It was, I eventually saw, an asset. Seeing it for what it was, not the money people said it would be, I did come back.

That is why, today, I’m a crypto billionaire.

But that story isn’t about money, and it must wait for another chapter.

4

Financial Advice: Inflation’s Oops Baby

What is financial advice, anyway?

I went looking for timeless wisdom on wealth. All I found was flux. Financial advice, it turns out, was always changing. The modern version is quite young, its birth a total accident.

* * *

In the ancient world, few people got ahead. Exceptions proved the rule. Sure, you could join the Roman legions and retire, but only by dodging swords for twenty-five years. After the Black Plague, with most workers dead, survivors negotiated land ownership. But to do this, you had to survive the black plague. Normally, life ended where it began.¹ Money did not grow. Working harder served no purpose. Where would you Go Ahead to?

Christian Europe initially deemed getting ahead immoral. Even in permissive Amsterdam², where things really got going, bankers were denied communion until 1658 alongside brothel keepers. It was sinful to make money on the sale of your house. Moving up was against the rules.

* * *

Then came capitalism. Life improved. The more some moved ahead, the more others believed they could, too. Striving got you somewhere.

“Go Ahead!” became the American theme by the early 1800s. Should you move west? Go Ahead! Start a business? Go Ahead! Buy stocks? Well, don’t go crazy. The real trick was “Work! Work! Work!” said Frederick Douglass in the most popular speech in his own lifetime, which was not What to the Slave is the Fourth of July?, but Self-Made Men. “Our mottos are ‘Look ahead’ and ‘Go Ahead!’ . . . Every man has his chance. If he cannot be President he can, at least, be prosperous.” Rags-to-riches was finally on offer.

But how? On untraveled trails, guides are few. “A person needs to live one life in this world to know how to live,” complained a man who went broke in the 1840s, “& when learned it is too late to be of any avail to us³.” Going up was new, advice on climbing rare. The prequels to financial advice were “Improvement Manuals.”

For about 200 years, there really wasn’t financial advice as we know it today, just a lot of thoughts on getting better.

Farm improvement came first. Modern get-rich guides don’t include chapters like “Liquid Manures and their Profitable Use.” Guidebooks for making old farms thrive, which exploded on the scene in the 1700s and 1800s, did. Few people bought stocks, but the “Surprising Profits in Ducks⁴” (real title) could turn your nineteenth-century life around.

The most avid improvers were women. I say “housewife manual” and you say “Down with the Patriarchy!” Pinterest is littered with misogynist examples, like “The Good Wife’s Guide” from 1955’s Housekeeping Monthly. This patronizing piece of chauvinism includes pearls like “a good wife knows her place.” You binged Mad Men. You know how it was.

Only it wasn’t. There was no magazine called Housekeeping Monthly and “The Good Wife’s Guide” is a hoax. Housewife manuals, meanwhile, were the most financially sophisticated improvement books in early American history. On the wife, not the husband, rested the burden of managing a modern capitalist family. The two main objects of a wife, the very real Housekeeper’s Book explained in 1837⁵, were “the comfort of her family, and the care of her purse.” She held the financial fate of the family in her hands.

A wife was a harried human spreadsheet paying bills, balancing account ledgers, and keeping figures running in her head all while in constant states of interruption from children and meal preparation. The popular The American Business Woman dealt with everything from family budgets to investing profitably in mortgages. The moment a successful housewife managed to safeguard more capital than projected expenses, another guide proclaimed, “She is a capitalist.”⁶

Men needed improving, too. Their most famous manual, Benjamin Franklin’s Advice to a Young Tradesman, was long on character and vague on specifics. “He that gets all he can honestly, and saves all he gets . . . will certainly become RICH” sounds good, but Franklin never told you how. Don’t buy to impress others, don’t smoke opium, never co-sign a friend’s loans—that was as detailed as most got.⁷

The final improvement was safety. The single largest creator of improvement pamphlets were insurance companies.⁸ Because improved houses, workers, families, and people were a lot less risky to cover, the late nineteenth century was littered with pamphlets on how to live life cleaner, safer, and better than ever before.

Consider the insurance company. Largely hated today, they were nineteenth-century family heroes. The path upward was covered in oil. The slightest misstep sent generations sliding to the bottom. Housefires, work accidents, and family deaths shattered the dreams of many climbers. Insurance made striving safer.

If a parent died, life insurance fended off starvation. Railway workers gobbled up accident insurance when it arrived in the 1840s. Fire insurance rebuilt family homes in Chicago (1871) and San Francisco (1906) after both burned to the ground. By 1900, no responsible person would be without insurance. There was roughly one policy for every American family because the improved family was better off not risking total failure. Getting better meant protecting against losing the progress you’d made, and everyday people were excited to protect their place in the great Go Ahead line. Workers spent more on insurance than on alcohol⁹, which is still true today if you don’t join a wine club.

* * *

If improvement wasn’t your thing, you could always try to get rich quick. Popular manuals on making fortunes in stocks bubbled up occasionally. They grew and lived alongside improvement culture the same way day trading YouTube channels coexist in a world with Goldman Sachs. It wasn’t what responsible people did, but some people weren’t trying to be responsible. Newspapers warned these pamphlets spread a disease, especially among men: “speculitis.”¹⁰

The easiest places to catch speculitis were bucket shops, bars that posted up-to-date stock prices via the newly invented stock ticker. Stocks were too expensive for working people to buy, so patrons instead placed wagers on the prices going up or down. To stop losing business, real bars bought tickers so customers could check stock prices and make private bets on the side.

Many fell prey.¹¹ “Investment guides” were just sales brochures for dangerous or illegal ideas. The highly advertised 1907 booklet The Law of Financial Success ends after 108 pages of inspirational stories, with a pitch to buy poorly capitalized western gold mines. Another scheme captured 40,000 people as “Investors,” who were sent regular account statements showing Madoff-like returns to encourage more contributions. Clients’ names were found by the U.S. Postal Service on a “Suckers List.” Selling the fantasy of imaginary compound interest procreating non-existent “Generational Wealth” is at least 200 years old. These ideas, though, were hardly mainstream. They sold alongside Dream Books, which told you how to interpret your sleep to pick lottery numbers. Speculitis was more gambling addiction than financial planning.

* * *

By about 1900, Americans finally understood which steps of the improvement ladder went up. There was no “financial advice” industry as we have it today, just clearly labeled steps everyone knew to take. The first was a small savings in a charity bank or insurance company, rarely more than $100.¹²

Step 2 was insurance.¹³ Even poor families carried life, accident, and fire policies. Step 3 was buying a home. Step 4 was using side hustles like raising chickens or renting rooms to pay the house off early. Step 5 varied, but was usually lending mortgages to neighbors, buying rental property, investing in local loan companies, or buying better tools for your trade.

What not to do was equally clear: don’t catch speculitis. The stock market was “the quickest and surest means of getting rid of money that is known¹⁴,” one writer said. Not a single published word, other than ads and scams, said differently. Few Americans thought about themselves as having a financial life outside of being farmers, mill workers, or shopkeepers. Getting ahead was a local event. Their primary investment was in improving themselves.

Americans finally knew just how to move up in their great Go Ahead country. There were rungs on the ladder. You took steps in the correct order.

And then, the ladder fell over.

* * *

Inside the Cracker Barrel restaurants dotting interstate highways are shops of fetishized nostalgia reminding us that flannel was once stylish and soda didn’t always have corn syrup. Look no further than the Pages of Time book series once sold there. The price of a gallon of milk in 1912? Just $0.24. As of this writing it is $4.33. The cost of milk has gone up 1,700 percent¹⁵ since the year my grandfather was born.

Now, go backward 100 years.

The price of milk in 1812, when Napoleon ruled France . . .

$0.24 . . .

to the penny—the price of milk 100 years later. For over a century, inflation was functionally 0 percent.¹⁶

Then came the First World War.

To fund it, the federal government asked Americans to buy Liberty Bonds. Citizens dutifully agreed: rich, poor, young, old. The solidarity of the bond campaign is hard to imagine today. Churches held joint services to fundraise. Employers released workers for rallies. Former President Taft’s niece climbed up one rung of a fire ladder for every $500 donated, giving excited investors a look up her dress. It was all very patriotic.

Bond investments were sound. Roughly 4 percent against no inflation meant a real 4 percent return. Americans could make money, do their duty, and see up famous women’s skirts all at the same time.

Then came inflation. Remember the start of Covid-19, when no one under forty had seen inflation? This was worse. No one alive, no mother, grandmother, or great grandmother, had ever seen prices rise.

In just five years, prices went up 8 percent, then 18 percent, 17 percent, 15 percent, and finally 15 percent again. For reference, Covid inflation was 1 percent, 5 percent, 8 percent, 4 percent, and 3 percent.

Prices doubled. Family budgeting manuals pined for “some years ago, when the dollar was worth 100 cents¹⁷.” No one knew what to do.

Patriotic bond buyers took incredible losses; 4 percent against double-digit inflation was spitting into the wind. Most Americans’ first large-scale market investment plummeted in value. Meanwhile the stock market boomed, going up over 50 percent in a single year. By 1920, the facade of safe investments crumbled, and with it any heed paid to the “stocks are gambling” aphorisms against speculitis. If the world was leaping ahead, your incremental improvements were tiny steps toward the poor house. To beat the market, join it. By the late 1920s, more than one in four American households owned some kind of stock.¹⁸

* * *

Americans had no idea what they were doing, but they were doing it anyway. The 1920s became Investment Pentecost. Everyone spoke in strange tongues: rate tables, preferred shares, common stock, mining certificates, railway mortgages. The everyday person was baptized in a sea of capitalist opportunities. “Perhaps never in the history of the world has so much been said on the subject,” opined one of the many brand new investor guides in 1919.¹⁹

The financial-advice genre was midwifed by a generation groping to beat inflation. Every type of financial advice alive today arrived in that moment. There has been nothing new since. The first financial-independence–retire-early book appeared in 1919. It sold out. Learn-at-home investment courses were first offered in 1922. Readers gobbled up books by Charles Dow, father of the Dow Jones Index, because they claimed to discern scientific patterns in stock charts. Goldbugs hoarded precious metals. The groundbreaking ideas that won the 2002 Nobel Prize in Economics (behavioral economics) were all contained in a single chapter, “Personality in Investment,” in 1921’s Financial Independence at Fifty²⁰. We live today in the world the Great War left behind.

Most importantly, Edgar Smith wrote Common Stocks as Long Term Investments. Smith took a random sample of equities and backtested them. Held long enough, they beat bonds. To a generation warned off such sin and burned anyway, no one felt inclined to check his math. Smith’s book “threw a bombshell into the investing word²¹,” causing the bull market to take off. The more people flooded into stocks, the more stock prices went up. Smith’s readers made his argument come true throughout the 1920s.

Americans mastered the lessons of the past just in time to be completely wrong. They thought they were learning from old mistakes. Courses now corrected, with true north pointing at Wall Street, they went hurtling toward 1929 and the greatest stock market crash ever.

Get Better at Being You

Nothing ever always works.

Financial advice wasn’t planned. It was a historical accident, inflation’s oops baby. People needed answers, and they were going to have them whether they were the right answers or not. That is what modern financial advice is, and what sets it apart from ancient wisdom, moral improvement, or just plain common sense. Financial advice is someone’s declaration of faith that what once beat inflation will work again . . . for sale.

Financial advice is a trailing indicator of what recently worked, and only occasionally a leading indicator of what will work going forward. It offers tremendous insights if you’re smart enough to be born twenty years earlier.

Improvement broke upon the rocks of inflation. The Great Crash humbled stocks. Post-war booms overturned the Depression’s fear of markets. My generation was told everyone should buy a house and went careening into 2008. This generation is assured they should put everything into passive index funds, and will smash into walls yet unseen. We are driving around blind curves, looking in the rearview mirror, asking someone to tell us where to steer.

Don’t look to financial advice to predict your future. A common aphorism on Wall Street is that there are only two types of commentators: those who don’t know, and those who don’t know that they don’t know.

This is great news for you. Many things worked. You do not need to waste time comparing systems to find “optimal” strategies. They are only optimal in hindsight. You live going forward.

The best path may well be to improve yourself, your (metaphorical) farm, and your family. Selling an insurance company your riskiest risks is smart, too. Becoming great at something by incrementally improving who you are, what you do, and who you do it with, all while protecting against disaster, is a pretty potent financial strategy. When Fast Time comes, a robust, improved version of you will pay the highest returns.

5

Gurus Are Selling Something; You Should Buy

If you want to get financial advice today, there are two places to turn.

Okay, three places, but the third is your cousin and he got his ideas from one of the other two. The first is in the hallowed halls of academia, where finance professors create mathematical equations on how to invest just the right amount in just the right percent to die happy. The second is to turn on social media and find the gurus teaching you how to get rich now. These two groups are not friends.

The cage match between Team Academics and Team Gurus isn’t going well for nerds. The consensus in university world is that popular finance is “uninformed.” In professor-speak, that is a very mean word. But the gurus are winning the battle for America’s financial mind. They have been for the past 100 years.

In a fascinating research paper, Yale Professor of Finance James Choi¹ quantified the differences between academia and pop-culture investors. He identified where the two completely diverge:

Profs | Gurus
Use debt, it makes life easier. | Stay out of debt, it’s a bad habit.
Wait to save until you are older. | Save each month of your entire life.
Always buy annuities. | Never buy annuities.
Dividends are for suckers. | Dividends make you rich.
Get an adjustable rate mortgage, you’re probably going to move anyway. | Get a fixed rate mortgage.
Pay the most expensive debt first. | Pay off debts smallest to largest.

Choi’s paper is a masterclass in understatement. The standard economic theory assumes lab-like conditions: no job loss, abundant willpower, desires that don’t change, the ability to predict the number of kids you will have, and a risk-aversion temperament that never shifts. As best as I can tell, the academic literature has no economic formula for a midlife crisis. The standard model is written for lives that don’t exist.

Gurus, on the other hand, emphasize that jobs go overseas, Super Bowl ads work, wants change, birthday sex leads to baby number three, and “risk taker” sounds cool until the market crashes. Choi labels economists’ failure to include cognitive psychology in their strategies “a potentially important oversight.”

Indeed. Winners of the most prestigious prize in thinking about money rarely do what their papers said they should, anyway. The winner of the 1993 Nobel Prize in Economics² put all his prize money in underperforming municipal bonds. Another laureate put 100 percent in stocks and forgot about them until the absent minded professor discovered huge losses in the dot-com crash. A third put most of his retirement into money market funds, which failed to keep up with inflation. A renowned Wall Street trader once described academics as “resembling a professor of anatomy who was still a virgin . . . you have to learn by doing.”³

But aren’t gurus icky sleazeballs? They’re called gurus, a famous investor said, “because ‘charlatan’ is so hard to spell.⁴” Sometimes that’s true. But double-click on the biggest ones and you see something else. None are Hollywood attractive. Most are abrasive. They share a trait with such ideological opposites as Winston Churchill and Bernie Sanders: in a world filled with fakes, you believe that they believe what they’re saying, in part because their message seems designed to alienate rather than convert. The most successful gurus of the past half century offer deal-with-it contrarianism.

The real gurus have a PhD in people. We the People are stuck running a gauntlet filled with stuff to lust after and people to envy, all while a ticking clock called Time won’t let us go backward in the maze to fix our mistakes. It’s scary in here. The best gurus, and there are good ones, help you identify where you are, where you can go, see traps to avoid, and offer faith that you, too, can Go Ahead. They’re selling you a map that usually works, and most plans are superior to running around with your eyes closed.

Buyer beware, sure. Financial advice itself (what to buy, how to buy it, and when to sell it) is mostly trying to predict the future using a much different past. What the top gurus do is something else. They are teaching behaviors and beliefs: a sense that you can act on the world, so it doesn’t just act on you.

* * *

Are some gurus just sleezy hucksters? Absolutely. The worst was the first: meet Napoleon Hill.

Hill’s Think and Grow Rich⁵ is indisputably one of the top-selling books of all time. Assigned as a boy reporter to interview Andrew Carnegie, the magnate challenged the youth to study the wealthiest men in the world. Giving the lad a letter of introduction to Henry Ford, he sent him on a lifelong journey.

Twenty-five years and 500 famous interviewees later, Hill revealed their secrets: an unshakeable belief in future wealth, repeating success phrases daily, cutting out the word “impossible” from the family dictionary, and harnessing the energy from your sex drive to dominate business. Thus calibrated, the mind established a mystical magnetic pull that brought ambition and destiny together.

Only Hill never actually spoke to any of those people. The book was endorsed by two former presidents and various businessman icons. All were long dead. They lived and died without any idea who Hill was.

The author himself was broke, living with his in-laws, and on the run from the law for securities fraud. He nonetheless made a fortune through believing he would. He was a world-class imposter pulling off an amazingly crafted long con.

Hill’s loudest advocate was Norman Vincent Peale. The Power of Positive Thinking pastor told his Sunday congregants that, if you desired success, Hill was required reading. One young parishioner was listening: Donald J. Trump, whose believe-in-yourself, facts-of-the-matter-be-damned mindset became a part of his financial and political bravado for fifty years. Hill’s batting average as a personal finance guru isn’t great, but his protégés do swing for the fences.

* * *

Gurus got remarkably better after Hill. The person most responsible was 1940s finance editor Sylvia Porter⁶. Porter had a radio show, was on the cover of Time magazine, produced a column in over 400 newspapers, and she helped edit JFK’s final radio speech (on tax cuts) before his assassination. She was the most important financial writer in America for five decades, a reign no future writer has come remotely close to challenging. Porter translated “financial bafflegab” into everyday language because there were no professionals available to do the job for ordinary people.

Before 1969, there was no job title called “financial advisor.” That changed when a former vacuum cleaner salesman, Loren Dunton, convinced mutual-fund salesmen nationwide to gather at O’Hare International Airport for a meeting. They founded the College for Financial Planning and, at a Howard Johnson restaurant, scribbled out a 150-question exam. The HoJo test certified a new breed of professionals with a badge of distinction. They arrived as salesmen. They flew away as Certified Financial Planners⁷ (CFPs). Every town in America could now have its own guru to trust.

Trust was a big deal at that moment. Inflation was back, and nuclear Cold War came with it. One group turned borderline apocalyptic: goldbugs said to buy mountain cabins, bury gold, keep a gun, and wait for the end of times. Books with hints for surviving the world’s demise ranged from the mild to the absurd, but they absolutely dominated the financial bestseller lists of the 1970s. Chief goldbug Harry Browne⁸ received almost half a million votes for president. Survivalist personal finance reached its peak in 1979, the year that launched the apocalyptic movie franchise Mad Max. Both offered strategies for the end of times, just as the times started to get really good.

Something more optimistic got into the water by the 1990s. The four personal finance icons we are most familiar with today arrived: Robert Kiyosaki, Suze Orman, Clark Howard, and Dave Ramsey. By the early 2000s, Howard, Orman, and Ramsey owned the radio waves and cable tv with shows on CNN’s Headline News, CNBC, and Fox Business. Kiyosaki’s book Rich Dad, Poor Dad is possibly the bestselling personal finance book of the past thirty years. If everyday people were looking for what to do with their money, their most likely encounter was with one of these four faces.

The 1990s personal finance Greatest Hits Collection came with a variety of styles. Kiyosaki created a board game called Cashflow⁹. Yes, I’ve made my children play it. You are a rat trying to get out of the race by accumulating assets, minimizing expenses, and accelerating early retirement. Rich Dad, Poor Dad, the book version of the game, said to stop accumulating degrees (like Kiyosaki’s Stanford-educated, job-dependent Poor Dad) and instead acquire assets that made you a Rich Dad boss. Suze Orman¹⁰ burst on the scene in 1997 by tapping the new home shopping channel QVC. She appeared on an episode of The Simpsons, was impersonated on Saturday Night Live, and holds the record for most financial advice titles on annual bestseller lists. Full stop. The modern guru who broke the historical mold, though, was Clark Howard¹¹. Howard is the only American money expert in history genuinely rich before becoming famous. From Ben Franklin forward, most others got their wealth dispensing the advice. Not Howard. While working for IBM, he lived on every other paycheck and invested the rest. Entirely self-taught on personal finance, he founded several entrepreneurial ventures which he sold before retiring to Florida at just thirty-one years old.

A man with a gleeful enjoyment for bargains and travel (and especially for travel bargains), Howard volunteered to give travel advice on local radio stations. Entering the financial guru world through the consumer advocacy door, he continues to be first and foremost an educator. He consistently encourages listeners to subscribe not to his services, but to Consumer Reports magazine.

Treat Gurus as Financial First Responders: Be Glad they Show up

Hating on gurus is very fashionable right now. But is every money mystic really just OG huckster Napoleon Hill reincarnate, selling snake oil and seminars?

Howard is the right place to stop and be skeptical of the skepticism. Of all American gurus, he stands to gain the least, but his pitch is shockingly identical to the other money medicine men and women: get out of debt, save relentlessly, don’t buy things you can’t afford, and trust the stock market to win for you . . . the opposite of what finance professors say.

Gurus are not the brain surgeons of personal finance. They are financial first responders. They show up when you screwed up, and help get things straightened out. We rarely think about our money until we really need to think about our money. The chances that we could find the ideas of Nobel laureates, understand them, and apply them are near 0 percent.

Is Rich Dad, Poor Dad a road map for success? Not really, but it probably helped more people think about the need to buy assets than all the sophisticated treatises ever written. Remember, there is no optimal financial advice. The value of even a decent impulse to act is immeasurable.

Or, perhaps, measurable.

Which brings us to Dave Ramsey, the sixty-six-year-old radio host famous for taking giant scissors to credit cards and giving listeners “baby steps.” The academic literature on Ramsey is universally negative. Sociologists say he blames the poor for poverty (they blame capitalism). Economists argue that avoiding debt makes life needlessly hard. Investment advisors grit their teeth at his promise of 12 percent returns. Finance professors roll their eyes at the bad math behind his “Debt Snowball.” Journalists accuse him of profiting on people’s ignorance.¹²

But the academics and journalists are wrong. To succeed, average Americans don’t need to think like professors, whose models work well in Excel and whose accountants can handle the tricks that TurboTax cannot. In fact, Dave Ramsey has changed more people’s personal finances than any person in human history. The proof is in the academic literature itself.

In a 2023 study of spending over the twenty-five years The Ramsey Show grew nationally, finance professor Felix Chopra¹³ found that, as radio stations added The Ramsey Show to their broadcast lineup, spending in that listening area went down 1.3 percent over the next year. And it stayed down. Individuals who listened to five minutes of the show spent at least 5 percent less going forward. That wasn’t five minutes a day. That was just five minutes.

To test his findings, Chopra hit upon an ingenious idea. Mountains get in the way of AM radio waves. Sure enough, where The Ramsey Show signal was blocked, spending stayed high. Financial first aid was not getting everywhere, but wherever the money ambulance arrived, financial lives were saved.

The median household that spends 1.3 percent less each year saves about $900, not including their savings from credit-card interest, avoiding new loans, or just generally getting their act together. If they invested the extra $900 annually over a working lifetime, they would be over $100K richer at retirement. There’s more. The Ramsey Show reaches around 20 million people each week. Americans save billions more each year than they would without this single anti-debt guru from Tennessee. Given his nearly thirty-year run on the air, Dave Ramsey has saved Americans the GDP of a mid-sized nation-state simply by yelling at them to “Sell the car!”

If personal finance has a GOAT debate, Ramsey is up there. But he isn’t alone. Combined with Howard, Orman, Porter, and even less conventional figures like Kiyosaki and the goldbugs, personal finance gurus have done more net good for everyday people’s lives than the finance textbooks ever will. Professors understand that annuities aren’t necessarily terrible and debt isn’t always evil, but you can’t call your finance professor and ask what to do when your uninsured spouse gets Alzheimer’s.

There is another reason to hear out Ramsey and the small platoon of financial gurus behind him: they genuinely believe you can, in the words of one Ramsey protégé, “break free from broke¹⁴.” The professors do not believe you will be rich unless you are already rich. The baseline assumption of academic finance is that most people should learn their place in life. Welders and Waffle House waitresses need not waste time believing they can Go Ahead.

Gurus have imperfect plans to bust you out of the paycheck-to-paycheck trap, and imperfect plans are better than none at all. Most lead to an escape hatch at the very end of the gauntlet, but at least they have a way to get you there. Their strategies are an odd mix of extremely defensive and relentlessly offensive approaches: staying out of debt and unflinching commitment to stocks is, on paper, an effective combination for winning in the very long term.

When I first embarked on this study, I assumed the professors would be right and the gurus wrong. I dutifully read the most important finance papers of the past 100 years. Here is one of the iconic equations of the twentieth century that still informs how professionals build portfolios today: E(Ri) = Rf + βi [E(Rm)–Rf].

Now what on God’s green earth was grandma supposed to do with that? Most people need to know how to save, spend, and whether or not they have a chance to end in a better place than they began: to Go Ahead! or to Give Up! Gurus are decidedly better at teaching than the professional teachers are. They also use non-economics, a language known as English, to translate.

The defense of Dave Ramsey, and personal finance gurus in general, is that they usually don’t tell you where the road is going. They tell you how to wear a financial seatbelt, how not to run off the road, what to do if you crash, and also help you believe you can get somewhere worth going. Agree or disagree with their finer points, the personal finance gurus in American history have offered more hope than any other group. In an economy where getting a few things right can be worth millions, buying their books and listening to their podcasts offers positive ROI.

Are they selling something? Sure.

Should you buy? Carefully, but absolutely.

6

Your Net Worth Is Wrong (So I Made Myself a Billionaire)

What are you worth?

What a disgusting question. I have a predisposition toward disliking anyone who can tell me their net worth off the top of their head. It’s just gross to think a spreadsheet more accurately totals your merit than your willingness to coach seven-year-old girls’ basketball. Yet, we do it. Some very loudly. There are websites estimating nearly every celebrity’s total figures. No one blares their boom in value more than the suddenly Ferrari-driving crypto bros. Which made me wonder . . . how real is net worth?

After the boom-bust-boom-bust-boom-again cycle of crypto and NFTs had settled in, I rethought my earlier stance on digital assets. As money, I doubted it would do much. If anything (and this is increasingly proving true) I thought cryptocurrencies would support the value of state currencies¹, instead of compete with them. Dollar-backed stable coins, where each coin is backed by a dollar of U.S. T-Bills, allow people all around the world to conduct business in what is a de facto dollar (not a dictator-driven inflationary currency). The day may come when we all pay in digital currencies, but they will make the dollar (or whatever currency is the global reserve) far more important than it already is.

Bitcoin, on the other hand, is just an asset. It rises and falls with the stock market. That’s when it hit me. Americans long had self-issued currencies. And capitalists have long built assets. But we’ve never in history had self-issued assets!

So I made myself a billionaire.

I took a crash course in crypto, figuring I’d learn more by doing. First, I wrote a white paper outlining my plan and posted it to my website. I set up a crypto wallet. To fund it, I jumped through multiple “Know Your Customer Law” hoops. FYI: good luck staying anonymous online when you have to show your driver’s license to move money there. I chose a blockchain (Ethereum). Then I bought USDC, a dollar-backed stable coin (proving my earlier point). My bank, not wrongly worried something weird was going on, created a few days’ delay. A week later, I was finally ready for my big move.

Using an online coding tool, I created my own ERC-20 token currency: Billionairely (ticker: BNLY). Days of painful attempts to learn GitHub and other forums followed. I determined to make the symbol for BNLY a coin featuring William Wells Brown, the man who escaped slavery and issued his own currency (Chapter 3). Next came creating a liquidity pool, where I committed a few hundred dollars of USDC against an equal number of Billionairely coins. In theory, anyone trading in that pool would have to add a dollar to take out a Billionairely token, making each token worth $1. Since I had made over a billion tokens, and I held nearly all of them in my wallet, I quickly checked an online crypto market aggregator to see the value. There it was. Ticker: BNLY—Market Cap: $1.13 billion—Owner: Me.

I just sat there.

“Honey! We’re billionaires!”

“That’s great. Are you going to get the kids from track practice?”

Like the comedy show Whose Line Is It Anyway? said: the points are made up, so the score doesn’t matter².

* * *

Net worth matters in only three moments of life: when you die (who gets what?), when you borrow (can you pay us back?), and when men feel the need to impress one another (whose is bigger?). That’s it. There is no other time when net worth is a relevant stat.

You will search in vain across the first 200 years of U.S. history to find “net worth” mentioned once. It did not occur in a single family finance book before World War I. The historical term that came closest was “an estate worth,” the old English phrase for families with landed wealth. Yet no one referred to total market value. They only referred to annual payments. “An estate worth £300” meant your business paid you about that much each year, only if you didn’t treat your estate like a business, the revenues were sure to dwindle. This is why Jane Austen fans know to beware romantic partners who can’t manage their careers. Dwindling estates are a theme from Sense and Sensibility to Pride and Prejudice.

The term millionaire did occur from time to time. It first appeared in a 1700s French investment bubble where share prices in the Crown’s Compagnie d’Occident skyrocketed and (briefly) gave early investors fabulous wealth overnight. That’s why millionaire has such a non-English sound. The original value would be roughly $30 million today. Beyond the reference to sudden, unimaginable wealth, this was not a math equation. It took no heed of how much debt the paper-millionaire carried. There were no “how to make a million francs” guides.

Housewife manuals from this time made passing reference to the idea that you could inventory everything’s worth in your home, but why would you? “No practical purpose is served³,” and a wife would have to regularly track “the mysteries of fluctuating values in connection with capitalistic accounting.” Early Americans scoffed at such crazy ideas as measuring net worth.

Where did the term arise? You paid for goods that had a net—(pause)—worth of $10. It was a way of saying what your total (net) bill was, much like the bottom of a bar tab. Meanwhile, for most of history a person of great worth meant someone of lofty character. A preacher may be “of great worth” and penniless.⁴ The two terms, net and worth, were irrelevant to one another. The idea of a person or family being worth something as a state of being, as if their moral status could be measured in money, is entirely new.

In the Progressive Era, obsessed with measurements, morality, and especially moral measurements, business accounting switched the term into a running tab on the business and the businessman. Was Carnegie Steel not Andrew Carnegie himself, in a certain way? Accountants, not ones for long reflections on Platonic philosophy, thought that made sense. Here is a quote from one of the first books to use the term “net worth,” an accounting manual printed just before World War I. There was a “common sense principle that a business man should know at all times where his business stands in relation to his creditors . . . Within reasonable approximation he should know his ‘net worth.’”⁵ The worth of the company was the worth of the CEO, the man who’d better know whether or not he could pay back the bank.

Social scientists in the 1940s⁶ picked up the phrase to measure families’ assets against debts. The Supreme Court ruled⁷ it could be used as evidence in tax evasion cases. By the time Ronald Reagan was elected, banks spoke openly of pursuing “high net worth clients.” The popular press took it from there. With a handy measure for personal wealth, advertisers were in a rage to sell watches, cars, suits, and vacations to Americans of a certain status. Net worth became a name tag you wore declaring what you could buy and how much debt you could use to buy it.

* * *

Even if net worth matters, nobody calculates it correctly. Men especially love to brag about their assets, and in nearly every case they exaggerate.

First of all, no one takes out the taxes. About one-fifth of your 401(k) belongs to the government because you never paid the taxes on it (Roths excepted). If you own real estate, that wildly inflated Zillow estimate you’re proud of needs to walk back 6 percent commissions, $5K–10K in legal costs, taxes on profits, and the back taxes from the years of depreciation. Your assets are worth about 80 percent of what you tell yourself, and sometimes less.

On the other side, people forget to add Social Security back in. To the typical American, government benefits add about half a million dollars to their balance sheet. Sure, you cannot sell it, bequeath it, and the ROI is terrible, but that is because Social Security is truly passive income.

The term for accurately knowing what you are worth is “augmented wealth⁸,” which takes into account all the financial benefits you’re qualified for: safety nets, tax breaks, etc. I’ve never met a single investor who could tell me theirs. The typical American family’s net worth is about $200,000, but their typical augmented wealth ranges from $600K–900K. You are wealthier than you think you are.

Beyond your pride, net worth is mostly worthless. Its primary purpose is to confirm you are, indeed, dead—in body, spirit, and account balance—so we can divvy up your stuff. The earliest places to find something like net worth calculations were in probate records, the court that handles assets when you die. Even if yours is positive while alive, you cannot eat it because you probably live in it. Your personal residence is, more than likely, your most valuable possession and it costs you money every month to heat, cool, pay off, repair, and redecorate because someone binge-watched HGTV. It is only valuable when you sell it. Your 401(k) balance doesn’t matter until you retire. Your car loses value every time the kids go to lacrosse practice.

Stop Being Impressed by net Worth (Especially your Own)

When people discuss net worth, they usually mean the 1 percent and how to tax all that wealth. This fundamentally misunderstands what net worth is. To figure out Jeff Bezos’s net worth, take Amazon’s share price today and multiply it by all his shares. Then subtract his debts. It is just an equation: assets × last sold value = market capitalization, and that market cap minus debts = net worth.

If you want to make Bezos poorer, you can. Just arrange to sell your shares of Amazon to the lowest bidder and have the sale registered on the stock exchange. For a millisecond, your stock sale will stick it to one of the world’s richest men. The value of Amazon, all the existing shares multiplied times the money you just sold it for, would make the whole company worth less. One sale can “create” or “erase” millions in a market cap’s “worth.”

One real dollar moves billions⁹ of phantom dollars in an instant, a tiny tail wagging a massive, mostly imaginary, dog. Bezos doesn’t have billions of dollars.¹⁰ Bezos has shares “worth,” at the latest prices, a market capitalization of billions of fictitious dollars created by many less, but far more real, ones. We say he is “worth” the imaginary number, minus whatever he’s borrowed to build his superyacht.

Market cap and net worth are figments of the imagination. They feed egos but not families. You can, however, borrow against them and feel rich. Net worth, which factors in the debt, never mentions that the other side of the balance sheet can disappear in an instant: the asset values can go up, but they can also go down.

I am not, in any meaningful sense, a billionaire. My satirical self-made crypto empire is built on a few hundred dollars of actual cash, multiplied out as if all my coins would sell for that. If I sold tomorrow, the price would crash to $0. It does, however, illustrate the weirdness of our wealth dialogue. If Bezos tried to sell all his Amazon shares at once, they wouldn’t go to nothing, but they would go way down. When all assets go on sale at the same time, their value drops. As the value of an asset disappears, the debt the holder took out against that value remains. Bezos will be fine, but ask any homeowner who learned this the hard way in 2008.

To Go Ahead, you need to focus less on valuations, market cap, and net worth and more on your most powerful wealth: you.

Sound gimmicky? It isn’t. It’s just math. The value of U.S. workers’ skills, knowledge, and work experience has an estimated market value thirty times greater than the entire stock market.¹¹ The greatest asset you have is what economists call “human capital.” Some people can sell lingerie in a nunnery. Others can build anything that moves. Some were great in biology class. Whatever you are good at, your greatest increase will come from leveraging your human capital in the marketplace. The better you get, the more wealth you can create. The typical American’s most valuable asset, worth around half a million dollars per person, and for many people far more, is the money they can make in the future by being great at something.

Who you are holds more value than anything else you likely possess. As we will discuss ahead, there are multiple ways to invest in human capital to create real wealth. You can concentrate on being great at one thing. Or, if your skill sets are of the less in-demand variety, you can diversify your time, hustle, and energy into getting the wind at your back. As an added benefit, strivers tend to bump into unplanned opportunities non-strivers miss.

Or, sure, found a cryptocurrency. Inflate your net worth all you want, but will it make you rich in a way that actually matters?

I’m new to being rich, so I often find the trappings funny. The appeal of Birkin bags and Bugattis puzzles me. I live in a gated golf-course community. Inside it is another gated golf-course community, where you pay extra for the second set of gates. A lot of professional athletes and celebrities live there, so I get it. My neighbor two doors down was a famous rapper whose rival tried to kill him at home. He probably needed the extra layer of protection.

A guy inside those double gates owns a palatial mansion around which he built a huge wall. He lives inside of a gate, inside of a gate, inside of a gate. Why? He’s crypto rich and terrified that home invaders will put a gun to his head demanding his private keys, the password that allows anyone to take all that “wealth” in an instant. He has a greater net worth than me, but I do not want his life. Neither do you.

Net worth itself, as a standalone measure, is wildly overrated and greatly misunderstood. Vacation homes and King Ranch Ford F-150s count as wealth while draining it away. You don’t just want a high net worth. You want to Go Ahead. When you get there, will your net worth be higher? Sure, but that’s no way to measure a person.

Focus on leveraging your most valuable asset: you.

Part II

Investing Then and Now

7

The Next Big Thing Is a Bad Idea

The Next Big Thing is here. It wants to steal your money.

Everyone wants to buy the next Microsoft stock at ground level. You probably shouldn’t. For 300 years, the next big thing has been the investment world’s greatest magician, drawing money in and making it disappear.

History gives the illusion that the next big thing is easy to spot (it isn’t), and that if you do spot it, you can time it (you can’t). That doesn’t mean you should never expose yourself or your investments to the future. You should, mostly because other people will get overly excited about the future’s arrival and drive prices upward for a while. Remember, people believe history happens quickly, but it mostly unfolds in Slow Time. Everyone hopes the next big thing will make them rich. It usually leaves them with losses.

When I began experimenting on myself with investments, all the cool kids wanted to be angel investors who helped fund the next Facebook-Uber-Instagram. That was difficult if you didn’t live in San Francisco and already have gobs of money. I finally got my shot in Oklahoma after visiting an innovative college featuring bright, hardworking heartlanders creating marketable business startups. The school had an entrepreneur-in-residence. Previous students ended up doing all kinds of interesting things, including building toys for the new Star Wars movies. The most recent class had invented a tech device delivering electronic speech for disabled ALS patients at just $3,000 per unit, one-tenth the nearest competitor’s price. By the time I found them, they had already been on an “I’m not crying, you’re crying” Today Show feature. They soon got FDA registration, export approval for foreign markets, and were hiring sales staff.

I asked to invest on the spot. Determined not to miss my unicorn¹, I didn’t tell my wife until after the check cleared.

I lost the entire investment. The people who built that company tried to do something truly good in the world, and if you ran the scenario 100 times, they probably would have succeeded in at least 10 of them. But doing something new is hard, and doing it profitably is even harder. To their everlasting credit, the students gifted the IP back to their college to continue serving the few remaining customers whose lives were changed because they could afford to talk to their families before they died.

Believe it or not, this experience of rushing into the future only to watch it disappear is very old. The train to tomorrow pulls up, and we are so anxious to push past the crowd of other time travelers for a spot aboard that we forget to confirm it’s the right route. If we don’t jump now, we’ll miss our chance! Alas, the future rarely arrives on our schedule.

* * *

The future was arriving in a hurry in the 1830s, too. “We are all so anxious to be rich in a hurry,”² one writer noted fearfully in 1832. There was so much future to invest in. The wildly successful Erie Canal, funded with 6 percent bonds, spawned imitators in every municipality that touched water. If you missed out on the Erie, here was your chance to connect the Chesapeake to the Ohio. Private toll road companies promised monopoly profits to access the farms canals couldn’t reach. Hot new railroad technology offered to skip water altogether from Baltimore to South Carolina. The first American factories reported 25 percent annual dividends; investors were doubling their money in three years. Everything was promised in Fast Time: a world of rapid change that would make investors wealthy in a short span.

Yet this wasn’t Fast Time; it was Slow. Canals must be dug. Roads must be cleared. Crossing mountains is expensive. And all this, always, took more time than planned. Moreover, as each new nodal point connected, as each new factory came online, prices and profits went down. Everyone jumped into the future in the same long decade not remembering that everyone else was jumping, too. Factory profits fell to barely 1 percent. Most canals were abandoned mid-stream, as highly indebted developers found they were digging toward a future they could no longer afford.

* * *

Lydia Maria Child’s husband, David, believed that God was bringing that future here quickly, and the Lord was using root vegetables. The sugar beet industry³ got its start when Napoleon closed Europe to British trade, which had the unfortunate effect of cutting his subjects off from Caribbean cane sugar. Getting sweets from beets seemed like a reasonable substitute. In 1811, the Emperor issued a beet decree, setting aside land for production and establishing special beet schools. There were beet scholarships, beet factories, even beet bounties—rewards for growers of the sweetest roots in France. By 1812 the nation was producing over 3 million pounds of root sugar. Then Napoleon was defeated at Waterloo, and the beet stopped.

American abolitionists saw this as a sign from heaven. If sugar cane could be eliminated, so could the Caribbean slavery that grew it. David Child, who possessed far more passion than prudence, sought to make the world and his family better off by being an early adopter. In 1836 he traveled abroad for a crash course in agriculture and returned the next year to establish one of America’s first beet manufacturing centers. He would not be the last. In Utah, Mormon leaders imported 500 bushels and much machinery. From Maine to California, zealous farmers leaned into the next big thing of American agriculture. Politicians erected trade protections for the industry by charging tariffs. The stars were aligned: there was a market, a method, and the political will to make sugar beets work.

Every one of them failed. Not until the late 1880s—fifty long, Slow years later—was there a single successful beet farm in the United States. And that was only after the newly established Department of Agriculture expended serious funds adapting the root to American soil. Today, after decades of expensive seed hybridization by scientists, beets make up 55 percent of all the sugar grown in the United States.

Meanwhile, David went broke. It is no accident that his wife, who appears in today’s history books as an abolitionist and early feminist, was most famous in her own lifetime for an entirely different work, The American Frugal Housewife.⁴ This was Child’s bestselling book by far, going through over thirty printings. With a husband who bet big on the future and lost, frugality was necessary in the actual, Slow present.

* * *

Then there is energy independence. Shale oil promised a bonanza⁵ of American wealth. Only it did so too early: in 1859. The number of shale gas companies in the United States went from three to forty in two years. By 1861, nearly all were gone. This happened again, in World War I when there was an oil shortage. And again, it busted because of cheaper competition from oil wells. And again, in the oil crisis of the 1970s. That one ended with one billion dollars in losses, laid off thousands of workers, and created ghost towns—like something out of Deadwood—that are still rotting in the desert today. And again, in the early 2000s. It will probably keep happening, or some green-energy version of it. The future just takes a long dang time to get here.

What about real estate—the path of progress, and all that? Florida is the destination state for beach vacations. People predicted it would be when Andrew Jackson was president, at a time when not a single paved road went through the inaccessible swamp land that was Florida. The first boom retreat town was St. Joseph⁶, on the Gulf of—then—Mexico. The American vacation industry got its start there. “I wish I had a villa⁷ in Florida or somewhere else, to retire to” is a sentence from a letter in 1830s Baltimore. Your grandpa wasn’t the first to spend cold winters dreaming of being a snowbird.

Land speculation on the Gulf went off the charts. You could buy land and order a vacation home by mail from the comfort of your newly built New York brownstone. The Florida Constitutional Convention was held in America’s next big getaway on the beach. In just four years, St. Joseph became Florida’s largest, wealthiest city.

But getting to St. Joe proved tough. With no railroad, the trip was exceedingly long. In 1840, vacationers were swamped by a hurricane. Yellow fever hit locals, who all fled. It being hard to run resorts without staff, the last vacant buildings were swept away in storm surges by 1844. The future of Florida came and went in less than eight years. No one resettled the area until the twentieth century.

Investors were correct that Florida would become the national vacation destination. They simply got to the future too soon.

* * *

In the 1990s, did you believe Amazon would one day achieve same-hour delivery for kettlebells and ketchup? They spent billions of dollars on the infrastructure to do it. It also took decades of laborious effort to build out the logistical supply chain. They’ve requested that governments change aviation law to allow drone flights. Same-day delivery is a big, bold, world-changing idea that came to pass in our lifetimes.

So let’s talk about Kozmo.com. The website (now gone) lingered with a sign that said “temporarily closed,” more or less from 2001 to 2020. Way back in 1998, Kozmo.com staked its claim on the one-hour delivery world. The vision was bold. The idea was doable. Investors sunk $280 million into it. For the most part, it was all lost in under four years. Here we sit, nearly thirty years later, anxiously awaiting that yoga mat we just ordered. No one, not even Amazon, could deliver it in less than a quarter century.

Google, the multi-billion-dollar company that started as a search engine in 1998, was not the first search engine on the web.⁸ It wasn’t even the second or third or fourth. Who was? No one you’ve heard of, unless you are at least forty-five years old. The idea was proposed the same year the United States dropped atomic bombs on Japan: SMART, Archie, Wandex, ALIWEB, JumpStation, World Wide Web Worm, RBSE, Excite, Global Network Navigator, Yahoo!, LookSmart, WebCrawler, Lycos, AltaVista, Hotbot . . . shall I go on?

AskJeeves was my first. You always remember your first. Fun aside, Google’s original name was BackRub, which does not sound like the type of website you’d use to settle a debate with your mother.

This brings us back to Microsoft. Since its 1986 IPO, the company has offered investors an astounding 23 percent annualized return. That assumes, of course, that you held it for nearly forty years. If you bought at age forty, would you really have held it until you were eighty? Maybe. The real question is, what else would you have bought and held in 1986 to bet on the future? Commodore, Atari, Lotus, Wang, and MIPS were all making the computer future happen, and every one of them went bust before it got here. The chances you would bet only on the right horse is, well, gambling.

The future takes a lot longer to get here than you think. Nearly every huge American bust was an idea that eventually boomed. Over and over again, the next big thing gets here . . . in laborious Slow Time.

Most investors think they live in Fast Time. They do not.

Get Good at Now

I once had coffee with a university president. He wanted to pick my brain on the future of higher education. Online education was barely out of its 1.0 stage. The University of Phoenix seemed poised to steal everyone’s students. In those days, anyone who had even taken online classes was rare. I, on the other hand, endured a required three-hour training for online grading. That was all it took to be an expert back then. My role was to peek around the corner of history and tell him what was coming.

“When was steam power invented?”⁹ I asked. The answer mimics most of history: Greeks discovered something, everyone forgot about it, then the English made money from it. The year was 1698. Isaac Newton was alive, and a Louis was still in charge of France. Coal-fired steam was about to power an Industrial Revolution. Now came my real question. “How long afterward was wood still 50 percent of all fuel?” That lasted 200 more years. Old-fashioned logs were more popular than oil all the way to the 1920s. Even during World War II, about 10 percent of heat still came from forest, not fossil, fuels. My message was simple: Everyone hears the future is coming, so they assume it will be here tomorrow. Don’t get distracted by then. Be extremely good at now.

After I lost my unicorn investment out west, I stuck to my “History Lessons” approach of avoiding lust for tomorrow. I missed Bitcoin. But I also missed WeWork, Terra/Luna, FTX, and the NFT craze that birthed Bored Apes. The real lesson of history is that Next Big Things are likely to plunge in value by 90 percent, and sure enough, they did. History taught me to look for something old and slow, even while investor bros warned me to #EnjoyStayingBroke.

The stories of the past we tell ourselves tend to be of a future arriving quickly. But look closely enough at most tales of creative disruptions, and you usually just find people being bad at the present. Yes, I know BlackBerry went from 20 percent of market share to a historical footnote after the iPhone by underestimating touchscreens. Did the future come too quickly? No. BlackBerry’s share price was roughly the same five years after Steve Jobs blew the world’s mind while wearing a turtleneck. Five years is a long time. Americans changed presidents once and Spider-Man twice in the same period. Four iPhones and Harry Potter movies arrived in that span.

BlackBerry flopped because it failed at now. When their much-delayed BlackBerry 10 operating system finally arrived in 2013, they had already lost most of the market. BlackBerry didn’t miss the future; it blew the present. Competition and the future are not the same thing. Competition is just capitalism in the present. The future is who wins the battles.

All these decades later, parents still send their kids to colleges, even to the one whose president was curious to peer around tomorrow’s corner. OnlineU stole some of his students. Making the NCAA basketball tournament got new ones to enroll. Some courses moved online. But the friendships, the parties, the homecoming games—the college experience—were all on-campus, so most students went there, too.

What lasted is likely to last. We still use granular sugar, burn rig-drilled oil, take convenient vacations, shop in the easiest ways possible, and crave the most useful devices. We live in the present. So do all the other consumers who make investments profitable. Investing in McDonald’s the year I was born¹⁰ outperformed the S&P 500 better than two to one. Don’t neglect the boring and slow companies that are good at now.

The best way to make money on the future is to build it, not buy it. Canal investors lost big, but canal diggers increased wages dramatically.¹¹ Sure, the work was dangerous and hard. Most work was in the early 1800s. But this hellacious work paid well. So did the railroad building of the 1890s and the computer engineering of the 1990s. AI jobs will likely prove a better investment for most people than AI companies. As a passive investment, the future is pretty crappy. Actively, it can change lives.

Social media just preloaded a video to your feed screaming the world is passing you by unless you buy the Next Big Thing now. Ignore it. Every pitch deck, and nearly every history of American capitalism, tells a story of things happening Fast. But history mostly takes its time. You should invest in the market, and yourself, accordingly.

8

Compound Interest and Passive Income Are Overrated

When I first started investing seriously, I did what everyone else does.

I had fun in the spreadsheets. You can dream big dreams in there. It is very exciting. Don’t like what you’re seeing? Just type in a different rate of return. Your partners in this cosplay are compound interest and passive income. A number here, an online calculation there, and you’re going to be wildly wealthy.

It is lewd, but true: compound interest and passive income are the kinks of personal finance. There isn’t an investing book in the past forty years that doesn’t fetishize them. Their primary purpose is not to get you rich, but to make other people rich getting you excited. Beware. It isn’t real.

Compound interest does all the work, growing your wealth faster and faster. Compounding creates net worth; bigger is better. An impressive net worth attracts passive income—money you make in your sleep. You don’t even have to work for it; it just shows up and wants you to have it. You can then send the passive income back to compound, and around we go.

Except for those tiny few uber-rich who simply can’t outspend their returns, none of this applied to everyday people for most of time. In history, compound interest had little power. Passive income did exist, but is now more a fond memory. When you stare at them closely, most people touting the transformational power of compounding and passive income are just playing pretend. Nearly every personal finance personality made their fortune doing something other than compounding regular returns and soaking up passive income. They’re hoping if you stare at their assets long enough, you’ll forget they’re fake.

Let’s start with the fact that these concepts contradict one another. You can’t have passive income and compound interest at the same time unless you start off very rich. If you use the income, it doesn’t compound. If it’s compounding, you’re not using it. You can’t live on something that’s growing and you can’t grow something you’ve killed.

The appeal, of course, is that pornography makes everything look so easy. There isn’t all the awkward trying to figure it out, the risking rejection, the mistakes, the “sorry, that didn’t work, let me try something else.” That is the tell, and once you spot it, you’ll see why personal finance seduced many people before you. Nothing that ends so amazing could ever be that easy.

Should we ignore the powerful draw of personal finance fantasies? No. They definitely grab your attention. Don’t discount excitement. It is necessary. It helps us take risks. It lets us speak out loud what we were embarrassed to say we really yearned for. Maybe it’s a house with a yard. Maybe it’s a Maserati, I don’t judge. You do you. Just remember that dreams do not make themselves come true. Real people do. Stop dreaming of being a millionaire online. Become one in the real world, and don’t expect compounding and passive income to do everything for you. You have to put in the work.

* * *

The power of compounding interest is less magic and more magic show. In Lewis Carroll’s follow up to Alice in Wonderland, he tells of a poor tailor whose rich client dupes him out of his pay. Offering the tailor double next year, the small bill builds and builds until it is £2,000 (around $300,000 today). Just as he pretends to pull out that extreme level of cash, the wealthy man casually suggests the tailor could double the bill again next year. With that much money, a man could live like a king! Off goes the tailor to await even more riches. “Will you ever have to pay him that four-thousand pounds?” asks a young girl.

“Never, my child! He’ll go on doubling it till he dies.”¹

Like most fantasies, compound interest wasn’t even useful. For most of U.S. history, getting ahead had nothing to do with compounding. Compounding requires two things most everyday people did not possess: limitlessness and time.

Most pioneers’ wealth was in land. Land does not compound. It only grows valuable when you add labor. Sure, Americans could hold that land for a price rise. But the real way to build income was annually adding more sons to the family so you could clear more land with those sons. The average adult could harvest seven acres per year. Seven sons meant fifty-six acres (including Dad). But this growth wasn’t infinite. There is an upper bound created by available land, willing wombs, and the expiration date on growing kids who leave home. Wealth was constrained by how much labor you could apply in a short window. Compounding doesn’t have ceilings, but real life (and real estate) does.

Much of what looked like hardy families getting rich slowly wasn’t compounding anyway, but increasing demand for a limited supply. More and more people flooded west, increasing the value of the farms already owned. Ever larger cities increased the demand for what farms could grow. Acreage wasn’t compounding into more acreage. It became more valuable per acre.

There is a myth that compounding is what made the Baby Boomers so wealthy. Partially, this is true. Thirty percent of Boomer wealth is of the stock market variety. Yet, almost as much is in real estate, where values exploded upward because it didn’t grow. Supply got restricted, making the houses we have cost ever more. The reason Grandma’s bungalow in Scarsdale is worth a cool million isn’t compound returns, it’s that you can’t build in Westchester County anymore.

Then there is time. Compounding is very simply the math that happens when you multiply a thing over and over again. One hundred dollars with 5 percent returns makes you five bucks. If you don’t spend it, next year you get to multiply by $105. Fast forward over half a century and you’ll earn over $50 because your balance is more than a thousand. And on and on it goes until you are rich with the poor tailor.

For this to work you need time, preferably lots of it. Early Americans had little. The typical American wasn’t going to live to forty-five, much less sixty-five. As Morgan Housel observed, 90 percent of Warren Buffett’s net worth² was made after his sixty-fifth birthday, an age most Americans never saw before World War II. Time was not on their side.

We live longer and our wealth isn’t planted in corn rows. Surely things are different now, right? Not as much as you think.

Warren Buffett became wealthy from compound interest because he didn’t live on the compound interest. The fifth-richest U.S. citizen lived, believe it or not, on a $100,000 annual salary from his company. This he spent on lunch—daily at McDonald’s no less—and expenses. He paid off his home in 1973 and never moved. The compounding was so powerful because he didn’t use it. As his business partner, Charlie Munger, liked to say, “The first rule of compounding is never interrupt it unnecessarily.”³

But necessity calls often. On paper, it can’t be stopped. But the compound interest plugged into the spreadsheet never runs off with someone from work and splits your assets in two. It never begs the doctor to do anything, anything it takes to save your premature baby. It never gets laid off, never forgets to pay a bill, never gets rear ended by an uninsured driver. It never hears everyone at work saying the market is imploding and you better get yours out while you have something left. The most common reason Gens X, Y, and Z report not having enough retirement savings is that they tapped 401(k)s in emergencies or market panics.

Compound interest gets interrupted all the time. As long as it stays in a spreadsheet, compound interest will be undefeated. But it is a paper champion: amazing at practice, but always underperforming in the game.⁴

* * *

Passive income, meanwhile, was never a way to get rich. It was a way to live off riches. Today, it is sold as the ultimate goal of personal finance. True, people in history did have passive income, and many people lived off that income. There are two problems today, though. First, most of what looks like passive income is actually something else. Second, passive income was murdered, and the killer is still on the loose.

Let’s start there. In the long centuries from 1600 to 1900, stock dividends and bond interest payments did pay some people’s bills. Remember, inflation was functionally 0 percent from after the Revolution to World War I. Five percent bonds in a 0 percent inflation world is a great way for Grandma to sit by the fireside in peace.

The folks who lived this way were called rentiers, because they basically rented their money out the same way landlords rent a house. But starting in World War I, and going all the way to the present, passive income gave you less and less because inflation rose more and more. John Maynard Keynes called this the “euthanasia of the rentier,” a gentle killing. Later thinkers called it a “murder-suicide,”⁵ since the longer old folks lived, the more of them that were still alive and renting out ever more money. The supply of money to rent became so large, the profits from rent-a-dollar went way down. Whichever way passive income died, it wasn’t pretty.

When I listen to today’s financial advisors talk, I stand up and have my Princess Bride moment. “My name is Dr. Joseph Moore. You killed Passive Income. Prepare to Die!” Oops. Wrong line. “You keep saying that word. I do not think it means what you think it means.”⁶

Most of what passes for passive income today is just successful speculation. If your stock goes up 10 percent, and you sell half the gains to pay bills, it wasn’t passive. It was speculative. Passive income involves no work, but it also involves little risk. Stock rises are not a guarantee. You bet on up . . . and up it went. If you had bet on up, only to watch it fall, you have no income.

The real math on passive investments isn’t the return (i.e., 5 percent). It is return minus taxes minus inflation (in that order). A 5 percent return minus federal and state taxes leaves about 3.5 percent. If inflation is 2.5 percent then you made 1 percent. If you’re trying to eat 1 percent, you will dine on canned tuna. If you try to compound 1 percent, good luck getting rich in one lifetime.

* * *

There is a sliver of good news, though. Just as most of what looks passive today is not, so too most of what looked passive in history wasn’t either. And it wasn’t speculative. For most people, their money was active.

Manuals as early as the 1840s were explicit: “Nothing is so fatal to success as the belief that a business, any business will run itself. It won’t.”⁷ That sentiment was universal in most of American history. The dream that you could own a company requiring no effort and collect checks was a pathway to poverty. “Not to oversee workmen, is to leave them your purse open,” Ben Franklin said even earlier.

The most successful retirees and widows worked at their investments, interviewing mortgage applicants in their parlors and asking overly personal questions about the health of the business and the marriage. They mentored the junior partners who took over their shops. They visited their rental properties to make sure they were tidy.

Everyone wants to get rich by doing nothing. You won’t. It doesn’t work to take value without giving it.

Add Value

Want to be rich? Add value.

There is a fundamental concept in the business world: value-add. This is, very simply, what companies do. Between running kids to gymnastics and hoping to watch the Thursday night football game, I don’t really have time to harvest my own oats. A company added value to my life by rolling them and shipping them in convenient pouches. I pay them more than they spent and am happy to do so.

In real estate investing, it’s taking property and making it better so that you make money. This could be better management, aesthetics, or tenants. Maybe you lease the land for a cellphone tower. You could buy one house, tear it down, and build three. Whatever you do, through smarts and sweat, it needs to make the property worth more than when you bought it. This is also what good venture capital firms do. They don’t just buy the startups; they mentor the managers.

You need to become a value-add investor. The real money is active. “Great fortunes,” Adam Smith explained, are the “consequence of a long life of industry, frugality, and attention.”⁸ You’re going to have to get involved.

None of us want to hear that. I didn’t. I was hoping I would uncover the missing Budget Scrolls and turn the Key of Knowledge to unlock some long-missed treasure. I guess, in a way, I did. It’s this: You. Must. Solve. Problems.

You don’t get rich dreaming of getting rich. Someone has to pay you because paying you was easier than solving problems themselves.

The portal to the American Dream is not opened via a stock trading app. That reveals a fantasy world. On the eve of the Civil War, a woman wrote a letter noting a local man was determined to get rich quick. He “despised labor as much as any” and was sure he would make his wealth in passive businesses. Years later she mentioned in another letter, “He and some daughters have died poor.”⁹ The fantasy of getting ahead isn’t going to make you wealthy. It never did.

It will take you adding value to something for someone else: a small business to serve others, real estate to house others, a greater role in a big company that benefits others. More than likely, you will have to use a lot of effort combined with a bit of leverage (debt/risk) to make the biggest impacts. Even then, you won’t get rich in little increments that compound annually, but in sudden surges. You sell the business. You 1031-exchange the rental building. You double your income by moving across country for a job few others can do well (most likely in an industry nobody finds exciting). Those categories (small business, leveraged assets, and high-payout career moves) have success rates far exceeding every other investment strategy. Most big gains come in big moments, the Fast Time when you finally reach the payout for what you’ve risked and what you’ve done for others.

The real thing is in the real world. Effort compounds more than spreadsheets. To get rich, you must meet someone else’s needs. Compounding interest and passive income only solve yours.

9

Diversification Won’t Make You Rich

There is a popular myth in personal finance today that the secret to getting rich is diversifying investments early and often.

That is historically false. Diversification is important, but it comes last, not first.

Charles Blunt¹ made a solid living installing new fabric onto old chairs for rich clients. Then, in the late 1600s, he saw an opportunity. His customers were hot for the newly created stock market, but not always able to handle trading. Blunt figured out how to trade stocks for them, charged fees, and his side hustle soon pulled down twenty times his old salary. As he aged, he slowly moved the newfound wealth into a wide array of investments: land, loans, stocks, and government bonds. Having risked the long climb, he was both wealthy and stable. He took every step in the right order. First, he limited himself to something he understood: making rich customers happy. Next, he concentrated all his efforts on being the best broker in the business for three decades. Finally, he spread his new wealth around to keep it safe. Limitation. Concentration. Diversification. Charles Blunt won the financial game by playing it the smart way.

Charles Blunt slit his own throat in 1720, financially ruined. Tempted by even greater wealth, he went backward, abandoning diversification by putting everything he had into a single stock called the South Sea Company. It went bust. His climb, and his demise, embody the core lessons of building wealth ever since. Go Ahead has an order: limit your actions to where you can win, concentrate your efforts where the payout is greatest, then diversify your gains so you walk off the field a winner. Getting the order right—limitation, concentration, then diversification—matters.

Advice today often starts with diversification, especially telling people to invest in a broad stock index as young as possible. This is historically backward. It mistakes what the rich have with what the rich did to have it. In rock climbing, the belay breaks your fall, but you don’t climb a belay. You climb a mountain. Focused energy takes you up. Diversification is for not tumbling back down.

Diversification of effort, of attention, and of assets was vital to surviving before capitalism, but dangerous inside it. Our modern economy is barely 300 years old, young by we-once-had-stegosaurus standards. Lots of ancient advice about spreading things around appeared in witticism and wisdom. “Don’t put all your eggs in one basket” was built for a world where “ahead” wasn’t a place chickens—or everyday people—went. Falling out of baskets or down social ladders was. All those time-worn instincts backfired in a world where getting ahead was possible.

Diversifying effort was, and often still is, seen as admirable. Not hiring help served as a point of pride for many people, especially the poor. Why pay for work you could do yourself? It never occurred to anyone that they were DIY-ing it wrong. This was such an acute problem that the president of Harvard gave a speech about it² in, of all places, an 1819 cattle show. His point? Hire more help. Farms were businesses. They should run as such. Stop fixing every little thing by yourself just because you could. The businessman-farmer with hired hands was free to concentrate on the big picture of new opportunities.

* * *

Success starts with limitation, and limiting yourself sounds boring. Being interested in many things makes for great pub chatter, but weak returns. The earliest success manuals and business maxims universally focused on Americans’ bad habit of spreading efforts and attention too thin. Being good at one thing was hard enough. The quickest way to lose money was to try mastering two.

Circus mogul P. T. Barnum described a common experience then and now in his most famous speech, The Art of Money Getting. Fortunes came from specialty, be it drilling teeth or oil. When a successful person hears of a way to double or triple their money doing literally anything other than their day job, they flatter themselves that since they are successful in one arena, they’ll be good in this, too. When the money is gone, “he learns what he ought to have known at the first . . . in a business which he doesn’t understand, he is like Samson when shorn of his locks . . . he becomes like other men.”³

Variety may be the spice of life, but it is the death of successful businesses and investing. An 1840s training guide for young merchants explained that those who indulged too many interests, “passing from business to business with versatile and unfinished eagerness,” quickly fell behind the diligent trader, worker, or investor who became great at one thing. “Perpetually busy, harassed by numerous occupations, they fly from one to another, and though always employed, effect nothing.”⁴ This wasn’t idle advice from old men. The credit records of early U.S. businesses are littered with comments of small timers trying to do too many things who went broke. A New Jersey grocer’s lone historical record is found in his nineteenth-century credit bureau report. “Failed. Went too far, too many irons.”⁵ Limitation saved financial lives.

* * *

Next, concentration paved the road up.

Andrew Carnegie, who knew a thing or two about climbing from the bottom to the top, encouraged young entrepreneurs to “Concentrate your energy, thought, and capital exclusively upon the business in which you are engaged.” People who failed “scattered their capital, which means that they have scattered their brains also. They have investments in this, or that, or the other, here, there, and everywhere. ‘Don’t put your eggs in one basket’ is all wrong. I tell you put all your eggs in one basket, and then watch that basket.”⁶

Of the great nineteenth-, twentieth-, and twenty-first-century investors, not a single one spread small bets around. Each took calculated, careful, but nonetheless substantial risks concentrating their efforts in just a handful of investments. Warren Buffett didn’t get rich diversifying, and said so. Some of the rich people you know may have tried different things, but they stuck with the one that worked.

Limit, Concentrate, then Diversify

Limitation is knowing what to ignore, and ignoring is a tremendous superpower. It must come first in the investment birth order because it lets you concentrate on the right things. Concentration is how you get the big wins. Diversification protects what you made.

When you carry books in public, people invariably ask what you’re reading. This has led to countless exchanges on money with complete strangers, since nearly every book I’ve read for over a decade is about investment history.

People will tell strangers anything. Several confessed, proudly, to bankruptcy fraud. One invested exclusively in Pokémon cards. The saddest was a waitress who asked if I knew about crypto. A little, I said. She promptly sat down and poured out a story of putting her entire college fund, left by her dead mother, into cryptocurrencies so she would make her family rich. The prices promptly crashed during her freshman year. So here she was, working to save and go back to school, crying with a stranger who wasn’t sure if asking for a refill was rude.

I looked up her coins recently. They bounced back to where she bought them, but it took four years to break even. She could have had her degree by then. Failure to limit yourself can hold you back.

Limitation is how you know what to concentrate on. The best limitations have two characteristics. First, they involve skill. Are you good at this, or can you become great over time? Even better if you choose to be great at something others can’t or won’t do. The best ways forward are the ones where you get some say in where the path goes, and the fewer people on the path the faster you’ll get somewhere. Ignore everything else. Second, ignore paths that don’t lead somewhere much better than where you are now. You want optionality: a huge upside with a very defined downside. Building an online store, starting a business you’ve seen from the inside, earning an in-demand credential, trying a commissioned sales job, or whatever strikes you as worth the risk of time and energy can have extremely high payouts. The costs, what you stand to lose in time and money, should be easy to measure. If the efforts are high but the potential payouts pedestrian, ignore those.

Then comes concentration. This is how nearly every person who got rich in American history did it. Every financial guru telling people the path to wealth is through regular, diversified investments in the stock market did not make their own wealth that way: they built a business worth millions, had high income jobs for Wall Street firms, or made money selling their advice. That doesn’t make them unique, it makes them normal. Concentration is the path to Go Ahead.

Of the Famine Irish who fled to New York, those able to Go Ahead usually focused on building small businesses. Hugh Collender⁷ and Michael Phelan were good at billiards, so they made it their trade in the 1850s. Their perfectionism for bumper rails garnered their tables a great reputation and, eventually, a high-profile buyer in President U.S. Grant. Their fame spread, and after Phelan died, Collender sold to the Brunswick Company, diversified his assets, and retired worth $1 million (over $30 million today). He wasn’t alone. Of the poorest Famine Irish to arrive in New York, fully one in five ended their lives as a business owner. Such concentration still works today: the number of American small-business owners worth $10 million or more⁸ has doubled in just the past twenty years. The majority of the wealthiest Americans’ income, according to IRS data, comes from owning a company that offers such oddly unsexy services as fast food franchises, carwashes, parts distribution, and carpet removal.

Once you reach bigger paydays, protect what you’ve earned. This is when you diversify. Concentration has an expiration date. You shouldn’t keep risking forever. I have a pet theory that Elon Musk will die broke because the man hasn’t met a risk he isn’t willing to take. He may continue to defy gravity, but for mere mortals, the roulette ball eventually hits the other color. The chance that Bill Gates goes broke, though, is essentially 0. When he retired, he sold down his 49 percent stake in Microsoft to 1 percent, diversifying into a host of other investments. Win the game, then diversify.

If Charles Blunt had learned this lesson, he wouldn’t have met his sad demise. He tried to go even bigger toward the end of life, when there wasn’t time left to recover. As Sylvia Porter, the grand dame of personal finance, admonished investors, no one “ever jumped out a window because they owned United States Government Bonds.”⁹ You won’t get rich on them, but you won’t go broke, either.

Limitation. Concentration. Diversification. In that order.

10

You Can Beat the Market; You Probably Shouldn’t

There is this feeling you get reading market hacks.

You look around, wide eyed . . . this trick made people money . . . but only I took the time to find out? I’m surrounded by simpletons listening to murder podcasts with no idea capitalism has a cheat code. Next year, we vacation at Sandals!

The number of get-rich trading hacks people have “discovered” this way defies calculation. The hot stock tip has a very long history. I’ve found references at least back to the 1600s. Things got more complicated over time, but the basic ideas are the same: if you know what they know, you can beat the system. There were simply too many schemes to try yourself, which was a shame, because I wanted to try them all.

Of all the silly stock strategies I attempted, none was more fun or frustrating than “The Cramer Bounce.”¹ In a 2005 research paper, finance professors found a glitch in the matrix. CNBC’s hit show Mad Money, hosted by former hedge fund manager Jim Cramer, was affecting the market for blips of time. Cramer is boisterous and ballsy. He screams. He rants. He occasionally throws things. He also regularly discusses a single stock in detail, followed by recommending that viewers buy, sell, or wait. The professors found that when: a) Cramer spent long segments on a single stock, b) the recommendation was “Buy,” and c) the ratings for the show were high, the stock rose the next day. Critically, the price bump almost always went away. It was usually gone, and often went down in value, within fifty days.

Voilà! I’d found the recipe. If I watched Mad Money each night, I could hone in on the target. Then, I made sure no huge sporting events were on, my proxy for ratings. Now I could profit off the poor suckers watching at home by shorting the stock. This was going to be great!

It was terrible. I lost money, which wasn’t the worst part. First, to short stocks I had to get a margin account (a brokerage agreeing that you can borrow money to buy stocks). Sounds easy. But they wanted me to have the cash in the account where I planned to borrow. To borrow $10,000, I had to have $5,000. I didn’t have $5,000. Could they do a thousand? No, the minimum was $2,000 and then I could borrow $4,000. So, after much paperwork and some hemming and hawing answering questions about being an “experienced investor,” I managed to get my margin account.

When you short a stock, you borrow someone else’s. Why? To sell it to another person. Why? Because you think they’re an idiot. This fool is paying too much, and soon the price will go down. When that happens (if it happens), you’ll buy it back cheaper than you sold it. Then just give the stock back to its original owner. This is like if you borrowed my power tool, sold it on Ebay, then bought the exact model cheaper on sale and returned it to me. I still have a DeWalt brushless drill, and you made a profit: selling for $100 and buying back for $95, you kept the $5 difference. It is buying something and selling it for a profit, but in reverse. Now do that, with borrowed money, times 1,000 shares, and you just paid the rent.

It sounds vexingly complex, but it’s not. You pay for something you never owned, with money you did not have, selling to someone you’ll never meet, because you plan to buy it back from someone else for less. Make sense? Of course not. It’s ridiculous, but I didn’t make the rules.

Now that I had my account, I could settle in five nights a week at six o’clock in the evening. This got old, fast. I had a wife. I had a new child. Neither wanted a balding man in a tie setting off sell sirens at high decibels. In the name of science, they would have to persevere. It took a while for the stars to align: long segment, buy siren, no Monday Night Football. Straight to the website I went, carefully hitting the buttons to borrow someone’s shares to sell to a bored retiree.

A great stock market commentator once noted that, as with losing your virginity, there were some things you just had to feel to understand. “Like all of life’s rich emotional experiences, the full flavor of losing important money cannot be conveyed by literature.”² Correct. Watching your borrowed money ebb and flow for days on end teaches you a lot about yourself. In my adult life, I have vomited just four times. Twice I was sick. Once I was drunk. The fourth time I was short a midwestern utility company borrowed against my infant’s college fund.

I soldiered on. There were wins and there were losses. Eventually I shut the margin account down and settled for just buying the stock at the opening bell (going long) and selling quickly a few days later. The only people that made money in this whole gambit worked for E*TRADE, who kept my low-but-not-nonexistent transaction fees. When it was over, my actual trades had won. The professors were right, and I beat the market. Net of fees, however, I had lost about $400.

The worst part of all this was, while Cramer was yelling at me like I was a child, my daughter was learning to walk. The idea itself wasn’t wrong, and to some extent, the moves I made were right. But there is nothing like hearing “come quick she’s doing it!” from downstairs to erase all your gains.

* * *

Yes, you can beat the market. But beating the market is a bad idea.

Sophisticated people these days disagree. Any money book, whether by journalists or gurus, will assure you that “study after study” proves no one can beat the market. Buckle up and buy an index fund. Since that is extremely boring advice, they will offer lots of inspiring stories and graphs explaining how to stop splurging on Starbucks and slow-go your way to a not horrific retirement.

Their skepticism is warranted. Alfred Cowles³ wrote a 1920s investment newsletter, quit when he realized he had no idea why prices rose, spent the rest of his life testing the financial predictions of others, and concluded by 1932 that a randomly drawn deck of cards got better returns than professionals.

The next year, the cleverly titled How to Lose Your Money Prudently⁴ told the possibly fictitious story of an investment banker who, struggling with a pen, splattered ink all over the newspaper’s stock section. Intrigued by the randomness of which stocks got hit (and quite possibly made up to explain Cowles’s recently published academic paper), the banker proceeded to discover his stock-picking division had underperformed this Rorschach test for a decade.

In 1973, Burton Malkiel took the urban legend to another level by asserting that a blindfolded monkey throwing darts could out-pick the pros in his A Random Walk Down Wall Street.⁵ The idea stuck. The first time I heard it, a novice investor assured me it had involved a live monkey, but no one could admit this because of PETA.

In 1988, the staff of The Wall Street Journal began a fourteen-year semi-annual stock throwing competition.⁶ Sans monkey, Malkiel threw the first dart. Since then, multiple research studies reported randomized selections beat the pros, including another round of WSJ reporters beating billionaire hedge fund managers in 2019, and mutual fund conference speakers in 2022. For the single year the picks were made, journalists beat tycoons.

Informed skepticism has a name, and it isn’t the Monkey’s Dart Board Theorem. The Efficient Market Hypothesis (EMH) is the foundation of nearly all investment theory today. The idea is simple: financial prices are products of groupthink. The prices of almond futures, tech stocks, or government bonds reflect all the information about lactose intolerance, AI, and politicians available right now. The little price movements around it are just the noise of an insurance company buying new assets here, a retiree selling some there. Because everything everyone knows is already in the price, there is no way to guess tomorrow’s. Prices shift only when we learn something new.

Stock prices follow a “random walk.” They don’t go anywhere in particular, and you never know from one moment to the next if they will step forward or back. Crucially, what a price just did has no relationship to what it is about to do. Asset prices aren’t drunks. They are meth addicts staring off with no sense of direction or time. There is no yesterday. No tomorrow. Just right now.

There is a lot more math and a Nobel Prize behind it, but that is the gist. The idea also wasn’t original to the economists who invented it, though the equations were. The oldest investment diary in existence, of middle-class English investor Samuel Jeake, noted much the same thing in 1699. “For telling when ’tis a good time to purchase, that’s past my skill or anybody else’s.”⁷ Now we had the math to prove that there was no way to “win” in the market unless you have information others do not have. And if you have information others don’t, a phenomenon called “insider trading,” you go directly to jail without passing Go.

* * *

EMH seemed to be proven right time and again, especially when it wasn’t. When everyday people tried to invest like the best, they ended up like the rest.

This was sweetly displayed when a group of little old ladies became famous for their investment club’s 24 percent annualized returns. Beginning in 1983, the Beardstown Ladies of Illinois pooled funds in the Lutheran church basement, selected stocks with a ten-ingredient “recipe,” and used midwestern values to kick the S&P 500’s fanny. Their book and DVD sold nearly a million copies and made the Beardstown Ladies investment superstars.⁸ Investment clubs became extremely popular.⁹ By 1998 there were 37,000 groups nationwide:¹⁰ teachers clubs, kids clubs, ladies clubs, and gay clubs.

Clubs underperformed significantly. One study found groups lagged the market by a massive 20 percent annualized.¹¹ The Beardstown Ladies, it turns out, were good at potlucks but not with accounting. When audited, their actual returns were 9 percent over a decade when the S&P returned 14 percent. They had great fellowship, though.¹²

There you go. The market is efficient, far too efficient for you to know something others don’t. Those who try, fail. There isn’t anything to do but learn to love randomness.

I didn’t have access to a monkey, but I did have a toddler. Before you do what I did, and ask a child to point at your Apple Stocks app to re-create the pick-em contest, know this: over the full 14 years after The Wall Street Journal began their experiments, the darts averaged a 3.5 percent return.

The pros, meanwhile, were up double digits.¹³

It turns out, not all walks are random. And some people do, indeed, beat the market.

* * *

The Efficient Market Hypothesis has two problems. The first is that asset prices don’t always do what it says they should. The second is that people regularly make money in ways it says they shouldn’t. That’s quite a pickle for a theory everyone keeps using.

According to EMH, prices move randomly and their volatility (not the direction of the step, but how jerky it is) stays within a certain range. Think of this like our drug addict on the street. You don’t know which way they will go, but you do know the area they’re likely to stay in. In practice, this means that most steps of our ne’er-do-well (market prices) should land pretty close to where they are right now. Of all the steps they could possibly take, even a series of steps, none launches them out of the city.¹⁴

That is the problem. Not often, but often enough, prices move wildly as if they are chased by demons. The first scholars to turn EMH into a workable model won a Nobel Prize one year and lost $4 billion the next. How? The Asian financial crisis and subsequent Russian government debt default were, per theory, a once every 6 trillion year phenomenon,¹⁵ but somehow appeared at the same moment as the Seinfeld finale. Both experiences disappointed.

Rare events appeared more than expected. When they did, the market sobered up into a world-class Olympic pole vaulter. Sometimes things went crashing through the floor. There have been five black-swan events (things happening today that yesterday’s prices said weren’t possible) in my lifetime alone: 1987, 1998, 2001, 2008, and 2020. That is just to the downside. There were also wild swings upward. A portfolio missing the best ten days of the past 112 years¹⁶ would have lost out on two-thirds of all stock market gains. Theory didn’t predict the wild swings up, either.

This matters. The farther a stock got away from its EMH cage, the greater the price effect of each step. Beyond a certain point, these weren’t jumps, but superhero leaps—a multiplying force—so that losses and gains took on comic-book absurdity. Each step did affect the next. In these moments, the impossible happened. Meth Head became the world’s most unlikely super soldier, leaping into tomorrow and destroying portfolios.

Efficient Market Hypothesizers took this all in stride. Rare events? Maybe not so rare. Wild swings? It takes time for investors to sift the data. Markets may not be perfectly efficient, but they are efficient enough.¹⁷ Doubt only confirmed the faith for most believers.

* * *

The heretics weren’t having it.

Two sects broke away from the EMH orthodoxy. The first were value investors, who argued the real trick was to buy future income when it went on sale. They are the Nordstrom Rack of personal finance. Why pay full price for designer names when you can own them for less?

The founding prophet of value investing was Benjamin Graham.¹⁸ Graham thought prices came from “Mr. Market,” a manic depressive who partied for long periods and then took downers. It was best to sell when he was high and buy when he was depressed. Graham regularly beat the market and later published his seminal book, The Intelligent Investor, in 1949. His protégé, Warren Buffett, became possibly the greatest investor of all time, beating the overall stock market by two to one over a long career. He is so famous that you already knew that.

If markets were truly efficient, then the success of Graham, Buffett, and their lesser-known acolytes shouldn’t have been possible. After all, they had the same information as everyone else.

The other sect of contrarians were a motley crew falling under the umbrella of “technical analysis.” These included everyone from commodities billionaire Paul Tudor Jones to stay-at-home day traders like Roaring Kitty, the investor embodying the Covid-era meme stock movement.

An army of divinity seekers searched the ticker-tape scrolls, creating increasingly complex price movement charts. Technical analysts thus became known as chartists.¹⁹ The reason stocks fluctuated, they told Graham’s cheapskates, was not the businesses but the buyers. As more buyers chased after a stock, the price went up. When the buyers went away, so did value. The art was to use charts to see where buyers were going, then get ahead of them.

Charts had bottoms (when everyone was done selling), heads (when everyone stopped buying), shoulders (which helped you find the head), resistance (found from the shoulders), and support (which held up the bottom). Games of heads, shoulders, knees, and toes became the hottest way to search for stock market miracles.

Scoffed at as pseudoscience by opponents, the method became the stuff of finance courses²⁰ by 1948. “Support levels” and “resistance levels” are the daily talk of analysts the world over, driving strategies that beat The Wall Street Journal’s writers and, if the lore is true, a blindfolded primate.

Astoundingly, for some investors, it worked. In fact, academic papers consistently found price strategies to exploit. Not only that, but these methods continued to be profitable,²¹ though usually only half as much, years after the findings were published.

If you are wondering why academics would publish their findings rather than run straight to their trading accounts, you don’t know many academics. Professors are a risk-averse people. We talk grandly and act smally. Our lust is for tenure and prestige. Printing one’s study gets a modest but lifelong payout in job security and invitations to speak at conferences of real risk takers as their distinguished guest. The big winners, meanwhile, rarely share their secrets.

* * *

How did people do what theory said they couldn’t? What was their secret? Can you use it to impress the people you went to high school with?

Start here. The market may or may not be efficient, but it is never fair.

First, the big winners are rarely passive. Warren Buffett personally interviewed the CEOs of prospective companies, very often demanding a seat on the board. He actively mentored their executives. You may get a notification to vote your 200 shares in Microsoft’s annual meeting, but there are 7 billion others. You don’t get to walk into corporate and speak your mind.

Buffett also bought his investments with debt. So do most major investors. Buffett’s leverage has been estimated at around 1.7 to 1.²² For every dollar Buffett invested, he borrowed another dollar and seventy cents and invested that, too. Nearly every large investor I’ve studied did the same, regardless of industry or strategy.

Debt is a big part of this story. Great investors do revert to the mean. They win some, they lose some. Warren Buffett’s worst investment was buying that New England textile firm early in his career, which he was about to sell until their CEO pissed him off. He invested millions of more dollars, and nearly the only thing he got out of the deal was the company’s name, Berkshire Hathaway.²³ If he lost so much money losing his temper, why is he Warren Buffett?

The one piece of wisdom that transcends all the rabbis of anti-efficient market radicalism is this: cut your losses quickly. This lesson occurs in every major value investor’s book and biography, but is also the central theme of a multi-volume set of interviews with the most successful chart-following technical analysts.²⁴ As it turns out, they are all getting rich the same way. When they hit predefined loss points, the greatest traders sell immediately. When they win, their wins can run for decades. Magnified by the borrowed money, reversion to the mean doesn’t mean very much. They can be wrong half of the time losing a million here, a million there, but be right and make $100 million in one go. Most studies of reversion to the mean don’t account for this tendency to admit defeat quickly while leveraging success.

Finally, most big market beaters grab things others can’t reach. This is what I mean by the market is not fair. Most big winners buy things you can’t buy because you don’t have enough money or know the right people—usually both.

After fourteen chapters detailing how to buy undervalued stocks with a margin of safety, Lord of Value Ben Graham proceeded to explain that this is not how he made his own fortune. He expressed “grave reservations” about everyday investors’ prospects for succeeding doing what he was telling them to do, since it isn’t what he principally did. Graham’s incredible returns came from buying liquidated companies at auction, complex arbitrages and hedges, and the acquisition of bargain stock issues not available to the general public. “We hesitate to prescribe our own diet for any large number of intelligent investors,” he said in a book literally titled The Intelligent Investor.

David Swensen,²⁵ possibly the greatest institutional investor not named Warren Buffett, employed a small platoon of Yale-educated finance grads to vet ideas. His biggest score was buying millions of acres of timber land when that sounded crazy. When you’re handling billions of dollars, opportunities come looking for you. As I write this, investors who spent as little as six cents on the dollar buying claims for Sam Bankman-Fried’s collapsed crypto exchange, FTX, are about to be repaid more than the original claims were worth.²⁶ For some, they will 15x their money. It turns out, one of the things the wunderkind did with all his illegal transfers was buy large shares of the AI firm behind ChatGPT, which are now very valuable.

Why didn’t you buy them? Because they weren’t for sale anywhere you could look. By the time this made the news, the great returns were gone. The same happened with the farmland Bill Gates bought in 2013. These investors did something you couldn’t do before you thought to do it, and once you’ve heard about it, all the real money was made.

Beating the Market is Rare and Rarely Worth it

Large asset managers actually do beat the market,²⁷ especially when they buy. For those managing around $600 million or more, their purchase decisions were 1.25 percent better than the rest of us. Their selling decisions weren’t as great, underperforming by around-0.75 percent. So, after buying better, but selling worse, the world’s best investors beat the market by about one half of one percent. If you are a $600 million hedge fund, that’s an extra $3 million more than your competitors. Not bad.

What’s in the secret sauce? Several ingredients: combine the power of borrowing two to one with four years at Yale ($70,000 per year), a grueling apprenticeship, and ten-plus years of seventy-hour weeks. The typical investment banker works sixty-seven hours a week. To boost morale,²⁸ JP Morgan Chase recently announced a new eighty-hour maximum weekly limit. You, too, can beat the market. Do you really want to?

Would it be worth it? A typical Millennial has $45,000 in retirement savings and the typical Gen X about $115,000. Assuming they could use all that to pick stocks, which in 401(k)s they can’t, the net positive return from immense effort and risk would be an extra $225 to $575 a year, roughly one night in a Miami hotel during hurricane season.

You would need one million dollars invested to make an additional $5,000, and that assumes you spend your life in pursuit of that extra 5 Gs. Remember, this is excess return (what you make by not sitting on your butt and buying index funds). The gains aren’t worth the cost or the learning curve.

Sure, you can buy a call option on Robinhood. But can you sell a reverse knockout put option structured versus a forward-forward contract for millions in dynamic hedges?²⁹ No, you cannot, and neither of us really knows what that means.

Here is an equation I use to remind myself that I am not now, nor ever likely to be, a stock picking genius.

Multiply 0.005 (the 1/2 percent excess returns of the leading money managers) by the money you can invest. Then, divide that number by the hours spent reading up on this brilliant new investing strategy.

It looks something like this: 0.005 × $1,000 = $5/5 hours = $1/hour.

Even more humbling, divide your hourly rate of pay by that number. The median worker in 2025 made about $36/hour. If you spent roughly an extra two minutes on the clock, you get the same money. If your name ends with “M.D.,” adjust accordingly. That’s the same money without the 3,000 hours a year studying markets, borrowing heavily, or paying tuition to learn what the heck you’re doing.

Yes, you can beat the market. Why on earth would you want to do that?

11

Women Were Always Active Investors

If you haven’t been to Charleston, South Carolina, you really should go.

There is great food and rich history. Strolling down the battery with a morning coffee, you can gaze across the distance toward Fort Sumter and ponder how the Civil War started right where you stand. Turning around, you’ll see the famed “Rainbow Row” houses of pink and blue hues owned by the richest colonial men. Locals will tell you the bright pastels helped drunk sailors remember which house they were staying in. Locals tell tourists such things to make them feel better about spending vacation money. The reality is that Rainbow Row, all of it, was originally an ugly green. Sailors didn’t live there. And much of the money behind it wasn’t from rich men, but the investments of everyday women.¹

* * *

Every few decades in history, someone writes how surprising it is to see women investing their money “these days.” In 1950, How to Lay a Nest Egg² infused advice for the new lady investors with gendered stereotypes such as, “Is the Stock Market Like a Super Market?” and sexualized innuendos of a leggy blonde asking her banker, “What exactly is a physical asset?” You don’t have to look far online to find proclamations that women are urgently catching up on financial literacy. You wouldn’t have to look far back in history, either, to find men freaking out over the shocking scene of 1790s “parsons, tradesmen, farmers, women” trading securities. Preachers knew the pulpit, and women knew the home, but neither belonged buying stocks.³ What is so surprising about these statements isn’t the misogyny. It’s that women were, from the dawn of capitalism to now, already a large part of the investment world. Every few decades, scandalized people assumed something very old was new. It never was and it isn’t now.

Stock and bond investing really got going on London’s Exchange Alley in the late 1690s, not long after Charleston was founded. Women were so prominent as customers that something new appeared—chocolate houses, catering to tea-drinking women who could sit, snack on sweets, and talk stocks. Women were at least 20 percent of the stockholders in the East India and South Sea Companies.⁴ By the 1740s, when Rainbow Row’s first houses were built, women owned one of every four shares in the Bank of England. The Bank’s single biggest investor was Sarah Churchill.

In colonial Charleston, meanwhile, people were busy building houses in what was then a very new town. Just like now, nobody had cash, so they borrowed the money. But the Bank of England was an ocean away and, besides, didn’t do mortgages. Enter the single ladies of the South.

Legally, a married woman’s status in business dealings was covered by that of her husband (feme covert). Single women and widows, however, could conduct any business they pleased (feme sole). Conduct they did. Charleston’s widows and unmarried women regularly issued loans to local families building houses, starting business, funding weddings, and even consolidating other debts.

Elizabeth Buretel was particularly good at issuing loans. She had over seventy outstanding to Charleston families when she died in 1727. Although technically one-year loans, she usually rolled them over until paid off. This gave her a steady income, loaning out her money and living on the interest payments.

Loans were for amounts great and small. So were the women who loaned them. Nearly eight in ten women who did this weren’t rich. Martha d’Harriette died in 1760 with a grand estate of £24,000, most of it invested in loans. As a girl, she probably saw poor old Margaret Adamson, who died with a small estate of £75, also heavily in the mortgage market. A man in 1770s Rhode Island once borrowed money from his innkeeper, Abigail Stoneman, by signing a loan document written out on the back of the nine of clubs.⁵ Lending money was the primary female personal finance strategy for 200 years.

Before banks, before financial planners, before Suze Orman: women knew how to handle money. Where did they learn? Mostly from one another. All those drawing room conversations were a bit less frivolous than Jane Austen would have you believe.

Women were everywhere in the American mortgage market. Good Housekeeping regularly ran ads for investments in mortgage companies. She could buy, for instance, first position Minnesota farm loans in 1887 with promised returns of 7–8 percent. Housewife manuals and financial advice books for women simply assumed mortgages were a large part of her estate from the 1700s to the 1920s. The first “retire early” guide suggested 5–10 percent of a woman’s wealth be committed to issuing private mortgages on farms and houses, in sums as small as $200. The American Business Woman,⁶ published until 1910, dedicated an entire section to it.

What changed? The New Deal. When the FHA backstopped the mortgage industry and standardized the 15- (and later 30-) year mortgage with low interest, customers sought this new and far better bargain. Many women loaned at as high as 10 percent, the legal limit in most states. These new loans set low, fixed interest for long periods. The lending ladies market withered away.

* * *

There were more than mortgages in women’s portfolios. They were also active investors in bonds. As we’ve seen, this type of activity was rare regardless of gender, but where it occurred women went toe to toe with men and, more often than not, beat them. The great hack for women was that, unlike a business or real estate deal, these purchases did not fall beneath feme covert laws.⁷ Since most courts considered stock and bond investing a form of gambling, buying them fell under women’s discretionary funds (called pin money). Like any other amusement, it was consumer spending. Married women could play the market all they wanted.

Abigail Adams was the most famous matriarch in the market. The Adams family was middle class. There was nothing about her husband, John, that screamed “This man will be our second president!” He was short and his father made shoes. Abigail had a nice life before politics, but nothing you can’t find in any suburb today. She possessed, however, the kind of practical smarts her husband lacked. Whereas John just wanted more land so the Hancocks would treat them like equals, Abigail understood the big money was made in paper.

While John was away in France, Abigail started buying government bonds⁸ after the American Revolution. There was so little faith in the government her husband helped start that prices went down to fifteen cents on the dollar, indicating widespread fear the United States wasn’t going to survive to pay its debts. This is when Abigail started buying. She sold when they rose to eighty-five cents, over 400 percent returns on her best buys.

John abhorred financial risk, but she understood it. “Do not be afraid,” she explained, “one must wait for interest & Run risks, but at all events it will fetch what is given for it.” Having bought low, she could always cash out with little loss. The upside was more than worth the downside. She was the Intelligent Investor well ahead of Ben Graham. Before anyone could stop her, she was in soldiers’ notes (back pay for Revolutionary service), Massachusetts bonds, and even Vermont land speculation. When it was over, she far surpassed her husband’s real estate deals, with a spectacular lifetime annualized return of around 18 percent. Warren Buffett’s is 19.9 percent.⁹

Adams may have been her generation’s best securities investor, period.¹⁰ She was not, however, alone. Women comprised a minimum of 10 percent of all financial deals,¹¹ including some of the most complex trading and debt schemes, in early America. In the early republic they were as much as 16 percent of the total stock and bond market, and in sectors like banking around 25 percent of shares were in female hands.¹²

As stocks grew in prominence, so did women’s investments in them. “They came from all classes,” an observer gushed of women investors, “heiresses, stenographers, businesswomen, housewives, farmers’ wives, cleaning ladies, waitresses, telephone girls, cooks, and washerwomen.”¹³ Women controlled about 40 percent of post–World War I securities. They held 30 percent of U.S. Steel, and over half of shares in both AT&T and the Pennsylvania Railroad. Investment reporters dubbed them “the Lady Bulls.”

Women’s magazines frequently reported on investments. Ladies’ Home Journal and Good Housekeeping ritually offered financial advice and stock market features through the 1910–20s. Ruth Boyle, on the personal finance beat for Good Housekeeping, focused on how women could invest “as a businessman does.”¹⁴ Elizabeth Frazer compiled her pieces for The Saturday Evening Post into 1926’s A Woman and Her Money.¹⁵

In textbooks on the Great Depression, students read that some poor fool wrote an essay called “Everybody Ought to Be Rich”¹⁶ just before the market crashed. That poor fool was John Raskob. That essay appeared in Ladies’ Home Journal. It was no anomaly. The actual essay tries to help women convince men to start investing $15 a month. Raskob wasn’t trying to sway women off to the sidelines. They were already in the game.

A generation later, Vogue ran an article titled “What a Woman Should Know About Investing.” Merrill Lynch followed it up offering Vogue readers an eight-week lecture course on investments. Thirty thousand enrolled. Female investors were not the creation of first-, second-, or third-wave feminism. They were not legislated into being. Women wanted to invest, and invest they did.

* * *

Stock exchanges were male-dominated spaces, but women intruded upon them just fine. Often hailed as “firsts” or noted for their rarity, thousands of women became finance professionals well before Sigourney Weaver and Melanie Griffith battled for respect in Working Girl. Victoria Woodhull, most famous for advocating free love and running for president in 1870, opened a stock brokerage in Wall Street with her sister to much fanfare. Alice Carpenter, a wealthy Bostonian, self-managed her inheritance so well that she was asked to open a women’s department for a bond company. Her success led many firms to create internal departments targeting female investors. By 1910, over 200 U.S. women were brokers, including four black women. Twenty years later, there were nearly 2,000. In 1967, Muriel Siebert became the first woman to purchase a seat on the New York Stock Exchange. She called it the most expensive piece of jewelry she ever bought.¹⁷

Colleen Moore was one of the most unique of these new brokers. She was once Hollywood’s It girl—the first box-office star to bob her hair, creating and immortalizing the banged flapper look of the 1920s. Her films grossed millions of dollars, back when that was a lot of money. When they turned the sound on, though, her star faded.

For her second act, Moore became a stock picker. She survived the 1929 crash by owning real estate and business ventures. Her third husband, a partner at Merrill Lynch, was aghast. He convinced her to start buying stocks in the Depression Era lows.

The former household name started picking Wall Street’s pocket. When she wrote How Women Can Make Money in the Stock Market in 1969, she had already made millions for herself and for Merrill Lynch.

Most women’s investment success came that way, inside of traditionally male venues. Furtive movements to create single-gender financial enterprises rarely got very far. Woodhull’s lady-led brokerage failed largely because, Woodhull herself admitted, she never wanted to trade stocks anyway. “We went unto Wall Street, not particularly because I wanted to be a broker,” she explained, but to “plant the Flag of women’s rebellion.”¹⁸ Rebellion wasn’t profitable.

The first attempt to found a women-only bank in 1879 received large publicity and deposits, taking in a respectable $500,000 ($15 million today). What drew women in was less feminism than the fantastic 8 percent interest payments. Within a year, the whole thing was revealed to be a fraud and the bank’s founder, a former fortune teller named Sarah Howe, spent three years in prison. Upon her release, she promptly attempted the same scheme in three different cities, paying interest from new deposits. She predated Charles Ponzi by forty years, but curiously never appears in “first woman ever” lists.

Several other, more honest attempts at women-only banking were tried and failed, including Betty Friedan’s First Women’s Bank of New York in 1974.¹⁹ The real reason women’s banking has not thrived is because women rarely treated their finances as a distinctly female experience. It is possible that, with the rise in women’s earning power and the decline in marriage rates, women-only investment houses like Ellevest will carve out these niches more successfully. But they are hardly the first to try.

There is No Gender-Affirming Capitalism

Women were always active investors. None of this glosses over the unfairness, the misogyny, or the barriers women regularly encountered. But it begs the question why each generation seems to give their best shocked-face emoji when “discovering” women actively invest.

I honestly don’t know, but I wish we would stop. The female investor isn’t an “exciting new phenomenon.” They’ve existed since the ladies of Rainbow Row loaned the money that built Charleston. Still, newsrooms regularly blare headlines like “More Women Invest Than Ever.” This does not mean what you think it means.

More women are investing than ever before because more people are investing than ever. Men and women are both currently approaching record highs of market participation. Rates will grow if the economy booms, and crater if it busts. We are all riding the same roller coaster, but it is the widespread stock ownership by everyday people that is new, not the gender balance.

Beware investing based on your identity, whatever it is. Studies of investment clubs found that single-gender ones tremendously underperformed the market, as did every other affinity group: teachers-only, LGBT-only, religious-only . . . all of them. The best performing had roughly balanced representation.

The market measures everyone’s money the same. Its pronouns are profit/loss.

12

Stocks Used to Be Bad for the Long Run

Dodging the Great Recession left me curious about money.

So, we sat down with a financial planner in 2009. Meeting with professionals sounded like what grownups did. He handed us what I now call “The Chart.”“You’ll love this, since you’re a history guy,” he said.

You’ve seen it, or a version of it. A mere $10,000 invested in the 1929 stock market, reinvesting all dividends, was now worth over $10 million! The dates change. The takeaway never does. Everything always goes up and to the right.

Now I was Curious George–level curious. The Man in the Big Business Casual showed us that when times grew dark, like depressions, burst housing bubbles, or the King of Pop dying, the stock market still eventually went up. Why? It just did. Please hold your questions till the end.

I started monkeying around with The Chart. The Man in the Big Business Casual moved from kindly, to patient, to frustrated, to annoyed. The Chart was all the proof I should need. History was on his side. I really should stop fooling with it.

The historical assumptions of The Chart were exactly what got me going bananas. There was no “mere” $10,000 then. Houses didn’t cost $10,000 in 1929. Any person dropping their life’s savings into stocks would have to live on the dividends, not reinvest.

Besides, you could not buy a stock index in 1929. The Dow Jones existed in the newspaper, but no one owned it. There were three options. You could buy every company in the Dow, but that meant buying 100 shares of 30 companies because the rules required a minimum purchase size. All those shares cost about $1 million ($12 million today). Ten thousand bucks wasn’t going to cut it. The Chart was monkey business.

Then, there was the investor. This mythical creature bought stocks in 1929, lost 80 percent, survived a depression, fought Nazis, feared nuclear Armageddon, lived through double-digit inflation, cried when Ross and Rachel got back together, but never once touched that money? How old were they in 1929?

According to the financial advisor, The Chart was proof that investing small sums over a long time got you rich. That wasn’t what I saw at all. I kept looking at it backward. The Chart showed that if you invested money you didn’t have, in a way you couldn’t do, avoiding fees you had to pay, saving dividends you certainly needed, and lived longer than you were likely to live . . . you, too, could be a millionaire by your hundredth birthday.

The Chart looks at the past, but it isn’t history. It apes history. Everything is Slow Time. In The Chart’s world, there was no inflation, no taxes, no fees, no oops babies. If I saw him today, The Man in Big Business Casual would stammer that the stock market went up seven-fold since we spoke. Overthink things and you end up curiously broke. Besides, stocks had always gone up and they always would. That was how people got ahead in this country.

But stocks didn’t always go up. Very few people got ahead with them. And overthinking things is my specialty.

* * *

The stock market was not the greatest path to wealth for average Americans for most of time. You wouldn’t know this if you spoke to any financial advisor, read any investing book, listened to any guru, or turned on any business channel. The idea that investing in stocks is how people got rich is so ingrained in our thinking that to suggest otherwise is heresy.

For much of history, though, the stock market wasn’t a very big deal, in part because there was not a market. There were dozens. New York had Wall Street, but Philadelphia, Baltimore, Providence, Hartford, and even smaller towns vied to become the leading place to trade shares. In the South, Alexandria, Richmond, Norfolk, Charleston, Savannah, Mobile, and New Orleans all had active stock exchanges. One of the busiest was in Natchez, Mississippi. Even so, most Americans didn’t live in cities, so buying stocks meant traveling or mailing funds across long, frustrating, dangerous distances.

Stockbrokers could sell you stock, but that was not their day job. One advertised that he helped find farms, houses, horses, and “carriages of any sort.” He was part stock man, part real estate agent, part used-car dealer. Another bragged he could secure poor suckers to take your place in the military draft.¹

Because the minimum transaction size was set at 100 shares, the smallest purchases often cost $10,000 or more ($250,000 today). People simply didn’t have that kind of cash. This left everyday people who wanted in to buy odd lots from expensive brokerages, set up margin accounts to use borrowed money, or most often simply bet on price swings at the local bucket shop, a local hybrid bar-gambling den. Most buyers weren’t even American citizens. They were rich Europeans.

The typical citizen’s view of stocks was that, though exciting for the imagination, they were a form of gambling.² The Supreme Court agreed. In 1906 it confirmed that states could outlaw bucket shops, effectively making it illegal for everyday people to buy stocks on margin. Since buying in cash was so expensive, governments effectively barred everyday people from buying stocks on the exchanges.³ Most Americans lived their entire lives and never owned a single share of American business.

That didn’t mean Americans missed out. In fact, they dodged bullets. Contrary to popular opinion, stocks did not beat bonds throughout history.⁴ From the founding to 1862, there wasn’t a single thirty-year period where stocks were a better investment than bonds. Over the entire nineteenth century, bonds beat stocks, and until World War II, they were about evenly split for investment returns. Yes, I have seen your friend’s social media post saying stocks always won. Your friend is wrong.

Case in point, the Second Bank of the United States⁵ was 30 percent of the entire U.S. stock market. In 1837, the price went from $120 per share to $1.50, and eventually failed altogether after Jackson’s Bank War and the nationwide Panic of 1837. This would be the equivalent today of Apple, Microsoft, Nvidia, Amazon, Google, Facebook, Tesla, Berkshire Hathaway, and Walmart all declaring bankruptcy on the same day. Gilded Age stock scams and rug pulls (getting investors into a stock and yanking its value away) were so notorious that top Wall Street investors held an 1899 New Year’s Eve party where high society lined up to shear the wool from a live lamb to celebrate fleecing ignorant investors. This was in the newspaper. They were proud of it.

Little wonder, then, that in 1899 barely 1 percent of Americans owned stocks.⁶ Why would you? They were expensive, far away, dangerous, and there were better things to do with your money. In that world, foul balls didn’t count as strikes in baseball, Teddy Roosevelt wasn’t even vice president, women’s long skirts had not started inching up their legs to help peddle the wildly popular bicycle, and everyone knew that stocks were for suckers.

Just 100 years later, in 1999, everything was different. Mark McGwire walloped 70 home runs, Bill Clinton had just been impeached, and women could wear whatever they dang well pleased. Over half of Americans in this strange new world owned stocks. It was, they said, the clear lesson of history.

What changed?

* * *

We’ve already seen that World War I inflation blew a hole through financial assumptions. Inflation became increasingly baked into capitalism’s cake. In a brief 1920s dalliance, millions of Americans jumped into stocks, but then the souffle, as novice bakers often learn, collapsed suddenly and took the joy of speculating with it. Recipes changed accordingly.

Slowly, though, Americans learned to wrap their minds around “the” market.The first transition came from pseudoscience, a phrase for combining small facts into grand truths those facts don’t fully prove. A Frenchman named Clément Juglar noticed that capitalist economies seemed to have a panic attack every seven to ten years. Englishman William Jevons took the Frenchman’s dates and compared them to nature. In a wonderful case of confusing correlation with causation, he discovered these economic tantrums vaguely overlapped with solar sunspots, which he presumed disrupted agricultural markets. The timelines didn’t exactly match up, so he dismissed some panics as not panicky enough and concluded that the average distance between market crashes was precisely 10.466 years. Jevons naturalized the business cycle.⁷

In the United States, The Wall Street Journal founder, Charles Dow, eagerly applied Jevon’s theory. Since the recently invented ticker-tape machine gave exact prices, Dow believed you could measure the stock market,⁸ and through it the economy, as a natural phenomenon. The first edition of The Wall Street Journal printed the price movement of twelve stock prices and officially branded it the Dow Jones Industrial Average in 1896. The exact number of stocks kept changing, but the idea that a standard sample of prices could measure the market took off. Standard & Poor’s index evolved from 90 stocks in the 1920s to 500 by 1957. Today there are indexes for just about everything, including an S&P Catholic Values Index.

Faith was certainly at work. Peter Hamilton, Dow’s successor at The Wall Street Journal, believed that prices revealed natural laws. Indexes measured the market “precisely as a thermometer registers heat or cold,”⁹ he explained. They were no longer speculators. They were financial weathermen.

Pseudoscience became legal after World War II. “Prudent Man Laws” required anyone charged with investment outcomes to behave as a traditionally practical person would. This meant buying bonds, real estate, and mortgages only. Stocks were, by law, too risky for prudence. But if stocks were understandable to the scientific mind, then surely a prudent man could play the market. In 1950, New York passed the first expansion to allow fiduciaries to place up to 35 percent of funds into common stocks.¹⁰ Two years later, Harry Markowitz’s landmark paper in The Journal of Finance birthed modern portfolio theory, offering practitioners proof that well diversified stocks outperformed other strategies. Prudent men went crazy for stocks.

Waves of adoption followed. Big entities started buying first: insurance companies and pension funds especially. The New York Stock Exchange (NYSE) launched its “Own Your Share of American Business” campaign targeting main-street buyers, but fees were still too high for everyday people. Then, in 1975, the NYSE eliminated fixed fees. The glide path to lowering transaction costs to $0 was on. The following year, Vanguard released their famed index fund, which for the first time allowed investors to truly buy “The Chart.” In 1994, E*TRADE offered the first public website for trading, with mind bogglingly low $14.95 fees per trade. Competition drove prices down further until Robinhood offered completely free trades, forcing others to do the same.

* * *

The same year E*TRADE arrived, Jeremy Siegel published Stocks for the Long Run, arguing that history proved stocks were always the best long-term investment. People bought the book in droves, and some suggested Siegel’s book helped fuel the 1990s stock market boom. In reality, Americans were already gobbling up stocks. Siegel just gave them their slogan.

Stock ownership was barely 20 percent of households in the early 1980s.¹¹ That rate doubled to over 40 percent before Siegel’s book hit. A few short years later, 50 percent of American families owned stocks as cheaper fees and 401(k) retirement plans gained steam. Siegel did not begin a stock market feeding frenzy any more than the Discovery Channel made fins scary in saltwater. But “Shark Week” and “Stocks Always Go Up in the Long Run” are much better branding for what excites people already.

Siegel’s book became part of the Holy Canon of Investing. People reference it without ever reading it, sometimes not even knowing it exists. “Stocks always go up in the long run” is embedded into the American mind like “A penny saved is a penny earned” or “The Mets will find a way to screw this up.” We’re not sure where we learned it. We just know it’s true.

* * *

What if it isn’t? In fact, there are many times stocks underperformed. After new sources were uncovered,¹² scholars noted that bonds beat stocks for all of the 1800s, and there were plenty of long periods of the twentieth century where stocks were just plain bad investments. The Dow was higher when my dad was a child in 1964 than when I was a preschooler in 1982.

The reality was “the market” was changing. What it used to be isn’t what it is today. Take dividends (payments investors receive out of company profits). For most of history, dividends accounted for nearly all investment returns. A company made profits, and those profits were handed over to the company’s owners. Not all dividends are the same, of course. The Dutch East India Trading Company issued returns in corn and pepper. You had to bring your own buckets: carrying costs.¹³

From the Founding Fathers to the release of Michael Jackson’s Thriller (1982), dividends were 96 percent of total stock returns. The rise in stock prices was minimal. Then, everything flipped, as if stocks had learned to moonwalk. Price appreciation became almost everything, accounting for roughly 70 percent of the money investors made. Fewer than one in five companies even bother with dividends anymore.¹⁴

There are perfectly good reasons for all of this. Dividends get taxed. Profits are better used growing the business. But the fact remains that stocks you buy online today aren’t remotely similar to what your grandfather bought. It is a new creature that keeps what it makes, and promises you that one day in the future you’ll have more.

Because of this, the other great shift in stocks is that you are no longer buying companies in any real sense. You are buying future buyers of companies. You click “Buy” on an order today because you assume some other person will hit “Buy” in the future. With few dividends to reinvest, the only way to make money is to wait for the numbers to go up. You are not buying a share of future income at today’s prices. You are buying a future buyer at today’s prices.

This means that the real value in today’s stock market is not from company profits, but from inflows of other buyers chasing those profits. In 1983, fewer than 20 million households owned stock, and they owned just a few companies each. Today more than 75 million do, and they own many more. Foreign ownership of equities also tripled; over 17 percent of all share owners don’t live here. Insurance agencies and pension plans that used to hold mostly safe assets are now overwhelmingly in stocks. Workplace retirement plans funnel billions in 401(k) withholdings to Wall Street every month. The stock market has gone up since 1983 in no small part because the number of stock buyers went up dramatically. The real profitability of U.S. companies increased¹⁵ nearly five times, but the prices of those company shares rose by over seventeen times.

Inflows are most of the investment game today. The return on stocks got better the more people believed the return on stocks was better. Faith remains an underappreciated pillar of the economy. We need people to keep believing because we need our 401(k) to keep going up and to the right on The Chart.

This phenomenon went on steroids the more trust Americans placed in the low-cost passive index funds and ETFs revolutionized by Vanguard in the 1970s.¹⁶ Since you could truly buy the whole market with tiny fees, passive funds beat active investors nearly everywhere. The personal finance industry became evangelical for indexing, preaching loudly and converting millions. The underlying assumption of index funds is that the price of the market today is always the right price because the active players have done all the hard work pricing them for you.

Indexing was supposed to be an ant on the elephant’s back, getting a free-ish ride. But, as indexing becomes ever larger, it multiplies into a giant ant army with only one order from the queen, “Buy!” At what price? “Any price!” The larger the army grows, the more it creates the value it seeks to find. Index funds are becoming an Oedipus, racing toward Thebes, proving the oracle right with every stride. The price must go up and to the right.

I’m not saying this ends in accidental murder and Freudian incest. I am saying we’ve turned the stock market into a retirement vehicle for the masses, which is not what it was originally built to do. That may work just fine for a long Slow Time. But if the ant army ever retreats, if more people want to sell their shares than want to buy them, then the order “Sell!” At what price? “At any price!” . . . will make for very interesting Fast Time history to live through.

We forget about time at our peril. What is “safe” and “sure” and “always worked” shifts over time. Timeless truths about wealth rarely last long. The more sure we become, the less safe any assumption is. I’m not a perma-bear telling you to get out of the market. I am saying that the “history” everyone says proves stocks are always good for the long run is less than a century old, which in my line of work is a rounding error.

* * *

Are you bored? I’m a little bored.

Stick with me and I’ll make it fun, I promise.

So much of this is in how we think about investments all the way back to Mr. Dow’s Index. If 1 million new people buy bonds, the prices go up. But no one talks about the prices of bonds going up. They report on the yields, which go down. That is because the guaranteed payment stays the same. A 3 percent bond purchased for $100 pays $3 each year. It could, if many more people wanted to buy it, sell for $200. The yield is thus cut in half to 1.5 percent. You still get the same $3, you just pay twice as much for it. What everyone does is buy something that is getting more expensive. What everyone sees is a return on investment that is getting lower and lower.

Stocks do the same thing, but they show the information in reverse. If more and more people want to buy a company with 3 percent profit, the price of the stock goes up and up, so your percent return goes down and down. If the price of the stock doubles, the profit per share is cut in half, the same as a bond. But nobody reports stocks this way. We just report that the price of the stock doubled. You are richer even though the return is poorer.

Let’s spice this up with one of society’s more perverse and pervasive double-standards. The way we think of bonds and stocks is a bit like the unfair ways we talk about women and men in the dating game. If a girl goes out with a lot of men, we don’t say, “Wow, she’s really desirable.” We say, “I wonder what’s wrong with her.” The potential return on that relationship goes down because it feels used. That’s bonds.

If a guy has great hair and a strong jaw line, the fact that everyone wants to be with him increases his appeal. He’s in the top 10 percent who get all the swipe-rights. We only report on his desirability, and the more desirable he is, the more desirable he becomes. Never mind the fact his returns as a new mate are actively going down. He will, after all, likely become a crappy partner fond of fawning attention. But we don’t slut shame Richard from the rich family because he looks amazing and his parents have a house in the Hamptons. That’s stocks. The more people swipe right on stocks, the more others want to own them. People rush in after the hot stock, making it hotter still.

Don’t blame me. Blame the patriarchy.

You are not the problem. He is. No, really. Most stocks are crappy partners and don’t deserve the unfair treatment they get. To explain this, I need you to meet your fabulous, financially responsible gay best friend named Treasury Bills. T-Bills always show up on time, get what you need, and help you jump off the emotional roller coaster. They provide a soft landing when the market breaks your heart. Or, in finance terms, they offer short-term liquidity and interest roughly tracking inflation. They never let you down.

Here’s the catch. T-Bill won’t procreate with you. They’re not built for it, and honestly it grosses them out thinking about it. If you’re looking to grow your money—to make it multiply—T-Bill isn’t down with that. But if you must harvest losses for tax season, they’ll help you cry it out.

Over half, 58 percent to be exact, of all stocks in American history returned less than T-Bills. Thirty-eight percent tied with T-Bills. Do the math: 58 + 38 = 96 percent. Every single dollar of excess gains from “the market” came from the leftover 4 percent.¹⁷ Since 1926, only 1,092 companies have accounted for any, ANY, ANY positive return over Treasury Bills. There are very few stocks worth leaving your platonic bestie for. Yet everyone believes “the stock market” goes up because it is natural for it to do so. The bias is baked in: men and stocks keep getting promoted because they are men and stocks.

It gets wilder. Half of the total difference between the safest thing in the world (T-Bills) and stocks came from just ninety companies. Less than one-third of one percent of all companies that ever existed are the reason stocks do well. That is 0.003. The top thirty companies accounted for a full third of all stock market gains. Most stocks may look good, but they’re dead weight.

Stocks Rarely make you Rich

The Man in the Big Business Casual did not know any of this. At the time, we had $1,700 to invest. After his fees, inflation, and taxes we would have made about $6,000 in real value today. That’s the price of a used golf cart. I’m not complaining, but driving to the promised land in an E-Z-GO would take forever.

Here I must talk to you in quiet whispers in the corner of the room, lest we be overheard. Everyone at life’s cocktail party assumes stocks are their ticket to wealth. Okay, everyone except the crypto-bros, but they’re snorting drugs at another party.

Stocks will not necessarily make you rich. The market’s meteoric rise is less than a century old. Just like the great grandmothers of 1917, who never saw nor heard of inflation, so too no one alive today remembers a world where stocks don’t eventually go up. But it is not a law of physics, just a tendency of the past ninety years. None of us are ready for another reality.

If you follow this herd, you may be fine. Perhaps we have not yet begun to inflate asset values, and outsized gains could go on for another ninety years. I wouldn’t bet against that theory. In fact, the herd of passive buyers continues to grow annually, almost assuring that our absurdly overpriced market will become even more wildly hot to date. The inexorable logic draws ever more people in. For average Americans, not investing each month rarely becomes a hoard of cash waiting to pounce on opportunity. The money finds its way into a new car payment, a better vacation, or a bottle of wine for the whole table. As a tool for protecting yourself from yourself, the stock market is fine. Personally, I will take all the free stocks they’ll give me. Your 401(k) matches are an unbeatable 100 percent return on investment. After that, stock investments are a perfectly good option for long-term savings.

But rich they rarely made you, unless you could be very, very patient. In history, few people thought about fifty-year increments. There are several roads to riches, but only recently was one paved with dollar cost averaging (and that road takes longer than the others).

No, the stock market doesn’t always go up, though for three generations it (mostly) has. It may continue three more. I doubt it gets to four. If stocks are a claim on profits, then we’re paying a heck of a lot for those profits: a dollar of earnings today costs three times what it did when I was born. If it is a claim on future buyers, at some point the world will run low on willing buyers (new inflows of funds), and the more sellers the ant army has, the worse the retreat will be. Perhaps this Tuesday, but more likely far in the future, the flow of funds into markets will peak and reverse. The undoing of assumptions that “everybody knows” is rarely a gentle process.

Yes, American corporations are increasingly profitable, but investors are paying more to get less. Earnings and dividend growth explain just half of the stock market returns since Ocean’s 11 came out in 2001. The other half is its own kind of complicated Vegas heist: 401(k) inflows (more people on the app), increasing price-to-earnings (P/E) ratios (our swipe-right dude phenomenon), stock buybacks (dude swiping right on himself to make his stats look better), and the party-never-stops effect of index funds (trillions in automated buy orders no matter how much companies make or lose . . . like bots that swipe right on everything) are the other half. The first part can go on forever. The second cannot.

As investments, you’re mostly just dating the same guy everyone else is into. He’s a lot of fun. Your grandparents loved him. Maybe it lasts. Just don’t act surprised if he runs off and breaks your heart. You won’t find your dream date on Robinhood.

You’re going to have to be a bit more curious than everyone else at the cocktail party to find what truly works. This book is about what history teaches for getting ahead. When you do what everyone else does, you get what everyone else gets. Stocks in history have been bad, mediocre, and (lately) awesome. They were rarely the way to a better life, though. That is a different history. The real wealth is at another party.

Part III

Financial Freedom the American Way

13

Financial Independence Isn’t What You Think

In the week leading up to my fortieth birthday, my wife sat me down.

“Anything you want.”

I raced through the moral calculus, assuming this chance would never return.

“Like, anything, anything?”

She took a long breath. “Anything.”

It took three seconds.

“Okay. I want a two-day family budget summit.”

Disappointment, and a sinking awareness that she chose this man amongst other very good options, swept over her face.

“For your fortieth birthday, you want to talk about the budget?”

“Yes.”

Best. Weekend. Ever.

And it made us rich.

* * *

My wife knew that I was bitten by a bug, and as with most diseases it’s best to treat the symptoms and hope things heal naturally. The bug was called Financial Independence Retire Early—the FIRE Movement. An idle curiosity in the long past of schemes and dreams; for some reason, it grabbed me. I was enraptured with visions of selling everything, moving to a shotgun cabin, and saving like crazy. To my wife, crazy was the perfect word.

FIRE is the CrossFit of personal finance: a tiny subgroup willing to risk injury pursuing extreme perfection, evangelical that everyone should try, and inspired by a founder destroyed by his own methods. It resides mostly in remote corners of the internet, where retirement talk, wonky math, and anti-consumerism intersect to create a little village saving much, spending little, and telling everyone all about it. I am, by nature, obsessive, and this type of radicalism appealed to me. My wife was stupefied.

I was not the first to dream, nor was she the first to doubt. The historical term was “pecuniary independence.” It meant those with more than enough, who made their own choices about what to do. They were rare, but not as rare as you might think.

Sylvester Judd¹ was born one year after they ratified the Constitution and died the year before the Civil War. His life was antebellum America. Yet, Judd only worked for half of it. The rest he spent living on investments and penning histories of New England for fun.

Judd’s path to FIRE was bumpy. He went broke at thirty, worked his way back, and eventually bought part of a newspaper business. At forty-six, he sold it. He wasn’t extremely wealthy, but he knew what “enough” was, and he had it. People like Judd were not unheard of. Most towns sported at least one person who simply had enough, and spent their life pursuing scientific or literary hobbies rather than piling on more wealth.

By the 1890s, Harper’s Magazine editorialized that “pecuniary independence” should be the goal of every family, assuring readers that achieving independence the American way was “comparatively easy” in contrast to Europe. Ironically, today the magazine sells large tote bags celebrating cats with the Latin phrase Libertas Sine Labore—Liberty without Labor.²

Here was the important distinction: the term “financial independence” was not yet synonymous with “not working.”³ It meant free to choose interesting work.

* * *

Contrarians were bubbling to the surface. The term for someone who did nothing wasn’t “retired” but “loafer.” It was not a compliment. Loafers played billiards and drank beer, aiming to do as little productive labor as possible. They were the nineteenth-century boys are video gaming crisis. Walt Whitman⁴ reveled in it, pledging to “loaf at my ease, observing a spear of summer grass,” instead of Going Ahead. Parisians celebrated this new affluent, thoughtful man—the flâneur—as a sign of culture; the United States, not so much.

If loafing wasn’t your thing and Whitman wasn’t your writer, you could always build a cabin with Henry David Thoreau. Thoreau embodied “ultraism,” an extreme rejection of consumerism. Ultraists believed in living simply, eating no sugar, rejecting masturbation (an urge they blamed on sugar), and spending as little as possible. The most famous was Sylvester Graham, who created his Graham cracker to give horny boys something sugarless to chew on when they got “the urge.” There were so many books on extreme frugality before the Civil War that a satirist wrote New Experiments: Means Without Living. Life could be so good; you didn’t have to enjoy it at all.⁵

No one took this farther than Thoreau. In the idealized story, visionary Henry D. abandons the destructive world of capitalism, goes to a pond in the woods, builds his own cabin like a real man, and proceeds to show that the simple life is better.

We skip the parts where he left Walden Pond, returned to capitalism, and ran a successful factory. That the pond was on someone else’s property. That his mother brought him food so he wouldn’t starve. You know. Details.

Nothing brings this into perspective like the incident where Thoreau, trapped in a lightning storm,⁶ found shelter in an immigrant family’s rented cabin. Thoreau proceeded to berate his kind hosts for not building their own home and for feeding their children butter and fresh meat. These ignorant fools came to America because “here you could get tea, and coffee, and meat every day,” without understanding the true “liberty to pursue such a mode of life as may enable you to do without these.” Thoreau embodied a sentimental delusion of simplicity, without all the harsh bits about starving babies and getting your kids to a better place.

Ralph Waldo Emerson was more transcendental. The great theorist saw a thrifty life as means to the ends of independence. Emancipated from consumption, the need to earn abolished, you were free to experience “frugality for gods and heroes.”⁷

Emerson was Thoreau’s best friend. Like Whitman, he contained multitudes of contradictions. Emerson lived without working because his first wife died, leaving behind a trust fund. He sued her family, won the money, and promptly quit his job to travel Europe writing profoundly about not working. Financial independence is rarely what it seems.

* * *

As Transcendentalists contemplated their navels and Ultraists starved, more active types up and left town. Back-to-the-landers are a pre-FIRE movement still active today. In the 1840s, salaried jobs increased and office despair rose. Young clerks scribbled away, pining to escape the boss, the clock, and the paycheck. Men’s magazines urged them, “Be men, therefore, and with true courage and manliness dash into the wilderness with your axe and make an opening for the sunlight and for an independent home.”⁸ Big talk.

Ed Morris acted.⁹ Starting out penniless in Philadelphia, he squirreled away money, avoided “taverns, oyster-houses, theaters, and fashionable tailors,” and managed to save two years’ pay. With that, he bought his own printing press. He was ready to be the next Benjamin Franklin.

The money ran out in a year. The Morris family spent two decades in and out of debt, unable to sleep at night, yearning for financial peace. Ed read about it constantly. His wife complained he was obsessed with the idea. She was happy in Philly. But slowly, one article slipped to her at a time, he wore her down. Forty years old, they sold everything, moved to New Jersey, and bought a farm.

Like thousands after him, Ed Morris found the dream different from reality. He first reported to the Census as a gentleman farmer. Ten years later, either of frustration or failure, he was a real estate agent. His real success came in writing down their story, Ten Acres Enough, and tirelessly selling the dream of freedom through farming. His biography of self-ownership sold through eight editions in two years.

Ten Acres Enough inspired generations. New York intellectual Ralph Borsodi,¹⁰ who wrote the bestselling Flight from the City, was one of them. Rebranding small farms as a “new way to family security,” Borsodi moved to a farm where he also established a “School for Living.” Readers followed, fleeing the materialism of the Roaring Twenties, and then the implosion of the Great Depression.

Borsodi struck a nerve. So popular was Flight from the City that a Department of Agriculture official published a kind of fool’s guide to farming. People whose knowledge was “limited to literature that depicts the attractive features of farm life in vivid colors” were simply unready to be snowed into their farmhouses for weeks with nowhere to go and nothing to eat. This more realistic manual went through an amazing twenty-four printings¹¹ in ten years.

Inspired, Scott and Helen Nearing fled to Vermont.¹² The Nearings were extreme: no electricity, plumbing, or coal stoves. Twenty years later they produced their own bestseller, Living the Good Life. What began as a 1930s pursuit of “Depression free living as independent as possible from the commodity and labor markets” had, by the 1950s, become a self-sustaining farm selling maple syrup. All this was done, remarkably, working just four hours a day! Thousands flocked there to learn how. The Nearings became counter-culture celebrities, lauded by the press for discovering the way back to Thoreau’s Walden Pond.

It was all true, except for the parts that weren’t.¹³ Borsodi and the Nearings did live on the land, but they hardly survived on farming alone, much less four hours’ worth. Borsodi, an early adopter of remote work, kept his $215/month salary (roughly $3,300 today) from New York City firms by having his paperwork mailed to the farm. This was nothing compared to the Nearings.¹⁴ One student couldn’t figure out why she kept failing where her famous neighbors succeeded. She discovered their original farm was purchased with money from life insurance left by Helen’s former lover and sustained when Scott’s wealthy father left around $1 million ($21 million today). Homesteading is much easier with two massive inheritances.

Today’s back-to-the-landers mix the joys of manuring one’s patch of grass with a whiff of selling the dream. Julliard grad, turned trad-wife, turned Mrs. American Pageant winner Hannah Neeleman shows over 10 million Instagram followers her favorite products alongside her wholesomely gorgeous farm life family in Utah. On the other side of the country, self-described “Christian libertarian environmentalist capitalist lunatic farmer” Joel Salatin built a Virginia homestead with over $1 million in annual sales. He now hawks online $995 training guides. The course is pitch perfect to 200 years of eager buyers. Homesteading “can provide the independence, self-reliance, and security we all desire” to “survive and thrive even if the stock market crashes.”¹⁵

Rugged independence still sells, just as it did when ten acres was enough.

* * *

Freedom from work, rather than to work, revived in the twentieth century. The first popular treatise on how to retire earlier than all your friends was 1919’s Financial Independence at Fifty by Victor de Villiers.¹⁶ The Magazine of Wall Street claimed he had invented a new “Building Your Income movement.” De Villiers preferred financial independence (FI).

As proof of concept, he offered himself, a “comparatively young man who has made himself financially independent a number of years before fifty.” The book set the basic rules for all FI manuals to follow. There were steps (six of them), an ode to compound interest, and a motivational sermon to cut down on spending. You, too, could retire by skipping expensive splurges.

This movement fizzled out. A grand jury indicted de Villiers for mail fraud.¹⁷ He had used his writings to drum up suckers, reportedly stealing all the investment money as “fees.” He also pled guilty to falsely selling a miracle health food which was just sweetened chocolate.

The idea languished until a dozing accountant in Heathrow Airport overheard passengers sharing the story of a drug smuggler who, not wanting to press his luck, retired rich. Being an accountant, he did the math and realized he, too, could retire young without once risking federal prison. Paul Terhorst and his wife, Vicki, did just that. In 1988 they published Cashing In on the American Dream: How to Retire at 35, a look back on their big leap of financial faith.¹⁸

Before he knew it, Terhorst was on Oprah. The math wasn’t new. The boldness was. The Terhorsts swapped their American dream home to live on the cheap abroad, a term later dubbed geoarbitrage. The Terhorsts were the real deal. They remain retired today, traveling the globe on the cheap and living lives of active leisure.

Joe Dominguez retired both earlier and younger than the Terhorsts, but published his book later. By 1992, when Your Money or Your Life exploded onto bestseller lists, he had been retired in an RV since 1969. Dominguez birthed the abbreviation FI. “FI-ers,” he explained with his co-author Vicki Robin, experienced “having enough—and then some.”¹⁹

Neither Terhorst nor Dominguez created any of this. Both mentioned regularly encountering others already living their exact lifestyle. It turns out, people had been doing this since Sylvester Judd was scribbling histories of New England. Finally, someone had popularized how. Their students, many originating out of crunchy anti-capitalist circles, gravitated to the freer culture of California. And it was in California that the FIRE, as fires are wont to do there, slowly grew into something larger.

* * *

At the dawn of Web 2.0,²⁰ The Motley Fool opened a chat board called the “Retire Early Home Page.” In August of 2000, just a few months after the dot-com crash, user “fzabaly” began short handing financially independent, retired early to FI/RE.²¹ From there, the spirit of the Lord took hold. Wander0692 posted “Has anyone else noticed how ‘FI/RE’ looks like the word ‘fire’? I remember attending church . . . and the preacher saying . . . Take our hearts and set them on fire . . . FI/RE is a fire that burns in me . . . So, from now on, I’m gonna drop the slash. A ‘FIRE’ it is. May it be ever thus.”

And, wander0692, ever it was.

As the computer engineers thronging Silicon Valley raked in money, FIRE became a cult movement and Your Money or Your Life an antihero text. Here was a way to cash out of the game. They began reading it, talking about it, and doing it. Being tech savvy and coming of age with the internet they helped build, many started webpages. The FIRE bloggers arrived.

Children born color blind into a technicolor world, FIRE bloggers didn’t understand why everyone chased things that shimmered at the cost of their lives. Something about their smartass language, in-your-face realism, and hipster mustaches struck a chord with thirtysomethings of the early 2010s. Gen X logged on and realized they could catch up to the Baby Boomers in half the time.

Retire young exploded. The term went through the Looking Glass of podcasts, YouTube, Instagram, and TikTok—anywhere anyone could say anything about how free they were. The movement quickly became a parody of itself. Warped enthusiasm birthed many sub-genres: LeanFire (extreme frugality), Fat Fire (the opposite), Barista Fire (working part-time for benefits), Boat Fire (FIRE on a boat), and Fast Fire (retire as quickly as you can). The Motley Fool once listed fifteen distinct groups.²²

Dominguez, though, became a victim of falling interest rates and his faith in government bonds. As rates plummeted, his tiny nest egg forced him to live off ever smaller returns. He ended life in a Seattle group home, his income cut roughly in half.²³

The earliest FIRE bloggers, meanwhile, nearly all went back to work. Jacob Fisker (Early Retirement Extreme) went into Chicago finance. Pete Adeney (Mr. Money Mustache) started a construction business. Sam Dogen (Financial Samurai) went to a Fintech but only lasted four months. These new pioneers of old pecuniary independence found what one 1870s thinker already knew: “Idleness is but another name for misery.”²⁴

Watch Out for What they Put in the Fire

Maybe the farm doesn’t actually pay for itself. Maybe the TikTok star lives in that mansion with twelve roommates, renting the cars for their videos. Maybe this profound thinker is living off his dead wife’s trust fund. You may never know, but rest assured there is always something hidden. Like Monet’s impressionist paintings, part of the allure is created by smudging out the fine lines, so you feel what the painter wants you to feel. FIRE is no different. Realism is harder, the climb steeper, the journey longer, and the boredom more . . . well, boring, than they tell you. It’s also hell on a marriage.

My attempt to woo my wife into FIRE finally met abject failure after I asked her to watch a documentary following a deeply indebted couple abandoning consumerism for the simple life in Oregon. Here were people living my dream and her nightmare. Halfway through, the love of my life burst into tears. “If this is what you want, I will hate every second of it.”

Well. It was worth a try.

I had been researching crazy finance for nearly a decade. My brain was full, our bank accounts not. We walked away from 2008 intact, but still carrying a negative net worth. As we clawed out of student debt, we hit a few fortunate windfalls. Generous gifts from family helped the struggling grad students not quit. Then my wife left grad school anyway and got a real job. Real jobs, it turns out, pay more than academic ones. I got a professorship. We had a child.

When we sat down for the budget summit, we were spending everything that hit the bank. No sooner did real paychecks arrive than we developed a taste for expensive wine, fashionable handbags, and organic food–serving daycares. We’d arrived. Now we were stuck there.

By this time, I was a seasoned veteran of playing with money despite having none. I had day-traded foreign currencies, gone to war with Jim Cramer, wrapped my mind around crypto, and played any number of get-rich-quick scams. It was all an academic game. I cared less if I won or lost than that I learned something interesting.

Then came forty. My birthday bash became a reckoning that there was zero chance we would get where we thought we were going. Something had to give. We agreed I could invest as heavily as I wanted. She would be supportive, but not active.

I decided to put all my chips in the game. I couldn’t convince my wife to go back to the trailer park, but maybe I could buy one. I’d read, interviewed, and watched people turn luck and pluck into millions while I wrote a book about them. I wanted in, and there were only two bridges across. The first, extreme frugality, was out because my marriage wouldn’t survive the crossing. That left the other one.

Take a really big risk.

14

Real Estate Is a Terrible Way to Make Money

Mailbox money.

That is the pitch in a thousand hotel seminars by would-be gurus. You buy a property, paint the cabinets, and tenants pay your bills. Do this, times ten, and you replace your income. You don’t even need money. Banks will lend all that. You, a little land baron, can drink coffee waving to your worker bee neighbors as they drive off to work.

To this point, I had been impervious to such pitches. I knew most of this stuff wasn’t real. Besides, I liked my day job.

Two things changed. First, along the way I drank a lot of coffee with investors. Amidst the frauds and hucksters, I met a good many genuine multi-millionaires next door. The second was that I was building a dad bod and due a good midlife crisis. I decided to skip the Corvette and try landlording.

I’ve found three myths of real estate investing in America, all very old. From the boosters selling new lands in I-ow-a, to house-flipping television, you will hear these “truths”: real estate always goes up, investing in it is passive, and this is how really wealthy people got rich.

No, it doesn’t. No, it isn’t. No, they didn’t.

* * *

Land isn’t naturally worth anything. Value is created.

Johnny Appleseed was America’s first flipper.¹ That wonderful story of an eccentric loner spreading the apple-a-day gospel for American families is ridiculous. First of all, his apples tasted gross. They were for making hard apple cider. Second, though he genuinely was a weirdo wanderer, Johnny was also a smart solo-preneur. He planted those trees to rig the real estate game.

Johnny Appleseed (not his real name) became famous when the speculators buying up eastern Ohio offered 100 acres of free land. The conditions were: 1) move there, and 2) harvest fifty apple trees and twenty peach trees to prove you were staying. Like all “free” offers, it was a gimmick. It takes years to clear land, plant trees, and bear fruit. This “free” offer was really a multi-year waiting period and a way to enrich the speculators once interested settlers drove up the value of surrounding land.

Johnny saw an opportunity. He would move ahead and plant the trees himself—thousands. When settlers came, he sold his claims at a slight up-charge, saving frontier families years of time. When lots sold out, he moved on and did it again. Staying one step ahead of settlers from western Pennsylvania to Illinois, he generated huge returns. Plant, tend, wait, sell, repeat. He made a small fortune as America’s first flipper. He created value.

That sounds like a lot of work, which begs the question, why do so many people think the value of land goes up, even if we don’t do anything to it?

Take the moon. In 1936, a man walked into a notary public’s office and successfully certified ownership over “all extraterrestrial objects.”² His competition has grown. The Lunar Registry has a website³ for those who wish to invest in moon land. Competitor websites explain why their claims are more valid. The Sea of Tranquility commands top dollar, while budget conscious investors can consider the Sea of Vapors. Over 300,000 such acres have sold to date. There is no oxygen add-on feature.

Legalities aside, if you owned the moon, what would you do with it? How would you make it more valuable than the price you paid? I’m asking for a friend.

Okay, I’m the friend. I own an acre in the Sea of Serenity, near the landing site of Apollo 17 and offering “phenomenal Earth views.” I’m not just any investor, I’m an Astropreneur.

To make this gambit pay off, I need to get value from or add value to my investment. Getting value out is pretty easy: my cocktail party story runs orbits around your cocktail party story. But to make it profitable, I must add value. The land has “proposed zoning” for tourism or light industry, presumably because heavy industry would ruin the phenomenal Earth views. I lack expertise in either, so now I must sell to some fool who is also out of good stories, or spend billions to oxygenate it.

For land to be valuable it must sit inside a valuable economy. Moon land does not. If jobs are thriving and housing is in demand, values go up. If the plant closes and jobs move to South America, they go down. There is a lot of land in America, and a lot of it is cheap for a reason. It’s only valuable if crops or people can put down roots. Thirty percent of the United States is forest, and 45 percent more is labeled wilderness. Most Americans live on just 5 percent of the United States. You could give every U.S. household nearly half an acre of property and we would all fit in Oregon. I call downtown Bend.

Real estate doesn’t naturally go up in value.⁴ It goes up when the local economy does, and even then, only when demand outpaces supply. Adjusted for inflation, homes in cities like Atlanta, Dallas, and Pittsburgh cost the same in 1997 as they had a century before, in 1897. Home values in St. Louis did not recover their 1890s values until 2003. Nationwide, American home prices stayed roughly the same until the end of World War II, and even then grew only marginally until the late 1970s. Prices occasionally went down. Real home price declines happened at least one year of almost every decade of the twentieth century. Between when I was two and six years old, house prices decreased nearly 10 percent in real terms, and another 6 percent while I was learning to drive. “Home values always go up” only works when the word always is defined as starting sixty years ago in California. For most of American history, no one assumed houses had to get more expensive.

Locally, things get more dramatic. In nearly every period of history at least one city has seen values completely collapse. New York City land dropped 50 percent in the Revolutionary era. Philadelphia houses dropped 40 percent in the 1830s. In fledgling Chicago they once went down over 80 percent. In 1982, the bottom dropped out of Houston’s housing market after the energy economy lost 200,000 jobs as developers continued to build over 100,000 more homes. House prices went down 30 percent and stayed depressed for fifteen years.⁵

Sometimes it goes the other way and prices rise without effort. If your sleepy village strikes gold, populations move in faster than housing builds up. San Francisco’s flood of gold rush residents sent land values to mind-boggling levels. Demand grew so high that lots sold when they were, literally, underwater. The land was still in the ocean and hadn’t been drained behind seawalls yet. Prices rose fifty times in two years while the ground was still wet. This has happened all over the country. When people tell you “They aren’t making any more land,” remind them that much of modern day Miami Beach was manmade by dredging up Biscayne Bay.

Investors call this the “path of progress,” a real estate term meaning you don’t have to add value. You simply buy where all the people are going and wait. That sounds simple enough, except the path of progress can take its sweet time, and occasionally turns the other way.

You’ve heard of Las Vegas, Nevada, but what about Bath, New York,⁶ founded during the Washington administration as a getaway resort town? To “hurry civilization” investors built a theater, racetrack, hotel, and a hothouse all surrounding their land office where you, too, could buy a piece of Bath. They hosted horse races, dances, fairs, and theater productions to sell tomorrow’s big vacation city.

It took 100 years to sell all of Bath. Investors died without profits. Today, what happens in Bath stays in Bath because there is nothing to do there. It’s a sleepy hamlet still surrounded by forest.

To create value, you must do something that others will not do or see something others cannot see. Even then, it has risks. Sometimes you build Vegas, other times Bath. The only guarantee, on Earth or off, is that this won’t be easy.

* * *

If you must add value, then real estate is an active, not a passive, investment. The real money is made doing something.

Renovating and expanding houses is an expensive, time-consuming process fraught with fraud and frustration. It always was. When George Washington renovated Mount Vernon,⁷ contractors double-booked jobs, painters billed him for other people’s paint, and absolutely nothing got done on time. Someone forgot to put the banister up a staircase, leaving anyone going upstairs liable to fall off. A good worker died. His replacement was, according to the president, “an intolerable sot” who showed up drunk.

No worries. You’re going to be a landlord, right? The tenants will pay for all this temporary hassle while you live your best life on Insta.

When news broke that the new American government would put a temporary capital in Philadelphia, one entrepreneurial woman knew how to cash in. She bought lots in Philadelphia⁸ near the site for the U.S. presidential residence, built rentals near the heart of American politics, and waited for the money to roll in.

The expenses got there first. Her contractor walked off the job. Fired workers broke in and stole materials. Renters failed to pay. Tenants illegally sublet units. Another died and his widow refused to leave. Someone took the front door off and just walked away with it. “Mailbox money” this was not.

What so many would-be investors forget is that they are buying a very tiny housing business, and the tenant is their customer. Good landlords know they must keep the customer happy. This often involved drinking and ritual merriment with renters, listening to grievances, and occasionally upgrading properties to meet their needs. Both then and now, not everyone learned the lesson.

“Rioting tenants” is not in the dropdown menu of any real estate investment software I’ve seen. But angry renters have a long American history. The Anti-Rent Movement involved 300,000 tenants across over 2 million acres and spread to New York City. It had everything: mass meetings, mob violence, even tarring and feathering of landlords. The “down-rent” men signed a Declaration of Independence on July 4, 1839. They dressed up like Indians and elected a war chief named Big Thunder. There was an actual battle. Big Thunder won. It was called “The Anti-Rent War.”⁹

Many famous Americans ran headlong into the harsh realities of real estate investing. If there were a Mt. Rushmore of black history, W. E. B. Du Bois would be on it. The first man of color to earn a doctorate at Harvard, co-founder of the NAACP, he was the most prominent African American leader in the nation before Martin Luther King, Jr. His writings are still regularly assigned in college classes today, in no small part because Du Bois was a fierce critic of capitalism (as are most of the professors doing the assigning).

But he tried his hand at it, too.¹⁰ We know this from his failed stint at real estate investing in the Roaring Twenties. The icon borrowed nearly $20,000 (about $400,000 today) to buy an apartment building in Harlem. He put just 10 percent down. Du Bois was one of his generation’s smartest men. He could do the math on paper. But in real life, repairs come in waves, tenants behave badly, and the attempt to keep quality, affordable housing runs into the inevitable dilemma between quality and affordability.

Tenants refused inspections. The fourth floor rotted out. Fire escape ladders went missing. And delays, delays, delays. Nothing is ever fixed on time. They never put this in the investment manuals.

Rent parties were thrown where tenants charged admission to apartment-sized mini-concerts that birthed the music and dancing that became Jazz Age Harlem. They were also very loud, filled with drugs and booze, and went deep into the night. “The men urinate out of the windows” was just one of many complaints the Du Bois family heard, including the sudden influx of prostitutes.

When Du Bois couldn’t meet payment for repairs (which mount even when rents don’t), he borrowed again. He had three mortgages on the building at once. At one point, he had to borrow money from his mistress. After taxes, utilities, the janitor, and repairs, the rents just couldn’t keep up. Not once did Du Bois turn a profit. He paid for the big mess out of pocket.

Landlording is hard and the margins are slim. Even the most brilliant people find this out the hard way. As a way to make money in the present, real estate mostly stinks.

A Terrible way to Make Money, but A Good Way to Build Wealth

Of the 100 largest U.S. fortunes, precisely none were made in real estate.¹¹ If you want the big money, it’s in finance (27 percent), tech (18 percent), and food and beverage (11 percent). Houses are, relative to other industries, a terrible way to make money.

Yet real estate is a wonderful way to build modest wealth for a host of reasons. First, prices adjust with inflation. Real estate acts like a short on the U.S. dollar, a bet that the dollar will lose value every year. You win by buying housing at today’s prices. Second, it gives ongoing income in a world with few dividend stocks. The real long-term, historic return on real estate¹² in the United States is a respectable 6 percent, beating bonds. Third, real estate is awash in tax advantages—though those could always go away. Finally, but most powerfully, you can use debt as leverage to buy more. If a $400,000 home is bought with a $40,000 down payment, and the house goes up in value to $480,000, you tripled your $40,000 (the new $80,000 plus your earlier $40,000). Yes, there are fees to factor in, but you are, essentially, buying an option. The most you can lose is what you put down, but the gain is infinite to the upside. Real estate, then, is a put option on the dollar, a call option on housing, an income annuity, and a tax haven all in one.

There is an idyllic image of housing today that says it should be viewed as a home first and an investment second (or not at all). To this telling, capitalism corrupted the family home by turning it into an investment vehicle. Historically, this just wasn’t true.

Most American families through most of time saw their home as an investment property first. From farms to filling it with boarders, the path to financial independence went straight through the house from the 1700s to now. There is nothing new about building wealth this way.

Building wealth and making money every month aren’t the same thing. Real estate’s real trick is to allow everyone, rich or poor, to leverage their savings today into wealth later. They can buy tomorrow’s upside so long as they can wait for a lot of tomorrows. You can build a modest fortune in it, and a modest fortune is grand enough for most everyday people.

Let’s confront the housing crisis that dominates headlines in 2026. No one, we are told, can afford to buy a house today unless they have one already. We’re not in 2016 anymore, Toto, when median home prices were last under $300,000. This road to wealth is blocked by the Baby Boomers, who tell Millennials, Gandalf-like, you shall not pass!

But today isn’t 1981, either, when a new mortgage cost a mind-blowing 52 percent of median family income. Today it is under 40 percent. Yes, there have been easier times to buy housing. There have been worse ones, too. Just ask the politicians: “We are today facing the gravest housing shortage in our country’s history.”

Who said that? A first-time congressional candidate named John F. Kennedy. It was 1946. He was correct. The housing shortage in 1946 was double today’s.

There is always something wrong with real estate. When I started buying, you could afford anything, but no one would lend you money. Today, prices are sky high, but lenders beg you to borrow. In the 1810s, you had to wait for apple trees to blossom. If you can add value, there is usually something right in real estate, too.

* * *

Armed with this history, a receding hairline, and determined to have a midlife crisis not involving sports cars, I decided to try. I thought I had learned all these lessons from books, but I still managed to relearn them the hard way. You have to work at real estate, and the primary job is making your customers happy. You must create real value, or they’ll walk. Oh, and nothing ever goes like the investing books say it will.

I thought I saw two things that would help me Go Ahead. First, the post-2008, devastated home values looked a great deal like the other price collapses in history. In each instance, those who came in and bought on the cheap did well if they could just hold on. Second, I thought I saw a path of progress. I traveled all around Sun Belt suburbs trying to find where a growing population was going, finally settling on a highway corridor filled with shotgun cabins and mobile homes. I had deep family ties there. It felt like home. The fact that I had little money by this point did not bother me; I had met others who did more with less. It would be a little extra little work, I told my wife, but not too much. How hard could it be?

Exceedingly hard. Before I knew it, I owned a small apartment building and a charming old house; both were losing money. Hoarders lived with rats in one apartment. A squatter aimed a shotgun at me. A prostitute offered to pay rent-in-kind (I said no).

Human traffickers moved into the house. I got to be on a conference call with the FBI, who convinced me not to evict thirty illegal Haitian immigrants so the feds could break up the trafficking ring. When the cops swarmed the house, the gang that ran things had done $25,000 in damage.

I didn’t have $25,000, and there was no history book for this.

If I wasn’t going to go broke, I would have to dig deeper into my bag of history tricks. Luckily for me, Americans have a long heritage of managing too much with too little, and that taught me just what to do. It was time to hustle.

15

House Hacks and Side Hustles Before Uber and Airbnb

The gig economy, they call it.

Kids today label side jobs rizzidencies or grinding, which in my day was a very different thing. Renting rooms in your house is “house hacking.” Before 2013, the only historical use of that phrase combined a tame noun with a violent verb: he went through the house, hacking bodies. Now it is a financial strategy that rebrands “I have roommates” into wealth creation. There’s an app for all that, but the idea is hardly new. Everyday Americans had hustle culture from Day 1.

Boy did I need a side gig. I was in debt up to my credit limit, scrapping vacations for HVAC repairs, and generally trying to keep my poorly planned upward mobility from crashing down to earth. Out of the blue, my wife got a promotion that came with a non-negotiable move to Atlanta, Georgia. The promotion was terrific. The timing, not. I was up for tenure, so we hunkered down for a commuter marriage. Where does a forty-year-old man live alone?

I had just the thing, inspired by history’s investment guides. I would stay for free with roommates. I rented a small three-bedroom ranch near campus and sublet the other two rooms. It went so well, and I got so many applicants, I decided to rent my room, too. I slept on the couch for eighteen months and went to Atlanta on weekends. The idea came from history, but the motivation came from the fact that all my investment properties were losing money. For the first year, my only rental that broke even was the one with two grad students, a geography professor, and an award-winning historian sleeping on the sofa.

* * *

The house-hacking label took hold on BiggerPockets.com, a website and podcast for novice real estate investors, around 2013. In this case, the game you hacked was financial freedom, and the cheat code was buying a house and renting the extra rooms to pay the mortgage. Hit a few buttons in correct order (FHA mortgage with 3 percent down, purchase a multi-family home, live in one unit, rent out the others) and boom! You win!

House hacking has its own tiny piece of the internet, at the corner of get rich with nothing and unconventional arrangements. It’s a four-plex. You can’t miss it. The idea has its own Reddit thread, with posts like “Roommate death,” asking if insurance covers removing the stench from a dead body.¹ Games don’t win themselves.

This rewarding roommate strategy is, yep, very old. American families have been renting rooms in their houses since the dawn of American families having rooms in houses. Before it was the cheat code for getting ahead, it was simply called “taking on a boarder.” As far back as colonial times, poor people house hacked to advance. The Summers family of 1760s Philadelphia “lived with Cordwainer Henry Birkey, his wife and three children, and divided the £18 annual rent,”² according to tax records. They were not the least bit unusual.

Immigrants were especially down with this strategy to pay for, pay off, and expand their homes. A social worker in early twentieth-century Chicago³ described recently arrived workers, earning $1.25 per day, who still “managed to lay a little aside for that longed-for possession—a house and a lot that they could call their own.”These families bought houses with little down and promptly rented out every room. After boarders helped pay down the mortgage, “then the house receives an additional story, and that was rented so that it began earning money.” Then they would expand again, this time adding rental rooms on the back and building “an imposing brick or stone structure” on the front to add curb appeal. Only after years of housemates would couples live in the nicest portion of their own homes, renting out the older rooms to pay for showpieces of American consumer culture: carpets, upholstered chairs, and a piano. These families found a shortcut on the difficult journey to the middle class.

This was no small phenomenon. In any given year before 1900, nearly one-third—pause over that . . . one-third—of all families took in boarders. Around half of American families were landlords at least once in their lives. Especially for young mothers stuck at home with little children, taking on boarders was a way to raise the family’s income. This money wasn’t free. Women’s labor came standard: laundry, cleaning, and meal prep were included.

Seventy percent of Lithuanian families in America had boarders in 1910, as did nearly 50 percent of Hungarian and Italian immigrants.⁴ By the early twentieth century in cities like New York and Pittsburgh, no less than 20 percent of all homes were renting rooms.⁵ Not just one. The typical immigrant household kept three to four renters at any given time.⁶

Why do this? Because the benefits were life changing. The lowest estimates suggest taking on boarders added 10 percent to family take-home pay. In Pittsburgh, immigrant and black families increased income by 30 percent this way.⁷ Families with renters were the most likely to have savings left over at the end of each year.⁸ In Detroit and Milwaukee, researchers found that nearly half of unskilled workers were able to afford their own homes only because they rented the rooms. For generations, house hacking was the primary American mortgage payoff strategy.

New York City policeman John Taylor and his wife, Agnes, became homeowners⁹ this way in the 1890s. Taylor had been a policeman for over a decade before they could finally afford the down payment on a brownstone at 152 Waverly Place for $17,500. For eight years, the couple lived on one floor and rented the others to nine men and a live-in maid. By 1900, with most of the mortgage paid down, they sold and bought 213 West 136th Street in Harlem, which they could afford all to themselves. As a 1905 newspaper commented, “Taking in boarders is one of the oldest and most respectable forms of adding to the income”¹⁰ for working people. Once they reached the middle class, most people put that chapter of life behind them, as the Taylors did.

* * *

As homes became more plentiful and nicer, taking on boarders gradually subsided. But it wasn’t affluence that did away with the strategy. Progressive reformers killed it, campaigning against the crass “lodger evil.” Between 1880 and 1920, 18 million people arrived in the United States, many of them renting rooms, couches, and even space on the floor from other immigrants. Overcrowding concerns were genuine, but much of it was hyped by racist tirades. The same man who wrote The Clansman, a book and later movie in which the KKK were the heroes, wrote horror stories about evil immigrant boarders. Legislation soon followed. Night raids, landlord laws, and zoning combined to effectively make taking on boarders illegal in most cities. The shame associated with it (like single men around married women) made renting your rooms a mark of embarrassment instead of a badge of Go Ahead honor.

The idea reemerged in 1976 when Doreen Bierbrier, a single Peace Corps worker in D.C., decided to buy a bungalow and pay for it with other single gals. Discovering a shortage of rentals for young women, she moved out of the house, rented out her old room, and did it again. And again. In ten years, she purchased four houses in nice D.C. neighborhoods. Bierbrier’s how-to guides became mainstays of the self-taught real estate scene in the late 1980s and 90s. The game was being played, analog, and the cheat code still worked.

Tech met tradition in 2007 when San Francisco entrepreneurs began renting air mattresses in their apartments during design conferences, officially launching Airbnb.com a year later. The popularity of renting your dead space exploded and morphed into a full-blown investment strategy for buying dedicated short-term rentals. Blowback against Airbnb rebirthed many of the Progressive Era agitations against “the lodger evil.” Whereas people in the past lived with a housing shortage and saw renting as the solution, today our housing shortage (and the increasing trend of renting out entire homes) frames boarders as adding to the problem.

I’m of no political persuasion here, but I will say monetizing space probably helped your family climb to the middle class. If your great grandmother could do it, you shouldn’t be ashamed to try. Just be aware that municipal governments armed with ordinances have shut this down once, and if the political winds blow a certain way they will shut it down again. Those eagerly gobbling up homes for short-term rentals may learn the hard way that, as another chapter of this book says, the government was always involved.

* * *

If roommate roulette isn’t your vibe, you can always grab a second income stream. What today are called “side hustles” were once called “tasks.” Side gigs and odd jobs monetized moments between harvests. Sons spent winters making shoes for local merchants. Bark was peeled for barrel making. Entire families spent their nights by the fire twisting hemp into strands of rope for sale.

In the 1840s a national craze for palm-leaf hats¹¹—big, broad forerunners of the cowboy version—meant women could work from home and make forty cents on the dollar of each hat’s sale. Three children once went on a hat-making spree and wove 800 in just over a month, earning two dollars per hat. As more and more families made them, the returns went down, but for a time it was as popular as driving for Uber.

The biggest hustles were butter and chickens. Around one dollar of every four earned on farms came from butter, mostly churned by women. Meanwhile, chickens were everywhere. A prize-winning essay in Good Housekeeping¹² assured readers that investing in a flock of thirty birds would, by year’s end, pay for itself through egg sales. This idea reoccurs to society every time there is an egg shortage, like in 2025.

As people increasingly moved to cities, it got harder to raise birds or keep cows. The new path was selling. In 1892, a former door-to-door book salesman transformed an army of women into independent shopkeepers minus the headache of a shop. “You get the same profit that the owner of a store receives,”¹³ he explained, without paying “rent, light, heat, clerk hire, and other expenses.” Top performers could even win a newfangled invention known as the automobile. His California Perfume Company later rebranded itself as Avon.

Avon’s concept of a sales force requiring no capital, no inventory, and setting their own hours as a path to self-sufficiency birthed the core concept that would drive the direct marketing boom. The appeal was broad. Two leading entrepreneurs of black women’s beauty products,¹⁴ Annie Malone and her one-time saleswoman Madame C. J. Walker, perfected the art of turning their best clients into agents for the company.

These were not yet the pyramid scheme we think of in the twentieth century. In fact, many black and white women made a respectable amount of money for their troubles via Avon and Walker. Many reported that their jobs helped make ends meet and gave them a way to save for major purchases. In its infancy, direct marketing was one of America’s best side hustles.

The appeal of selling your way to a better life grew larger at just the moment the returns got smaller. In the 1930s, a traveling businessman hit upon the idea of selling Chinese herbs to Americans. He recruited local enthusiasts to buy products from him wholesale to resell themselves. They weren’t salespeople, they were “distributors.” This turned loyal customers into his largest sellers, who in turn built a distribution pyramid beneath themselves of like-minded evangelists getting ever smaller cuts. The company was eventually named Nutrilite. It birthed multilevel marketing (MLM).¹⁵

By promising financial freedom, MLM companies unleashed a swarm of direct salespeople onto the American suburbs in the latter half of the twentieth century, selling everything from cookware to phone services to miracle cures. MLM tapped into something in the American soul. Possessing no capital, two generations removed from family farms, awash in a sea of consumer goods bought on credit, saddled with mortgages on homes they could no longer rent out, Americans had few outlets for the old desire to achieve independence. With eight-hour shifts and two-day weekends, would-be entrepreneurs turned their free time into hawking Tupperware parties to friends who didn’t want to be there, but didn’t know how to say no.

The returns for selling “soap and hope” are famously low. Ninety-nine percent of American “distributors” make no money after expenses. Even the top 1 percent of sellers rarely make more than minimum wage. For every pink Cadillac carrying a Mary Kay super seller, countless other dreamers are still driving the same clunker to trunk shows. How many? One in seven households have a MLM member, the overwhelming majority of them poor and likely to stay that way.¹⁶

Beware MLM companies. When your side hustle is scamming you, you will get happier results with more traditional routes: part-time jobs, roommate strategies, and so on. Heck, raise chickens. You’ll do better financially, and your friends won’t avoid you.

Sometimes Diversification Works out of Order

Remember the clear lesson of history: limitation, concentration, diversification, in that order. But, like every rule, there are exceptions.

For several years in the 1840s, George Jenkins¹⁷ worked on his father’s Woodville, New York, farm, taught school, and went out as a sailor on the Great Lakes after each harvest, all to save up to buy his own land. A hundred miles away in Cooperstown, a man named Salmon Bostwick worked for a butcher and a whiskey distiller to save funds to buy his own farm. Once they arrived, each put all their strivings into what they’d striven for and dropped the side hustles.

Extra tasks were never most people’s life-long strategy. They were way stations on the way up, like washing dishes to get through college. No one wanted this forever. Long term, house hacking and side hustling do have downsides.

Diversification is also distraction. You can’t stay on course because you’re going in too many directions. We have a grudging respect for those who get up earlier, work harder, or just grind more than everyone else. But an engine can only run so hot for so long. You can’t go the extra mile forever. To scrape by, even to inch ahead, you can do many things. But to leap ahead, you must concentrate on being great at one thing. The goal is, and always was, to force the world into a tipping point on your behalf. You want every ounce of your effort to have bigger and bigger payouts. Limitation-concentration-diversification works best in that order.

But every order depends on the starting point. If you start out in life with very little, have a degree in communications from a university with “at” in the title, or the economy turns sour on everyone at the same time, these strategies can help you stay in the game. Remember they are cheat codes, not forever strategies. Saving a down payment, paying off a debt, getting a credential, or keeping a struggling dream alive are worth some extra effort. Taking in a roommate or a part-time job (just please, no multilevel marketing) are solid choices. Nobody ever went broke selling cute koozies on Etsy.

Hustle more than others and you’ll do well. But set a clear point at which you’ll know you’ve gotten where you’re financially going. Don’t fall behind because you are too ashamed or too lazy to do more when you have less. Once the wind is at your back, return to concentrating on riding the wind instead of spitting into it.

That’s what I did. Christmas was coming, and my real estate was in the toilet. Between paying off debts and keeping rentals afloat, I had no money. So, I embraced what all working-class people did, drove to a tree farm, and began slinging Frasier Firs into people’s trucks for cash at night. I would take off my university garb, throw on boots and jeans, and make up the difference between the dream and the reality.

More than once professors brought their families. The first time, I hid inside the staff’s wooden hut. Why, I wondered, was I ashamed? Perhaps my climb up the social ladder was all a show. Ph.D. in hand, I thought I had wedged my way into the ill-defined middle class. I’d won a grant from Harvard. People flew me to Britain to speak. I corresponded with multiple winners of the Pulitzer Prize. Now here I was, back to my roots, broke, covered in pine tar, sleeping on a couch, trying to buy my wife a Christmas present. The second time this happened, I walked back out, said “Hey,” and carried the seven-footer to a colleague’s car as they awkwardly tried to make sense of the situation. I figured I was only doing what history told me to do.

The gig economy is not new¹⁸, and Airbnb invented nothing Americans weren’t doing for hundreds of years prior. More people moved ahead with second jobs and side hustles than without. They were the norm, more badges of honor than marks of shame. Using them is not a sign our national economy is broken or that you screwed up. They are just what everyone always did when they had to.

16

Yes, People Retired Before Social Security

No one retired before Social Security.¹

Nobody can retire on Social Security.²

Those two contradictions sum up the American zeitgeist on aging. Thank God for FDR or we could never retire, which is good because we can’t afford to anyway. Twin pessimisms about the past and the future, both are utterly false.

Okay, Doomer. Americans were retiring well before Social Security, and you will be just fine retiring with it.

* * *

The Book of New Deal Pensions is established canon, and contradicting it is heresy. Standard fare in college textbooks and major news outlets, according to this telling (to quote just one headline of many), “Before Social Security, Most Americans Faced Very Bleak Retirement.”³

To be sure, there was real suffering for the old then, as there is now. One New Deal official put it bluntly: “Many workers can escape the economic problems of old age only by dying.”⁴ Before his racist blockbuster Birth of a Nation, D. W. Griffith⁵ was best known for the heartrending movie What Shall We Do with Our Old? The silent film follows the demise of an elderly carpenter and his sick wife. He goes to jail for stealing bread. She dies. “Nothing for the useful citizen wounded in the battle of life,” reads the last scene. Even today, it’s a bit of a tearjerker.

Then bravely rode in the hero, FDR, demanding two reforms. The first, Social Security, provided a government guaranteed retirement to everyone over sixty-five. The second, wrangled away from Big Industry, was private pensions for workers.⁶ Now the future was bright. Your pension at the factory combined with your Social Security checks made tomorrow secure, life longer, and retirement communities full. Commentators credit the New Deal with “the near elimination of destitution among the elderly.”⁷

Only the standard view isn’t entirely true. It mistakes an effect for a cause—the things you get from economic growth are not the cause of that growth.⁸ This is rather like saying your neighbor’s fancy car is making him rich. The car came from the wealth, it isn’t creating the wealth. Retirement came from abundance. It did not create it.

In reality, people were retiring in steady numbers long before Social Security. The first large-scale retirement communities were not in Maricopa County, Arizona, in the 1960s. They were in Coral Gables, Florida, in the 1920s. Something else was going on. Americans were on a retirement streak well in advance of government assistance.

The same holds true for pensions: retirement plans managed by employers that gave “guaranteed” retirements to loyal workers. The nostalgia for the pension age is understandable. It sounds like the best of two worlds: capitalism’s wealth with feudalism’s loyalty. For those who earned them, they were as good as advertised (unless you worked for Studebaker).

The pension era was glorious, yes, but also brief and small. In the 1930s around 15 percent of American workers were part of a pension plan. At their absolute height in the early 1980s, pensions covered around 40 percent of workers.⁹ You will hear that “most people used to have a pension” but, so long as “most” is defined as over half, that just wasn’t true.

Besides, not all old people wanted to use them.

The final error in the Sacred Social Security and Precious Pension narrative is that Americans were not actually begging for retirement—they were begging not to retire. People weren’t enamored with the endless weekend; they were terrified of it.

Fear was justified. The olden days were exceedingly boring. There was no recorded music. No sports teams to watch, and no television to watch them on. No social media to scroll on the toilet. Pickleball wasn’t invented yet. Retirement was a mental health hellscape of dullness, more nightmare than dream.

Having nothing to do meant having nothing to do.

Everyone understood this. John Adams, thinking about life after the presidency, dreamed that “I may have Farm enough to amuse me and employ me . . . that I may not rust alive.”¹⁰ Long Island in the 1830s, noted a traveler, was mostly farmed by old businessmen from the city. “Retired, or half retired merchants are . . . farming about as much for amusement as profit.”¹¹ As late as the 1950s, American leaders genuinely worried retirees were dying early from boredom, so they proposed a national leisure education program. Fearful congressmen wanted to teach old people to have fun.¹²

If this drudgery jail wasn’t bad enough, young people were forcing you into it. Pensions were not acts of benevolence. They were a basis for bias, born of obsessions with operational efficiency where elderly workers lingered in jobs that others wanted. The Department of the Treasury was, notoriously, a semi-retirement community for federal workers. When a new Treasury secretary took office in 1897, he was aghast to find he couldn’t fire anyone because he’d been tasked with a caretaking agency. Progressive Presidents Theodore Roosevelt and Woodrow Wilson both desperately tried to get the old out of government jobs. “The Firing Process was to be bureaucratized,” as one historian explained. The goal was not to take care of the old, but to give their jobs to younger workers.¹³

Shadow retirement systems were quite prevalent, and highly controversial. One study of the supposedly heartless industrial sector found rampant hiding of elderly workers. Some businesses paid full benefits for part-time work. Others gave regular “gifts” to the aged. The most common tactic was to shift the old to easier factory roles. When The New York Times ran an exposé during the Depression, the controversy wasn’t the heartless treatment of the aged. The paper excoriated employers’ irrational loyalty to the less productive. In a world with young men ready and willing to work hard, why coddle the old?¹⁴

Even in the post-war era, more Americans worried about how to achieve financial independence and retire late (FIRL) than early. Forced retirement at sixty-five, not voluntary retirement before, was the hot button issue. There were robust and well-publicized debates at Johns Hopkins University advocating forced retirement at sixty, proclaiming “the comparative uselessness of men above forty years of age”! Pensions eased the old out to pasture.

What changed?

The world got wealthier.

Productivity boomed, life expanded, and leisure exploded. All of this predated most pensions and the New Deal. A graph of Americans retiring tracks nicely with an increase in wealth per person and growth in productivity. The wealthier Americans got, the more they wanted that pecuniary independence once reserved only for elites.

Productivity explosion (more stuff made in less time) created a world you would want to retire in: baseball broadcasts, records, news shows, picture magazines, television. None of this existed for someone born in 1900.¹⁵ By the time they turned sixty-five, it was all there at an affordable price. The idea of having no work meant having more time to enjoy amazing things. The nightmare of 1900 was the dream of the 1960s.

Saying modern retirement was created by governments is like saying Lionel Messi invented soccer. He mastered the art, but the field (and Pelé) was there long before. The growing wealth that made doing nothing doable and enjoyable had already put the ball in play. Play Americans did.

* * *

When Ida Fuller cashed the nation’s first Social Security check in 1940, nearly half of all workers over sixty-five had already retired.¹⁶ Half.

That percentage had been rising steadily for nearly two lifetimes. In 1870 less than 10 percent of the elderly retired. By 1900 it was one in three. When Ms. Fuller had her picture taken for the newspaper with her government check, the cake was already baked. Americans were growing into this retirement thing.¹⁷

Without Social Security or a pension, how were they paying for it? Everyday people’s retirement plans had four parts: land, business, kids, and annuities.

Paid-for farmland could be leased to young farmers.¹⁸ Those who built businesses gradually handed the reins to junior partners or sold outright. The less successful moved in with children. Children were required by the English Poor Laws to care for aged parents. Early American courts regularly received claimants of adult kids being sued for not taking care of elders.¹⁹ About four out of ten retirees had to move in with family, suffering the indignity of putting their kids in charge of bedtime.

The most popular retirement strategy was also the newest: the annuity. Annuities are DIY versions of Social Security. You pay a lot of money up front, and an insurance company promises to send you checks in your old age.

Since fewer Americans had farms to sell and many had city rents to pay, annuities became the go-to investment for retirement. Isabel Ely Lord, a librarian turned 1920s finance writer, advocated that women should put their savings “into an income bond,” aka an annuity, because “the old lady who receives a hundred dollars on the first day of every month . . . is independent and self-respecting.”²⁰ A hundred dollars went a lot farther back then.

* * *

Social Security did not revolutionize retirement. It standardized it. The federal government substituted a single, national annuity for a diverse array of individual, employer, and local ones. The growth rate of Americans retiring by sixty-five after Social Security was nearly identical to before, until it finally peaked in 2000 at 83 percent.²¹

The supposed golden age of retirement after World War II isn’t that old, either. Social Security didn’t pay out until the 1940s, and even then, paid little. Pensions didn’t really shape the average family until about the 1980s, when those who earned Cold War–Era pensions began retiring en masse. The Roth IRA was created the same year Mark McGwire and Sammy Sosa were trying to hit sixty-two home runs.

For better or worse, today’s world is much like the earlier period with a vast array of options. Annuities, Social Security, and pensions are called defined-benefit plans, meaning you know what you will get when you are old. Today’s workers are offered defined-contribution plans, meaning you know what your employer will help you save. These are popularly called 401(k)s, and they effectively ended the short-lived reign of King Pension.

The 401(k) was a historical accident. In the 1970s, top tax rates were 70 percent. To get around this, Congress authorized a special retirement savings where money went in, but no taxes came out until retirement. For C-suite executives, 100 pennies to invest was better than 30 pennies to invest. They hid this little gem deep in the tax code: in section 401 subsection k. You know this was never intended to transform economic life, or some politician would have introduced the Saving for Happiness and Income Tomorrow bill. The SHIT Act would have been hailed as a bold initiative for controlling your own destiny. Alas, it was just a tax loophole until enterprising HR managers discovered it could unburden them from pension expenses. By 1996 they were the most common offerings. Today they are nearly universal. All in all, Americans have made their peace with the SHIT Act. It is hard to beat a tax-free investment.

We should be more cautious. The typical American’s income tax rate today is just 15 percent, not the 70 percent 401(k)s were designed to avoid. That is better than nothing, but most people never consider the opportunity cost of having inaccessible savings. Their money would probably be better used buying real estate, starting a small business, or paying for higher professional credentials. Show me a nurse anesthetist married to an IA-rated aircraft mechanic, and I’ll show you what financial security looks like. Those trainings, though, take time and money.

Yes, You Will Retire

People retired before Social Security, and you will retire with it. There is a lot of screaming that Social Security isn’t enough. In equal measure, there is shrieking that our savings and 401(k)s are a fleet of tiny trollers sailing directly into a category 5 hurricane of inflation and volatility. We aren’t ready. Nobody has enough. We’re all going on food stamps!

Wait. They stopped making food stamps in 2008?

We’re all going to starve!

Here are five quotes from The New York Times²²:

“Retirement for the majority will be a difficult and unhappy period of readjustment with loss of needed income and a lower standard of living.”

“To earn supplemental money, former salesmen may sell part-time, women may baby-sit. . . .”

“Retired couples . . . should lower their expectations. A lot of dreams about trips and doing other things are not going to be possible.”

“Everyone agrees that the system needs to be fixed quickly, because otherwise it will begin to run out of money.”

“. . . I won’t be taken care of, . . . I work because I have to, not just because I want to.”

The years? 1958, 1964, 1988, 1998, and 2001. A 1980 bestseller claimed²³ just 2 percent of sixty-five-year-olds were financially secure enough to retire, just as a massive gray wave swamped places called Sun City and Palm Springs.

Here is what you should know as it relates to you, and your retirement.

The doom-mongers are correct about subtraction, but they forget about addition. It is true that Social Security isn’t enough to live on honorably for forty years, neither is there enough in most 401(k)s to hang out for four decades in Boca.

But when you add all the strategies up, as Americans did both before and after Social Security, you usually do just fine. Social Security, private annuities, pension plans, 401(k)s, rental real estate, paid-for homes, and kids who aren’t screwed up are a pretty potent combination.²⁴

Let’s apply the financial returns of retiring in every year since 1877²⁵ (the most reliable date we have such data) to see just how transformational combining strategies is. Take a couple in which one spouse has the typical 401(k) balance and the other has half that amount, retiring at sixty-five, whose spending tracks with typical retirees. All on their own, they are guaranteed only two years before running out of money becomes a real concern. By the time they are seventy-one not a single historical return from 150 years of data has them with anything left.

Now add their average Social Security benefits to their modest savings. In every single scenario, their money outlasts them. In fact, in the worst scenario they die with more money than they started. The most typical outcome is dying with $1.1 million. Social Security is what turns average savings into actual nest eggs.

We’ve still not added in most Americans’ largest asset: home equity. For those retirees who, as most do, downsize to a small, paid-for patio home outside of Tucson, their costs go down while their account balance goes up.

The divergence between cultural pessimism and financial reality is wonderfully summarized in a longitudinal study by Gallup.²⁶ Twenty years before they retired, nearly half of people said they wouldn’t have enough. When they retired, however, nearly 80 percent reported being comfortable. The divergence between anxious expectations and pleasant reality held up across all cohorts for two decades.

The lesson? You are richer than you think you are. Social Security is worth,²⁷ to the average middle-class earner, about half a million dollars in future income. You have a half million dollar annuity preloaded by the feds on your balance sheet. Your ancestors bought their own, yours goes through the government. The results are roughly the same.

Count me in as a begrudging fan of the safety net. There are people who, by ill choice or ill luck, simply won’t or cannot save. For society to force on them an old age plan may be paternalistic, but it saves money in the long run. In 1816, the town of Salem, Massachusetts, spent half of tax revenue on poor relief.²⁸ Trust me. This is cheaper. Around 20 percent of Americans have only Social Security²⁹ in retirement. For the 20 percent, that is a harsh reality. For the other nearly 80 percent, combining strategies means they’re likely to be just fine.

Why? Because, like retirement itself, this is all brought to you courtesy of a booming economic engine. You don’t deserve retirement because you pushed yourself so hard. Rice farming peasants of the 1500s worked harder than you ever will without playing a single round of golf. Every swing of the pickleball racquet comes courtesy of the explosive growth that birthed this incredible moment to be alive. Count your blessings more than your account balance. You live in a wonderful moment to grow old. If I gave you a time machine and took you everywhen, you would choose to be eighty right now.

There is no money to be made making you feel good about retirement, but there are huge profits (and political power) for those who can prophecy your financial doom (and their ability to save you). Ignore them. Social Security probably isn’t going away. If it does, we will just bring back its annuity predecessors which can be purchased from any insurance salesman you drank beers with in high school. Save, but maxing out your 401(k) probably isn’t your path to wealth. Compared to the post-war period, you barely pay income taxes to begin with (10 to 36 percent), and you will do better investing in yourself, your kids, or other assets. Take the employer’s free match, but don’t be scared to build your own Me, Inc. investment fund on the side. Betting on you is your best retirement strategy, anyway.

17

Immigrants Make the Best Capitalists

For scholars, who are my tribe, the chief sin of laymen is “essentialism.”

“All Jews are . . . Black folks tend to . . . We all know Asians are good with. . . .” That’s called essentializing by race or ethnicity. It is a shorthand that allows all exceptions to be proof of a rule. For the professor, it is always more complicated than that.

Yet we risk missing very real phenomena for fear of being labeled simpletons or, worse, racists. Actually, Jewish Americans did experience a meteoric rise in financial status. Black Americans have been perpetually underbanked. Asian Americans do over-perform other races for per-capita income. The wealthiest U.S. ethnicities by per capita income are not white, and it is not even close. Indians, Taiwanese, Japanese, Chinese, and Koreans are the top five for non-natives. Whites come in around seventeenth, making them a fifth seed in the ethnic-money-March-madness tournament. Among whites, the wealthiest ancestries are Macedonian, Russian, and Latvian—certainly not “from Kentucky.”The best cash-flowing native-born white group is the Amish. The wealthiest single ethnic group in America is the Shakopee Mdewakanton Indian tribe in Minnesota, with per-capita income of over $1 million annually from casino revenues.

Something is going on here. What is it? Nineteenth-century eugenicists (and not a few online today) argue it’s all in the DNA. I’ve found no evidence of this in history. History, in fact, may itself be one of the best explanations of why some groups thrive and others don’t. Most of that history is about immigration.

It would be much more accurate to say that there were immigrant versus native financial strategies, rather than ethnic or racial ones. Nearly all immigrants to the United States, from four continents and across three centuries, were accused of living too frugally, saving excessively, and obsessing on home ownership. These traditions dissipated over generations in some traditions more than others, but they are why so many immigrant groups in every decade of U.S. history outperformed the overall economy. Working, saving, thinking, and (perhaps most critically) moving like an immigrant were some of the most powerful tools for getting ahead in American history. They still are.

* * *

We’ll track this story in the opposite direction than it is normally told, from west to east. From San Francisco’s gold rush to Washington State’s fertile Yakima Valley, major waves of Pacific Coast immigrants came from Asia. Pamphlets circulating in Guangdong, China,¹ told workers, “Americans are a very rich people . . . There will be big pay, large houses, and food and clothing of the finest descriptions.” The housing promises proved overhyped, but claims that “Money is in great plenty and to spare in America” were true enough to make the risk worth taking.

The first wave of Chinese immigrants,² all male, spent their financial lives remitting funds to families back home. Young men were married to a village girl with strict instructions to get her pregnant before leaving, ensuring his return to the village. One Cantonese lullaby for those children summarized the financial strategy well:

Daddy has gone to Gold Mountain³

To earn money

He will earn gold and silver

Ten thousand taels

When he returns

We will build a house and buy farmland

These men hurried off in search of wealth to send home. What they found were mixed blessings. There was, indeed, gold in the mountains, plains, and towns of California, the northwest, and Hawaii. In the 1880s, one week’s pay in America was worth one month’s in rural China. The work, though, was brutal, even by the standards of farmers used to toil.

Remittances to China forever changed families, some for good and others for ill. Many saved, invested in lands and houses, and went from peasants to landlords in one generation because a son or two left for America. Other families founded hospitals, schools, and poor relief. For some families back home, the wealth was so great multiple generations stopped working altogether. Many Chinese immigrants hailed from the Taishan area, renowned for its work ethic and entrepreneurial spirit due in part to the poor condition of the soil. But twenty years of remittances changed Taishan into a land of neglected fields, fine art collections, and extra concubines.

With time, workers preferred to keep their wealth where they’d made it. For those willing to break with tradition and send for their wives to join them, the results were profound. Husband and wife teams could earn around $450 per year together, a solid income in the mid-1800s. They also achieved staggering savings rates of up to 60 percent.⁴

By 1920, nearly a third of Chinese Americans found their way into the laundry business.⁵ Largely seen in American eyes as “woman’s work,”thus not in competition with white industrial workers, Chinese-owned laundries blossomed across the country. Laundries fueled the growth of an Asian middle class. Despite the low social acclaim, multi-generational laundries were a haven for Chinese incomes that faced little competition and built wealth. Requiring easily obtainable skills, small capital outlays, and minimal command of English to run, many college-degree–holding children of laundry owners found to their surprise that their parents made more than their white collar jobs did. One study of Chinese Americans found families who sold their laundries to move up to higher social status jobs lamented the fact financially.

By and large, Chinese families remained renters⁶ for the first half of the twentieth century, but not by choice. Three political changes profoundly shifted this dynamic. First, the Chinese Exclusion Act’s repeal (partially in 1943 and fully in 1963) and other legal reforms allowed successful Chinese Americans to bring their families to the United States. Then, in 1952, Alien Land laws were deemed unconstitutional, allowing home ownership again. Finally, the Korean War era enforcement of the Trading with the Enemy Act barred remittance payments to China. With more money staying in their own accounts, families increasingly residing in the United States, and the legal ability to buy, Asian Americans exploded upward in real estate and home ownership rates. Over 50 percent owned their own homes by 1980, and Asian American home ownership remains among the highest rates today.

* * *

We start with Asian Americans along the Pacific Coast (and, interestingly, the Mississippi Delta)⁷ not because they were unique but because they weren’t. Nearly everything about the European immigrant experience in the east played out the same as in the west. Young men led the way, and their financial instructions were mostly to send money back home where they hoped to return. The more women came, the more men stayed. Work was grueling, but pay compared to what was possible back home boggled the mind. Immigrants often saved in excess of 50 percent of their income, numbers that caused white progressives to reform immigrant evils, since workers weren’t eating, bathing, dressing, or housing themselves to middle-class standards. Local men complained that immigrants would work harder, longer, and for less. Immigrant small-business owners outpaced natives’ entrepreneurial spirit in leaps and bounds.

Ironically, the word frugality appears across 300 years as an insult hurled at new arrivals. In “the mind of the Hebrew,” complained a New York writer in 1879, “the principles of frugality are inherited.” At almost the same time on the opposite coast, the California State Senate decried that Chinese immigrants were able to survive on just fifteen cents a day compared to the two dollars of white workers. Cursed frugality was thrown at Scottish immigrants in the 1700s, Irish in the 1840s, Jews in the Gilded Age, Indians after World War II, Hispanics of the late twentieth century, and African and Caribbean immigrants today. All got tarred with the brush of underconsumption.⁸ How very un-American of them.

There was an immigrant way of getting ahead in America. It was not for the faint of heart. That wasn’t what made it controversial, though. The controversy was that it worked. Intense immigrant savings regimens were nearly universal. Immigrants in 1890s Pittsburgh were notorious savers,⁹ known to save up to 40 percent of their salaries, and many single men set the goal of saving half of their pay. A visiting Irish priest in New York noted with worry the tenacity with which the women of Éire hoarded income, enduring unfathomable abuse at work so they could increase their savings.

Immigrants, then and now, sought jobs in the highest-cost areas¹⁰ because that was also where the highest wages were. By combining the highest possible pay with sacrifices on living standards, they could arbitrage America’s best income zones. Many achieved their tremendous savings rates by boarding as cheaply as possible. “Stag boardinghouses” (all male) were known to keep four to six men in a room, often sleeping in rotating shifts based on work schedules. In Omaha, officials found a small house with forty-six men living in it, and near Chicago sixty Romanians lived in a single two-story home. These were extremes, but the principle was constant: the mania for saving could only come with significant sacrifice. Strivers were willing to forgo better lodging to send money home or save it.

* * *

What was it all for? In 1774 the ship Bachelor¹¹ ran aground in the British Isles with colonists bound for America. Through a bureaucratic fluke, and with months of time to kill, the passengers gave detailed interviews to local officials. William Gordon was a farmer well over sixty years old from the Scottish Highlands. He was going with an aged wife, six adult children and their families, and sold everything he had to pay for their journey to North Carolina. When asked to explain his leaving, he told interviewers he was “an old man and lame so that it was indifferent to him in what country he died.” He was leaving “for the greater benefit of his children . . . in hopes that his children would earn their bread more comfortably than elsewhere.”

One hundred and twenty-five years later, the largely immigrant Ford plant workers¹² of the early 1900s were notorious savers. A Turkish immigrant named Mustafa was reported to have saved in the local bank over $1,000 (about $30,000 today) in a year, a 65 percent savings rate. When concerned managers investigated to see why he lived so frugally, he explained he was saving to bring his wife and children to the United States. Over a century apart, a Scottish Catholic and Turkish Muslim went on their journeys for the same reasons.

Move More

“He who crosses the ocean can buy a house,” went a saying in Italy. Those ships went across the Atlantic and Pacific. Immigrant life in America across three centuries was first, foremost, and by definition, mobile. Mobility mattered. It still matters today, including for you.

Immigrants had a restlessness for rising up the ladder that second, third, and fourth generations simply couldn’t understand. Why would you do that? Many warnings against being pennywise and pound foolish are just a language barrier between work ethics.

The immigration issue is, as I write this, politically . . . what’s the word . . . fraught? I shall not weigh in on who to vote for. It occurs to me that, historically, we’ve been here before. Both sides (yes, both) could stand to calmly listen to the past. There is nothing wise in assuming gang members should be welcomed in because, well, at least we know they can commit to something. We’ve dealt with immigrant gangs—the Italian variety among others—before. Similarly, the American system is at its best when it rewards strivers. Boxing out the most relentless risers turns citizenship into a medieval guild: we’ll regulate prices by restricting entry. Guilds weren’t good for Europe, and they aren’t good for the health of the U.S. economy, either. It is possible to imagine a sane immigration policy, even if it is hard to imagine it coming from either side, today.

The truth is, the children of the most recent immigrants, from South America and Southeast Asia, continue to be more upwardly mobile than native born Americans.¹³ This is driven by the same historical factors: a selection bias toward the hardworking, aggressive saving, avoidance of luxury, taking on boarders, and a tendency to put money into real estate. And, just as Serbian or Norwegian men could make twice the wages as their nineteenth-century friends back home (and Chinese workers ten times theirs), so today’s workers have found the same exponential power law. Upward-mobility rates of immigrants today are the same as they were for the famine Irish dairymen and Asian dry cleaners.

Mobility still matters, and not just for immigrants. Families that move out of state, both immigrants and U.S.-born families, have children who outperform their peers financially. If you’re stuck in Nowhere-ville, Maine, there isn’t much to Go Ahead to. Moving is hard and risky, but also pays big dividends. Before we celebrated our twenty-first wedding anniversary, my wife and I had moved sixteen times. We’ve met people along the way with amazing talent who never got ahead because they “were not relocatable,” in the corporate parlance. I get it. Kids need schools. Life isn’t all about money. Broadway plays lack a certain zing for native New Yorkers watching the traveling cast in Cincinnati. Chasing dreams is hard work. It often involves saying goodbye to friends and grabbing free boxes from the liquor store because you’re too cheap for movers. Historically, though, the payouts are real.

Grit isn’t ethnic, racial, or even cultural. Plenty of people raised in the same villages across the same seas stayed behind. America self-selected for the people who wanted it most. If you live here, you probably don’t feel the need to strive quite that hard. But if getting rich is your goal, it helps to have an immigrant mentality—no matter where you are from.

18

Scams: The Nigerian Prince Is Actually from Spain

One of the joys of being alive when email arrived was getting my first message from royalty: a Nigerian prince.

This signal honor was also urgent. In trouble and needing to flee to the United States, his hundred-million-dollar fortune was locked up by political rivals. He needed an American to get the money out. If I would be his ally, he would be my benefactor. Anyone willing to step up should send name, phone number, and bank account information. Then would come instructions on wiring the necessary fees and bribes to get the millions into my account: $50,000 should be enough. Next would come tragic news that the prince got assassinated in a coup. The money, sadly, went with him.

I got this email as a teenager days after getting my first AOL account. I asked my dad about it. He laughed. “I thought that guy was from Spain.” Turns out, Dad was right.

In 1898, The New York Times warned readers that “An Old Swindle” had returned.¹ For the past thirty years, a Spanish príncipe kept mailing people from prison. Arrested by enemies, desperate to get his family out of Havana (or, sometimes, Barcelona), he needed your help. D. Santiago de Ochoa had been able to bury his great wealth just in time. He wasn’t worried about himself, but for his poor, suffering daughter. If you could send money to secure her release, he would give you the information to unbury the treasure and let you keep it (please, kindly, split some with the beloved child).

This worked. A lot. It’s been going on since at least the U.S. Civil War. Just Google “Nigerian Prince Scam” and see how many recent arrests there are in the news. How is this possible? Why do we fall for this crap?

Americans have a long history of getting hoodwinked. We are, it turns out, a gullible people. Awash in the allure of Go Ahead, money and lives get risked on the smallest of chances. This strange history keeps going because, if you look closely enough, the differences between dreams and delusions aren’t that big.

* * *

For those who first came to the Americas, dissecting fact from fiction was life and death. The high stakes didn’t increase anyone’s competence. Strategists talk about “the fog of war,” when you have a plan but also can’t see clearly to know if the enemy is in front or behind. Europeans bent on making a better life for themselves felt much the same way. The very idea of America was a leap of, sometimes misguided, faith.

By the early 1500s, map makers drew decently good maps of the New World’s coasts. One decided to hazard a guess at what might be in the interior, adding imaginary lakes, mountains, and other fun features to the New World.² When it came time to settle North America, investment companies took his made-up map seriously, assuming the interior bodies of water were real. Entire colonial business plans and proposed town locations rested on one man’s thought experiment. Another map was so wrong that a poor soul trying to locate his new farm with it claimed the drawing “might as well serve for any part of Germany as for East-Florida.”³

The founding of the United States only increased the confusion. If those faraway colonists could create brave new worlds, why not us? In 1821, with Símon Bolívar leading successful revolutions seemingly everywhere, one of his generals arrived in England with glorious news. He was no longer just the Scotsman, Sir George Macgregor.⁴ He was now “His Highness Gregor, Cacique of Poyais.” The cacique, which vaguely meant chief or king, ruled over a small country in modern-day Nicaragua. He told of fabulous natural resources, and with the help of leading London politicians issued over half a million pounds in government bonds to build paradise there. The bonds sold out. Colonists signed up in droves for fresh lives in a new country. People bought a dream, endorsed by prominent leaders, not so different from many Americans’ reality.

They arrived to find a “capital city” of mud huts in swamp land inhabited by surprised natives. The cacique had, it turned out, won his “kingdom” in a drunken night of gambling with a Miskito Indian chief. Of the 200 colonists, just fifty returned alive. The cobbler appointed “Official Shoemaker to the Princess of Poyais” committed suicide. Macgregor, meanwhile, absconded with the money to France and died rich. The scam was so believable that, as late as the 1870s, investors in London still traded Poyais bonds on the off chance they paid out.

* * *

By then Americans were getting used to being pitched false promises. There were so many financial gimmicks available in the 1870s that The American Agriculturalist devoted an entire section to the topic each year, called “Sundry Humbugs.”⁵ It was printed beneath a picture of moths dancing around a candle flame. Humbugs were “schemes to obtain money or its equivalent” without earning it, which suddenly makes sense of Mr. Scrooge’s cursing in A Christmas Carol. He’s just telling Tiny Tim, “No, that’s a scam.”

Humbugs fell into many categories:⁶ advance payment companies (Madoff-like investments that disappeared after the early deposits), discount watches (selling fake knockoffs as refurbished, high-end brands), “Bogus Real Estate Agents” (buying property super cheap that wasn’t really for sale), war claims agents (handling fictitious compensation claims for your losses during the Civil War), fake baking ingredients, counterfeit money schemes, and “marvelous remedies” which were often just candy. “Unsettled prizes” were the most common gimmick, where the reader had won something but needed to send postage to ship it. Most of these are still around, today.

One particularly successful ruse came from “Clark & Co., Claims Adjusters,” who sent official-looking letters asking if the enclosed clipping was your signature. It was yours, because whoever Clark was, he found your John Hancock discarded from old checks. It seems “you” were the proud owner of mining company stock valued at $500 ($15,000 today). They needed to prove you were the owner. Since you knew your signature, if you would kindly send $5 ($150 today) to Mr. Clark’s company, he would forward you the stock. This, by the way, he promptly did, though it was simply the stock of some long-bankrupt mining operation. The newspaper noted the sucker had, at least, “paid $5 for a very useful lesson.”

* * *

Are lotteries a scam? They certainly have a long history of getting people’s money. Governments raised funds for public buildings and common defense this way. Queen Elizabeth used one to improve English harbors.⁷ The winner was freed from arrest from all but the most violent offense for a whole week and given money to spend for their seven days of debauchery. The Virginia colony was financed with lottery money until moral degeneracy from lottery players got out of control.

Lotteries were the most common speculation in colonial America.⁸ Nearly every colony used them to raise funds. The finances of colonial Philadelphia were so bad that they not only ran lotteries, but the city purchased its own tickets, hoping to win.

Stocks and bonds were expensive, and early lottery tickets weren’t cheap, either. Poor people adapted by placing side bets on what the winning lottery numbers would be. This game evolved into “playing the numbers,” run by mafia bosses, with numbers drawn daily.

People treated their numbers seriously. Dream books, hot-selling cheap-printed gambling suggestions, laid claim to exotic spiritualism to guide your bets.⁹ The Gypsy Witch Dream Book and Policy Player’s Guide (1903) is just one example that taught you to find the right numbers while sleeping. Bettors played “gigs,” combinations that went by various names. There were beer gigs, washer-woman gigs, and gigs named after celebrities. Events in life were signs to play particular strategies. Having a run-in with the cops was a sure sign to play the policeman’s gig.

Betting was viewed by many working people as a reasonable financial strategy.¹⁰ Most paper investments weren’t affordable on working wages. Banks regularly faced runs that lost depositors their small savings. The temptations of urban life offered an alarming number of new ways to waste money. A weekly betting strategy, meanwhile, was a highly leveraged short on poverty. The common advice was to bet small change one would otherwise fritter away, so any winnings were gravy.

Lotteries were still a bad bet for working people. There were better financial strategies, just none that offered the excitement and immediacy of numbers. It wasn’t just the poor, either. When the stock market crashed in 1929, many former stock investors joined them playing the numbers in New York, trying to recoup their losses.

* * *

You, of course, would do no such things. You are far too sharp to fall for crazy dreams and simpletons’ math.

Or, not. I know a highly successful land developer. This man’s annual take-home pay is measured in proximity to one million dollars: half a million is a rough year. When we first went to dinner, my annual pay was his rounding error. Yet, while pulling over for gas, he proudly showed me an array of specialized credit cards: one for gasoline, another for the meal we would have, yet another for air travel. He had a Mastercard dedicated exclusively to wine enthusiasts. “Got to rack those points up, am I right?” I drank a $300 bottle of wine across from a man rich enough to buy my hometown and thought: he has no clue that a point is just a penny.

A point is a penny, rebranded and gamified by the credit-card industry. You didn’t just save; you scored! Loyalty programs are everywhere and, to many shoppers, everything. Starbucks has stars, which change in value at precisely the moment members get used to what they mean. Sephora gives more points the more you spend. Rouge members who spend $1,000 thereafter get three points per dollar. That’s three cents per dollar. And you get a birthday gift!

Customer loyalty games went all the way to the Supreme Court. The rewards points in your foodie app are a new spin on an old gimmick: trading stamps.¹¹ In the 1850s, a soap company offered certificates in the package. Collect enough certs, then mail them in for prizes. By the 1890s this morphed into a stamp system for each dime spent. Filling up a stamp book earned rewards.

Consumers loved them for what they were: little green coupons. Retailers pushed them for what they brought in: more business. Competitors sued for what they created: misled consumers. This landed on the Supreme Court’s docket not once, but twice: in 1916 and again in 1972.

The first major player was S&H Green Stamps, which took the idea national. Subscribing stores issued little green stamps, which could be accumulated by shopping at many different vendors. The savvy shopper, having collected multiple stamps from various stores, could order other goods only available from the S&H catalogue or, in some cities, buy at the local S&H store.

But S&H didn’t accept cash. To juice their loyalty program, they only sold goods for completely filled stamp books. A partially filled book held only fractional value. Filling the book became an early twentieth-century obsession, and competitors rushed to make new stamp companies for different retailers. Before long, shoppers were flush with green, blue, or red stamp books from competing stores.

Some families religiously saved tens of thousands of stamps each year. One company shipped over 100 million stamp books to users. In 1905 word got out that the B&M Blue Trading Stamp company was declaring bankruptcy. A mob of women flooded the streets of Manhattan, many from out of state. Authorities attempted to keep them out of the stockroom, since the goods belonged to the company’s creditors. The stamp-wielding women, unimpressed by American bankruptcy law, smashed in the doors and took everything inside.

Stores responded to this passion with double- and triple-stamp days. Just like today, smart shoppers maneuvered their shopping around the points, not the points around their needs. In 1950s Denver, a local Save-a-Nickel store offered four-times the stamps all week long. Local retailers cried foul and published an op-ed decrying stamp inflation. With so many stickers being thrown out in the early 1950s, a stamp just wasn’t worth what it was in the good old days.

Ads for stamps emphasized that they were “free.” Consumers believed it. Credit-card swipers believe it, too.

Credit-card rewards pushed stamps from the scene. In 1986, the same year Mike Tyson won his first boxing title, the heavyweight of retail Sears created the Discover Card with a cash back program. Consumers loved it, and points, miles, and cash were soon the rebate programs du jour. None of this was new, and it was no accident that a retailer figured it out. Americans had been gobbling up shopping credits for nearly a century.

The trick, of course, is that 1 percent cash back is just a penny. Americans consider “cash” to be dollars but pennies to be “small change.”The slogan “1 percent small change back” doesn’t resonate. Hearing 1 percent cash, the brain does not hear “one penny” but “one dollar.”

Here was the issue that got the Supreme Court involved. Stamps, the Court opined in 1916, bordered on but did not cross into lotteries. They did have “the seduction and evil” of illegal gaming. By encouraging the shopper to come back again and again for their Pavlovian rewards, stores were playing fast and loose with the line of consumer deception. After all, someone is paying for the discount, and that person was generally the consumer themselves through higher prices. By raising prices a few percentage points to cover the stamps (and now points), they created the illusion of a reward. But the rebate was at best a deferred savings account and certainly an incentive to overspend.

All those people with lost stamps, partially filled books, or shopping addictions were paying the price with no reward. Families that didn’t want to use stamps paid more but got nothing in return, functionally forcing everyone to play the game. People addicted to the rewards shopped more than they otherwise would. The average person spent, in today’s dollars, nearly $100 more every month if they were in a rewards program, compared with those who were not.

This same dilemma applies now. Cash-back and points cards average their rebates at 1 percent, but payment systems like Visa or American Express charge as much as 2.5 percent per transaction to the store.¹² The store increases the cost of the goods they sell accordingly. Budgets of credit-card–using families are increased by over $1,000 per year from scoring points. But you aren’t dunking on the credit-card companies (who are doing just fine). Cash-paying consumers who reap no rewards pay those higher prices, too, as do those carrying card balances with 18 percent interest: all the points get scored on them. The families least likely to have good rewards cards, the poor, are the ones shoveling money into the accounts of those who best manage to run up the score, the upper-middle class.¹³

This gamification of shopping, rewarding winners at the cost of losers, was an issue that the 1916 Supreme Court ultimately ruled was for states to decide. In 1972, with the federal government’s power expanded, a more liberal set of justices green-lighted nearly unlimited power to the Federal Trade Commission to deem stamp systems a deceptive practice. Over half of the fifty states considered or enacted legislation to restrict or tax stamps and points.¹⁴

Rewards programs survived every assault. When North Dakota passed a tax on stamp companies in the 1950s, residents voted two-to-one to overturn it. Women’s clubs picketed the New Jersey capital against anti-stamp legislation. By 1965, over 80 percent of American shoppers saved stamps. And today, over 80 percent oppose legislation on credit-card rewards, even when pollsters explain doing so would lower prices. As far as consumers are concerned, we’re playing this game and we’re winning!

So there you stand, paying 3 percent more for gasoline because you get 2 percent back for the family trip to the beach, to which you’ll fly with miles from another card you only use when dining out. On a good month, your net spread is a loss of 1 percent. But it feels so good when you’re scoring.

The thrill is meant to distract you from the sleight of hand. They took money from your account and time from your life, as you juggle your multi-card system. What you’ve won are redeemable tokens, chased after like children at a Chuck E. Cheese, where the din of loud music and smell of cheap pizza help you forget that the ultimate prize you’re furiously banging buttons to win is worth barely a penny.

The Line between Dreams and Delusions is Thin

Why are we so easily suckered? We feel only so sorry for the fool who mails money to Spain. After all, they wanted to get 30 percent of a grand fortune and didn’t offer to cut us in. At some point, though, most of us bought a lottery ticket because . . . what if? And most Americans daily tap to pay and dream of the cruise they’re reward-pointing themselves to.

Gullibility for quick riches is almost a necessity for the American dream to work. It is the coin’s other side. To get ahead, you must believe you can get ahead. But who are you, you, little old you to believe you can live a better life than someone else?

Transport backward 500 years and the idea of progress for everyday people was itself the ruse. Any villager setting out to rise above their station would endure the catcalls and embarrassment of having fallen for false hope. Your ancestors, at some point, did it anyway. Luckily, they didn’t land in Poyais.

Americans so easily fall for scams because we so readily believe getting ahead could happen to us. It tempts our Go Ahead spirit with an advertisement for getting there without all the nasty bits about work, investment, expertise, or thrift. It isn’t the getting ahead bit we fall for, because that is true enough. It’s skipping the line.

There are wise optimists who know that wealth isn’t in their inbox. Getting ahead doesn’t happen to you. You happen to it.

Part IV

The Feds and the Family

19

Budgets Are New; Hating Them Isn’t

In the roaring year 1926, a husband wrote a gleeful letter to the editor¹ explaining how he and his wife finally saved their marriage.

After years of screaming matches between Mr. Spend and Mrs. Save, they held a funeral ceremony not for the marriage, but for the budget. Solemn words were spoken. The book was cremated. “We have been free ever since,” he explained, and the marriage was never better.

Getting your butt on a budget is common fare in personal finance books. We don’t lack for good tools. The color-coded spreadsheets and online accounting software available to run a family of four today dwarfs the complexity of the account ledgers John D. Rockefeller used to become the world’s wealthiest man. We could, if we had any energy left after the kids are asleep, sit in the blue light glow of the laptop screen, assigning charges we don’t remember swiping to one of a hundred categories like “nail salon.”

Are we backsliding? Shouldn’t we be sticking to a budget the way our hardy pioneer great-great-great grandparents did?

Of course not. They didn’t have budgets back then.

* * *

Budgets, it turns out, are new. The idea that you and your partner run a small non-profit from the kitchen table, complete with account ledgers, is a bit like cubist art: interesting, hard to follow, and entirely a product of early-twentieth-century progressives.

Like modern art, budgets changed the way families saw things, especially financial time. Was life lived daily, weekly, monthly, seasonally, or yearly? The first thinkers to recommend family budgets advised not creating one until you had tracked expenses for an entire year. This made sense for farm families, since seasonal swings and harvest payments drove toward one big annual reckoning. As people moved into cities, pay changed. Most workers got paid weekly, and some daily. Strangely, budget advocates recommended taking your yearly expenses and dividing by twelve to get monthly estimates. Monthly budgeting came decades before monthly paychecks. This decision, which we still live with today, had less to do with those who earned the pay and more with those who invented the budgets.

Modern spending plans sprang to the scene between 1900 and 1920, mostly through the advent of the newest academic college department: home economics. Progressivism was ascendant, and with it the belief that if absolutely everything was constantly counted, then leaders could bring economic forces under control. For families, this included scientific management at home.

Progressives, however, didn’t all agree on what the science said. The first wing, led by the editors of Good Housekeeping, Christine Frederick (who also invented standard countertop heights) and First Lady Eleanor Roosevelt, kept strict, accurate, and complex accounts. We will call these the “Complexity Keepers.” Frederick’s budgets had seven categories, each with corresponding subcategories. Saving, for instance, included within it two subgenres, Luxuries and Advancement. Advancement had within it a wide range of sub-subcategories² like education, music lessons, magazine subscriptions, holidays, telegrams, doctors’ visits, charity, and “toilet articles.” Others included adjustment ratios for marrying a “sedentary man” versus an active one.³ In 1969, Honeywell introduced the first computer for family budgets. The H316 Kitchen Computer would spit out recipes from your available ingredients or balance the family’s bills. The $10,000 price tag (over $90,000 today) and the two-week programing course required to use it meant that no one bought one. But the idea was out there. Budgets were so complex they required computational power.⁴

Not everyone signed on to this plan for marital harmony by budget reconciliation. “Simplicity Savers” mocked those who “budget everything down to the last string-bean.”⁵ Noting that the sheer volume of work was too complicated for everyday people trying to live their lives, they advocated simple heuristics that kept the best of budgets without the worst work. Sylvia Porter, who started out in the other camp but abandoned it as impractical, told readers to keep their records simple. Others argued that budgets were like diets, nobody stuck to them.⁶ Simplicity Savers said a family’s first act with each pay envelope should be to put something directly into savings: life insurance, banks, real estate, or investments. Then, pay necessary bills. Whatever was left could be spent as the family saw fit. Since pay usually came around every seven days, you could only make so many mistakes.

* * *

Who handled the money? Earnings came home each week as cash inside an envelope. Who held it? Old assumptions said that men always handled the money, leaving wives to grovel, childlike, for a bit to spend from her patriarchal oppressor. Scholars, it seems, came to these conclusions not by looking at family behaviors, but by reading coverture laws. Since legally everything in the family was beneath the husband, it was assumed things worked that way on the ground. Yet housewife manuals were awash in instructions on women’s never-ending task of managing family finances. Which was it?

Two side-by-side experiences co-existed since the Revolutionary War. From the late 1700s on, there is no discernible shift from one-gendered paradigm to another in family financial management. In fact, the continuity seems to be that whoever hated keeping books the least had to do it.

Take Elizabeth Meredith.⁷ Married to a Philadelphia tanner just after the Revolution, she helped her husband build his business until they were able to sell it. He did the physical labor, and she kept the accounts. In fact, when she took over the books it quickly became apparent that her husband had no gift for it, and the whole enterprise was “so deranged and it was impossible to tell where to begin.” Her husband was a good tanner but a mediocre businessman, whether because of “blunder or error” it was hard for her to say.

Meredith righted the ship. She was a sharp small-business owner. She kept pressure on suppliers, took on boarders for extra income, negotiated bank loans, and was ruthless with overdue payments. She and her husband did very well, slowly building a profitable business and investing the proceeds into rental real estate.

Credit agencies in the 1840s recorded multiple instances across the country of women being the better financial managers in a family business: “His wife is the manager & much better for bus[iness],” “his wife is now the business man,” or “Her husband . . . is a sort of ‘shop boy’ for her,”⁸ were not irregular notations.

Female financial oversight was not simply a “Break glass in case of male incompetence” emergency-response mechanism. Many families delegated the role of money management entirely to the wife. Lydia Maria Child put a great deal of ethical emphasis on women’s skills at keeping expenses below income. Frances Green’s 1837 The Housekeeper’s Book⁹ began with instructions on account keeping. “One branch of domestic duty which devolves upon the mistress of a house, is to keep account of the expenditures of her family,” she taught young brides.

Many women loathed this wifely duty. Budgeting did not empower early American women to live their best lives now. It drained them. Account books were a time-consuming and isolating task, done not with friends, but alone at the family desk or kitchen table.

Across the nineteenth and twentieth centuries, families were split roughly between allowances systems doled out by the husband and many other families who left the entire responsibility of money management to the wife.¹⁰ Most families treated the family budget less as a sphere of gendered power to negotiate and more as a dreaded chore foisted upon one spouse by the other.

* * *

To make the budget work, someone had to curtail spending on something. That was never easy. Early Americans swam in a sea of stuff to buy. Colonial Boston had 500 shops for only 16,000 people, a higher ratio of stores-to-shoppers than Bostonians enjoy today. Consumerism ran so rampant that a preacher in Connecticut convinced anxious sinners to save their souls by purging idolatrous finery. Congregants piled up their imported “Scarlet Cloaks, Velvet Hoods, fine Laces, and every thing that had two colours.” Standing beside the big pile of sin, the minister shocked the crowd by stripping down naked and throwing his clothes on top. Something about a bare-assed preacher getting ready to burn all their things jolted the crowd to their senses, and they rushed in to save their treasures. Americans have preferred retail therapy to repentance for a long, long time.

What really kept American spending in check was how expensive everything was. Your budget, no matter how tight, is skewed toward fun and frivolity in a way your great grandparents could only dream. People didn’t buy less than us today because they had more will power. They bought less because basic items cost much more. In our world of plenty, we are utterly disoriented to how cheap it is to live a modern life.

As late as the 1870s, families spent over half of their total income on food.¹¹ Just food. Another 25 percent went to rent. Fifteen percent went to clothing, or more precisely cloth and thread, which women then turned into clothing. Add that together and just 10 percent of the average working family’s budget remained for everything else. Tuition, medical bills, leisure, savings: these were afterthoughts. All of life, for most of life, was about surviving.

Then that changed. By 1940, the cost to feed a family was cut in half. Today, even after inflation hit, the average family spends 12 percent of their income on food, a great deal of it at Chipotle. The same happened for clothes. Even before the rise of falls-apart-fast-fashion websites, by the early 2000s most families covered their nakedness for less than 3 percent of income, preachers included.

Hacking abundance to power our savings sounds logical enough. When so much cost so little, why not live for less and invest the rest? Take The Latte Factor,¹² an instant New York Times bestseller that explained how to find the hidden Platform 9 ¾ to your retirement dreams. The magic comes from skipping Starbucks each day. Drop the money from a daily grande, half-caf, extra-hot, oat milk, sugar-free vanilla, upside-down caramel macchiato into an index fund, and you’re rich in barely thirty years.

An 1872 book made the same point, except with beer.¹³ A man making the lowest market wage could still save an incredible 25 percent of his income. To do this, he must commit to skipping three beers a day and investing the savings. Wait twenty years and you, too, could buy a farm by forty.

To understand the logic, you must know two things. First, as I mentioned, everything used to be more expensive. Second, which I forgot to mention, Americans are much less drunk than we used to be. Before Prohibition, Americans spent 4 percent of gross domestic product on booze. Today it is less than 1 percent. In the 1800s, each person drank about seven gallons of alcohol a year.¹⁴ Today, we drink two. The booze budget wasn’t as crazy as it seemed, and the chances the worker earned more sober were high.

Booze, tobacco, cars, and a host of other “bad habits”¹⁵ were featured in “how to save more” guides from the nineteenth and early twentieth century, well before anyone decided to make cappuccinos the main villain. One of the earliest appeared in 1867 ads for the Freedman’s Bank, just after emancipation, urging former slaves to forgo tobacco and alcohol to save an extra ten cents per day. In ten years, with compound interest, sober savers would have $500 to buy their own land. The bank tragically failed before anyone could prove the theory true (it turns out compound interest really is overrated).

Regardless of who kept them or what they cut out, budgets and spending plans were optimistic documents. They projected a future that could be better than the past: a life better than your long-suffering parents’, less chancy than your hard-partying neighbors’, or more hopeful for ambitious kids. Families could dream, in pencil and paper, of a financial future for themselves. Vacations and college funds, all far away, became real on the page.

The problem, of course, is that optimism can be hard work. What with all the dreaming and saving and watching the neighbors get new drapes or the work buddies chug oysters and beer. To Progressives’ chagrin, many families navigated life in capitalism just fine without detailed spending plans. A 1920s survey reported that only one in four families followed a written budget, and 60 percent kept no records at all. The ability to save between those who did and didn’t differed . . . by merely 1 percent. Far more families reported “avoiding liquor”¹⁶ as their most powerful tool for financial success.

The Simple path to a Better Budget is . . . Simplicity

Do budgets matter? Kind of. You will not Frugal February your way to the promised land, but you can spend your way out of it. Thrift is to wealth as lines are to roads. If you recklessly ignore it, you’ll end up in a ditch. The discipline it takes to stay in the lines (not blowing all your money) is required for the trip. But the lines don’t get you there, they show you how to stay safe on the way. To get rich, you’re going to need an engine.

Mostly, people drive by feel. In 2014, someone ran a fascinating experiment on over 1,000 small-business people in the Dominican Republic with limited formal training in business. To one group, they taught traditional accounting. To the other, they taught a few simple rules of thumb like how to roughly estimate funds. After a year and half, the nearly 500 participants with formal accounting training showed no change in financial literacy. But the group that learned simple, easy-to-remember tricks had done significantly better than before.¹⁷

Should you have a budget? Sure. What should it look like? Don’t know, don’t care. Handling a budget is like making a bed. Skip it, and things get messy. There are lots of ways to make it, though. If you or your partner wants that task done with military precision, bingo. That person is in charge. Make sure you offer to help if it isn’t you. If it is you, don’t scream at others for not fluffing the pillows (or forgetting receipts).

Simple heuristics often do just fine. Save first. Think in chunks of time, whatever chunk of time works for you. Progressives made the monthly part up, as best I can tell from thin air. They didn’t search the Torah or climb a tall mountain to find a sage. Most of American history was managed annually. Quarterly is a good idea for salespeople and extremely rich people: sales rise and fall, and the wealthy are paid from quarterly earnings. Some people like weekly. Find what works for you.

I’ve tried them all: envelopes, spreadsheets, expensive software. I personally prefer having savings and investments go away first, and transfer out designated bills (mortgage/rent, future taxes, estimated utilities) into a second account. Whatever is left, go crazy with. You do you. Just do something.

Whatever you do, don’t feel guilty. Accounting is an unnatural act. That’s why it takes six years to become a CPA. And we’re not doing worse than earlier generations. We’re better! Statistics vary wildly, but however you define them, more Americans budget today than ever before. You’re doing great (but that pillow really could use fluffing).

20

Debt Isn’t (Necessarily) Dumb

I should have been thrilled to get off the 2008 real-estate Titanic just as it sank, but all I could see was a life raft shot through with holes.

I’d pulled the trigger myself.

Earlier in life, I had eked out scholarships to a tiny junior college. My parents said they could afford the rest. Someone let slip “the rest” meant the ungodly sum of $2,000. I knew they didn’t have that, so I went to the financial aid office and signed up for student loans. I was nineteen and felt very grown up. Then, for real college and graduate school, I did the same.

When I looked up from our near-death experience in home ownership, we were carrying almost $70,000 in student loans, most of it mine. You don’t get a degree in liberal arts to Go Ahead in life. I’d spent most of the money on dorms and beer living expenses and deferred the payments. This, oddly, my peers described as “normal.”

The financial class that saved us preached that borrowers were slaves to the lender. I could feel the chains. No sooner did we unload the moving van after selling our home in ’08, than we taped clip art $100 bills, 20 to a page, on the refrigerator. Every $100 paid down we colored in with green marker.

We ate beans and rice. We drank water. We sold Christmas presents on eBay (sorry, Mom). Cash gifts from family went straight to the loans. My wife took an extra job. I moonlighted with corporate carpet cleaners after dark. We moved chasing cheaper rent. It ran us ragged, but one by one the green bills filled in. Whenever a whole page turned green, we ate out and split an entrée.

Years passed. The green marker ran dry. Then, out of nowhere, we were crying in the car outside a bank depositing the last of the money. We were debt free, and we were never, ever going back.

We went back.

The second go-round, though, was different.

Poor people have twin assumptions about debt, peasant mentalities tucked into cultural corners, relatively unchanged since feudalism. Debt is a coping mechanism. It takes you nowhere and isn’t supposed to. If it works, it keeps you stuck. Debt is financial nicotine. Every drag extends its stay.

The second idea continues the logic. If you want to move ahead, the first thing to ditch is debt. Decent competency is a measure of success the poor can see from where they stand. Sure, it takes self-denial, hard work, and time, but you can imagine yourself owning a home and a car with no payments and probably know someone who does.

When I set off to research the financial advice everyday people used to Go Ahead, this is precisely what I expected to find: a long backstory where debt was evil, rare, and relatively recent. I thought I would find people living debt-free lives, working tirelessly to avoid the snares lenders laid in their paths. In my mental model, people in the olden days knew better than to borrow $70,000 for useless degrees. The ancient ways would be better.

I was wrong.

* * *

Most of America was bought on credit.¹ It was impossible to live without it. In a rural nation where everyone got paid at harvest, credit allowed seed, tools, wagon wheels, girls’ dresses, and men’s whiskey to change hands without resorting to fisticuffs. Even the money people paid with were paper slips of credit: bills of sale on unharvested crops or just shinplaster tokens to a local store. People paid with debt. The unit of account was dollars, but butter, bacon, and barley were what eventually changed hands. Many people went years running debts and paying down accounts without once touching a gold or silver coin. The story of a cash-only, debt-free, rugged-individualist America is entirely fictional. Without debt, Americans would have starved.

When debt is everywhere, refusing it seems silly. In history, literally everyone was doing it. What’s the problem?

Enter a strong contender for the personal finance GOAT: Benjamin Franklin. He is the most quoted American ever. Franklin’s essays are the most widely shared financial advice in American history.² You probably read these when Coach assigned them in eighth grade. (In an odd statistical anomaly, one in three history teachers’ first name is Coach.³ There is actual research on this.) The most memorable are Poor Richard’s admonitions to wake early, work hard, and that it is better to “go to bed supper-less, than rise in debt.”

Franklin feared bad habits: borrowed money gets spent on crap you don’t need. His Way to Wealth is directed at shoppers waiting for an annual discount blowout sale. Everyone was “offered, by the terms of this sale, six months credit . . . What madness it must be to run in debt for these superfluities?” Franklin’s sermon against buy now, pay later could just as easily have targeted companies like Klarna and Afterpay.

The excuse for debt was that no one had enough money. But the more “real” money Americans got, like the greenback, the more debt they took. General Motors started selling automobiles on credit in 1919. At century’s end, GM made more profit lending on cars than building them. By 1998, there were more credit cards in America than citizens.

The easier it got to pay, the more people bought. In the 1990s, two professors held an auction for Boston Celtics tickets.⁴ Half of bidders were required to pay cash in twenty-four hours, the other half could use plastic. Credit-card bidders bid double. That was before you could pay with your phone. Researchers at UNC–Chapel Hill recently found smartphones increased spending an additional 4 to 10 percent⁵ because, and this is truly mind boggling, using a physical wallet adds ten extra seconds of time to think.

The great trap of consumer credit, as Franklin understood, is that it distracts from winning the game. Debt is a trap: it locks you into right now for a long time. It’s hard to take big risks sitting on a couch you’re paying 21 percent interest on. If you want to Go Ahead, ditch the consumer credit.

* * *

So, debt was bad, right?

Not exactly.

The wisest Founding Father sure borrowed a lot of money for a guy who would rather starve than owe.

Young Ben Franklin got his lucky break when a friend named Vernon asked him to visit New York City and pick up debts owed to said Vernon. Franklin promptly ran out of cash and started spending the money he’d been sent to collect. It took six years for him to confess and even longer to pay it back. When he started his printing business, his partner’s father loaned them four years’ pay. The people who sold him the equipment also did so on credit, then sued Franklin for not making his payments. To resolve the lawsuit, he borrowed again, this time from friends. Benjamin Franklin got his start by going deeply into debt.⁶

This is why Advice to a Young Tradesman says nothing about staying out of debt, but a lot about how to get more. Franklin’s goal wasn’t getting rid of credit, but to build such a sterling reputation that people loaned you a lot. “He that is known to pay punctually . . . may at any time, and on any occasion, raise all the money his friends can spare.”⁷ Debt created discipline: industry and frugality were not optional, because laziness ruined your rep. The first rule of credit was to never lose it.

This theme runs throughout American debt history. If you didn’t start out rich, there weren’t many ways to build a business without it. Puritan Cotton Mather preached a thirty-page sermon (church took longer back then) on how to use debt well. The leading business newspaper before the Civil War explained that credit in business was “what cream is to a nice cup of coffee:”⁸ harsh without it, but too much ruined everything.

One of the greatest rags to riches Americans of all time, a one-eyed uneducated sailor named Stephen Girard, spent twenty-five years as the richest man in the nation.⁹ Girard’s first ventures took on insanely high leverage. After he scored big, he slowly de-levered until he carried $1 of debt for every $2 of equity. It worked. Historians judge him the fourth-richest American to ever live,¹⁰ ahead of Henry Ford and Bill Gates.

Read the biographies of most famous entrepreneurial founders and at some point, usually in the early chapters, somebody else’s money shows up. It may be family, friends, or banks (and very often in-laws). Increasingly in the tech boom, it’s angel investors trading cash for equity. There are, of course, exceptions. Sara Blakely, who invented Spanx, built the whole thing from scratch on a shoestring cash budget. Dave Ramsey’s EntreLeadership program teaches small-business owners how to scale without debt. There are people who do this and do it well, but they are the exceptions that prove the rule.

* * *

It wasn’t just the 1 percent using leverage to Go Ahead. The primary business investment of American families was the home. From productive farms or suburban split levels, borrowing made most Americans’ longest stride forward possible.

From Iowa to the Dakotas, the land was often cheap but the seed and equipment to make them work required taking out loans. Only one in three American homes had a mortgage as late as the 1920s, but that stat is deceptive. Mortgages got paid off as quickly as possible. They were entrance fees, not life-long burdens. Even where the land was free, typical farm families took out mortgages between $500 and $800¹¹ to get their start. That is around $25,000 adjusted for inflation, interestingly close to today’s median student-loan debt burden.¹² Borrowing the startup costs for Us, Inc. has a long history.

The numbers have now flipped. Only one in three homes do not have a mortgage today. Why? The answer lies in one of history’s truly new, and in this case peculiarly American, revolutions: the long-term, fixed-rate, amortized mortgage.

An amortized mortgage is paid down with each payment. A fixed interest rate means the payment never changes. Earlier loans did not have these features. They required huge down payments (40–50 percent), short terms (one to five years), and payments changed at renewal.

FDR swept into power with a plan for mortgages with (gasp) fifteen-year terms, fixed rates, amortized payments, and low upfront costs (20 percent). These numbers only got better over time. Today, down payments can be as low as 3.5 percent and loans last for thirty years.

The cumulative effect of these mortgages is an American superpower. By locking in an interest rate, buyers can refinance if inflation goes down but are never forced to refinance if it goes up. Canada, the UK, Sweden, and most places in the world do not have this privilege. Their rates rise with inflation.

The Super American Mortgage is a leveraged play against inflation. It is a bet against the dollar, which historically loses about 3 percent of its value every year. You effectively sold the dollar short—leveraged five to one—and locked in the gains for half your lifetime. Every other such speculative investment requires a massive net worth and a very big margin account on the Chicago Board of Trade. You get yours at any bank in the country. Plus, it comes with a good school district.

Meanwhile, the paid-for home is a poor man’s strategy in a rich world. The areas of the United States with the lowest rates of mortgage debt are also the poorest, and vice versa. The most paid-for houses in the country are in West Virginia. Globally, Europe, yes Europe, has a higher percentage of debt-free homes than the United States, led by Romania at a shocking 96 percent free and clear. Romania is beautiful, but not awash in six-figure jobs.

For everyday people, American real estate and the fixed-rate mortgage have been like a pulley on life’s ladder, making each step up faster and easier. Being able to risk a very small loss (the down payment) for a very large gain, American families became land speculators en masse.

* * *

Before we go all “Ode to Joy” on debt, it’s worth remembering how emotional owing is. The strategies of the poor, to wallow in debt or get out altogether, highly correlate to good sleep.

We’ve seen Ben Franklin. But why don’t you know Richard Anderson?¹³ Like Franklin, he was very good at getting into debt, but very bad at getting out. The reason his name is not in your history books as vice president or even president is very simply that he died from debt.

Anderson was obsessed with real estate speculation. He bought everything that came to market. His star was rising, and his finances should have, too. Congressman at twenty. Friends with President Monroe. A shoo-in for Senate if he ran. But he didn’t run. He couldn’t afford to.

“I have borrowed of A for a few days—then of B to pay A, then of C to pay B,” reads his diary from 1817. Unable to sleep, he penned panic attacks in cursive letters. “My debts must be paid. My debts must be paid!”

Seeking a way out, he begged political friends for a good-paying government job. There was only one, minister to the newly formed nation of Colombia. Big title, big pay. Everyone who heard told him not to go. He didn’t speak Spanish, and every other American sent to Colombia so far had died. He went and died, too—killed by credit (and malaria). Debt is powerful. Dangerously so.

* * *

Americans encountered three types of debt. Debts of desperation, dumbness, and determination.

Desperation has its own sad history.¹⁴ Medical bills were a leading cause of bankruptcy as far back as we have records. When a child absolutely must see the doctor, most families sacrificed their ladder up to build a bridge to survival. These debts and their aftermath are tragic, though less tragic than the doctor not coming or the NICU not existing. When my brother was born prematurely, the bill was so large my mother still remembers sitting in stunned silence in the kitchen reading it. They took a loan from a Lutheran charity. It took years, they often joked, to own him free and clear. That was a debt worth taking.

Debts of dumbness are different. Consumer credit is bookended by screams against it from Ben Franklin to Dave Ramsey. In between, many Americans put their fingers in their ears and celebrated buying things they didn’t need with money they didn’t have. But no one got ahead paying 20 percent interest on last year’s fashion statement.

Some business debts are dumb, too. If you possess even a moderate fortune, like a young Richard Anderson, risking it all serves little purpose.

But if you have no fortune at all, there is far less to risk. Debts of determination, like small-business loans, fueled many climbs from the bottom. The Franklins of the world have nothing to lose but their sleep. Viva la revolución!

Use Debt as an Imbalance Engine

Debt does not create wealth, opportunity does. When opportunity comes along, debt helps you grab as much of it as you can handle. What debt creates is imbalance. Like a seesaw, if you went down you dropped hard. If things went up, you flew higher than your own legs could jump. Debt is an engine of imbalance.

For most everyday people, such risks often feel unnaturally dangerous. They did to me. Yet my mental make-up runs afoul of history. The study that I thought would confirm slow and steady won the race, taught me that not taking chances carried its own risk. History is littered with stories of debt-free families whose tiny estates were gone in an instant: a child with polio needs the doctor, a wave of insects eats the crops, a factory closes, a blizzard buries the cattle, an in-demand skill goes obsolete. Those families collapsed, too, by not taking chances. It wasn’t the debt that got most people (except the dumb kind). It was bad luck slamming into smallness. Hard times fell on the debtors and the debt free.

* * *

I slaved to get out of debt. I was terrified of falling back in. But I saw an opportunity and I knew it wouldn’t last. I had a baseline assumption that American real estate would bounce back after 2008 because, historically, it usually bounced back. I was in a window of time, and that window would close. Debt would let me reach in while it was still cracked and grab as much opportunity as I could.

My second debt life was an attempt to play the Go Ahead game. My rental properties at this point were mostly super cheap shotgun cabins worth nothing and failing fast. The cops had just raided one of them for human traffickers. This should have been my sign to run.

Instead, I decided it couldn’t get any worse. If debt was a seesaw, I thought, let’s see how high this thing goes.

I stopped researching this book. I drove through the city looking for investments. Someone mentioned a slum lord was going under. I bought the entire side of a city street. Did I have the money? No, but I figured the Lord was my banker and my credit was good.

I sold one house, borrowed from a bank, then from a friend, and bought ten houses in a single day. Then another four nobody wanted. I found shady lenders with high rates. At one point I owned over twenty rental properties. In the valley of the shadow of debt, I finally understood what Mark Twain meant in The Gilded Age. “I wasn’t worth a cent two years ago, and now I owe two million dollars.”

I would figure this out if it killed me.

I guess I’d forgotten that Mark Twain filed for bankruptcy.

21

The Government Was Always Involved

Truth 1: You are not self-made.

Truth 2: You are the only one responsible for getting you ahead.

These twin facts are the central dilemma of getting rich in American history. Not being self-made may bruise the egos of those on the political right. That you, and only you, determine where you end up offends the left.

Your job is to negotiate life in capitalism. Capitalism is not one thing, but a set of values adapted to culture. German capitalism, Dutch capitalism, Chinese capitalism, and American capitalism all apply the same concepts differently. Those boil down to four principles: people can own assets, innovation and competition are okay, prices should come from supply and demand, and profit is morally fine. The traditional story is that governments also stayed out of the market. Hogwash. Throughout history, every government (especially the United States) was not only present, but necessary for capitalism to thrive. If you doubt this, check the balance of your FDIC-insured, government issued, digital greenback dollars. The government was always involved.¹

It still is. At a base level, the government’s role is twofold. First, it protects the principles of capitalism. At any moment, any government in the world could declare getting ahead evil, innovation too disruptive, prices controlled, and your wealth its own (just Google “kulaks”). They could do that, but since governments that tried have largely flopped, ours mostly protects the principles.

The second way is setting rules by which everyone applies the principles. Who determines, for instance, whether the Mississippi River Basin belongs to the free people of Chicago to poop in, or the free people of St. Louis to drink from? In 1901, the U.S. Supreme Court did. They ruled Chicagoans were welcome to put all their sewage into the Show Me State’s drinking water. Cardinals and Cubs fans never broke bread again because the other team literally shat in their cup.

Each government sets its rules, and at any moment could change them. Change is the point of this chapter. Whatever you believe politically, the government is involved, and you’d best figure out how. The themes that emerge are simple, but important to your financial journey: 1) The government will open and close opportunities in the market. When they do, it is wise to use them. 2) The government sets the rules of the game. It is best to follow them. 3) Never wait for salvation through politics. 4) Some savvy players will manipulate the rules of the game. Be careful building your financial strategy this way. It can work in Slow Time, but makes you fragile in Fast Time.

Who gets to poop in whose water, who grabs what land at what price, where the roads to opportunity will literally be built, how innovation gets applied, and which investments will have what guardrails are all part of this story. A powerful state can shape your investments. Tragically, a powerful state can also destroy a lifetime of work in an instant. Caveat Emptor Civis.

* * *

Our classic story of rugged Americans forging ahead to the west and making something of themselves is true. Also true is that the government did a lot of the forging ahead with them. There was no shortage of land in the early republic, and no shortage of people willing to trek there. What the trekkers lacked was money. So, President Jefferson, who won office arguing for less government, promptly made that government the single most potent force in the economy. No—not the Louisiana Purchase of 1803—the Land Act of 1800. The federal government loaned money to citizens to buy land back from itself, like me lending you the money to buy my house from me. When the first land office opened in Chillicothe, Ohio, crowds had been waiting for three weeks to take the deal. Overnight, the United States government became the largest bank in the world.²

Infrastructure shaped opportunity, too. The United States may have been a free market, but no one could get to it. Less than 100 miles of paved roads existed in the new nation. So, governments started spending money like it was a YouTube challenge. After New York built the Erie Canal, turnpike and canal fever swept through politics. Governments contributed three-fourths of all infrastructure dollars in early America.

Disasters, all. Of 200 projects in New England, 194 were unprofitable. Half of the turnpikes were abandoned in the middle of the woods, where the money ran out. The same thing happened decades later, except with railroads. Arkansas, Mississippi, and Michigan defaulted on their debts. Fun fact: Arkansas is the only U.S. state that’s defaulted twice.

Was this terrible government waste? Yes, and it worked great. The cost of transportation dropped³ from 20 cents/ton-mile to less than 1 cent. Without reckless government spending, crops planted for markets couldn’t reach consumers. The people of Kentucky can only drink so much bourbon before they must sell it to someone outside the state, and for that it must get there cheaply.

It happened again. In 1917 the United States had 30,000 miles of paved roads (versus 4 million today), nearly all of them east of the Mississippi River. It took a military convoy sixty-two days moving at six miles per hour to cross the country. An officer in that convoy, Dwight Eisenhower, became president and authorized $25 billion for the Interstate Highway System. By the 1980s you could drive from the East Coast to the West Coast without stopping for anything but gas, food, and selfies in Kansas by the World’s Largest Ball of Twine.

Again, federal investments paid off. Productivity rose 30 percent in the 1950s, 25 percent in the 1960s, and came back to earth in the 1970s just as the last major arteries connected. Owners of gas stations, food franchises, vacation resorts, factories, and distribution centers thrived because a big country got smaller on the government’s dime.

Land-grant colleges, the public research universities dotting America, arrived after the Morrill Acts (1862 and 1890) founded research institutions. These universities’ scientists got water into the desert (Arizona), saved herds from disease (Texas A&M), developed radar (MIT), created nuclear power (Cal–Berkeley), invented synthetic rubber (Ohio State), and drastically increased milk production (Wisconsin–Madison). In comic books, government scientists are always trying to make a super-human-cat-warrior. In the real world, they’re trying to improve everyday life. You can drive to steak dinner, fly to see the grandkids, use cheap power, and eat Honey Bunches of Oats for breakfast—all while living in Surprise, Arizona—because of this vast web of not-so-secret government labs.

Governments also create trust. Free marketers don’t love guardrails, but they benefit from them. Mutual and index funds currently make up around 50 percent of all stock ownership. Yet the original version, investment trusts, were equally popular and lost gobs of money. By 1929 there were nearly 800.⁴

They were ticking bombs. More diversification for less risk “sounds a good deal more reasonable than it actually is,” remembered a broker. It slowed their rise in the bull market, then crashed with everything else in the Great Depression. Investment trusts managed to perform worse than the stocks they held.⁵

Proclaimed dead and in the grave then, they became the most popular investments in the world. How? Congress resurrected them in 1936 and 1940. The first law ended double taxation, the second required tight regulation. Faith restored, American investors flocked back. By the 1950s, Better Homes & Gardens gushed “there is virtually no possibility that you’ll lose your shirt” in mutual funds. Another excited cover story—for Playboy—fawned over them, too,⁶ though that model did indeed lose her shirt.

Consumer protections are not, as it turns out, biological laws, but human ones. Have you ever reversed a fraudulent charge on a credit card? If you told the bank “thank you,” you shouldn’t. They had to. The 1970s saw a flurry of activism on consumer protection: the Consumer Credit Protection Act (1968), Fair Credit Reporting Act (1970), Equal Credit Opportunity Act (1974), and Fair Debt Collection Practices Act (1977). These created a web of red tape for banks, but for consumers the benefits have been clear: clarity on interest rates, fees, and payment terms, limits on fraudulent credit-card charges, and the legal right to correct billing errors. Is this government interference? Of course it is, in the same way that setting the rules of the road annoys BMW drivers.

Half of my friends are free-market conservatives, and they’ve stopped inviting me to parties because I can do this all day. Thirty-year mortgages, the GI Bill, the internet, and GPS all had government funding behind them. The real reason everything costs less at Target is the Consumer Goods Pricing Act (1975). The government has been in the free market capitalism business for a very long time.

* * *

Well, that settles it. Big government for the win, right?

No. A government strong enough to pull you up is also mighty enough to push you down.

Countless families who “did the right thing” and became American homeowners learned that harsh lesson. The state legislature of Washington passed laws in 1921–23 restricting land ownership for Asians. Fully twenty years before Pearl Harbor, Yakima Valley Japanese families had their land confiscated by the state. In Miami, not once but twice, entire districts of black-owned homes were condemned and bulldozed to make way for interstates. Decades of hard work and home equity vanished in flashes of Fast Time. Real estate proved to be anything but a sure store of wealth. The government can create opportunity. It can destroy it, too.⁷

Those issues involved race. Crying evil is easy. Yet the officials who approved these policies thought they were being progressive, and their policies were favored by voters. Oftentimes, the worst government hazards are the most popular.

Take price controls, ever seductive during inflation. In 1946, former first lady Eleanor Roosevelt published an essay in nearly 100 newspapers demanding Congress keep emergency ceilings for prices because of “the high cost of living and the difficulty of finding inexpensive clothes.” The war against the Nazis was over, but the “long fight to put the control of our economic system in the hands of the government” had just begun. Mrs. Roosevelt fervently believed that without a strong central government’s control, Americans could not afford new clothes.⁸

She was wrong. The price controls themselves drove the prices up because manufacturers, who couldn’t raise prices but absorbed increased costs, either reduced quality (leading to early wearing out) or quantity, further exacerbating shortages or moving goods to black markets. Suppliers unwilling to engage in illegal sales stopped shipping products altogether, since they sold at a loss. Once restrictions lifted, the price of American clothes steadily declined. Not long before, the typical American had owned just one and a half shirts. Today, over 100 pieces of clothing is average. Your messy drawers of sweatpants surpass the wardrobe of six early American families. Eleanor Roosevelt, and the cultural historians who have valorized the topic, seemed oblivious that controls created scarcity. In the words of a World Bank research paper in 2020, “Price Controls: Good Intentions, Bad Outcomes.”⁹

In fact, the worst financial advice in American history, other than scams, has been to wait for government to solve your problems.

After World War II, GIs returned to a housing shortage twice as bad as today’s. Experts testified that the nation was 5 million units behind. Today’s shortfall is half that for a population twice the size. No worries. New Dealers knew what not to do: home ownership. America’s leading political thinkers,¹⁰ some of the most popular of their day, swamped airwaves and magazines with talks and titles like Home Ownership: Is It Sound? Their answer: absolutely not. Private builders were slow. New houses were flimsy. Another Depression was certain. Home buying was too risky. Citizens should wait for the government to build massive rental housing projects instead.

Every one of these predictions was wrong. Builders developed faster methods. Homes got more, not less, safe. We’re still waiting on that Second Depression. People who took their advice missed out on the greatest wealth creation moment in human history to that point. Between when Paw Paw returned from WWII and his first grandchild, me, was born, housing wealth went up more than 1,000 percent.

“Let the government save you” is, and always was, monumentally bad advice. Student-loan borrowers learned this lesson painfully when they stopped paying balances assuming all would be forgiven. Political salvation is rooted in hope, and hope is a poor financial strategy.

Beware the Loophole; It Becomes a Noose

For people on the left, this history means we need more government. For those on the right, less. History, and the way we tell it, is a proxy fight for politics. “Who controls the past controls the future,” George Orwell said in 1984. True. We debate history not because we care about all the dead people, but because we are partisans in our own wars and want all the weapons we can get.

Politics is not coming to save you, but it will affect you. Whether you can’t wait for a liberal or a libertarian utopia, your dream of world domination by people who think like you will have to wait. When it comes to personal finances, you’re going to navigate this maze of jumbled intentions with the rest of us. How do you do it?

The most important lesson is this: governments also move in Slow and Fast Time. Decades, even centuries can pass under one regime, then suddenly shift. Be wary of those who promise to show you how to get rich playing games with governments that eventually change their minds.

Take, for instance, deducting interest from taxable income. In 1913, the same law that created modern income taxes explicitly excluded interest on debt. If the law creating income taxes said interest payments could not count, surely it never would. For seventy years, it didn’t. Investors noticed. They started taking all the debt they could get their hands on. Investment seminars sprung up teaching people how to buy houses with credit cards and take the business losses off income taxes. Then, in 1986, Ronald Reagan made the deductions disappear. Hundreds of thousands of investors were sitting upside down beneath mountains of debt they couldn’t afford and got crushed. The most famous victim of this sudden political Fast Time was a young real estate investor named Dave Ramsey. Not coincidentally, Ramsey became the most famous financial guru in America by railing against debt.

Beware the loophole game; it becomes a noose. Along your wealth journey you will be inundated with ads convincing you to contort your finances to save some small amount in taxes. The smaller you are, the less you should listen. The benefits are too few, the upfront costs too large, and the hassle and stress cause too much hair loss. I know, it happened to me.

* * *

As my real estate losses mounted, I returned to the “how to get out of taxes” books that once littered store shelves. Since I was trying so many other strategies on myself, why not tax evasion? I reached out to one of the many bestselling gurus on the subject. He wouldn’t talk to me, but handed me off to one of his assistants whose job was to pitch me products. The conversation was going great until he realized how little I was worth. “To be honest with you, Dr. Moore, I don’t think we’re a good fit for your portfolio.” He’d thought I was a pediatrician.

The strategy I called about is called “cost segregation,” which then qualifies investors for a process called “Accelerated Depreciation.” It is perfectly legal. Donald Trump does it on everything he owns. The tax code makes you depreciate investment property—claim a loss of money for wear and tear—slowly. This trick claims nearly the whole loss now if you get a professional to list out every single piece of the house. Why you can do this is a mystery, but I paid an engineer to itemize every door handle, electrical wire, ceiling fan, and faucet. Even the garbage disposals counted. For a brief moment in time I was a real estate magnate, just me and Donald Trump beating the system by its own rules.

A few months later, I realized my mistake. For one, the costs for the engineer and CPA ate up much of the tax savings. Second, now I couldn’t sell the houses. If I got in trouble and needed to bail (the whole reason I tried this to begin with), I would owe back the entire tax burden I just dodged. I built a trap I couldn’t escape. Now I was stuck with these properties, losing money, and there was nothing I could do about it. All this courtesy of the get-rich-quick schemes I’d spent years laughing at. The closer you get to crazy, the less crazy it sounds.

Don’t build your financial life trying to get around the government. It is too big, you are too small, and the consequences last too long. During Slow Time, many investors build their entire strategy around current tax codes. You can buy a house with 1031 exchanges (the loophole that skips taxes by trading investments), but only if you can live with the new investment if the rule goes away. The Biden Administration came close to eliminating 1031s. Many investors proudly put away money in Roth accounts to avoid taxes on future growth; if the nation switches to a VAT system to replace income tax (as the Trump Administration has openly considered), those investors will get taxed twice. The rules can change swiftly, upending your financial assumptions. When the government enters Fast Time, your financial world changes.

Beating the government won’t get you very far, anyway. The smaller you are, the truer this is. Better to hurt your pride than your portfolio. The government isn’t your enemy any more than it is your friend. Find a way to win inside the system, pay the taxes, and be grateful you live in a place where getting ahead is possible. For much of human history, the rules didn’t allow that.

22

Going Broke Is Better than Ever

Did you hear the one about the Supreme Court Justice who died broke on the run from the law?

James Wilson lived and lost the American dream.¹ An immigrant. Poor. Ambitious. Hardworking. Like Alexander Hamilton, Wilson was a destitute Scot in a rich Englishman’s world. As a young lawyer, he worked for real estate investors. He saw the rich getting richer and he wanted in.

The American Revolution put his financial ambition on hold. Wilson rattled off a checklist of prominent roles. Continental Congress? Check. Signed Declaration of Independence? Check. Member of the Constitutional Convention? Check. George Washington asked him to serve on the first Supreme Court. From that prominent perch and with a massive paycheck ( Justices made forty times a day laborer’s pay), he returned to getting rich.

At first, Wilson could do no wrong. A parcel here. A joint venture there. He mastered the art of buying land for a little money down, getting it surveyed, and selling for profit before the payments came due. His political and financial stars rose.

Wilson went bigger. He put down payments on land across the nation. He bought in Ohio, Kentucky, North Carolina, Georgia, and Alabama—anywhere he could buy with just a little down. A poor boy from Fife, Scotland, soon controlled a vast American empire.

Or did it control him? When Wall Street’s first crash came in 1792, real estate values plummeted. Wilson, the man who wrote Article II of the Constitution, couldn’t sell his lands, couldn’t make the payments, and couldn’t give it back because the land was worth less than the debt. By 1796 it was over. Bankers called his loans due, served a warrant, and Wilson became the first and only sitting Supreme Court Justice to ever spend the night in jail. Once bailed out, he skipped town. The Supreme Court met for an entire year short one member, who drank himself to death hiding from his creditors.

Anybody could fail. More than a few did. “In no country in the world are private fortunes more precarious than in the United States,” explained de Tocqueville.² “It is not uncommon for the same man, in the course of his life, to rise and sink . . . from opulence to poverty.” True. But incomplete.

There is a bounciness to American failure. We judge broke on an inverted scale. Did the repo lady tow your Kia? You’re a bum. Did the bank foreclose your $100 million portfolio? Wow. Someone loaned you $100 million! We like our bankrupts big, us Yanks. We also like a good comeback story. If you die in debt, you failed. Bounce back, and we will elect you president (William McKinley and Donald Trump),³ watch you box (Mike Tyson) and ball (Sheryl Swoops), binge your reality show (Anna Nicole Smith), and listen to your music (Willy Nelson and 50 Cent).

The reasons Americans go bust have largely stayed the same across 200 years. Failure, however, isn’t what it used to be. It’s better than ever.

* * *

Going broke was never great. People often went to prison, some for years, for not paying debts. Creditors could demand courts keep you there until you died. This sounds illogical because, inside, you can’t make money to pay them back. The hope was that suffering or shame got family to pay on your behalf. That was hard because your wife and children (now homeless) often lived in the prison, too.

Even outside of jail, you could fall very low in the early United States. When the economy collapsed in 1837, failed debtors often left in the middle of the night with only the letters GTT carved on their doors: gone to Texas.⁴ A double-dip recession afterward got so bad that others simply gave up rather than start over out west. Suicides by financial failures dominated newspaper headlines for years afterward.

Bankruptcy laws proved shockingly hard to pass. Creditors worried that letting people off the hook would create a nation of bad borrowers, constantly putting their hand out, but never paying back. Reformers argued the current system didn’t work for anybody, and besides, that’s what interest rates were for. They paid lenders for the risks of lending. Profits came with dangers.

Reformers briefly won the day with a law in 1800, but it was repealed in 1803. In 1841 another national bankruptcy act passed, only to be undone in 1843. Not until 1898 did the United States get permanent protection for bankruptcy, allowing creditors to take what borrowers had left and the unfortunate debtor to start over and try again.

Financial death became rebirth. By the twentieth century, Americans could try, fail, and try again without dying in prison or paying off debts the rest of their lives. Bouncing back became a thing you could do in the United States.

* * *

The brief cohort who declared bankruptcy in the short 1842–43 span offered historians a window into the busted lives of the early nation. Over 40,000 citizens applied for relief,⁵ equivalent to the entire population of Brooklyn, New York, at the time. The causes of their distress were varied, and many were as simple as the random rubble of the 1837 economic collapse. Still, they fit certain patterns: personal extravagance, business inexperience, and undercapitalization dominated the records more than simple bad luck. When the rain fell on the ready and the unready, the worst swimmers drowned.

Bankrupts were fragile optimists. Since their business was sure to succeed, they might as well live the good life now. In a majority of cases, personal overspending played a role.⁶ In a world bursting with credit and consumer goods, the temptations were everywhere.

Good Housekeeping illustrated the point with a story of an entrepreneurial husband and wife casually discussing the pending death of an aunt. “If Aunt Jane were to die, I should not be a bit surprised if she left us that old fashioned set of silver that belonged to my great grandparents.” Thus began the couple’s spiral. The silver was too nice for the sideboard, so a new one would be required. The popular sideboards today were all oak, so their current furniture would have to go. “Walnut is altogether out of style, especially in dining rooms.” But the new oak wouldn’t match the rugs. The topic turned to which new carpets to buy, which then required speculation about which new wallpaper would match the rugs. This, of course, meant new trim work, and on and on it went, until the solution was obvious. Buy a new home to house the trim that matched the walls against the rugs to seat the furniture that kept the fine silver. How to pay for it? The husband didn’t think they could. She burst into tears since he obviously did not love her enough. Everyone was quite relieved when the aunt died and left the cutlery to someone else.⁷

Beyond overspending, the next leading cause of failure was not knowing what you were doing. Overeager to be their own boss, with limited to no understanding of accounting, many failed because they made basic errors seasoned veterans wouldn’t. One New Englander sold an apple orchard and decided to write the sale contract himself, presumably to save on legal fees. The land was repayable in 200 barrels of apple cider, paid annually, with interest calculated in cider and apples. The whole thing fell into a ruinous lawsuit because no one specified who should provide the barrels.⁸

The inexperienced were also undercapitalized. There was a naive quality to those striking out on their own. Excited to do more, they extended business so thin that they were constantly at risk of ruin if a single customer couldn’t pay. Hopeless romantics in business seemed “to believe, with Mother Goose, that a tree top is a proper place for a cradle.”⁹ When the bough breaks, dreams fall back to earth. Across the long nineteenth century, only one in five businesses failed early, but about half of the underfunded ones did. The same held true for craftsmen who, though they knew their trade, hung out their shingle with no cash cushion to buy tools or reserves for lean times.¹⁰

Jonathon Amory and Henry Leeds¹¹ were eager young businessmen with a great plan to make loads of money using little of their own. With a $25,000 loan from Amory’s father-in-law, they quickly built a massive textile shipping firm. In 1838, they did a mind blowing $1.3 million in gross sales ($65 million today). All of this was performed with borrowed money and no real capital. They netted much less. Lack of reserves caught them holding the bag. To get through slack times, they took out more loans. By 1840, they were done, owing $350,000 ($12 million today) and completely ruined. They had done too much with too little.

The list went on. With a fragile network of credit, where any one failure could ripple through to everyone they owed, some people got dragged under by the drowning men they did business with. Co-signing a loan, across every U.S. century, has led to an incredible number of financial failures for the person trying to help. Future President William McKinley literally signed a blank check for someone he trusted, who promised to fill in the numbers but conveniently added a 0. While he was governor of Ohio, McKinley was functionally bankrupted simply by being gullible.

A common theme in investment and business failure, across all centuries, was chasing inflated returns that suddenly deflated. This happened so many times and in so many states that I don’t know where to begin. Assuming that last year’s hot investment will therefore be next year’s has unwound many family fortunes.

Perhaps the greatest example was out west. Dakota lands opened up just as teeming immigrants flooded eastern cities. Factory workers needed protein, and 1881’s The Beef Bonanza: How to Get Rich on the Plains¹² went nineteenth-century viral, telling you how to make money selling it to them. According to the detailed calculations of the author, a man with almost no experience could borrow the money to start cattle herding and get mind blowing 25 percent annualized returns. He reported ranchers with no experience making their entire investment back in a single year.

Would-be cowboys jumped aboard the Northern Pacific Railway and headed west. A French marquis spent millions to buy up land and flip the profits into a coup d’état for the French throne. An idealistic Scotsman came scouting for British investors. So many Harvard graduates rushed west that the Harvard Graduates Magazine¹³ felt compelled to track them all down.

One Harvard man was twenty-four-year-old Teddy Roosevelt.¹⁴ Teddy was mildly rich from inheritance, very good at spending, and recklessly bad at investing. He put $5,000 (about $150,000 today) into a poorly performing Wyoming beef business. Then Teddy wrote a check for 10 percent of his inheritance to buy a cattle ranch. This was no sure thing—the check he wrote for his previous venture had bounced—but this one cleared, and Roosevelt joined the rush to get rich out west.

From 1881 to 1886 these East Coast dudes did no wrong. Two Harvard buddies cleared 21 percent profits in their first year and immediately raised funds to expand their herds.¹⁵ Followers piled in now that success was so obvious. More cattle were shipped in from Texas so newbie ranchers could make their fortunes.

They authored their own destruction. Herds grew larger. More beef than ever came to market. Prices collapsed an astounding 50 percent. Profits disappeared.

One by one, the men who just last fall knew they were Cattle Kings discovered they were get-rich-quick tenderfoots riding a busted boom. They sold, at a loss, the cattle they had left. The Harvard investors lost 43 percent of their money. The marquis left broke and got assassinated. Roosevelt held on somewhat longer than most, refusing to admit he was beaten. Ten years later he had spent his entire inheritance and was now in debt. Roosevelt gave the ranch away for free and took a government job. He wanted to run for mayor of New York in 1894 but his wife, who had taken over the finances, wouldn’t let him because they needed his salary.

The inevitable recalibration of capitalism got them all. If there is a lot of money to be made doing something, many will rush in to do it (often with borrowed funds). This creates more product (great for consumers) and destroys excess profits (hard for investors). Returns erode as popularity increases. This story is in Iowa cornfields, Texas shale oil, Oregon microbreweries, and pandemic-era exercise bikes.

Bankruptcy is brutal. It is, however, less horrible than not-bankruptcy, which is what the United States had for nearly half the nation’s life. Suffering is neither remotely new nor peculiarly American. Getting back on the seesaw, and going up again, was.

Failure is Absolutely an Option, So learn from it

The French and English played card games of bets and bluffs for centuries. Only in America, though, did we give each player a three-card draw.¹⁶ Were you dealt a bad hand? Trade it back in and start over. Poker was born in the same nation, and at the same moment, Americans decided that second chances were worth the gamble.

Many early American bankrupts did, indeed, bounce back. Because historians have the records of nascent credit agencies, essentially businesses spying on other businesses to produce nineteenth-century credit reports, we know that about 40 percent of them rebounded to have financial success.¹⁷ Credit reports note these former failures being more careful not to overextend, focusing on businesses they knew well, and not living high on the hog. In essence, they did the inverse of what got them in trouble.

One bounce-back bankrupt was John Dayton of New York. Jumping headlong into business with no capital, he failed quickly. Swallowing pride, he went back to clerk for the employer he once left. There he stayed for over ten years on a salary, slowly accumulating several thousand dollars of savings and a decade of connections in the business. When he went out on his own a second time, this time well capitalized and with two partners, he proceeded toward a steady business career and ended life worth over $100,000 ($2.2 million today). He was one of over 10,000 success stories in the bankruptcy class of 1842–43. In the future, he was joined by millions of Americans, famous and everyday, whose second acts proved more impressive than their first.

There has never been a better time to fail than right now. Financial failure is hard. Brutally hard. But it was always brutally hard. Now it is also reversable.

If you start a small business and fall flat on your face or the economy nose dives, and you can’t make the mortgage payments, your losses and pain will be real. You will not, however, be dragged to debtors’ prison with your spouse and children in tow. You will not have your ear cut off (which used to happen, too). Your labor will not be sold to work off the debt for five years. You will be embarrassed. You will be depressed. But You-Will-Be-Okay.

Perspective is easy to have when you’re reading a book about others’ lives, far removed from their pain. It is much harder when you find yourself on the backside of an ill-advised decision. Someone else’s suffering is something to ponder. Your own is a crisis.

* * *

About two years into my over-leveraged amateur hour real estate investments, I started to lose my hair. Not because my DNA said it was time, but because the stress, the no-sleep, and the anxiety around how I was going to pick which Peter to rob to get Paul his money was utterly exhausting.

I had made every mistake in the history books. I had no business training. I taught myself accounting with YouTube. I was undercapitalized and banking on a rising market to bail me out. In a brief blip of three good months, I bought a new car. And, in the coup de grâce, I was naively over trusting. At the critical moment, with things just starting to turn around, I signed over nearly $50,000 of borrowed money for renovations. I had another baby on the way and would be gone for a while, and because I was tired, stressed, and foolish . . . I paid it all in advance.

Yep. That was as dumb as it sounds. The work was never done, the money disappeared, and with it my last hope for making things work.

Suddenly broke in 1893, Henry Adams mused, “As a starting point for a new education at fifty-five years old, the shock of finding oneself suspended, for several months, over the edge of bankruptcy, without knowing how one got there, or how to get away, is to be strongly recommended.”¹⁸ I was just over forty and vaguely remembered getting here . . . something about how I was going to be financially free . . . that if these idiots could do it so could I. I absolutely did not know the way back.

There has never been a better time to fail than right now, but failure never hurts harder than the moment it happens to you, whether it’s in 1740, 1840, 1940, or just when any forty-year-old is forty. When it comes, you lose all sense of control. The rush of Fast Time is upon you, and there is nothing to turn it off. You are being rushed down the rapids toward your own drowning—powerless to turn the kayak around and go the other way. Everything is now happening to you. There aren’t any paddles, and the fact that you have a lifejacket doesn’t in the least bit minimize the terror.

There are, however, ropes to grab if you can look up from your doom and see them. I got lucky. I had put together a nearly perfect recipe for going broke. But I also had strong bonds at home. I could lose my investments. I could humble my pride. But I wasn’t going to lose my family. Knowing that, I reset my expectations. I would probably fail financially, but I would learn my lessons and move forward. What were they going to do, cut off my ear?

Besides, even at the bottom, I had done something really cool. Anybody can lose a car. I was on the verge of losing millions of dollars. Now that was a failure!

23

Marriage (and Dual Incomes) Mattered . . . A Lot

George Washington had diarrhea.¹

Twenty-six and desperate to get rich, he wasn’t going to let that stop him. Wearing his best clothes, he gingerly mounted a horse and rode off to woo the wealthiest single woman in America. Young George made decent money surveying land. Like most young men with good pay, he spent it fast on gambling and booze. Now he wanted more. That is where Martha Custis came in. He was worth a few thousand pounds. She was worth £40,000 (over $8 million today). Sour stomach and all, this first date had a lot on the line.

Apparently, George was quite the charmer. A week later, Martha wrote and invited him to spend the night (a kind of formal come hither text). Soon, no longer single, George Washington was one of the richest men in America. All because he knew the most important piece of financial advice in history: marry well.

Marriage has changed a lot since then. Two families agreeing on business terms became two thirty-somethings tired of swiping left. Obligation transformed into an option. If we marry at all, it’s to make two individuals happy, not to form one joint enterprise. Marriage offers an after-market add-on feature to your career: nice to have if you can afford it.

Yet marriage was, and remains, financial. When it works, it offers three important benefits. First come the network effects: in-laws have an upside. Second comes the power of two incomes, which is not some new invention of the 1960s. Third, marriage offers the less tangible but highly valuable impact of mutuality.

When it doesn’t work, the repercussions are dire. But investing in a good marriage still has outsized returns. Whatever the fate of the institution, you are far more likely to succeed financially within one than without.

We have a lot to learn from the history of marriage about how to Go Ahead. Then and now, it was crucial. Capitalism, it turns out, is a team sport.

* * *

Benjamin Franklin called marrying for money the “abominable Prostitution of Persons and Minds.” Nice words.

Like much of Franklin’s writing, it was good for thee but not for he. Franklin’s own marital arrangements were callous cash transactions. While courting the daughter of a friend, he bluntly informed the family he expected a dowry large enough to pay off his last remaining business loan. His would-be in-laws didn’t have the money, to which Franklin suggested they mortgage their house. The answer was no, and Franklin married someone else.

Dowries, often called the bride price, offend us, as if daughters and cattle were interchangeable. Dowries, though, went the other way. The girl’s family paid someone to marry her, which, again, sounds horrible.

It wasn’t. Dowries were vital financial strategies: the startup funds for life. Early American families didn’t own businesses, they were businesses. If a woman married a brewer, cooper, or tailor she didn’t just become the wife of a guy with that job. She now ran a brewery, cooperage, or tailor shop. Boys’ parents had already paid for years of apprenticeships. Now brides’ families were looking around at which small business to invest in for their daughter’s future. For grooms, dowries were the largest infusion of capital they would ever receive. For wives and their families, it was the largest investment of capital they ever made. Marriage was, at its core, a tiny business startup funded by two families.

A new idea, the companionate marriage became (and remains) the norm: first comes love, then comes marriage. But dowries didn’t go away. They came from a new provider: girls’ labor. Young women left home to work for rich families or factories, raising their own startup funds. Young men did the same, building up skillsets to start their own shop just as soon as a hardworking lady in her fundraising phase picked him.

There are still cute holdovers—sweet and social, not hard and fast—like brides’ parents paying for weddings since they no longer spring for workmen’s tools. Young men sometimes still ask fathers for hands in marriage, but everyone knows the answer.

We are left with an institution created for one purpose being used for something completely different. A system about stability is tasked with making us happy. Talking about money and marriage became icky. It polluted the purity of choosing someone because we finish each other’s sentences.

If fiancés talk about money at all, it usually involves paying for the wedding. That issue first arose in the Victorian period, when couples from Cleveland started behaving like British royalty on the big day. Aghast, home economists tried to rebrand the dowry as a “sunny opportunity fund”² to help couples survive every day after the ceremony. They begged young people to invest more in the marriage than in the wedding. That advice fell on deaf ears. Saving for boozy bridesmaid brunches is a ton more fun; it also inversely correlates to success. A 2014 study of thousands of couples³ found that spending more than $20,000 on a wedding corresponded to a 60 percent increase in divorce.

* * *

In the 1830s, just as companionate marriage was becoming popular, someone turned the marriage market into a fun family card game. Cards described prospective mates by wealth, status, attractiveness, and even bad breath. The game was a teaching tool. Play your hand carefully. Drawing a blank (a spousal “dud” who offered nothing) led to dying unhappy. Wedding vows, the instructions read, could be compared to a lottery.⁴ Strategically maximize your chances for success.

The most valuable asset was assets. In-laws’ wealth, as much as a spouse’s breath, affected outcomes. Marriage doubled your business network, opening doors to loans and job placements for children. Much like today’s movies feature bumbling male sidekicks (from Shrek’s Donkey to Zach Galifianakis in The Hangover), the heroines of nineteenth-century novels always had a foolish friend who married for love. Marrying because “they’re just so cute” was good for a laugh and a hard life lesson.

For everyday people without family wealth, personal traits were good substitutes. Early twentieth-century feminists⁵ advised women that a man with a small salary who was “thrifty, vigorous, self-sacrificing and courageous” had great potential to end with more than he started with. Wealth came first, but in its absence, look for early indicators.

For young men wanting to get rich, you weren’t just picking a sex partner. You were choosing the first person customers saw entering the shop. Top traits for a wife⁶ were in business manuals, sometimes alongside chapters on double-entry bookkeeping. After calm demeanor came thrift, orderliness, and cheerfulness in tough times (since businesses ebbed and flowed). The biggest red flags were despondence (depression) and a girl who liked spending money. “A sprinkle of ugliness” was a trifle to trade for a woman who wasn’t crazy, extravagant, or crazy extravagant. Insensitive, yes, but these aphorisms mattered. When the Panic of 1837 wiped out most American small businesses, one Philadelphia print shop owner⁷ forthrightly explained the only reason his business survived was his wife’s expert management.

Both men’s and women’s guides saw marriage in the 1800s as a partnership, now chosen by the two partners instead of parental angel investors. One brought capital and management skills, the other a skillset and willingness to strive. Singles were instructed to have, between her savings and his, half a year’s pay set aside.

Finally, couples were advised to get married quickly. “I believe in short engagements and long marriages,”⁸ a popular 1903 advice manual for men explained. A guide for would-be merchants sixty years earlier agreed. “We do not approve the policy of deferring marriage till one is very rich . . . No; we are for early marriage.”⁹ This was less a romantic eagerness for love and more the marital math. “Get married,” said an even earlier magazine in 1800s Baltimore. “A wife is cheaper than a house-keeper, her industry will assist you many ways, and your children will soon share and lighten your labor.”¹⁰ Marriage created a business partnership. Sex created new staff.

Our modern noses turn up at this stuff. At the reception, we want the DJ playing Taylor Swift’s “Lover,” not Cardi B’s “Money.” The financial effects of marriage, though, were undeniable. A good marriage was a good investment, and best to invest early. Of course, they also rode to church in wagons. Is partnership marriage a timeless truth, or so last-last century? Before we can answer, we must understand the second historical power law of marriage: dual incomes.

* * *

Women’s work is severely undercounted in the historical record. Couples labored side by side, dividing tasks and responsibilities. It was not uncommon for newspapers to run advertisements from a new widow¹¹ proclaiming that she intended to keep running the family business, so the news of her husband’s death shouldn’t deter customers. Widows occasionally even continued running their husband’s legal firms and medical practices.

Working-class men both expected and needed their wives’ incomes. A 1790s tradesman bemoaned to a newspaper the “Plague of the Learned Wife,”¹² who would rather read and “talk like skollards [scholars]” than find gainful employment. One hundred years later, in the mill town of Brockton, Massachusetts, less than half of the families employed by a local shoe factory had just one wage earner. Women worked full-time, part-time, and seasonal jobs and often registered complaints with management when they didn’t get enough hours.¹³

Meanwhile, the economic value of work at home was pivotal. A typical woman labored fifty-eight hours on housework per week¹⁴ in 1900. If she kept boarders, side hustles, worked in the family business, or at a local factory, those hours were added on top.

The story of women’s work at home has two volumes. In Volume 1, a woman toils constantly, six children of varying ages surround her, water comes from a well, and electrical appliances are science fiction. One observer in Texas remembered the endless chicken coops and butter sales and explained that “women often supported their families through such funds while their husbands learned to farm.”¹⁵ Women ordered books, like the 1866 Money-Maker’s Manual, which included instructions for how to buy a “womb veil” (an early diaphragm) to avoid labor disruption alongside recipes for baked goods that sold well in city streets. It gave a list of small businesses you could start with no capital, including a crash course in dog breeding.¹⁶ Bostonian women encountered a similar pamphlet floating around in the 1890s, arguing women could make “handsome profits” by producing its recipes for colored ink and peppermint lozenges.¹⁷ Your friend making jewelry and scented candles stands in a long line of women crushing the bottom line.

Volume II: Rise of the (Washing) Machines.¹⁸ Our heroine, whose mother lugged seven tons of coal to the stove and nine thousand gallons of water from the well each year, can finally rest. The laundry, a single load of which took her ancestors four vigorous hours of scrubbing in near boiling water and hung outside in the brutal Minnesota cold, whirls in a contraption housed in the garage. In 1945, someone asked a farm wife to wear a pedometer while doing laundry her old way versus the new. What once took her well over a mile and a long day was done in under two hours and she barely moved.

From World War II to now, women’s hours of paid employment per week doubled because their hours worked at home were cut by over half. Birth control was important, too, but more for the added convenience. You could always buy a womb veil.

* * *

The post-war stay-at-home mom phenomenon was more a lull between eras than a long-standing tradition. In conservative middle-class circles, it became celebrated as a golden age. In Betty Friedan’s version, it was filled with budding alcoholics neurotically changing the sheets for the second time this week, waging secret rebellions against insanity.

My family remembers this period somewhat differently than either side: it was the arrival of the new world. In 1939, Paw Paw hitchhiked from his tiny South Carolina town to the New York World’s Fair. He was twenty-seven when he saw “The Town of Tomorrow” exhibit. Wide-eyed country folk encountered a futuristic dreamland: an electric refrigerator with a freezer box, electric stoves, a machine that washed dishes, and another for washing clothes. There was even a strange contraption labeled a “garbage disposal” that took the trash from the sink out via the plumbing . . . plumbing! Clean water came in, dirty water flushed out. A world without hauled water!

By 1959, my grandfather was forty-seven and had fought a war. Baby and wife in tow, they moved from their trailer into a real stick-built home. The bathroom had pink tile. It also had electricity, a telephone, a refrigerator with a freezer box, an electric stove, and a washing machine. They skipped the garbage disposal.

Let’s focus on the washing machine. This saved my grandmother on average 12 hours each week, 624 hours each year, and over 11,000 hours while raising a family. It gave one year of her life back¹⁹ compared to her mother.

The first time I heard Maw Maw curse she was eighty-seven. A fashionable argument arose in academia that these technologies actually made things worse. Now that the family owned robotic servants, there was no need to hire domestic ones. All jobs fell on one woman’s shoulders. Wives worked more, not less, than ever before.

That sounded suspicious. If we’d had servants, no one told me. But, always eager to learn, I called Maw Maw and read her a long passage of these academic treatises to get her opinion. I present her answer, which I had the presence of mind to record, here:

Bullshit. Pardon my French. My mother woke up at five am to start a wood stove with firewood she got from outside. Then she went to the chicken coop to get eggs. She washed our clothes by hand. She made our clothes by hand. My mother, bless her, never played with me a single hour of my life. Not once. She never played with me. She couldn’t. She had no time! I played with your father every day on the floor. Anyone who says life got harder is crazy.

Before you accuse me of mansplaining progress, remember that 1) an old woman said that, and 2) the United States’ power grid was only completed around 1950. We have been a fully electrical nation for just seventy-five years, and in that time most of the large-scale social transformations in American life occurred. For all of us, the world we are living in is very, very, very new.

Growing up where I did, women just worked. All of them. Maw Maw went back to work as soon as my dad went to school. She retired at eighty years old and only then because she got mad at her new boss. My other grandmother sewed clothes in a textile factory. My mother worked. My aunts worked. My friends’ mothers worked. The only kids we knew with completely stay-at-home moms lived across town in two-story houses. For most American families, dual incomes are not new.

* * *

There was more to it than two incomes. Marriage also created joint purpose. A recent survey of nearly 40,000 couples²⁰ found that those with joint checking accounts were happier and less likely to break up. The finding got stronger the less money they had.

Togetherness isn’t for sale at Target. You must commit to a person and get that person to commit to you. Marriage done right is a resilience mechanism. There’s two of you to handle tough times. When one is tempted to do something stupid, the other one is there to warn them. When one wants to take a smart risk, the other can cover that risk. Sure, marriage is hard. Life is harder without it.

Does marriage still work, or is it so last century? At the end of the twentieth century, researchers completed a longitudinal study of economic mobility in 4,000 families.²¹ The single largest factor related to falling down life’s ladder was poor marital relationships. That has been true across all centuries, geographies, races, and classes. You don’t choose the family you start with, so picking the family you start is among the few and most powerful prosperity drivers in your control: at least as powerful as education and income.

As divorce rates rose, fears of failure drove many to step away from the marriage market. Since 1971, the percent of Americans who were married dropped²² from 67 percent to 53 percent. That wasn’t just the rise of “partners.” More than half of people under thirty-five now live without a live-in romantic mate²³ of any kind.

The payouts from marriage, however, rose. The income of both married men and married women grew 13 percent since the 1970s. Meanwhile, unmarried men’s incomes went down 11 percent. For all the talk of high-powered singles skipping the financial line, married mothers under fifty-five²⁴ make twice as much as single women their same age, and at retirement they have three times more in assets ($322,000 versus $100,000). Men who never divorce own ten times more than single men the same age. The highest levels of financial satisfaction²⁵ today are reported by couples. No, it’s not a honeymoon effect.²⁶ The effects get more pronounced the older people get, as the compound returns of life together or alone play out.

Marriage confounds race and class as predictors of success. Married black men make more than single white men.²⁷ A child born poor with two continuously married parents²⁸ has a greater chance of making it all the way to the top 20 percent than they do of staying at the bottom. The effect of marriage on poor kids’ success²⁹ is so strong that it holds up not just for their own parents’ marriage, but also the marriage rates in their zip code. Consider that. Marriage doesn’t just affect your success and your kids’, the institution is so powerful that your marriage affects your neighbors’ kids’ chances of success.

Results are robust for gay couples, too.³⁰ In fact, same-sex married couples earn more on average than straight married couples do. The marriage benefit doubles for lesbian couples. Even twin studies,³¹ where one twin marries and the other stays single, show married siblings live longer, make more, and die happier.

Debates rage amongst academics as to which chicken begets which egg: do happy successful people get and stay married,³² or does marrying help people obtain and retain success? Even so, the lessons of history are clear: marriage mattered to financial success for a host of reasons. It still does.

Invest in US, Inc.

Today there are two American marriage stories. In the first, it’s disappearing. Poverty and struggle feed into divorce and single parenthood, which create more poverty and struggle. This hits the poor and working class hardest. The upper third of Americans, meanwhile, are marrying just fine. They have the highest marriage rates, least divorce, and most financial success.

Ironically, rich marriages today most resemble working-class marriages of the past, where both partners actively engaged in making money and expected their spouse to do the same. She’s a principal and he’s an accountant, and they’ve teamed up to do more together than they could do apart. They can fund better learning for kids, better vacations for themselves, and more retirement savings for both.

Also like the past, upper-middle-class couples still have dowries, just without all the oppressive patriarchy stuff. Paying for kids’ college is little different than paying craftsmen to apprentice your son as a blacksmith. Down-payment assistance on homes and other windfalls are passed along as marriage starter packs. What was once the strategy of families getting ahead is now the process for staying there.

As fewer people get married, the returns on marriage increase significantly. In a world where everyone is spread too thin, couples get economies of scale and psychologies of mutuality. The old marriage model, the one where the “partner” part mattered a lot, still has tremendous value. The sorting mechanisms popular today greatly undervalue the importance of the family that raised them, their work ethic, and how they weather hard times. I’m told this is not a viewable feature on Bumble.

Once married, there is a “two-income trap.”³³ Don’t step in it. The trap is when you take both incomes, add them together, and set your lifestyle there. A nicer house here. A car payment there. Pretty soon, the gas for the Suburban is its own mortgage payment and, if one gets laid off, you discover the trap only after you’re in it. The trap catches too many couples. Don’t let it catch you. If you want to be rich, you’ll have to do what others don’t. This doesn’t necessarily mean measuring everything in dollars. A stay-at-home mom invests in the kids’ development, which is your biggest generational payout. She (and, increasingly, he) is also slack in the line—reserve labor in an emergency—able to take a job full or part time to survive bad weather.

If you want to have a superpower, though, live on one income and invest the other. Millions of immigrant families bought their first home that way. For 300 years, most American families could barely survive on a lone provider. The only way up was using both. That’s not the case now, and we live richer lives for it. But by harnessing today’s wealth with yesteryear’s strategies, we can exponentially break free from “normal” American lives and actually Go Ahead. Invest it in stocks, a small business, houses, or making your first independent film . . . wherever you think the real payout is. The specific investment is less urgent than the retained earnings.

* * *

Networks. Dual incomes. Teamwork. That’s a potent combo.

I’m an odd duck. I think mostly about the future and the past. When a recession comes, I tend to assume bad times won’t last. In boom times, I stay sober, assuming I may need a clear head when this is over. I knew in my bones that American housing couldn’t go to zero and would bounce back. I could see the future. I just couldn’t get there.

My wife, on the other hand, is a day-to-day operations genius, like Elizabeth Meredith was 200 years before. She was running hundreds of millions of dollars in business before she turned thirty. She’s corporate America to the core and a whiz bang with a spreadsheet. And she was about to become my business partner.

I laid the no-good upside-down mess I’d made out to her page by painful page. When she saw the gravity of the situation, I assumed she was grabbing her phone to Google “good divorce lawyers.” She was getting her calculator, and had it solved in under two hours. To cut expenses, her mom could do more free childcare (networks). She could cover our spending for a while so I could invest more in the business (dual incomes). A renovation would wait, sell these houses, and those funds would go over there to cover that. You’ll be fine. Let’s order pizza (teamwork).

Wealth in capitalism comes from sustained efficiency at scale. Most Americans’ first successful small-businesses venture was Us, Inc. It still is.

24

Generational Wealth Doesn’t Last Long

Maw Maw had Paw Paw.

My grandfather returned from World War II’s Pacific theater weighing 100 pounds, a shell-shocked version of himself. He was reared in the Roaring Twenties, became a man the year of the Great Crash, then narrowly escaped a grenade, a Japanese sniper, and an airplane crash before landing back in the USA. An army cook offered each solider anything they wanted for their first meal back home. A smartass asked for a bear steak. He got it. My grandfather remembered asking for a plate of sliced tomatoes. “It was the first thing that popped into my head.”

If they drew a caricature of the Greatest Generation it would look identical to Paw Paw. He possessed a mane of flowing hair, a wiry six-foot frame, a ferocious devotion to Douglas MacArthur, and lived in utter terror of debt. Surviving the Depression, he took out precisely one loan his entire life: a ten-year VA mortgage to move Maw Maw and my father out of the trailer park. The monthly payment was $64.64. She awakened one night to an empty bed, walked down the tiny hallway, and found him with pen and paper mumbling to himself. “Sixty-four dollars and sixty-four cents. Sixty-four dollars and sixty-four cents.” They paid it off in five years.

Alzheimer’s struck when he was almost eighty, and, at the nursing home intake, the family stumbled into the legacy of his Depression Era fears for the future. Paw Paw had assured Maw Maw that the VA and Medicaid would handle his old age, but the VA was backlogged, and then Medicaid told her she was too rich.

Wait. What? That was impossible. To everyone’s shock, including Maw Maw, my father, and anyone who saw his decrepit Buick station wagon sans hubcaps driven shamelessly around town, the man owned a bond portfolio worth nearly $700,000. Adjusted for inflation, it would be over $1 million today.

No one knew. The only hint, given just as he got sick, was the Saturday he awakened my startled grandmother and said, “Come on, we’re going to see the grandkids.” But he wasn’t there to see me. He told my mother to get in the car and drove two mystified women to a hardware store. There he told my mother, whose used appliances were falling apart, to buy anything she wanted. He paid cash, and they left. A few years later, we found out he had been the half-millionaire next door.

I never saw a dime of that money. Neither did anyone else in the family.

For that, I am forever grateful.

* * *

For early Americans, generational wealth was their “why.” Some version of “a better life for my kids” is the most common answer given when investigators asked people why they were moving to or around the United States. Whether in the exit interviews of English colonists, notes from Ellis Island, or the Chinese family songs that “Daddy has gone to Gold Mountain,” people wanted a future for their families. This experience knows no distinction of ethnicity or race: Ahluwalia. Smith. Wojokowski. Zhao. Leaving generational wealth may be the most American dream there is.

Each wave of land-grabbing farmers—from New England to the Dakotas—intentionally purchased more land than they could ever farm in hopes to pass some to their children. One New England farmer tripled his real estate holdings in his life by carefully underspending, investing wisely, and working extra hours clearing land and selling timber. Why? He had nine children. Records show him in his seventies, desperately trying to buy more land for his remaining brood to the very year he died.

You can find generational wealth advertised in 1790s land brochures, in ethnographic interviews of Caribbean and Cambodian immigrants, in 1980s no-money-down real estate seminars, and today’s social media influencers. Jay-Z shifted the end game of rap music to generational wealth in his 2017 song “Legacy,” discussing what a will is with his daughter. CNBC wrote an article¹ about the money lessons from rap’s shift to a future-orientated genre.

A poor Laotian woman named Cer Vang felt much the same. She explained to researchers that she had only modest ambition for herself in America. “I have a home. I have a car. I think that’s all I ask for.” But for her kids, she was thinking generationally. “Maybe next five or six generations they will be in the upper class, but if you don’t think ahead this will not be.”²

Inheritance matters more for the working and middle class than for the wealthy. The wealthiest Americans get about 17 percent of their total lifetime wealth from inheritance. For the middle class, it’s nearly a third.³ This makes intuitive sense. For two kids inheriting Mom’s paid-for home worth, say, $300,000, the total windfall is about $150,000 each. That would roughly double the net worth of the typical forty-five-year-old American. For an only child, it would triple it. The wealthy inherit more, but statistically it matters less.

* * *

Where there is desire, there will be product. Selling a family future became big business in America. That dream could grow as large as anxious parents could imagine. One of the earliest investment guides, from the 1840s, assured bond buyers that putting aside small amounts of each paycheck into bonds and leaving it for a mere century “makes grandchildren millionaires.”⁴ A hundred years of not using your money was all that stood between poor people and the Vanderbilts.

Two marketing professors arrived at the same conclusion, only this time about the rich in the early internet age. Most people read the runaway bestseller The Millionaire Next Door and thought, “See, I can be rich, too!” But that wasn’t the authors’ main point. They were, after all, marketers. The culminating chapter is all about selling these used-car-driving misers something they’ll finally buy: opportunity for children and grandchildren to get ahead. Millionaires were impervious to ads for Rolex watches, but giddy to blow money spoiling the grands. Selling the hope that youngsters today could start where enterprising parents ended was, and remains, big business.

Generational wealth, though, has a critical flaw. Many kids don’t stay on the path. The Millionaire Next Door noted how much easier it was to sell luxury goods to rich kids instead of rich parents. That insight was hardly new.

* * *

The chief problem with inherited wealth is the next generation’s propensity to lose it. A developer who made his fortune selling to early American farmers, William Cooper, raised his kids with every privilege he never had. They rewarded him by squandering the entire estate. One son was so spoiled he got kicked out of Yale for sneaking a donkey into class. The only thing left of the fortune he built from scratch is the town bearing his name that houses the Baseball Hall of Fame: Cooperstown, NY.⁵

Generational wealth feels big to the first generation that earns it. Knowing how carefully you had to spend, aggressively you needed to save, and hard you had to work gives strivers a particular view of how far money will go. Surely this amount could last forever, right? But divided up amongst people who are both used to having it and unsure how it got here, the half-life of inheritance is quite short.

Nowhere was this reality more clearly displayed than with the world’s most famous millionaire miser, Hetty Greene. Greene lived a life of almost perverse thriftiness. She neither dressed, dined, nor drove anything but the cheapest options. She refused to turn on the heat in the New England winter. She died in 1936 worth $100 million ($2.2 billion today). The world’s richest woman lived like a pauper, loathed charity, and instructed her children not to give a dime of her money away.

That legacy could not last. Half of her fortune went to her son, who promptly bought a sixty-person crew yacht, married a prostitute, sailed the globe, built a mansion, filled it with young girls, acquired one of the world’s largest collections of pornography, and bought a stuffed whale penis to display at house parties. After he and his sister died, what they hadn’t blown passed precisely to what Hetty hated—charities.⁶

P. T. Barnum, the circus mogul who knew well how to separate fools from their funds, noted that young adults “loaded down with other people’s money are almost sure to lose all they inherit.”⁷ Sometimes the sins were less about spending and more about incompetence. A stockbroker and market commentator who survived both the Roaring Twenties and Depression-era Thirties noted that most of the great family fortunes managed on Wall Street were eventually lost. “Occasionally the heirs spend all the money; more often they lose it in the course of investing.” He advised families to put their trusts in the hands of the laziest grandson instead of the ambitious ones. “Otherwise, he is liable to try his hand at doubling the estate, and that might be the end of the estate.”⁸

Some of this is psychology. Some is sociology. Some is simple math. Most people don’t consider how the combination of profligate spending, ill-prepared investing, and long division destroy inherited wealth. When whaling merchant Gideon Howland died in 1847, he’d left bequests to thirty-odd family members pending the death of his last children. That took a very long time. When the estate was finally divvied up, there were over 400 descendants with various claims. One person received 1/1,440th allotment of an inheritance he had known nothing about, which, after fees and taxes, was $715. This holds true today. Of the infamous 1 percent we hear so much about, 90 percent of their grandchildren aren’t particularly wealthy.⁹

* * *

These are not simply problems for the rich. Take Jeffrey Murrell, who died in 1824 in Tennessee. Jeffrey and his wife, Zipah,¹⁰ had worked hard all their lives, braving the move to western lands close to their congressman, Davy Crockett. They paid off their borrowed homestead. When Murrell died, he left a paid-for profitable farm to his wife and sons. He had done it, rising from abject poverty to the independent Jeffersonian. Just three years later, the farm was sold off to pay his wife’s debts. His sons kept getting into trouble with the law rather than farming Dad’s land. Without the work ethic and knowledge to keep the family’s upward march moving, it was all gone by 1827.

One of the saddest episodes were the Irish immigrants of 1850s Newburyport, Massachusetts.¹¹ An extensive study of these workers came to the surprising conclusion that, despite low pay, harsh conditions, limited skills, and potato-famine poverty, they made shocking financial improvements in a single lifetime. About two-thirds of the families moved ahead, and around 50 percent became property owners. Arriving landless and penniless, they had hoisted themselves up into the American dream by their own bootstraps. What could be sad about that?

The price they had paid. Most immigrant families pulled their kids out of school early, proud that they weren’t spoiled like “the Yankee children” who idled away their early teens figuring numbers and reading. Irish lads moved from learning to earning, actively contributing to the bottom line. Then, the bill came due. The families that gained the most in one generation gained the least in the second. They had paid off their mortgages by cashing out their families’ futures. One paid-for house can only be divided once, leaving many more locked out of upward mobility.

What’s not in the Will Counts More

There are over 500 books on Amazon.com listed under Children’s Books—Education & Reference—Money & Savings. I know because I ordered a sizeable portion and promptly volunteered to do bedtime. I told colleagues I was doing “research.” My kids have been force-fed roughly 100 illustrated lessons from ways to make money to fractional accounting. From A Boy, A Budget, and a Dream to My First Lemonade Stand Business, I’m confident I’ve forever scarred their poor psyches. There are even books for drooling toddlers, like The Bull & The Bear’s ABC (“A is for Assets, the things that you own. B is for Bank, where your money is grown.”). Some are harder sells than others (The Magic of Accounting). My personal favorite is Curious George Saves His Pennies for the lessons about hard work and generosity, but also to see how long it takes kids to cry foul on the absurdly low costs of George’s toy store visit so we can discuss inflation.

My youngest once accosted a generous grandmother giving the season’s hottest birthday gift. Grandma’s misstep was asking if we had seen the toy’s viral ad. “They’re stealing your money,” piped up my five-year-old. Before I could stop it, and over my wife’s mortified glare, the most angelic treble voice twinkled aloud: “Ads are just people stealing your money, and you fell for it!”

These books should come with labels: Warning: may cause judgy children.

But she wasn’t wrong. (And I was quite proud.)

The real value of generational wealth throughout history wasn’t the money. It was education and access. The cheat code for the highest intergenerational upward mobility was neither land, money, or wealth but the education and trade skills parents passed on. In some middling families, nearly all the excess wealth of very short lives was poured into children’s apprenticeship programs, tuition bills, or tutors. These were the families most likely to move ahead.

Opening doors for kids was never cheap. “There went so much money to my children that I became very melancholy, and feared I should be ruined by it,” is as true today as it was when yeoman farmer Edward Bohun said it in the 1700s. Poor Ed wasn’t unusual. Another man around the same time, Ralph Josselin, figured he’d spent one-third of his life’s income on raising, educating, and setting up his kids in apprenticeships and dowries. Things weren’t that much better by the twentieth century. Progressive reformers estimated¹² that families with little ones carried 36 percent more costs than those without. Today, parents spend more on childcare than rent in over 100 U.S. cities.

We think this is messed up. Shouldn’t it be cheap to raise kids so we can get rich and leave them money? Maybe it should be that way, but it never was that way. And, for most of history, investing on the front end of kids’ lives had the highest payouts. In a massive study of upward mobility in the early 2000s, receiving a large inheritance was not predictive of upward mobility. In fact, many who received such windfalls fell backward over time. But of the seven total factors measured, some of the most strongly correlated to upward mobility were education, on-the-job training, and financial literacy.

This is true in the twenty-first century because it was always true. The most important legacy isn’t revealed in the will, but in handing down the skills and opening doors kids need to succeed in their own lives. William Cooper built a fortune and his kids blew it, but he did one thing right. They received the best education he could afford. After his wastrel son got expelled from Yale, Cooper got the boy a job on a merchant ship. The time at sea and the hard work calmed the young man down. Possessing a sharp mind and no more money, James Fenimore Cooper turned to writing some of America’s greatest novels like Last of the Mohicans. He built his own fortune, and years after his father died reclaimed and renovated the family’s long abandoned home in tiny Cooperstown.

* * *

When my befuddled and newly wealthy Maw Maw and Father sat down with a tax advisor to ask what to do with their sudden windfall, things didn’t go well. To qualify for nursing home benefits, Paw Paw needed to be broke. Otherwise, they would have to spend the money on nursing care until it was gone. Never fear. The tax advisor was very proud of himself. He had a plan to save the money and get Paw Paw in right away. “Divorce him,” he said. “With dementia he won’t know, and he can leave everything to you. You can still see him every day like nothing has changed.”

Maw Maw told the CPA to go to hell, marched out of his office, and proceeded to spend over half a million dollars over ten long years on a man who eventually forgot her name. The last check barely cleared. The day he died, at ninety-one, he finally qualified for government assistance.

Generational wealth doesn’t last long.

If money is a tool, it is most like a saw. It will cut through many problems, and bigger saws cut through bigger problems. But all saws wear out. No saw cuts forever. Money, unlike love, is not eternal.

The problems you are trying to solve for your children with money are not about money. The money is just the saw to cut through the knotty bits. The best bequest is a chance. Success in a world with a thousand obstacles is not guaranteed, no matter how much cash they have, and the cash may well become an obstacle.

Leave a legacy of competence. Tutors and internships outperform trust funds. Exposure is greater than excess. The families that truly valued the next generation understood the return on investing in human capital.

My grandfather’s greatest legacy wasn’t a penchant for over saving or spending half his pay on thirty-year bonds with 10 percent yields. It was insisting that his family be competent at life. It was wandering through the woods with me and my BB gun, telling tales that made the 1920s roar and 1930s terrifying. He recalled sneaking out windows to hear the old men spin yarns and howl at punchlines. I’d ask him to tell me again about the platoonmate who took a bullet in the butt cheek and was sent home, ass in the air on a stretcher, laughing at his good fortune.

Once he told me about the time the neighborhood developer got in financial trouble and stopped by the house, offering to sell him all the lots he wanted for half price. He passed. Didn’t want the stress, he said. But in the long run, he mused, it would have all worked out if he hadn’t been so wary of risk.

The man Maw Maw wouldn’t divorce for money endowed me with great stories, a love of history, and taught me to think about Slow and Fast Time. That was all the inheritance I needed.

Part V

It’s Getting Better; Much, Much Better

25

People Really Did Get Ahead, and You Can, Too

Perhaps you’ve heard that nobody can get ahead anymore.

That capitalism is broken. That only the rich get richer. We name our sports teams after workers and what they make—Steelers, Brewers, Packers, Pistons—but no one would watch the Manhattan Middle Managers play the Silicon Valley Unicorns. Success is out there, on the coasts, for the elites. We are left behind in the flyover states, but at least we get football.

Anything bad you’ve believed about capitalism, I’ve believed it more. Finding myself as a happy warrior for Go Ahead America was not just a strange personal trip, it was also family heresy and professional suicide.

Most people don’t know this about the South, but we once had a budding communist party. When I was a kid, my dad periodically voted for communists for president.¹ The only mainstream candidate he ever genuinely liked was Bernie Sanders. If that sounds strange, then you’ve never heard of the Loray Mill Strike of 1929² in Gastonia, North Carolina. Gastonia is wedged into the Carolinas’ state border region, where thousands of poor, sharecropping southerners flocked in from both sides, desperate for work in the factories. My great grandmother was born there in one of the mill village shacks. Dozens of great aunts, uncles, and cousins worked the spindles. When the initial boom subsided, management tried getting more work from fewer workers for less pay. The communist National Textile Workers Union noticed, dispatched organizers to teach poor rednecks The Communist Manifesto and labor strike strategies and, on April Fools’ Day, 1929, thousands of poor lintheads—and a dozen of my relatives—walked off the job.

It was a disaster. A deputy died. A striking pregnant mother of five kids was shot. Workers were evicted from mill housing. The event is so famous it spawned an entire genre of Marxist fiction, Gastonia novels. That was the high-tide of southern labor unions, and helps explain why socialism never succeeded down South. There remain, however, working families embedded throughout the Carolinas with long memories.

When it came time to try real estate, I chose Gastonia. I bought homes along the same streets once owned by the evil mill barons. I would be the change I wanted to see in the world. This was all an experiment anyway, so I charged breakeven prices. No profit, no problem. The mortgages would pay down, which would build my wealth. I would do what they said couldn’t be done: good for myself and affordable housing for all!

I forgave late rents. I fixed every small thing. I only charged what I had to. Solidarity, not charity!

But I’d made a critical error. Every real estate guide tells you to set aside small amounts of rent for monthly repairs. Only repairs don’t arrive in monthly installments. They come in trees that fall on the neighbor’s car. By being kind, under charging, and forgiving, I trapped myself and the tenants into a cycle where each problem made the next problem worse. I eventually just ran out of money to fix things. If I couldn’t keep up payments, the lenders would take the houses and sell them to some slumlord who would jack up the rents. All of this, ironically, because I hadn’t charged enough.

Things came to a head when I was texted pictures of a house I’d recently renovated that was literally destroyed. Every windowpane was shattered. There were holes in the walls. The front door was ripped off the hinges. Why? Apparently, she was sleeping around, and he’d had enough and let his rage loose on my rental property. An elderly woman in an apartment was waiting for us to swing by and fix her bathroom. Now I couldn’t even afford the parts.

C. S. Lewis, the author famous for The Lion, The Witch, and The Wardrobe, converted to Christianity later in life. It wasn’t like conversions you see on The Righteous Gemstones revivals. He was driving to the zoo. “When we set out, I did not believe . . . and when we reached the zoo, I did. Yet I had not exactly spent the journey in thought. Nor in great emotion.” Lewis was as surprised as anyone else.

That is what happened to me. When I climbed into my Volvo after surveying the damage, I was a humanities professor assigning Karl Marx each and every semester. When I got home, I was a capitalist. My way wasn’t working. The great irony is that I never actually cared about money that much. I thought people were getting scammed by financial gurus, and I wanted to study the lie to expose it. I arrived in exactly the opposite place I’d meant to go.

* * *

Let me tell you what I believed before I tell you why I no longer believe it. There is a Despair Industrial Complex of academics, activists, and journalists convinced that capitalism is a system of exploitation keeping people down rather than offering a path up. I call them Big Woe, because every hot take is either “Woe to Them!” or “Woe is Me!” Inside Big Woe, the fight is against “War Capitalism”: governments and businesses just helping each other win the game of power and coercion like two brother lions who’ve always had each other’s back. Want higher wages? The government will send the militia (as they did in Gastonia). Want more rights? Businesses will buy off politicians to keep that from happening. Let’s not worry that there was also war feudalism or war Alexander-the-Great-ism or that the Assyrian Empire didn’t exactly advance emancipatory visions of labor. What matters is that the system we have today is built for the few on the backs of the many.

I once attended an academic conference panel where the main topic was how to use class assignments to mobilize students to rally against our oppressors. Academic conferences on capitalism, the joke goes, feels like someone convinced all the WTO protestors to get their PhDs together. Historians especially love myth busting. It is so gratifying to destroy the illusions of 100 freshmen per seminar. Since young people are particularly anxious to know what their parents got wrong and to get good grades, the audience is receptive. The American Dream, we inform them, was a fantasy sold to the masses to keep their eyes off their shackles.

Big Woe’s message is working. Anti-capitalism is culturally everywhere, especially on campus. Want to impress your Netflix & chill partner? Next time you’re watching a crime drama, proclaim, “It’s the CEO!” It is important to do this early. You will get less credit if you wait. Businessmen (and women) are evil in American culture. A study of nearly 1,000 shows³ found that businesspeople commit more television crime than any other characters, even than career criminals. You will know this intuitively if you’ve ever binged Law & Order.

Before I started working on this book, I gave earnest lectures teaching students all this Go Ahead stuff was mostly made up. One of the favorite professor targets is the Horatio Alger myth. Rags-to-riches heroes, we assure students, were not real. Notes are dutifully typed into iPads.

Alger is an odd windmill to tilt at. I’ve not met a single college freshman who’s read his stories. Most people nodding that these tales aren’t realistic just now learned who Horatio Alger was. Hey, this guy you never heard of wrote some stories you’ve never read but don’t worry because they’re all bunk.

Alger was a writer who neither started poor nor ended up rich. He was, however, wildly popular 150 years ago. His stories sold so well in the Gilded Age that he ranks, to this day, among the top 100 American authors by sales. Every story followed the same formula. A poor boy’s character gets tested. He makes the hard but moral choice (saving a baby, returning lost valuables), which brings him to the attention of some wealthy mentor. From there, he is given a chance. Just a chance, mind you. Maybe it’s a clerk job where he learns the business. Through slow, steady accumulation, he winds up wealthy. Moral character and hard work lead to success in America for young boys.

Not so fast, says literally every academic in every discipline. Everyday people rising by their hard work is a fantasy to keep the poor loving their chains. Mark Twain was especially scathing of Alger’s books. He wrote a counter-story of an equally moral lad for whom every good deed got punished: he warned friends not to sail on Sundays and nearly drowned, he helped a blind man get out of the mud only to be accused of pushing him over. Finally, he tries to rescue tortured dogs from street urchins but gets both himself and the mutts blown to bits.

Award-winning works assure us Twain was right.⁴ People in the Revolutionary Era didn’t have a Hamilton-like shot to throw away. Similar studies exist for the Civil War era, Gilded Age, Progressive Era, Great Depression (obviously), and post 1970s. To cap it off, seemingly the only thing that MSNBC and Fox News agree on is that someone screwed the working class.

We arrive at this lunacy: nobody can get ahead anymore, which is funny because no one used to get ahead, either. A robust body of prestigious people say Americans were locked in place for the 1700s, 1800s, 1900s, and they’re still stuck in neutral today. Here we sit, and all that crossing of oceans and fruited plains got us nowhere. Our ancestors should have kept their butts in Guangdong, Ireland, Norway, Panama, Punjab, and Poland. What a waste of three centuries!

Skepticism is extremely seductive. Not buying the bullshit sounds smart. But they’re wrong. “Horatio Alger is a Myth” is, itself, a myth made up by cynics to impress other cynics. Look around you.

If something can’t be true, it probably isn’t. Everyday Americans long believed people got ahead because they saw people getting ahead. Today, despite a chorus of voices saying you can’t, you can. You probably know someone who has. The truth is messier. It was hard. It still is hard, just not as hard as before. Challenging and doable are not mutually exclusive.

* * *

Where did all the poor people go? In 1800, nearly 85 percent of the world lived in extreme poverty. Today it’s less than 10 percent. Right now around the globe, the number of people surviving on above $10 per day,⁶ a threshold for basic health, grows by nearly 250,000 every single DAY. Every 161 days, a population the size of California exits extreme poverty.

The same is true of American history.⁵ In 1974, President Ford’s America,⁷ an incredible 30 percent of Americans lived on just $37 a day (inflation adjusted). Today, just 16 percent fall below that line. True, that is much higher than tiny Norway (6 percent), but is still lower than France (16.2 percent), Japan (25 percent), Britain (25 percent) and Italy (32 percent). The United States has the third least amount of poverty among large nations (Germany and Canada are the top two).

I didn’t say poverty and inequality don’t exist. But ending global poverty wasn’t even an ambition 100 years ago. We see more suffering because there is less of it, and what remains is therefore more offensive to our new normal. Historically, poverty was not weird. Everyday people getting to Go Ahead . . . that’s the weird part.

How did weird happen? To the dismay of my communist ancestors, the answer is capitalism. What makes it so spectacular for everyday people, and so spectacularly controversial, is not that it makes assets prices go up, but that capitalism brings the price of living down. That is why my ancestors were striking. Competition from other mills incentivized highly efficient processes that increased their workload but drove down their wages. They were mad as hell because, let’s face it, we all want higher wages.

But clothes got cheaper as more people competed for jobs making them. This helps explain why the town was so divided. Most Gastonians were anti-striker. In the depths of the Great Depression, pollsters asked citizens how they felt about ongoing worker revolts. Americans had never been more desperate for change, and capitalism had fallen completely on its face. Yet 67 percent thought the government should forcibly break up strikes,⁸ and the same number agreed with General Motors for not budging on workers’ pay demands. Why? Probably because more expensive cars are not in everyday people’s best interest.

“Aha!” says Big Woe. That’s why wages have stagnated and crushed the working class!

No, they haven’t.

Don’t take my word for it. Go to the Federal Reserve Bank’s freely available datacenter (just Google “FRED data”) and look up “Real Median Personal Income in the United States.” Since 1971, it’s up over 50 percent. Yes, I’ve seen the charts on Twitter saying the opposite. They’re wrong. We make more money than we used to and things got cheaper. That’s why you don’t own half a shirt.

Big Woe, not about to back down, wails that the prices of housing and healthcare are killing any chance at the American dream! There are now over 200 cities where starter homes cost over $1 million. Almost four in ten adults skip necessary medical care because it costs too much. Big Woe is right about that. These stink pretty badly (though, as we saw in earlier chapters, we’ve seen stinkier). We’ve had bad housing markets and high healthcare costs before, but none of them (including today’s) were caused by capitalism. Though it pains me greatly to say it . . . capitalism was, and is, the solution.

The problem with housing costs isn’t the houses. It’s the land. Building a square foot of house hasn’t increased in price since the early 1980s,⁹ adjusted for inflation. The actual inflation-adjusted cost to put nails in wood on top of concrete is cheaper than when my grandfather built his home with his brothers on nights and weekends using plans they ordered in a catalogue. Let’s put aside that starter homes today are twice the size of the average house in the 1950s and somehow Baby Boomers still managed to hide cigarettes from their parents there anyway.

Don’t blame capitalism, blame your city council. Zoning laws,¹⁰ rules that say you can’t build here or, if you do, only so much, create housing scarcity. The land you are allowed to build on costs more than ever before. Local politics (not red versus blue, but us versus ourselves) is pricing people out of home ownership, not capitalism. Some dilemmas are genuinely political, and that is one of them. No, it isn’t build-for-rent or corporate America owning homes. A house is a house is a house, and the more of them for sale or rent, the more prices come down. The answer to the housing shortage is build, baby, build, and tell local politicians to get out of the way. I’m a multimillionaire from real estate. I promise you the worst thing that could happen to my net worth is to let people build more houses. Please, for the good of the nation, tell your town council to make me poorer.

And healthcare? This is a particularly bad time to say, “I work in health insurance,” in public. Everyone hates the insurance companies because that’s who denies Grandma’s claim for chemo. But can you tell me the profit margin of health insurance companies? The answer over the past ten years is about 2–3 percent. In 2024 it was less than 2 percent. Here is a random sample of companies that are more profitable than health insurers and their profit margins: funeral services (10–15 percent), waste management (8–12 percent), self-storage facilities (10 percent). You can make more money burying people, dumping their trash, or storing their junk than managing medical billing. The company that makes TurboTax is nearly ten times more profitable than my health insurer. As a way to make bank, health insurance stinks.

You can do dang well as a doctor, though. The American Medical Association (AMA), a guild (like the medieval kind), refuses to increase the number of doctors and fought nurse practitioner laws like they were Viking invaders sent to burn the healthcare village. Norway has over 5 doctors for every 1,000 citizens. We have half that. Healthcare is so expensive in large part because the supply of healthcare providers is restricted to keep beachfront condos within reach of physicians. I’m not blaming the whole healthcare cost crisis on the AMA, and every doctor I know works insane hours trying their best to take care of an equally insane number of patients per day. That, though, is at least part of the problem: too few providers for too many patients.

Wherever you find high prices, you should always ask which medieval guild is behind it, restricting the supply. Sometimes it’s people like me, the well-to-do “Already Homeowners Guild” members who vote up invisible barriers. No one ever sees the house my town never built that you never buy. Leaving the medieval period behind, one industry at a time, made everyday people’s lives and ability to pursue the American Dream real. Blame me and the guilds, but don’t blame capitalism.

* * *

So, what about all that “nobody really got ahead” stuff. Oh, it’s true. Studies of Revolutionary-era Philadelphia¹¹ found that only one in five poor people who stayed in Philly moved up to the middle class. Of those who saved funds and went out west, just 40 percent moved up and scarcely 10 percent did very well. A national study of records from 1820 to 1910 showed that, at best, 28 percent of any city’s inhabitants¹² were able to truly Go Ahead to financial independence. Barely 30 percent of workers’ children moved up to own their own shop, and even for hardworking immigrants’ children it was merely 50 percent.

Now go back and re-read that paragraph, but remove the following words: only, just, scarcely, at best, barely, and merely. Here we meet the central dilemma of understanding Go Ahead in American history. Compared to what?

These were historically dramatic numbers. In Europe, less than 10 percent of workers were likely to make it to some form of middle-class status within ten years of work,¹³ often must less. Compare that to nearly every American city: 10 percent was the lower bound of upward mobility for everyday people. Many cities saw 20 percent or more of their citizens go from unskilled workers to middle class or higher in any given decade. Americans lived longer, ate better, and possessed more wealth than those they left behind.¹⁴ By 1920, Americans were wealthier per-person than any place in the world by every measure: mean wealth, median wealth, workers’ wages, median landholding . . . everything.

Overall mobility has slowed¹⁵ compared to the post-World War II boom. The famous 2017 paper by Raj Chetty in Science found an incredible 90 percent of kids born around 1940 out-earned their parents. For kids born after 1980, though, it fell to half.

I ask again, compared to what? No Major League Baseball team has a winning percentage of 0.763 since the 1906 Chicago Cubs, but that tells you more about the weakness of baseball then than the strength of the game now. All American baseball players today, and probably most college teams, could manhandle the ’06 Cubs. Yes, 1940 was a particularly awesome year to be born compared to any moment in history before, but Americans in 1940 were not nearly as wealthy as we are today. Our median income is triple theirs.

In most cases, scholars compare old societies to a perfectly random distribution. In that magical world, someone born in the bottom 20 percent would have a perfectly random chance (one in five) of making it to the top 20 percent, no matter where they were born. Sounds great.

But that world does not exist now, and it never existed in the past—anywhere. Modern-day Denmark, a nation just larger than Phoenix, Arizona, comes the closest and even they don’t have perfect randomness. About one in six born at the bottom of Legoland in Billund climb to grasp the plastic flag at the top of Copenhagen’s economy. In the United States, where we sell off-brand blocks at the Dollar Store, it is merely half of that.

What happens at the top? If you can’t get to the front, surely it is because someone else is holding their spot in line. Not true. In the United States, 64 percent of those born at the top fall out in their lifetime, precisely the same percentage as in Denmark.¹⁶ Most Americans (and Danes) who make it to the top didn’t start there, and those born there don’t stay.

Working people in history weren’t comparing themselves to modern Nordic socialist perfection, anyway. They were comparing themselves to nineteenth-century, poverty stricken Europe¹⁷ and Asia. To be a farmer in Minnesota was to not be a peasant in Norway. To own a dry cleaning service in San Francisco was to not work in famine-plagued rural China. They improved their lives compared to what was on offer, which is what Go Ahead was always about.

Which brings us to today. Of those born in the bottom financial fifth of the United States, six in ten get out. That’s not perfect (eight in ten) but it’s a better-than-average shot. Four in ten become middle class, upper middle class, or rich. Nearly one in ten make it all the way to the top.

Go Ahead is there for the taking. If I told your ancestors, from India to Ireland, that you would live in a time where kids born at the bottom had a better than 50 percent shot at a good life and one of every ten born poor became rich, they would call me crazy or praise their gods. Probably both.

If only one in ten born at the bottom makes it all the way to the top, then damn it, be the one.

Be Careful What You Believe

At some point, someone thought it would be a great idea to destroy everyday people’s faith in the American Dream. Incentives matter, and for those doing the bashing they’ve been well rewarded with tenure on the left and political power on the right.

I implore you to believe they might all be wrong. Believe that this system has worked for others and it will work for you, because it has and it will. Is it perfect? Of course not. Neither is our version of football, where you throw the ball with your hands, but we love it, anyway.

If you read the actual Horatio Alger stories, and you’ve ever lived poor or working class, you’ll notice less the main character than the secondary ones. They’re the kids you grew up with. Mickey Maguire is a bully who mocks kids trying to get ahead. He reappears, time and again, beating people up, occasionally going to jail for petty theft, and accusing the rising star of putting on airs. There’s also Johnny Nolan, a boy of no ambition, shamelessly lazy since he figures no one gets anywhere anyway. I’ve known dozens of these boys (and girls). They still live in a ten-mile radius of home. They may have beaten you up as kids, but they didn’t believe they could beat the system, so they never did.

It is easy to scoff at the idea that “outlook,” “mindset,” “optimism,” or whatever other self-helpy mantra people preach holds the secret to success. But outlook is crucial. The Consumer Financial Protection Bureau found,¹⁸ to everyone’s surprise, that income was slightly negatively correlated to financial well-being. The strongest indicator was “a positive attitude” and “the habit of saving.” In a follow-up study, behavior (again, greater than income) was the greatest predictor of well-being. If you say this in learned circles you are “poor shaming”—blaming failure on the individuals when it is the system’s fault. But these results, in another study of nearly 150,000 people, are strongest for the poor. Hopeful views for the future significantly predicted long-term savings.¹⁹ Yes, systems matter. So does the faith in yourself the myth busters gleefully seek to destroy.

They’re not just wrong. They’re hurting people.

To see how far you’ve come, you must look back at where you started. If you want to gaze off at distant utopia, fine by me. Looking back, though, it feels like we’re awfully close to where previous generations strived to Go Ahead to. If we lose our sense of awe and wonder at how different our world is from the past, and if we lose our bearings on how hard it was to get this far, we will abandon the process of getting ahead. That is a mistake.

Don’t buy from Big Woe. You don’t have to give your DNA to a genealogy company to discover this; just call your grandmother and ask: How many generations removed are you from your family’s first indoor, flush toilet?

Conclusion

The Real Lessons of Financial History

To my great surprise, and the astonishment of anyone who ever knew me, I ended this journey rich—especially by the standards of a man raised thinking only the successful bought furniture from Rooms to Go.

I pulled an inverse Hemingway: I got rich slowly, then suddenly. I concentrated on what I was good at. Without meaning to, I became an expert in the fields of personal finance and real estate. I learned that smallness begets smallness, so I sold my cheap-o problems and bought similar ones on much more expensive land. Getting drug dealers out of a $50,000 rental is, it turns out, exactly the same process as getting them out of $500,000 ones, but the latter offers ten times the reward. I began buying ever nicer housing with what the owners felt were insurmountable problems. Since I’d faced shotguns, prostitutes, and human traffickers at this point, what did I care? I learned to run my investments like a business, to sell when the time was right, and to roll that money into new, more expensive investments. Not everything worked. But the wins, amplified by leverage, dwarfed my salary until I no longer needed it.

One day I fiddled with a spreadsheet and realized that we were millionaires. Then two, and on it went. The cliché is true. Your first million really is the hardest. Nothing much changed about me, but it sounded cool . . . kind of like saying I’m a crypto billionaire.

All in all, the fact that a bumbling history professor got rich trying to prove no one does seems like a good indication you can, too. Somewhere north of working in the mill and south of founding PayPal, Go Ahead happened, and happens, to everyday people all the time. You don’t need to be in the 0.01 percent, but being in the top 10 percent sure beats not being there.

The point isn’t that it is easy, but that it can be done. Yes, there is inequality, but getting on the other side of it is possible. Getting rich the American way is not all that hard, historically speaking. Most who Go Ahead perform some combination of seven strategies:

Built their own business

Took a large income in someone else’s business

Combined several small incomes to create excess

Invested truly extreme portions of their income

Leveraged a high-payout opportunity with debt or risk

Invested steadily over a long period

Married well

I used 1, 3, 5, and 7. Should you? Doubtful (except 7, which is good advice for nearly everyone). Not every strategy works the same in each era. The Baby Boomers, who employed strategy 6 and watched every asset rise “in the long term,” are portrayed as normal. Wrong. They are a historical oddity. Simply buying a house and saving 10 percent in stocks around 1870 would have left you wiped out four separate times. A recent study covering 125 years showed that Americans saving 20 percent of their annual incomes in stocks would have failed to survive retirement nearly half of the time. The only savings rate that never failed was over 40 percent¹ (strategy 4).

What strategies you use and when to use them is the tricky part. It helps tremendously to employ any of them in a growing area (like San Francisco in the 1850s, LA in the 1950s, or the Sun Belt today). Moving locations supercharges the effect. The path of progress isn’t a strategy, but it is a tailwind. Predicting the future is notoriously hard, and the path of progress regularly changes direction, but it is a lot easier to get rich where the people are going than where they are leaving.

The real lesson of history, remember, is a sense: of what really happened, how people’s lives really worked, and how the world’s most finite commodity, your time, moves. Nostalgia is a bad guide to truth, and many of the supposed “lessons of history” are just false.

The real lessons will surprise you. They surprised me. About half of what I thought would be true when I started researching over a decade ago turned out to be wrong. Here are seven financial ideas from history that didn’t work, and twenty-five that did.

What Didn’t Work

1) Assuming this time will be just like last time: Late in World War II, an executive at the chain store Montgomery Ward² was handed a chart of prices back to the nineteenth century. Every time there was war, prices rose. In peace, they fell hard. He literally said out loud, “Who am I to argue with history?” He ordered all plans for future stores to stop, refused to even repaint existing buildings, and hoarded bonds to await the coming collapse. And that, children, is why you have never shopped at a Montgomery Ward.

History is a laboratory of time moving in Slow and Fast modes. Slow Time usually looks a lot like the past. Fast Time rarely does. Precisely because the next economy will be different from the current one, people try to overfit the lessons of the last crisis only to confidently make new mistakes. In the late 1990s, fools focused on real estate while the stock market tripled. Then the tech bubble burst, day traders died, and the wealth road was paved flipping houses to sell. Piddly little rent checks were for old men needing hobbies . . . until the ’08 crash, when rental investing became so popular even Warren Buffett wanted to do it. Covid hit, and very smart people were sure a bonanza of foreclosed deals were on their way just like in 2008, but they never came. And on it will go. You need something more profound than “it worked last time.”

2) Believing predictions (especially by experts): I have read thousands of books, articles, and pamphlets of financial advice spanning 300 years. The sheer volume of wrong predictions is difficult to comprehend. Leading experts called depressions that didn’t occur, boom times that crashed, safe real estate that wasn’t, inflation that never took off, political sea changes that came to naught, and any number of “can’t miss” strategies that not only missed but backfired. You could crush a car beneath the writings of the people who got it wrong. To prove this yourself, open your smartphone and download any financial podcast from December 2019 with titles like “Predictions for 2020.” They will discuss many topics. A global pandemic isn’t one of them.

3) Amateur investing: Getting distracted by investing is hazardous to your wealth. One ruined Great Depression investor, with gallows humor, noted that the stock market crash brought at least one silver lining. Professionals were focusing on work again. “Many a doctor who was overlooking his patients³ . . . was over looking at the ticker.” The same idea appears in most decades. The “rage for speculation has brought misfortune to merchants and manufacturers,”⁴ a business writer noted in 1840, as they neglected their day jobs chasing dreams of South American bond bonanzas.

In 2025, the typical investor spent just six minutes on research per stock trade,⁵ usually all six minutes just before the trade. What little research they do is checking price charts and analyst ratings. They almost never consult risk metrics used by professional traders. The rule of concentration always rules: you’ll make the most money being exceptional at one thing rather than mildly aware of many.

4) Putting all your faith in compound interest: It will not always come to save you. From the very first financial advice books to now, the “magic” of compounding returns has mesmerized audiences. Look what happens in ten years. Twenty years! Thirty years!!! While the math is correct, the connection to the real world is not.

The number-one rule of compound interest is . . . never interrupt it. But everyday people do not put money away just to watch it grow. They defer spending today to eat tomorrow. Children come along and want cars. Parents need assisted living. Job loss is not a function in Excel. Lust takes over: for vacation homes, new kitchens, or new spouses. Real people interrupt compounding all the time.

5) Trusting “It’s Guaranteed”: Anything guaranteed isn’t. Over and over again, the idea of guaranteed returns (also known as “can’t miss” and “sure rewards”) appeared in American history. From the Dismal Swamp to canal companies to the Northern Pacific Railway, and in such tragedies as the Freedman’s Bank or the savings and loan crisis, every guarantee has been voided by reality. No one, not even the U.S. government, can promise the future will pay out. The few that do, specifically annuities in the twentieth century, did so by paying less than other investments. If you are given such a promise, explain you’ve been dealing with stomach pains and the laxative is finally kicking in. Get this person away from you.

6) Hoping government will save you: Governments matter, always. But predicting political salvation isn’t something you should bet on. Some of the worst financial advice in history was to trust governments to solve your problems, like skipping home ownership or planning on student loan forgiveness. Use whatever programs politicians implement, but don’t sit around doing nothing in the meantime.

While you wait four years for the people you are sure have all the right answers to a) win, b) really do what they said, and c) do it before the other side wins again, you could have been four years farther down the wealth road. From 1950 to 2024, investing a dollar in stocks returned nearly $3,000. Only investing during Democratic or Republican presidencies,⁶ and not the other, dropped returns to $100 or less. Vote your conscience. Invest in your best interest.

Yes, the government was always involved. Sometimes it throws ropes down to help. Other times it throws roadblocks in your path. The climb still belongs to you.

7) Believing it was easier “back then”: It wasn’t. Early America was no cakewalk. People fled farms for hot, sweaty industrial jobs because farms were mind-blowingly boring—literally. Farming families shot themselves at much higher rates than people in the supposedly horrible urban cities of the early industrial era. Thoreau was wrong. People are happier in modernity.

It wasn’t easier in the 1950s, either. Mom and Dad had to have sex quietly because they shared 900 square feet with four kids. Most women did work, especially immigrants and black women, for low pay. Structural racism was far more structural then than now; many people struggled to get ahead for reasons out of their control. And no, the golden era of workers’ wages did not end in 1972. The average worker today earns more, lives in a bigger home, eats more diverse foods, and watches a wider array of entertainment than her grandfather who worked at the Ford plant. She does this working on average eight fewer hours a week in a safer job.

Perhaps no song released in the last ten years so sums up this wrongheaded nostalgia than the Sam Hunt country hit, “I Bet Breaking Up Was Easy in the 90s.” No, Sam, it sucked then, too.

Life was not better in some bygone era. Your life, your time, your moment is among the best to be alive in human history. Carpe now.

Do What Worked

1) Use Slow Time to get ready, and Fast Time to Go Ahead: Life mostly moves in Slow Time. Even in the internet age, your financial life will occur at the same pace as before. Plan, invest, and think accordingly. When Fast Time comes, and it will, you will neither predict it is coming nor which way it will go. The rules of thumb presented here will hopefully help you navigate these rapid moments without getting wiped out; you may even move ahead.

Eisenhower said that Napoleon said, a genius “is the man who can do the average thing when everybody else is going crazy.” I’m not sure Napoleon really said that, but it is true. When everyone assumes the good times can’t end, or that the bad times never will, those who can save, buy, invest, or leverage what others are too happy or too scared to touch will win more battles than they lose, and they’ll win the biggest battles. Eisenhower, not Napoleon, won the big one.

A recession will come. When? No clue, but you would be surprised how many fortunes were made during hard times. I regularly print book drafts out on my Hewlett-Packard printer, a company founded in the depths of the Great Depression in a detached shed where one of the founders slept for cheap rent. You will face one of these, though hopefully not that bad. Use Slow Time to build a strong position you can pounce from. When, not if, it comes, jumping on the opportunities others flee from may well be how you speed up your journey. It sounds incredibly strange when young people tell me “I wish

I was lucky enough to be around in the 2008 crash like you were.” Since I have not yet mastered Gen Z slang, I rarely know how to respond. I’m still not sure if the Great Financial Crisis counts as skibidi or not skibidi. When their moment comes, I tell them, it will be more than vibes. Get ready for Fast Time.

2) Solve someone else’s problem (not your own): Walk into a colonial store and you would have been asked, “How do you intend to pay?” But today’s stores all ask the same central question of American capitalism: “How can I help you?”⁷ In that one question is the central path forward for you and every other American. Iowa farmers solved the grain problems of Europe. Cattle ranchers in Texas solved the protein problems for New York. Construction workers solved the housing needs of growing families. Their children riveted Chryslers together to solve the transportation needs of suburbanites. You will be rewarded for your efforts in direct proportion to how you solve someone else’s needs. This can be a career choice, a business idea, or moving to a place where there are more people’s problems seeking solutions. Most financial advice focuses only on your money problems, but the answer lies in other’s.

3) Find your guru: The world is complicated. Finding someone who can help you distill complexity into simplicity is a good thing. Sure, remain skeptical. Buy their books, not their seminars. Read their websites, avoid their products. Remember they make a living, too, and the way they pay the bills is through you. But most of what is truly helpful from the gurus is what they offer for free: steps, rules of thumb, and investing principles. Buying into just about any decent plan will get you better returns than flying by the seat of your own pants. I’m a big fan of Kyla Scanlon and Morgan Housel for conceptualizing our place in the economy, Marginal Revolution for tracking the trends that lead to Fast Time, Bill McBride, and Logan Mohtashami for real estate markets, Scott Galloway for career advice, and Dave Ramsey if you struggle with spending habits. The best financial advice on the internet, bar none, is from Clark Howard.

4) Marry wisely: Marriage matters, a lot. Make yours work. Don’t buy the hype that you’re better alone. Also, and this is an unpopular but true lesson from the 1700s and 1800s, beauty is overrated and frugality, family resources, and income potential are underrated. What do Henry Flagler (Standard Oil), Alexander Graham Bell (AT&T), Leland Stanford (Central Pacific Railroad/Stanford U.), and Sam Walton (Wal-Mart) all have in common? They got started by borrowing money from their in-laws. If you don’t marry rich, hardworking and smart also pays out well. Not all the marriageable men and women of the world think prudently about their finances. That’s okay. You only need one.

5) Harness the power of dual incomes: One of history’s most effective financial strategies for everyday people, and one only available to couples, is to have two incomes but live on one. From the factory girls of New England, through immigrant wives running boarding houses, to the twentieth century “working girls” of the office, this strategy stands the test of time. The families that stashed one income into paying for or off a house, putting money into retirements or rentals, or self-funding a new business were often the most likely to get ahead in their own lifetimes. The dual-income couple spending all it makes is, indeed, caught in a “Two-Income Trap.” But the dual-income household that creates a financial fly-wheel can build considerable wealth. Too few families employ this old strategy today, and I wish it would make a comeback.

6) (Side) Hustle smartly: All side hustles are useful for certain times and places. The trick here is to weigh how much more you could make in your lifetime just being great at what you do (concentration). If the answer is “a lot” then side hustle little (limitation). The payouts will come later, but larger for those who can be great at one thing. But not everyone has that type of job. They can get similar effects by leveraging spare time into much more than spare change (diversification).

Trying to save up a down payment or to pay off a car? These are great times to embrace monetizing free time. Your great-great grandmother’s butter probably paid off the farm, so you are not too good to drive for Instacart in this season of life. But, as many immigrant families cherished, there should come a day when the goals are met and you can rest beneath your own vine and fig tree without having to side hustle in someone else’s garden.

7) Rent out your space (for a time): Most American families paid for their farms and townhomes by monetizing them. With more space per person than ever in history, but less homes on the market than needed, boarders and accessible dwelling units (ADUs) make sense. Of course, housemates are messy and often a pain to have around. They were that way for your ancestors, too. Take a page from their book. Have strict rules, kick people out quickly when they break them, and make sure they pay on time. But Airbnb is nothing new; the ideal of being broke in your own space is a luxury item few people in history would have understood or respected.

8) Move more: It’s a big economy, and your mobility matters. You are not as stuck as you think you are. If the Exodusters can walk to Kansas, you can commute to a better gig. Go where the best jobs are paying the most. Most American boomers retiring today are wealthy because their parents or grandparents fled places like Arkansas to build the modern Southern California suburbs. Whether it is trading in expensive San Francisco for affordable Austin or selling out of Florida to retire to the Carolinas, most Americans who geoarbitrage take advantage of the greatest free market zones in the world: the fifty United States.

I cannot emphasize this point enough. We aren’t mobile anymore. In the late 1800s, one in three Americans changed addresses every year.⁸ In the 1960s, it was still one in five. That helps account for all the upward mobility. Today, it is just one in thirteen. Staying put is highly correlated to the dramatic drop (by 50 percent) in people starting small businesses. When students ask me what they should do to become millionaires, my usual answer is move to one of the five fastest-growing metros, start a trade business, and sell it in fifteen years. The easiest place to monetize your human capital is where the money is, and money follows people. If you’re not getting anywhere where you are, Go!

9) Utilize government largesse: Government programs matter, even the bad ones. There is nothing new about this. Land sales, water projects, war with the Sioux, electrification initiatives, and Social Security are just a few ways the federal government paved the way for its citizens. That isn’t always “interfering” in the market. It is just the government being the government. Not every initiative works, and many backfire (especially for the Sioux). But you shouldn’t be shy about supporting those that work, nor timid to criticize those that don’t. Our politics were always messy, but there is nothing peculiar about expecting the government to open up opportunity. After (not before) government programs offer you opportunity, embrace them. The Small Business Administration offers business loans. Use them. States offer move-in incentives. Find them. As long as the government offers Pell Grants, take them.

10) Chase money actively: Even if you hate your job, you should try to do it better than anyone else. And if you still hate your job after that, find something else to do. The chance you will buy a stock or crypto that makes more money than your career earnings has a decimal at the front. The chance you can make more money by adding a part-time job than you can by day-trading is close to 100 percent. Income matters.

If you want to flip houses, that is great for you and for America because it salvages older homes. But you will quickly find that building codes are there for a reason, finishing drywall is dirty work, and there is no “easy” money. Want rentals? You will discover that profit margins run tight, roofs leak, and hoarders are real. That doesn’t make these investments foolish. It makes them active.

If you don’t know where to start, ask those who’ve already succeeded in building something. If such people aren’t available, read The Sweaty Startup by Nick Huber. Striving is not optional. There is sweat equity in every climb that didn’t involve a lotto ticket.

11) Avoid retirement anxiety: You can and will retire. Remember that nearly 50 percent of those living to sixty-five were retiring well before Social Security, and many more did not want to retire for fear of boredom. Even at the peak of the pension era (the late 1970s), six in ten Americans did not have a pension. You may not hang in Sag Harbor, but if you maximize your income and invest eagerly, the chances you will starve are next to nothing. Social Security is far from perfect, but it is basically a poorly performing annuity and most Americans build their retirements on top of that. Some things help more than others: paying off a house beforehand, downsizing, and part-time work are all worthwhile. You will, certainly, have to make sacrifices. But those sacrifices are made to enjoy a twenty-five-year run your forebears never saw. Taking it easy has never been easier.

12) Separate retirement saving from investing: Most of what parades as investment literature are just savings strategies by another name. You should save for retirement, but you will not get rich that way barring a very long lead time. It is better to be safe at seventy than broke, but it is better to be free at fifty than either. If your happiest dreams are a great retirement, that is wonderful. You can pretty much just save your way there. If you want to get rich, with enough money to do what you please as you please, your 401(k) isn’t your supersecret sauce. You’re going to have to do more than that.

13) Do not obsess over early retirement: You can get rich and keep working, so don’t conflate the two. If you are built to achieve an early exit, you probably aren’t built to enjoy it. If you can’t help but catch the FIRE, make sure you seek a meaningful life. The first early retirees, self-sufficient farmers of the 1800s, still worked more hours a week than the typical forty-year-old today. Most early retirees go back to work. I know. I’m one of them.

14) Make your money by concentration. Save through diversification: Your best path to wealth is through extreme focus on one way of making money: owning a company, getting promotions, or “living in a van down by the river.”⁹ Whatever your strategy is, you’ll get the outsized returns by becoming very, very, very good at something. As part of this, your highest return on investment is probably yourself. The younger you are, the more true this is. Invest in your own human capital before you worry about the stock market. If you are deciding between monthly savings and building your skillset, build your skillset first.

After you’ve made your money, diversification protects against losing all that you made. Limitation, concentration, diversification have worked in all eras.

15) Invest in your kids: Remember that your kids’ education is also an investment. Spreading your capital across companies, stocks, real estate, and kids lessens the risk of having a paid-for house still occupied by your useless thirty-three-year-old and increases your chances the kids will help you out if needed.

Remember generational wealth is not as powerful as you hear: Your kids will probably spend it on nicer vacations than you took. History is clear. Invest in their human capital. Build their capacity to succeed. The most important wealth you can pass down boils down to education and job training, cash to help get started in marriage (the house, not the wedding), and as much exposure as you can give to how money works while growing up. Everything after this is nice to have, and everything past that has spoiled many a middle-class kid. Inheritance is overrated.

16) Never co-sign a loan . . . ever!: Nothing. Not for anything. No matter how much DNA you share. This includes your kid’s student loans. If you can pay for their college, pay for it. Otherwise, the debt is theirs. You can always help them out with their payments, but you can’t go back and un-sign the loan docs. This is one of the oldest pieces of financial wisdom in American history. In general, debt-free strategies have lower upsides but far less downside. Signing onto someone else’s loan is all downside. This has ruined lives and broken up families. Don’t do it! Ever!

This advice is one of the few consistent throughlines in American history that survived every era. No matter what money was, no matter what bankruptcy law said, no matter how much family business happened, co-signing loans has undone more American finances than any other mistake. If it can destroy people in the 1700s, 1800s, 1900s, and 2000s it can probably trip you up, too. Yes, your best friend wants that truck. No, you don’t need to help.

You can, as the women of Charleston did, profitably loan money, but you probably won’t. The person most likely to ask you for funds often has access to your heart strings, which hurt when pulled. Lending, both then and now, is a business, and banks are simply better at it today than they were 200 years ago. There are places everyday people can profitably pretend to be banks, like well-established loan flipper businesses or private lenders with long track records of success. If you are tempted to chase yields this way, make sure the lawyer at the closing table represents you, not the borrower. Remember, lending is a dangerous business, not a personal favor. That’s what the interest rate is for: it’s the price you demand for the risk of seeing all your money go away, potentially forever.

17) Play the market, but not to win: The appeal of beating the market excited many.The ridiculous profit margins of the bucket shop owners of the 1890s (and stock apps today) are worth remembering. If you find such pursuits fun, and the money expendable, enjoy your hobby. But don’t call this investing. Remember to adequately factor any return on investment, and you must include time. If you make $45 per hour at work, and you spend two hours each week looking at stocks, then your total invested capital includes nearly $5,000 annually in extra costs from your time. If you are a thoracic surgeon, multiply accordingly.

18) Embrace failure: Many, and probably most Americans who start something new stumble. As devastating as it can feel, we should risk more failure more often. You can only go so broke in America. That wasn’t always true. You won’t be publicly shamed. There are no debtors’ prisons to die in.

Open the hair salon. Move to the booming city. Buy the franchise. Take the online certification course. If it doesn’t work, move on. The chances of failure are overstated. In the 1800s, a widely publicized number said 95 percent of all businesses failed.¹⁰ It appeared in newspapers nationwide and has perpetuated to this day. It was wrong. The real numbers ranged from 30 to 50 percent, not far off today. Most people who try will find some measure of success, but the act of trying is what is in short supply. Remember, financial life has never been less risky than right now.

19) Stay in the market: Play the long game in the market, but stay exposed to what might replace it. It took a century to build today’s faith that Wall Street “always” beat other investments. It hasn’t always, and it won’t always. But faith, once established, is a very hard thing to break. The lesson of history is not, again I say not, that smart people avoid the market, stay in cash, predict constant crashes, or whatever The Big Short version of history you’ve been told on the doomsday fortune teller platform formerly known as Twitter. Something will, one day, become a more popular investment than U.S. stocks. But that something, if it is to last, will have to have some real return from some real business or product. In earlier eras these might have been income-producing farms, government bonds, or lending mortgages. The chances this change happens in your lifetime are relatively small, and the chances you could predict it even smaller. Things which have worked for a long time usually continue to work.

That said, I will register a historical warning. Fast Time eventually comes for most assumptions that “it always worked that way, so it always will.” If what happened before must happen again, then, sure, build your entire wealth strategy around it. But never forget that it doesn’t “have” to happen. The universe does not owe you a certain annualized return. However you go about winning the game, remember to diversify at some point. Own stocks (I do), but few people in history would want to only own stocks.

20) Give annuities a chance: Everyone hates insurance companies, but at least take a moment to be grateful they exist. Your ancestors carried all their risks each day out to their fields and factories. You can sell your risk of accident, injury, illness, fire, or flood to insurance companies. You can also purchase a retirement from them, which is what a century of people did before Social Security.

The reason most gurus hate annuities is that 1) they leave nothing for your heirs and 2) they underperform the market. On some, the fees are also truly godawful. The rise of lifelong singles and childless couples will lessen the first issue. For the second, the meteoric rise of the S&P 500 the last four decades may not repeat over the next four. And you can find annuities without egregious fee structures. Insurance companies can do things everyday people can’t, like buy hedges against market failures and invest in timber land before it gets exciting. Not all annuities are good, some are downright horrific, and not all insurers are created equal. But for a stress reduction against losing your nest egg in a late-life market crash, a modest annuity from a top-rated insurer bought through a fiduciary advisor isn’t quite as bad as is often made out. They were a godsend to earlier generations.

Let me be clear. Annuities will not make you rich. They are for protecting your downside, not increasing your upside.

21) Simplify your budget: You don’t need seventy envelopes or fourteen bank accounts or a monthly subscription to keep track of how much is being set aside for soccer camp. Precise budgeting is a holdover from the Progressive Era’s obsession with measuring everything. Decide how much you should save for things you’ll need to spend money on later in the year, and put that in an online savings account with high interest. Decide how much you’ll invest, and have that put into investments. Everything left should be spent on food and concert tickets. But when you’re broke, stop spending. Keep a stash of ramen noodles for the end of every month.

22) Borrow (carefully): To leap ahead it helps to use a catapult. When you’re flying through the air, though, it can feel terrifying. I wake up every day of my life with an urge to pay off my house, and I could, but I don’t. I get richer by writing the mortgage checks. In fact, I once bought a house with over a million dollars cash, realized I’d screwed up, so went back and put a mortgage on it. If this seems strange, trust me, it seems strange to me, too.

Historically, the most successful strivers leveraged debt-to-equity ratios somewhere between one-to-two and two-to-one. There were outliers who took (and take) more, but you only hear about the ones who say they won, not the many more in front of bankruptcy judges. You can risk too much, but avoiding leverage, especially for opportunities like housing and business expansion, holds back wealth building. Most people who climbed from the bottom to the top took some risks with some leverage to get an outsized payout.

23) Look for oversized (and occasional) paydays: Poor people think in terms of the steadiness of money (weekly checks, monthly deposits). The rich think in terms of rare windfalls (from annual bonuses to selling equity at the IPO). You make more money in real estate when you sell than you do cashing rent checks. Change your mindset. Stop oohing and aahing at the steady stream of small fireworks. You want a money bomb to go off. Invest in things with big one-time payouts.

24) Risk more: You can risk too much. You can also risk too little. Everyday people were taught to steer clear of risk. Too much risk is deadly. But taking no risks, sitting contented in your steady job with the steady check, is not safety. It is fiddling in Slow Time. When the Fast Time comes and the banks are merging, the market’s crashing, or the new technology is finally breaking out, you won’t have time to retool. Take on new roles at work. Solve new and harder problems. Build your human capital. Once you kind of know what you’re doing, look for places you can leverage your way into something larger. When the tide comes in (or out) strong, the smallest boats are most vulnerable.

Blind risk isn’t the goal, as we learned in “Going Broke Is Better Than Ever.” Risk mitigation is important. Historically, the best strategies were building competence in your field, staying within reasonable leverage ratios, and starting small before going all-in. A proof of concept phase is also useful. Do your wedding cakes sell from the kitchen before you lease a shop? Can you manage one rental before you buy twelve? Do people who don’t care about your feelings get excited using your product? Quit rules,¹¹ hard stop points when you accept your losses and move to what is next, are also important and one of the most valuable lessons from successful stock traders (and poker players). Remember the traders who beat the market are good at taking small losses and holding on to big wins. Also, keep enough cash in the bank to survive a crisis.

Past that, risk more. Perhaps Wall Street traders and the heirs to large fortunes risk too much, but the baseline case for everyday people is that we risk too little. Terrified of losing what we have, we risk getting nowhere at all. There has never been a less risky time, or one with bigger, longer payouts for taking them, than right now.

25) Reject pessimism: The returns on despair are low. Big Woe is selling pessimism at scale, but remember—Eeyore ends every episode of Winnie the Pooh surprised at how good things turned out.

Sure, optimism needs its guardrails. But do not confuse cynicism with wisdom. They are not the same.

Believe that you can make it in this country, because if you can’t get ahead here, there probably isn’t a place you will. Doubt every person who says that it is harder today than ever before, that no one gets ahead, or the game is rigged. Give them a copy of this book, and go back to looking forward.

Yes, you can Go Ahead. If you do look backward, though, glance at all those generations who dreamed you would get there . . . and say thanks.

Acknowledgments

People really can become self-made success stories, and no one can truly be self-made. Embrace both, because both are true.

To Go Ahead, working your tail off is just a prerequisite. It guarantees nothing. You’re also going to have to take some risks, and no one else is going to take them for you. When you jump, the landing belongs to you.

To avoid landing economically rump-side up, someone must reach out their hand to pull, push, or just catch your fall. You, like me, landed upon thousands of days someone who didn’t want to show up to work, coach, teach, or listen did it anyway when they could have been doing anything else. If you aren’t grateful, look back and count the millions worldwide who would love to end their story where yours starts.

I would have gotten nowhere without tremendous help. The compounding returns from others’ kindness, in deposits big and small, are the reason I am thriving and that this book exists. A non-comprehensive list of people who reached down, pushed up, or told me to stop whining, include: the late Robert Calhoon, my agent Scott Mendel, and editor Kirby Sandmeyer. Scholars and friends who read various drafts or offered ideas (or simply listened to ad nauseum rambles) including Elizabeth Amato, Chris Cameron, Albert Churella, Mandy Cooper, Donna Cornachio, Casey Delehanty, David Dyer, Ben Gaskins, Amanda Gibson, Lindsay Keiter, Greg Jackson, Jim Joedecke, Greg Krafcik, Bryan McGovern, Mark Noll, Tom Okie, David Parker, Stephen Rios, Donna Schronce, Rachel Van, Tim Vanderburg, and David Yelton. Writing wardrobe by LAKE Pajamas. Family support was unfathomably generous, especially Dale and Gail Stockamp, Celia and David Stockamp, Kurt and Tamara Ward (who are like family), Jim and Becky James (whose class started this crazy journey), Steve Contianos, Monk and Megan Moore, Louise and the late Joseph Moore, and Michael and Rachel Moore. My wonderful daughters were patient with all the money books, give/save/spend jars, and get-rich board games. I am so proud of you both for being such great kids and future adults. My beautiful, smart, insightful wife read every word and made each better—your investments in me were the greatest I’ve ever received. Saveos.

Intellectually, the people who shaped my thinking, for less than $25 a book and a few hours’ time, are like cherished teachers I’ve (mostly) never met but who nonetheless changed my mental map forever. If their thoughts bubble up here and there, I mean imitation as the sincerest form of flattery. These include: Edward Chancellor, Tyler Cowen, Morgan Housel, Clark Howard, the late Benoit Mandelbrot, Deidre McCloskey, Dave Ramsey, Russ Roberts, and Nassim Taleb.

Finally, you. Thank you. You don’t owe me anything, and certainly not your time. I hope these ideas do for you what they did for me. May you Go Ahead to where you want to be.

Notes

Introduction: Go Ahead!

1 Where I was brought up, we never talked about money: Mark Twain as quoted by Norman Hapgood in The Literary Digest 109 (1931), 43. My thanks to Twain scholar Barbara Schmidt for helping me verify the quote.

2 no one gets ahead anymore: Reverend Newman Smyth said in the nineteenth century that “some unseen yet hostile powers are breaking out the rungs of the ladder,” as quoted in Stephan Thernstrom, The Other Bostonians: Poverty and Progress in the American Metropolis, 1880–1970 (Cambridge, MA: Harvard University Press, 1978), 45–46.

3 the Scots-Irish people of Appalachia: Jim Webb, Born Fighting: How the Scots-Irish Shaped America (New York: Crown, 2005); J. D. Vance, Hillbilly Elegy: A Memoir of a Family and Culture in Crisis (New York: Harper, 2018). For a response to Webb’s narrative, see Warren R. Hofstra, ed., Ulster to America: The Scots-Irish Migration Experience, 1680–1830 (Knoxville, TN: University of Tennessee Press, 2011).

Chapter 1: Getting ahead is Easier than Ever

1 Mississippi, the poorest U.S. state: On “the Mississippi Question,” see Douglas Carswell, “Is Mississippi Really as Poor as Britain,” The Atlantic (August 18, 2023). Here, I use 2023 GDP per capita numbers from the World Bank (UK = $49,463) and the US Department of Commerce (Mississippi $49,593). The Mississippi number is per capita income, which is actually lower than GDP per capita. World Bank, “GDP per capita (current US$)—United Kingdom,” World Bank Data (2023); “SASUMMARY State annual summary statistics: personal income, GDP, consumer spending, price indexes, and employment,” US Bureau of Economic Analysis (April 17, 2025); Servet Yanatma, “Poorest US state rivals Germany: GDP per capita in US and Europe,” Euronews (March 1, 2025).

2“It’s stunning to me how few say, oh, could you help me get into Denmark?” Tyler Cowen, “Is the American Dream Alive and Well? A Free Press Debate” The Free Press (September 13, 2024).

3 obtained the right to land: Russel R. Menard, “From Servant to Freeholder: Status Mobility and Property Accumulation in Seventeenth-Century Maryland,” in Stanley Katz, John M. Murrin, and Douglas Greenberg, eds., Colonial America: Essays in Politics and Social Development (New York: McGraw Hill, 2001), 131–153.

4“poor, in debt, discontented, and armed!”: Edmund Morgan, American Slavery, American Freedom: The Ordeal of Colonial Virginia (New York: W. W. Norton & Co., 1975), 24–26.

5 In 1870, food, rent, and clothing: “Consumer expenditures in 2023,” United States Bureau of Labor Statistics (December 2024); Robert J. Gordon, The Rise and Fall of American Growth (Princeton: Princeton University Press, 2016).

6“Ours is the age of suicide and mysterious disappearances”: Scott A. Sandage, Born Losers: A History of Failure in America (Cambridge, MA: Harvard University Press, 2005), 6–7. New-Yorker and The New Yorker are not the same publication.

7 median income has risen: Wage increases have slowed, not reversed, since the post-war boom. The cultural hue and cry that labor productivity increased more (it did, by over 100 percent) and CEO-to-worker pay increased more (from 20-to-1 to today’s 350-to-1) is not the same thing as arguing that median personal income has not grown (it has). Many “wages have stagnated” graphs also show only hourly wages without showing retirement contributions, healthcare, etc. U.S. Census Bureau, Real Median Personal Income in the United States [MEPAINUSA672N], retrieved from FRED, Federal Reserve Bank of St. Louis, https://fred.stlouisfed.org/series/MEPAINUSA672N, April 28, 2025.

8 even left-leaning groups admit wages are up: Paul Krugman, “What isn’t the matter with American workers?” Economic Innovation Group ( June 2024); Elise Gould, Katherine DeCourcy, Joe Fast, and Ben Zipperer, “Strong wage growth for low-wage workers bucks the historic trend,” Economic Policy Institute, March 24, 2025.

9 The median weekly earnings of high-school graduates: Jeremy Horpedahl, “The Middle/Working Class Has Not Been ‘Hollowed Out,’” Economists Writing Every Day (May 7, 2025); source data from US Bureau of Labor Statistics OEWS and US Bureau of Economic Analysis; Michael B. Strain, The American Dream Is Not Dead (But Populism Could Kill It) (West Conshohocken, PA: Templeton Press, 2020), 33–100.

10 you are probably going to hang on to about eighty-four: John Burn-Murdoch, “Why are Americans dying so young?” Financial Times, March 31, 2023.

11 the American Dream is no longer possible: Jere Behrman and Paul Taubman, “Intergenerational Earnings Mobility in the United States: Some Estimates and a Test of Becker’s Intergenerational Endowment Model,” The Review of Economics and Statistics 67, no. 1 (February 1985), 144–51; Raj Chetty, Nathaniel Hendren, Patrick Kline, and Emmanuel Saez, “Where Is the Land of Opportunity? The Geography of Intergenerational Mobility in the United States,” Quarterly Journal of Economics 129, no. 4 ( June 2014), 1553–1623; Gabriel Borelli, “Americans are split over the state of the American dream,” Pew Research Center, July 2, 2024.

12“Fear-Setting”: Tim Ferris, “Fear-Setting: The Most Valuable Exercise I Do Every Month,” May 15, 2017.

Chapter 2: Fast Time, Slow Time

1 Fast Time and Slow Time: The technical term should be fractal time and essentially applies the great French mathematician Benoit Mandelbrot’s concepts of “slow random” and “wild random” to the financial lives of everyday people. In fractal time, volatility “clusters here and there. Periods of big price changes group together, interspersed by intervals of more sedate variation.” Mandelbrot was able to prove that, in markets, “Time does not run in a straight line…It stretches and shrinks.” In fractal time, what speeds up or slows down is volatility. I call this Fast and Slow Time. Mandelbrot suggested that forces of price and chronology created “trading time,” which could speed up or slow down under volatility. I propose using this as a helpful concept for people’s financial lives in general. Slow Time and Fast Time are taken from two of Mandelbrot’s stages of randomness: slow random and wild random. The third state (mild random) is a world of only binary choices (heads/ tails) and does not apply to daily life outside of a casino. Relatively few historians have tried to integrate fractals and chaos theory into historical analysis. Benoit Mandelbrot and Richard L. Hudson, The Misbehavior of Markets: A Fractal View of Financial Turbulence, Annotated Edition (New York: Basic Books, 2006), 264, 290. See also H.W. Brands, “Fractal History, or Clio and the Chaotics,” Diplomatic History 16, no. 4 (Fall 1992), 495–510; David F. Lindenfeld, “Causality, Chaos Theory, and the End of the Weimar Republic: A Commentary on Henry Turner’s Hitler’s Thirty Days to Power,” History and Theory 38, no. 3 (October 1999), 291–99; Niall Ferguson, “Virtual History: Towards a ‘chaotic’ theory of the past,” in Niall Ferguson, ed., Virtual History: Alternatives and Counterfactuals (New York: Basic Books, 1999), 1–90; Noël Bonneuil, “The Mathematics of Time in History,” History and Theory 49 (December 2010), 28–46.

2 Slow Time matters most: There are overlaps here with Nassim Taleb’s concept of the Black Swan and Extremistan. To understand the relationship of the two, it is helpful to remember Mandelbrot’s three phases of randomness. Slow Time = Slow Randomness, and Fast Time = Wild Randomness. I am simply relabeling these for a general audience. Whereas all Black Swans cause Wild Random/Fast Time, not all Wild Random/Fast Times are caused by Black Swans. Sometimes volatility increases in ways reasonable minds could see coming, even if other reasonable minds disagreed. Slow Random/Slow Time, meanwhile, is not from Mediocristan, but rather are phases of life in Extremistan when the fat tail outcomes have not manifested themselves. There is no guarantee that Slow Time will be either long or short intervals between the next period of volatility, for the obvious reason that it is random. So, it is not true that Slow Time is necessarily longer in duration than Fast Time. Nassim Nicholas Taleb, The Incerto: Fooled by Randomness, The Black Swan, The Bed of Procrustes, Antifragile, Skin in the Game (New York: Random House, 2021).

3 Kim Basinger: “Actual Factual Gwinnett: Kim Basinger used to own Braselton?!,” The Atlanta Journal Constitution, March 23, 2016; Kenna Simmons, “Ga Ga Land,” Georgia Trend, March 1, 2018, https://www.georgiatrend.com/2018/03/01/ga-ga-land/; “Georgia film space projected to overtake California for top spot,” Atlanta News First, September 13, 2023, https://www.atlantanewsfirst.com/2023/09/13/georgia-film-space-projected-overtake-california-top-spot/.

4 outside Metro Atlanta: Simmons, “Ga Ga Land.”

5“delusion lies in the conception of time”: James Buchan, Frozen Desire: The Meaning of Money (New York: Welcome Rain Publishers, 2001), 110.

6 Norman McGhee: Gregory S. Bell, In the Black: A History of African Americans on Wall Street (New York: John Wiley & Sons, Inc., 2002), 31–35.

7 shipping changed forever: Marc Levinson, The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger (Princeton: Princeton University Press, 2016).

8“a historical sense”: Lewis B. Namier, Avenues of History (London: H. Hamilton, 1952).

Chapter 3: Crypto Isn’t the Future; It’s the Past

1 broke but determined: William Wells Brown, Three Years in Europe: Places I Have Seen and People I Have Met (London: Charles Gilpin, 1852); for debates about the veracity of the story, see Geoffrey Sanborn, Plagiarama! William Wells Brown and the Aesthetic of Attractions (New York: Columbia University Press), 50–51.

2 Financial life was mind bogglingly complex: This chapter summarizes scholarship on early American money. Joshua R. Greenberg, Bank Notes and Shinplasters: The Rage for Paper Money in the Early Republic (Philadelphia: University of Pennsylvania Press, 2020); Sharon Ann Murphy, Other People’s Money: How Banking Worked in the Early American Republic (Baltimore: Johns Hopkins University Press, 2017); Jessica Lepler, The Many Panics of 1837: People, Politics, and the Creation of a Transatlantic Financial Crisis (New York: Cambridge University Press, 2013); Joshua D. Rothman, Flush Times & Fever Dreams: A Story of Capitalism and Slavery in the Age of Jackson (Athens, GA: University of Georgia, 2012); Scott Reynolds Nelson, A Nation of Deadbeats: An Uncommon History of America’s Financial Disasters (New York: Alfred A. Knopf, 2012); Robert E. Wright, The Wealth of Nations Rediscovered: Integration and Expansion in American Financial Markets, 1780–1850 (New York: Cambridge University Press, 2010); Stephen Mihm, A Nation of Counterfeiters: Capitalism, Con Men, and the Making of the United States (Cambridge, MA: Harvard University Press, 2007); Marieke de Goede, Virtue, Fortune and Faith: A Genealogy of Finance (Minneapolis, MN: University of Minnesota Press, 2005); Philip L. Mossman, Money of the American Colonies and Confederation: A Numismatic, Economic, and Historical Correlation (New York: The American Numismatic Society, 1993); Leslie V. Brock, The Currency of the American Colonies, 1700–1764: A Study in Colonial Finance and Imperial Relations (New York: Arno Press, 1975); E. James Ferguson, “Currency Finance: An Interpretation of Colonial Monetary Practices,” The William and Mary Quarterly Third Series, vol. 10, no. 2 (April 1953), 153–180.

3“did not know a Set of Bills of Exchange”: Wright, The Wealth of Nations Rediscovered, 28.

4 tornados of counterfeit money: Mossman, Money of the American Colonies and Confederation, 10: Richard Doty, “Book Review: Stephen Mihm’s Nation of Counterfeiters,” E-Sylum vol. 10, no. 40 (October 2007).

5“get rid of them as speedily as possible”: Greenberg, Bank Notes and Shinplasters, 13, 52, 71; Seth Rockman, Scraping By: Wage Labor, Slavery, and Survival in Early Baltimore (Baltimore: Johns Hopkins University Press, 2009), 174.

6 A year later, the Court surprisingly reversed itself: Hepburn v. Griswold, 75 U.S. 603 (1869) was actually decided in early 1870 and declared the Legal Tender Acts issuance of federal currency unconstitutional. Overturned by the Legal Tender Cases (Knox v. Lee and Parker v. Davis), 78 U.S. 682 (1870).

7 money is anything you can use to pay your debts and taxes: The theoretical underpinnings of this argument are in Christine Desan, Making Money: Coin, Currency, and the Coming of Capitalism (Oxford University Press, 2014). Desan’s argument is especially popular among Modern Monetary Theorists. I agree with Desan’s view of money but find MMT well-intentioned but wrong.

Chapter 4: Financial Advice: Inflation’s Oops Baby

1 life ended where it began: On medieval mobility, which could spike upward at times (and downward often) but largely pales compared to anything like modern economic upward mobility, see: Gregory Clark, The Son Also Rises: Surnames and the History of Social Mobility (Princeton: Princeton University Press, 2014); Christopher Dyer, Standards of Living in the Later Middle Ages: Social Change in England c.1200–1520 (New York: Cambridge University Press, 1989), 229–31; Richard Lachmann, From Manor to Market: Structural Change in England 1536–1640 (Madison: University of Wisconsin Press, 1987), especially Table 4.5. On early modern mobility in England, see Keith Wrightson, Earthly Necessities: Economic Lives in Early Modern Britain (New Haven: Yale University Press, 2000). On ancient wisdom, see Proverbs 21:5b; Ecclesiastes 5:13–14; 11:2; “Admonition of Singāla,” Dīgha Nīkāya 3.180, as translated in Ainslie T. Embree, ed., Sources of the Indian Tradition, Volume One (New York: Columbia University Press, 1988), 122–23.

2 Even in permissive Amsterdam: Simon Schama, The Embarrassment of Riches: An Interpretation of Dutch Culture in the Golden Age (New York: Knopf, 1987), 330.

3“of any avail to us”: J. Henry Hill as quoted in Sandage, Born Losers, 45.

4“Surprising Profits in Ducks”: Edmund Morris, Ten Acres Enough (New York: James Miller, 1866).

5 Housekeeper’s Book explained in 1837: The Housekeeper’s Book (Philadelphia: William Marshall & Co., 1837), 19.

6“She is a capitalist.”: John Howard Cromwell, The American Business Woman 2nd edition (New York: G.P. Putnam’s Sons, 1910), 94–95; C. W. Haskins, How to Keep Household Accounts: A Manual of Family Finance (New York: Harper & Brothers Publishers, 1903), 93.

7 as detailed as most got: Benjamin Franklin, “Advice to a Young Tradesman, Written by an Old One,” in Leonard W. Labaree, ed., The Papers of Benjamin Franklin 3 (New Haven: Yale University Press, 1961), 304–08; Edwin T. Freedly, A Practical Treatise on Business: or, How to Get, Save, Spend, Give, Lend, and Bequeath Money (Philadelphia: Lippincott, Grambo & Co., 1853); Gordon W. Light, The Young Merchant (Boston: 1840); P. T. Barnum, The Art of Money Getting, or, Golden Rules for Making Money (1880).

8 Consider the insurance company: Peter Bernstein, Against the Gods: The Remarkable Story of Risk (New York: John Wiley & Sons, 2010).

9 Workers spent more on insurance than on alcohol: Jonathan Levy, Freaks of Fortune: The Emerging World of Capitalism and Risk in America (Cambridge, MA: Harvard University Press, 2012), 12–61; Gordon, The Young Merchant, 308; June Alexander, Daily Life in Immigrant America, 1870–1920 (Chicago: Ivan R. Dee, 2007), 175. The number was $0.77 a month on a monthly income of $42. But full employment for all months was rare, so their total outlay was closer to 3 percent.

10“speculitis”: David Hochfelder, “Where the Common People Could Speculate: The Ticker, Bucket Shops, and the Origins of Popular Participation in Financial Markets, 1880–1920,” The Journal of American History 93, no. 2, September 2006, 335–58.

11 Many fell prey: Paul Crosthwaite, Peter Knight, Nicky Marsh, Helen Paul, and James Taylor, Invested: How Three Centuries of Stock Market Advice Reshaped Our Money, Markets, and Minds (Chicago: The University of Chicago Press, 2022), 119–21; Edward E. Beals, The Law of Financial Success 5th Edition (Chicago: The Fiduciary Press, 1907).

12 rarely more than $100: Tyler Anbinder, “Moving beyond ‘Rags to Riches’: New York’s Irish Famine Immigrants and Their Surprising Savings Accounts,” The Journal of American History 99, no. 3, December 2012, 741–770.

13 Step 2 was insurance: This order comes up in nearly every pre-1940s book. Only after these were paper investments suggested. Those included bank funds at interest, state or federal bonds, stocks, and mining stocks. Thomas A. Davies, How to Make Money and How to Keep It (New York: G. W. Carleton & Co., 1867); Albert W. Atwood, Putnam’s Investment Handbook: A Stimulus and Guide to Financial Independence (New York: G. P. Putnam’s Sons, 1919), 29–204; William A. Schnedler, How to Get Ahead Financially (New York: Harper & Brothers Publishers, 1926).

14“surest means of getting rid of money that is known”: Davies, How to Make Money and How to Keep It, 251; C. W. Taber, The Business of the Household (Philadelphia: J. B. Lippincott Company, 1918), 424.

15 cost of milk has gone up 1,700 percent: The price of milk actually went down for the majority of the nineteenth century, in some cases by half. 1912 Pages of Time Celebration (Pages of Time, 2015); for the price of milk in 1912, I’ve used the numbers for New York City. Report of the Committee on Markets, Prices and Costs of the New York State Food Investigation Commission (New York: Chas P. Young Co., August 1, 1912), 63; for 1812, I’ve actually used the numbers at the end of 1811 and the beginning of 1812, as the War of 1812 disrupted average annual prices downward and the prices for milk did not technically rebound to $0.24 until 1818. Carroll D. Wright, Comparative Wages, Prices, and Cost of Living (Boston: Wright & Potter, 1889), 89; May 2022 milk prices taken from USDA Retail Milk Prices Reports, May 18, 2022.

16 inflation was functionally 0 percent: From 1793 to 1893, inflation was 0.07 percent. Edward F. McQuarrie, “Stocks for the Long Run? Sometimes Yes. Sometimes No.,” SSRN Paper 3805927 ( July 23, 2021), 20. There was a brief bout of Civil War inflation followed by decades of relative deflation.

17“when the dollar was worth 100 cents:” Maurice Le Bosquet, The Art of Spending: How to Live Better and Save More (Chicago: American School of Home Economics, 1921), 8.

18 more than one in four American households owned some kind of stock: 8 million households out of around 29 million total. Julia C. Ott, When Wall Street Met Main Street: The Quest for an Investors’ Democracy (Cambridge, MA: Harvard University Press, 2011), 152; Gardiner C. Means, “The Diffusion of Stock Ownership in the United States,” The Quarterly Journal of Economics 44, no. 4 (August 1930), 561–600.

19 new investor guides in 1919: Albert W. Atwood, Putnam’s Investment Handbook: A Stimulus and Guide to Financial Independence (New York: G. P. Putnam’s Sons, 1919), 8; Isabel Ely Lord, Getting Your Money’s Worth (New York: Harcourt, Brace, and Co., 1922); Benjamin R. Andrews, Economics of the Household: Its Administration and Finance (New York: The Macmillan Company, 1924).

201921’s Financial Independence at Fifty: Victor de Villiers, Financial Independence at Fifty 2nd edition (New York: The Magazine of Wall Street, 1921. On financial courses, Enoch Burton Gowin, Developing Financial Skill (Boston: American Institute of Finance, 1922); Paul Crosthwaite, Peter Knight and Nicky Marsh, “The Economic Humanities and the History of Financial Advice,” American Literary History 31, no. 4 (2019), 675. On chartism, Charles H. Dow, Scientific Stock Speculation (New York: Magazine of Wall Street, 1920); Morris Niefield, The Personal Finance Business (New York: Harper & Bros, 1933). Note that “personal finance” was originally a term about lending to consumers, not handling your own money.

21 threw a bombshell into the investing word: Edgar Lawrence Smith, Common Stocks as Long Term Investments (New York: The Macmillan Company, 1925); Irving Fisher as quoted in Robert J. Shiller, Irrational Exuberance 3rd edition (Princeton: Princeton University Press, 2015), 215–16.

Chapter 5: Gurus are Selling Something; You Should Buy

1 Yale Professor of Finance James Choi: James J. Choi, “Popular Personal Financial Advice versus the Professors,” Journal of Economic Perspectives 36, no. 4 (Fall 2022), 167–92.

2 Nobel Prize in Economics: Peter Gosselin, High Wire: The Precarious Financial Lives of American Families (New York: Basic Books, 2008), 264–65.

3“you have to learn by doing”: Gerald M. Loeb, The Battle for Investment Survival (New York: Simon and Schuster, 1957), 109.

4“so hard to spell”: William J. Bernstein, The Investor’s Manifesto: Preparing for Prosperity, Armageddon, and Everything in Between (New York: Wiley, 2009), Chapter 4.

5 Think and Grow Rich: Napoleon Hill, Think and Grow Rich (Meriden, CN: The Ralston Society, 1937). The best overview of Hill’s nefarious career is Matt Novak, “The Untold Story of Napoleon Hill, the Greatest Self-Help Scammer of All Time,” Gizmodo (December 16, 2016), https://gizmodo.com/the-untold-story-of-napoleon-hill-the-greatest-self-he-1789385645, accessed June 22, 2022; Michael J. Ritt and Kirk Landers, A Lifetime of Riches, revised edition (New York: Dutton, 1995); Richard Lingerman, “How to Lose Friends and Alienate People,” The New York Times (August 13, 1995).

6 Silvia Porter: Tracy Lucht, Sylvia Porter: America’s Original Personal Finance Columnist (Syracuse, NY: Syracuse University Press, 2013); “Sylvia Porter, Financial Columnist, Is Dead at 77,” The New York Times ( June 7, 1991); Sylvia Porter, How to Make Money in Government Bonds (New York: Harper, 1939); Sylvia Porter, Sylvia Porter’s Money Book: How to Earn It, Spend It, Save It, Invest It, Borrow It—And Use It to Better Your Life (New York: Doubleday and Company, 1975), 8, 34–39, 793, 815–18.

7 They flew away as financial planners: E. Denby Brandon Jr. and H. Oliver Welch, The History of Financial Planning: The Transformation of Financial Services (New York: Wiley, 2009).

8 Harry Browne: Harry Browne, You Can Profit from a Monetary Crisis (New York: Bantam Books, 1974), 130–64, 301–304.

9 a board game called Cashflow: Robert T. Kiyosaki and Emi Kiyosaki, Rich Brother, Rich Sister: Two Different Paths to God (New York: Vanguard Press, 2009), 78–79; Rob Walker, “If I Were a Rich Dad: Why millions buy Rich Dad, Poor Dad’s nonsense,” Slate, June 20, 2002; John Reed, “Robert T. Kiyosaki’s book Rich Dad, Poor Dad, Part 1,” https://johntreed.com/blogs/john-t-reed-s-real-estate-investment-blog/61651011-john-t-reeds-analysis-of-robert-t-kiyosakis-book-rich-dad-poor-dad-part-1. Accessed July 13, 2022.

10 Suze Orman: Suze Orman, You’ve Earned It, Don’t Lose It: Mistakes You Can’t Afford to Make When You Retire (New York: Newmarket Press, 1994); Lynn Andriani, “The Dollars and Sense of Suze Orman,” Publishers Weekly (February 24, 2003); Helaine Olen, Pound Foolish: Exposing the Dark Side of the Personal Finance Industry (New York: Portfolio, 2012), 27–47.

11 Clark Howard: Clark Howard, interview by Joseph Moore, April 8, 2024.

12 Journalists accuse him of profiting on people’s ignorance Olen, Pound Foolish, 61–69.

13 finance professor Felix Chopra: Felix Chopra, “Media Persuasion and Consumption: Evidence from The Ramsey Show”: SSRN Paper 3992358 (November 12, 2023).

14“break free from broke”: George Kamel, Breaking Free from Broke: The Ultimate Guide to More Money and Less Stress (Nashville: Ramsey Press, 2024).

Chapter 6: Your Net Worth is Wrong (So I Made Myself a Billionaire)

1 support the value of state currencies: Nic Carter, “Regime change in stablecoins,” Token 2049 Conference (September 15, 2023).

2 the points are made up, so the score doesn’t matter: Whose Line Is It Anyway? Created by Dan Patterson and Mark Leveson; hosted by Drew Carey; Hat Trick Productions; aired July 16, 1998–December 15, 2007, on ABC.

3“No practical purpose is served”: C. W. Haskins, How to Keep Household Accounts: A Manual of Family Finance (New York: Harper & Brothers Publishers, 1903). See also Naomi R. Lamoreaux, “Rethinking the Transition to Capitalism in the Early American Northeast,” The Journal of American History 90, no. 2 (September 2003), 437–61.

4 A preacher may be “of great worth” and penniless: Key to the Elements of Book-Keeping; in a series of short examples for the use of schools ( John Porteous, 1831).

5“he should know his ‘net worth’”: Herbert G. Stockwell, Net Worth and the Balance Sheet (Ronald Press Company, 1912), 6.; the term subsequently moved into agricultural accounting. C. E. Ladd, “A System of Farm Cost Accounting,” US Department of Agriculture Farmer’s Bulletin 572, March 4, 1914, 3.

6 Social scientists in the 1940s: Family Income and Expenditures: Middle Atlantic and North Central Region, New England Region: Part 1, Family Income, Urban and Village Series, Miscellaneous Publication No. 370 (US Dept. of Agriculture: 1940), 443.

7 The Supreme Court ruled: Holland v. United States, 348 U.S. 121 (1954).

8 is “augmented wealth”: Edward N. Wolff, “Taxes and Revaluation of Household Wealth,” Journal of Pension Economics and Finance 21, no. 4 (2022), 537–564; Timm Bönke, Markus Grabka, Carsten Schröder, and Edward N. Wolff, “A Head-to-Head Comparison of Augmented Wealth in Germany and the United States,” The Scandinavian Journal of Economics 12, issue 3, 2020, 1140–1180.

9 One real dollar moves billions: Xavier Gabaix and Ralph S. Koijen, “In Search of the Origins of Financial Fluctuations: The Inelastic Market Hypothesis,” SSRN Working Paper 3686935 (December 23, 2023).

10 Bezos doesn’t have billions of dollars: “Why Billionaires Pay So Little Tax,” The Daily, The New York Times ( June 15, 2021).

11 market value thirty times greater than the entire stock market: Julian di Giovanni and Akito Matsumoto, “The Value of Human Capital Wealth,” Global COE Hi-Stat Discussion Paper Series gd10–174, (2011: Institute of Economic Research).

Chapter 7: The Next Big Thing is A Bad Idea

1 Determined not to miss my unicorn: “College project helps man with ALS say ‘I love you’ to his wife again,” Today, April 27, 2017, https://www.today.com/health/ visuals-technology-helps-man-als-tell-his-wife-i-love-t110845.

2“We are all so anxious to be rich in a hurry”: Robert F. Dalzell, Enterprising Elite: The Boston Associates and the World They Made (Cambridge, MA: Harvard University Press, 1987).

3 The sugar beet industry: Leonard J. Arrington, “Science, Government, and Enterprise in Economic Development: The Western Beet Sugar Industry,” Agricultural History 41, no. 1 ( January 1967), 1–18.

4 The American Frugal Housewife: Kirk Jeffrey, “Marriage, Career, and Feminine Ideology in Nineteenth-Century America: Reconstructing the Marital Experience of Lydia Maria Child, 1828–1874,” Feminist Studies2, no. 2/3 (1975), 113–130.

5 Shale oil promised a bonanza: Anthony Andrews, “Oil Shale: History, Incentives, and Policy” (Washington, D.C.: Library of Congress Congressional Research Service, 2006), 8–13.

6 St. Joseph: A. M. Sakolski, The Great American Land Bubble: The Amazing Story of Land Grabbing, Speculations, and Booms from Colonial Days to the Present Times, reprint (Ludwig von Mises Institute, 2012), LOC 6143; Christopher Knowlton, Bubble in the Sun: The Florida Boom of the 1920s and How It Brought on the Great Depression (New York: Simon & Schuster, 2020), 3–12.

7“I wish I had a villa”: William Wirt as quoted in Anya Jabour, Marriage in the Early Republic: Elizabeth and William Wirt and the Companionate Ideal (Baltimore: Johns Hopkins University Press, 1998), 154.

8 the first search engine on the web: Aaron Wall, ed., “History of Search Engines: From 1945 to Google Today,” Search Engine History, http://www.searchenginehistory.com/#:~:text=The%20first%20search%20engine%20created,it%20was%20shortened%20to%20Archie, accessed August 21, 2020.

9“When was steam power invented?”: Richard Rhodes, Energy: A Human History (New York: Simon & Schuster, 2018), 187, 219, 338–339; Richard Rhodes, “Energy Transitions: A Curious History,” paper presented at The Security Implications of Increased Global Reliance on Nuclear Power Conference, Stanford University, September 19, 2007, 11, https://fsi-live.s3.us-west-1.amazonaws.com/s3fs-public/Rhodes-Energy_Transitions.pdf.

10 McDonald’s the year I was born: McDonald’s annualized return was about 14 percent to the S&P’s 12 percent. That 2 percent difference compounds to big divergence: $100 in McDonald’s would be worth nearly $49,000 today versus $22,500 in the S&P.

11 canal diggers increased wages dramatically: Most historians are pessimistic about canal workers’ financial lives. Illness, injury, weather, and the economic cycle drove wages lower than expected. This was especially true after 1837 when depression and waves of Irish immigration ballooned the labor pool. But there is bias in both directions. Immigrant laborers far surpassed income back home, many “underemployed” workers were simply farmers using canal pay to get ahead, and families regularly used strategies like boarders and butter (discussed in other chapters) to stretch their finances. If many workers made little and blew that on liquor, others found ways to exceed their expenses from 5 percent up to 50 percent a year. This excess they stowed away to buy farmland when the work went away. When managers shifted pay to daily “piece work” systems to save money, several determined Irish diggers managed to earn four times their normal wages. Everyone struggled; many struggles paid off. Peter Way, Common Labor: Workers and the Digging of North American Canals, 1780–1860 (Baltimore: Johns Hopkins University Press, 1993), 105–30.

Chapter 8: Compound Interest and Passive Income are Overrated

1“He’ll go on doubling it till he dies”: Lewis Carroll, Sylvie and Bruno (New York: Macmillan & Co., 1890), 131.

290 percent of Warren Buffett’s net worth: Morgan Housel, The Psychology of Money (Petersfield, UK: Harriman House, 2020), 49–50.

3“The first rule of compounding is never interrupt it unnecessarily”: Peter D. Kaufman, ed., Poor Charlie’s Almanack: The Wit and Wisdom of Charles T. Munger (2005).

4 always underperforming in the game: Much the same point is made by Taleb, Skin in the Game, 223.

5“murder-suicide.”: Joseph Kopecky and Alan M. Taylor, “The Savings Glut of the Old: Population, Aging the Risk-Premium, and the Murder-Suicide of the Rentier,” NBER Working Paper Series, Working Paper 29944 (April 2022); Martin Wolf, “Wipe our rentiers with cheap money,” Financial Times, May 6, 2014.

6“I do not think it means what you think it means”: The Princess Bride, directed by Rob Reiner (Beverly Hills, CA: 20th Century Fox, 1987).

7“any business will run itself. It won’t”: H. L. Reade, Success in Business, or Money and How to Make It (Philadelphia: 1875), 69; Benjamin Franklin, “Advice to a Young Tradesman, Written by an Old One,” in Leonard W. Labored, ed., The Papers of Benjamin Franklin 3 (New Haven: Yale University Press, 1961), 304–08.

8“a long life of industry, frugality, and attention”: Adam Smith as quoted in Edward Chancellor, Devil Take the Hindmost (New York: Farrar, Straus, Giroux, 1999), 90. Emphasis added.

9“He and some daughters have died poor.”: Christopher Clark, The Roots of Rural Capitalism: Western Massachusetts, 1780–1860 (Cornell University Press, 1992), 163.

Chapter 9: Diversification Won’t Make You Rich

1 Charles Blunt: Murphy, The Origins of English Financial Markets, 215.

2 the president of Harvard gave a speech about it: Josiah Quincy as quoted in Clark, The Roots of Rural Capitalism, 107.

3“becomes like other men”: P. T. Barnum, The Art of Money Getting, or, Golden Rules for Making Money (New York: Ward, Lock, & Co., 1880).

4“always employed, effect nothing”: Light, The Young Merchant, 112–13.

5“Went too far, too many irons”: Sandage, Born Losers, 142.

6“then watch that basket”: Andrew Carnegie, The Empire of Business (New York: Doubleday, Page & Company, 1917), 18.

7 Hugh Collender: Tyler Anbinder, Plentiful Country: The Great Potato Famine and the Making of Irish New York (New York: Little, Brown and Company, 2024), 383–90.

8 small-business owners worth $10 million or more: “Stealthy Wealthy Are Making Money with Boring Businesses,” The Wall Street Journal (May 19, 2025).

9“owned United States Government Bonds”: Sylvia Porter, as quoted in Tracy Lucht, Sylvia Porter: America’s Original Personal Finance Columnist (Syracuse: Syracuse University Press, 2013), 64.

Chapter 10: You Can Beat the Market; You Probably Shouldn’t

1“The Cramer Bounce”: Joseph Engelberg, Caroline Sasseville, and Jared Williams, “Market Madness? The Case of Mad Money,” Management Science 58, no. 2 (February 2012), 351–64. The original paper was posted to SSRN in 2005.

2“losing important money cannot be conveyed by literature”: Fred Schwed, Jr., Where Are the Customers’ Yachts? or, A Good Hard Look at Wall Street ( John Wiley & Sons, 1995), 67. The book was originally published in 1940, also by John Wiley & Sons.

3 Alfred Cowles: Alfred Cowles, III, “Can Stock Market Forecasters Forecast?,” Econometrica 1, no. 3 ( July 1933), 309–24.

4 How to Lose Your Money Prudently: The error in this experiment, if it really happened, is obvious. The random selections were from stocks that survived to be back tested, rather than from all those available at the start date. Fred C. Kelly, How to Lose Your Money Prudently (Philadelphia: Roland Swain Company, 1933), 21–23.

5 A Random Walk Down Wall Street: Burton Malkiel, A Random Walk Down Wall Street 13th edition (New York: W.W. Norton & Company, 2024), 34, 163.

6 semi-annual stock throwing competition: “Making Monkeys Out of the Sohn Investing Gurus,” The Wall Street Journal (May 6, 2019); “This Strategy Beat Top Funds—Don’t Try It,” The Wall Street Journal (May 10, 2023).

7“that’s past my skill or anybody’s else’s”: Anne L. Murphy, “Dealing with Uncertainty: Managing Personal Investment in the Early English National Debt,” History 91, 302 (April 2006): 200–217, quote from 213.

8 made the Beardstown Ladies investment superstars: The Beardstown Ladies Investment Club with Leslie Whitaker, The Beardstown Ladies Common-Sense Investment Guide: How We Beat the Stock Market—And How You Can Too (New York: Hyperion, 1994), xii, 105–109.

9 Investment clubs became extremely popular: Brooke Harrington, Pop Finance (Princeton: Princeton University Press, 2008), 15; Janice M. Traflet, A Nation of Small Share-Holders: Marketing Wall Street After World War II (Baltimore: Johns Hopkins University Press, 2013), 141–43.

10 By 1998 there were 37,000 groups nationwide: The National Association of Investors Corporation (NAIC), https://www.betterinvesting.org/about-us/our -history-of-helping-investors.

11 lagged the market by a massive 20 percent annualized: Harrington, Pop Finance, 181.

12 They had great fellowship, though: The ladies may have suffered from a simple data entry error, or they might have inadvertently included the proceeds from their How-To video series as market returns. “The Lessons from Beardstown,” Chicago Tribune (March 28, 1998), 22; Susan Chandler, “Fact-Checking a Good Investment: Beardstown Errors Raises Trust Issue,” Chicago Tribune (March 19, 1998), 1.

13 The pros, meanwhile, were up double digits: Georgette Jansen, “Investment Dashboard: A Brief History of Our Contest,” Wall Street Journal (October 7, 1998); Georgette Jansen, “Investment Dartboard: Putting Away the Darts after 14 Years—The Wall Street Journal’s Dartboard Ends Its Run,” Wall Street Journal (18 April 2002); Jake Spencer, “This Strategy Beat Top Funds—Don’t Try It,” Wall Street Journal (May 10, 2023).

14 none launches them out of the city: At a more technical level, this means the geometric Brownian motion of returns follows a Gaussian distribution where the vast majority of the time things will land at or near the middle.

15 once every 6 trillion year phenomenon: Kevin Dowd, John Cotter, Chris Humphrey, and Margaret Woods, “How Unlucky is 25-Sigma?,” Journal of Portfolio Management 34, no. 4 (Summer 2008), 76–80.

16 A portfolio missing the best ten days of the past 112 years: Housel, The Psychology of Money.

17 Markets may not be perfectly efficient, but they are efficient enough: Burton G. Malkiel, “The Efficient Market Hypothesis and Its Critics,” CEPS Working Paper No. 91 (April 2003).

18 Benjamin Graham: Joe Carlen, The Einstein of Money: The Life and Timeless Financial Wisdom of Benjamin Graham (Amherst, NY: Prometheus Books, 2012), 17–34.

19 the Chartists: Paul Crosthwaite, Peter Knight, and Nicky Marsh, “The Economic Humanities and the History of Financial Advice,” American Literary History 31, no. 4 (2019), 675.

20 the stuff of finance courses: The first edition came out in 1948. Robert D. Edwards and John Magee, Technical Analysis of Stock Trends, 5th edition (Springfield, MA: John Magee, 1966).

21 these methods continued to be profitable: R. David McLean and Jeffrey Pontiff, “Does Academic Research Destroy Stock Return Predictability?,” The Journal of Finance 71, no. 1 (February 2016), 5–31.

22 Buffett’s leverage has been estimated at around 1.7 to 1: Frazzini, et al. estimate this is 1.7 to 1 but part of that is float from his insurance companies, bringing the number down. Andrea Frazzini, David Kabiller, and Lasse Heje Pedersen, “Buffett’s Alpha,” Financial Analsysts Journal 74, no. 4 (Fourth Quarter, 2018), 35–55.

23 Berkshire Hathaway: Alex Crippen, “CNBC Transcript: Warren Buffett’s $200B Berkshire Blunder and the Valuable Lesson He Learned,” CNBC, October 18, 2010.

24 most successful chart-following technical analysts: Jack D. Schwager, Market Wizards: Interviews with Top Traders (New York: John Wiley & Sons, 2012).

25 David Swensen: David F. Swensen, “Introduction,” in Charles D. Ellis, Winning the Loser’s Game (New York: McGraw Hill, 2017), xii.

26 more than the original claims were worth: David Yaffe-Bellany and Matthew Goldstein, “The Hot New Market in Crypto? Trading FTX’s Carcass,” The New York Times (December 20, 2023).

27 Large asset managers actually do beat the market: Klakow Akepanidtaworn, Rick Di Mascio, Alex Imas, and Lawrence Schmidt, “Selling Fast and Buying Slow: Heuristics and Trading Performance of Institutional Investors,” SSRN ( July 17, 2012).

28 to boost morale: “Wall Street Curbs Young Bankers’ Hours After Overwork Outcry,” The Wall Street Journal (September 11, 2024).

29 a forward-forward contract for millions in dynamic hedges: A forward-forward is a contract to exchange an asset at one period against the reverse trade at a later period. Nassim Taleb, Dynamic Hedging: Managing Vanilla and Exotic Options (New York: John Wiley & Sons, 1996), 32.

Chapter 11: Women were always Active Investors

1 the investments of everyday women: For instance, the will of Mary Dutarque (d. 1767), who appears to be the mother of Lewis Dutarque, who acquired 105 East Bay St. in 1778. Neighboring 97 East Bay St. appears to have begun construction in the 1740s. Russell R. Menard, “Financing the Lowcountry Export Boom: Capital and Growth in Early South Carolina,” The William and Mary Quarterly 51, no. 4 (October 1994), 659–76; Elizabeth M. Pruden, “Investing Widows: Autonomy in a Nascent Capitalist Society,” in Jack P. Greene, Rosemary Brana-Shute, and Randy Sparks, eds., Money, Trade, and Power: The Evolution of Colonial South Carolina’s Plantation Society (Columbia, SC: The University of South Carolina Press, 2001), 345.

2 How to Lay a Nest Egg: Edgar Scott, How to Lay a Nest Egg: Financial Facts of Life for the Average Girl (Philadelphia: The John C. Winston Company, 1950), 22, 48.

3 neither belonged buying stocks: “A Citizen of Philadelphia,” as quoted in Nelson, A Nation of Deadbeats,” 29. Emphasis added.

4 East India and South Sea Companies: Catherine Ingrassia, Authorship, Commerce, and Gender in Early Eighteenth-Century England: A Culture of Paper Credit (New York: Cambridge University Press, 1998), 20.

5 on the back of the nine of clubs: Sara T. Damiano, To Her Credit: Women, Finance, and the Law in Eighteenth-Century New England Cities (Baltimore: Johns Hopkins University Press, 2021), 60–61.

6 The American Business Woman: texts referencing female mortgage issuance include Villiers, Financial Independence at Fifty, 119–120; Albert W. Atwood, Putnam’s Investment Handbook: A Stimulus and Guide to Financial Independence (New York: G. P. Putnam’s Sons, 1919), 60–61; John Howard Cromwell, The American Business Woman 2nd edition (New York: G. P. Putnam’s Sons, 1910), 105–18.

7 did not fall beneath feme covert laws: There is some debate about this. Catherine Ingrassia, Authorship, Commerce, and Gender in Early Eighteenth-Century England, 31. For a counter perspective, some scholars argue men had to sign off on early stock transactions in London. Murphy, The Origins of English Financial Markets, 206.

8 Abigail started buying government bonds: Abigail Adams’s investment life taken from Woody Holton, Unruly Americans and the Origins of the Constitution (New York: Hill & Wang, 2007), 34–38; Woody Holton, Abigail Adams (New York: Free Press, 2009), 168–238.

9 Warren Buffett’s is 19.8 percent: John Divine and Wayne Duggan, “The Complete Berkshire Hathaway Portfolio,” U.S. News & World Reports (September 4, 2024).

10 her generation’s best securities investor, period: Stephen Girard and others might have gotten better lifetime returns, but their investments were in actively managed merchant ventures and real estate rentals, not paper investments.

1110 percent of all financial deals: Scott C. Miller, “Ten Facts About the American Economy in the 18th Century,” MountVernon.org.

1225 percent of shares were in female hands: Wright, The Wealth of Nations Rediscovered, 68.

13“waitresses, telephone girls, cooks, and washerwomen”: Chancellor, Devil Take the Hindmost, 205.

14“as a businessman does”: Paul Crosthwaite, Peter Knight, Nicky Marsh, Helen Paul, and James Taylor, Invested: How Three Centuries of Stock Market Advice Reshaped Our Money, Markets, and Minds (Chicago: The University of Chicago Press, 2022), 170–71.

15 A Woman and Her Money: Elizabeth Frazer, A Woman and Her Money (New York: George H. Doran, 1926).

16“Everybody Ought to Be Rich”: Samuel Crowther, “Everybody Ought to Be Rich: An Interview with John J. Raskob,” Ladies’ Home Journal (August 1929), 9, 39.

17 the most expensive piece of jewelry she ever bought: George Robb, “Ladies of the Ticker: Pioneering Women Stockbrokers from the 1880s to the 1920s,” Financial History (Summer 2017), 20–23.

18“plant the Flag of women’s rebellion”: Victoria Woodhull as quoted in Miriam Brody, Victoria Woodhull: Free Spirit for Women’s Rights (New York: Oxford University Press, 2004), 35.

19 First Women’s Bank of New York in 1974: Ian Rose, “A Bank of Her Own,” JSTOR Daily, https://daily.jstor.org/a-bank-of-her-own/, accessed September 8, 2023.

Chapter 12: Stocks used to be Bad for the Long Run

1 suckers to take your place in the military draft: Wright, The Wealth of Nations Rediscovered, 128–29.

2 a form of gambling: Newspapers ran columns notifying readers of the latest investment scams. “Honesty is the Best Policy,” American Agriculturalist 38 (1879), 8.

3 governments effectively barred everyday people from buying stocks on the exchanges: This was a combination of opinions accompanied by state and federal regulatory actions. Bucket shops were completely eliminated by 1915, but police raids had begun in earnest around 1905–06. Board of Trade v. Christie Grain & Stock Co., 198 U.S. 236 (1905); Gatewood v. State of North Carolina, 203 U.S. 531 (1906); Hochfelder, “Where the Common People Could Speculate.”

4 stocks did not beat bonds throughout history: Edward F. McQuarrie, “Stocks for the Long Run? Sometimes Yes. Sometimes No.,” Financial Analysts Journal 80, no. 1 ( January 2024), 12–28; Edward F. McQuarrie, “Where Siegel Went Awry: Outdated Sources & Incomplete Data,” SSRN ( July 23, 2021) https://ssrn.com /abstract=3805927.

5 The Second Bank of the United States: McQuarrie, “Where Siegel Went Awry,” 6.

6 barely 1 percent of Americans owned stocks: Ott, When Wall Street Met Main Street, 2.

7 Jevons naturalized the business cycle: Lepler, The Many Panics of 1837, 238–41.

8 you could measure the stock market: Charles H. Dow, Scientific Stock Speculation (New York: Magazine of Wall Street, 1920), 13; de Goede, Virtue, Fortune and Faith, 103–16; Crosthwaite, Invested, 177–79.

9“as a thermometer registers heat or cold”: Peter Hamilton, The Stock Market a Barometer: A Study of Its Forecast Value Based on Charles H. Dow’s Theory of the Price Movement (New York: Harper and Row, 1922).

1035 percent of funds into common stocks: Traflet, A Nation of Small Share-Holders, 82–97.

11 Stock ownership was barely 20 percent of households in the early 1980s: John V. Duca and Mark Walker, “Why Has U.S. Stock Ownership Doubled Since the Early 1980s? Equity Participation Over the Past Half Century,” Federal Reserve Bank of Dallas working paper 2222 (November 2022).

12 After new sources were uncovered: McQuarrie, “Stocks for the Long Run? Sometimes yes, Sometimes No.”; Seigel responded in an online debate forum, not wrongly pointing out that nineteenth-century bonds often had the same risk premium as modern stocks because America was still an emerging market. “New Insights on Stocks for the Long Run,” CFA Institute Research and Policy Center, https://rpc.cfainstitute.org/research/multimedia/2024/new-insights-on-stocks-for -the-long-run. For a view that emphasizes the twentieth-century superiority of stock market returns, see Elory Dimson, Paul Marsh, and Mike Staunton, UBS Global Investment Returns Yearbook, 2024 (Zurich: UBS AG, 2024) and their earlier work, Triumph of the Optimists: 101 Years of Global Investment Returns (Princeton: Princeton University Press, 2002).

13 bring your own buckets: carrying costs: Planet Money, “Episode 598: The Very First Short” ( January 23, 2015), https://www.npr.org/transcripts/379416223, accessed May 18, 2022.

14 Fewer than one in five companies even bother with dividends anymore: McQuarrie, “Stocks for the Long Run? Sometimes Yes, Sometimes No.”

15 real profitability of U.S. companies increased: These calculations are on the real GAAP earnings and stock prices for S&P 500 companies (to control for the effect of stock buybacks on EPS).

16 ETFs revolutionized by Vanguard in the 1970s: Robin Wigglesworth, Trillions: How a Band of Wall Street Renegades Invented the Index Fund and Changed Finance Forever (New York: Portfolio, 2021). On the inelastic market hypothesis, see Xavier Gabaix and Ralph S. Koijen, “In Search of the Origins of Financial Fluctuations: The Inelastic Market Hypothesis,” SSRN Working Paper 3686935 (December 23, 2023). For arguments that an ETF/Index doom loop is unlikely, see James J. Rowley, Jr., Inna Zorina, and Carol Zhu, “A drop in the bucket: Indexing’s share of U.S. trading activity,” Vanguard (2019); Kenechukwu Anadu, Mathias Kruttli, Patrick McCabe, Emilio Osambela, and Chae Hee Shin, “The Shift from Active to Passive Investing: Potential Risks to Financial Stability?,” Finance and Economics Discussion Series 2018–060, Washington Board of Governors of the Federal Reserve System, August 27, 2018.

17 Every single dollar of excess gains from “the market” came from the leftover 4 percent: Globally the percentages are even worse. Just over 2 percent of global companies account for the difference between stocks and treasuries. Hendrik Bessembinder, “Do Stocks Outperform Treasury Bills?,” Journal of Financial Economics 129, no. 3 (September 2018), 440–57; Hendrick Bessembinder, Te-Feng Chen Goeun Choi, and K.C. John Wei, “Long-Term Shareholder Returns: Evidence from 64,000 Global Stocks,” SSRN Paper # 3710251 (March 6, 2023).

Chapter 13: Financial Independence Isn’t What You Think

1 Sylvester Judd: Clark, The Roots of Rural Capitalism, 3–6, 82, 91.

2 Liberty without Labor: T. J. Jackson Lears, “The Modernization of Thrift,” in Joshua J. Yates and James Davison Hunter, eds., Thrift and Thriving in America: Capitalism and Moral Order from the Puritans to the Present (New York: Oxford University Press, 2011), 216; the bag is a playful tribute to the daily routine of cats, https://store .harpers.org/, accessed January 29, 2025.

3 not yet synonymous with “not working”: George Emory Fellows, “Direct Relation of Industrial Education to National Prosperity,” Seventy-Eighth Annual Meeting of the American Institute of Instruction (Shelton, CN: American Institute of Instruction, 1908), 36.

4 Walt Whitman: Walt Whitman, “Song of Myself ” (1892); Michael Zakim, “The Business Clerk as Social Revolutionary; or, a Labor History of the Nonproducing Classes,” Journal of the Early Republic Vol. 26 no. 4 (Winter 2006), 563–603.

5 you didn’t have to enjoy it at all: Lepler, The Many Panics of 1837, 81.

6 Thoreau, trapped in a lightning storm: Henry David Thoreau, Walden Vol. 2 (New York, Houghton Mifflin and Company, 1982), 319–21.

7“frugality for gods and heroes”: Ralph Waldo Emerson, “Man the Reformer” (1841).

8“for an independent home”: Michael Zakim, “Producing Capitalism: The Clerk at Work,” in Michael Zakim and Gary J. Kornblith, eds., Capitalism Takes Command: The Social Transformation of Nineteenth-Century America (Chicago: Chicago University Press, 2012), 225.

9 Ed Morris acted: The following taken from Edmund Morris, Ten Acres Enough (New York: James Miller, 1866); National Archives and Records Administration, Department of Commerce-Bureau of the Census: Seventh Census of the United States: 1860 (1860), Burlington, Burlington New Jersey; National Archives and Records Administration, Department of Commerce-Bureau of the Census: Eighth Census of the United States: 1870 (1870) Burlington, New Jersey.

10 New York intellectual Ralph Borsodi: Ralph Borsodi, Flight From the City (New York: Harper & Brothers, 1933).

11 realistic manual went through an amazing twenty-four printings: Maurice Grenville Kains, Five Acres and Independence: A Practical Guide to the Selection and Management of the Small Farm (Pocket Books, 1948), 1–2.

12 Scott and Helen Nearing fled to Vermont: Helen and Scott Nearing, Living the Good Life: How to Live Sanely and Simply in a Troubled World (New York: Schocken Books, 1970), x. For a helpful overview of the Nearings’ lives and political background, see Paul Greenberg’s review of their work (September 5, 2004), https:// paulgreenberg.org/PublishedNearings.htm, accessed August 10, 2023.

13 all true, except for the parts that weren’t: Borsodi, Flight From the City, 98; Jean Hay Bright, Meanwhile, Next Door to the Good Life: Homesteading in the 1970s in the Shadows of Helen and Scott Nearing, and How It All—and They—Ended Up (Dixmont, ME: BrightBerry Press, 2013).

14 nothing compared to the Nearings: Rebecca Kneale Gould, At Home in Nature: Modern Homesteading and Spiritual Practice in America (Berkeley: University of California Press, 2005), xix, 245.

15“survive and thrive even if the stock market crashes”: Bianca Booker, “The Strange Allure of Pioneer Living,” The Atlantic, November 2018; thelunaticfarmer.com, accessed April 21, 2025.

16 Victor de Villiers: de Villiers, Financial Independence at Fifty.

17 indicted de Villiers for mail fraud: De Villiers was twice banned by the SEC from being involved in securities sales. His final indictment was for selling “questionable securities” to gold mines in Idaho. “Financial Writer Seized in Fraud,” The New York Times (August 3, 1938), 20; “Arrested in De Villiers Case,” The New York Times (August 13, 1938), 13; “Misbranding of Pankoka. U.S. v Pankoka Health Foods, Inc., Victor deVilliers, Nicholas P. Williams, Panaytos D. Panoulias, and Dr. Demetrius Mitsakos,” National Library of Medicine, https://fdanj.nlm.nih.gov/catalog /fdnj24041, accessed July 6, 2022.

18 their big leap of financial faith: Paul Terhorst, Cashing In on the American Dream: How to Retire at 35 (New York: Bantam Books, 1988).

19“having enough—and then some”: Joe Dominguez and Vicki Robin, Your Money or Your Life (New York: Penguin, 1992).

20 At the dawn of Web 2.0: Jacob Fisker and Sam Dogen, “Who Started the FIRE Movement? The History of Financial Independence,” Financial Samurai, July 13, 2022.

21 short handing financially independent, retired early to FI/RE: John P. Greaney, “Who coined the term FIRE (Financially Independent Retired Early)?” October 1, 2022. https://retireearlyhomepage.com/fire.html, accessed August 2, 2023.

22 no less than fifteen distinct groups: Dominguez and Robin, Your Money or Your Life, 251–53; “15+ Types of FIRE and What They Mean,” The Motley Fool, https://www.fool.com/allstarmoney/originals/types-of-fire-what-they-mean/#:~:text=FIRE%20 %E2%80%94%20The%20OG%20term%20that,total%20yearly%20expenses%20by %2025, accessed July 13, 2022, and no longer available.

23 cut roughly in half: “Down Shifters—A growing number of Americans are discovering that simplifying your life doesn’t have to mean pulling up roots or pinching pennies,” Kiplinger’s Personal Finance, August 1996, 32–38; “2022 Update: Real-Life Retiree Investment Returns,” https://retireearlyhomepage.com/reallife23.html, accessed August 22, 2023.

24“Idleness is but another name for misery”: Jacob Lund Fisker, “Early Retirement Extreme: The ten-year update,” getrichslowly.com (October 2, 2019); Ryan Ermey, “A millionaire early retiree earning $380,000 a year in passive income went back to work—but only lasted 4 months,” cnbc.com, August 2, 2024; Reade, Success in Business, 36.

Chapter 14: Real Estate is a Terrible Way to Make Money

1 Johnny Appleseed was America’s first flipper: Natasha Geiling, “The Real Johnny Appleseed Brought Apples—and Booze—to the American Frontier,” Smithsonian Magazine (November 10, 2014). His real name was John Chapman, and his weirdness was not the apple planting but his extreme religious views that included doing no harm to animals, refusing to graft trees (for fear of hurting them), and giving away all his money.

2“all extraterrestrial objects”: Herb Auerbach with Ira Nadel, Placemakers: A Brief History of Real Estate Development (Vancouver, CA: Figure 1 Publishing, Inc., 2016), 184–191.

3 The Lunar Registry has a website: https://lunarregistry.com/, accessed June 30, 2021.

4 Real estate doesn’t naturally go up in value: Katharina Knoll, Moritz Schularick, and Thomas Steger, “No Price Like Home: Global House Prices, 1870–2012,” American Economic Review 107, no. 2, February 2017, 331–353, Figure 14; Federal Reserve Bank of Philadelphia, Historical Housing Prices Project, accessed September 9, 2025, https://www.philadelphiafed.org/surveys-and-data/regional-economic -analysis/historical-housing-prices.

5 House prices went down 30 percent and stayed depressed for fifteen years: Nelson, A Nation of Deadbeats, 73; Elaine Lewinnek, The Working Man’s Reward: Chicago’s Early Suburbs and the Roots of American Sprawl (New York: Oxford University Press, 2014), 16–32; Barton A. Smith and William P. Tesarek, “House prices and regional real estate cycles: market adjustments in Houston,” Journal of the American Real Estate & Urban Economics Association 19, no. 3, Fall 1991.

6 what about Bath, New York: A. M. Sakolski, The Great American Land Bubble: The Amazing Story of Land Grabbing, Speculations, and Booms from Colonial Days to the Present Times, reprint (Ludwig von Mises Institute, 2012), LOC 1479.

7 George Washington renovated Mount Vernon: John Berlau, George Washington, Entrepreneur: How Our Founding Father’s Private Business Pursuits Changed America and the World (All Points Books, 2020), 81, 103; Edward G. Lengel, First Entrepreneur: How George Washington Built His—and the Nation’s—Prosperity (Da Capo, 2016), 243.

8 She bought lots in Philadelphia: Susan Branson, “Women and the Family Economy in the Early Republic: The Case of Elizabeth Meredith,” Journal of the Early Republic 16, no. 1 (Spring 1996), 47–71.

9“The Anti-Rent War”: Charles W. McCurdy, The Anti-Rent Era in New York Law and Politics, 1839–1865 (Chapel Hill, NC: University of North Carolina Press, 2006).

10 he tried his hand at it, too: David Levering Lewis, W. E. B. Du Bois: A Biography (Henry Holt, 2009), 443, 523, 575.

11 Of the 100 largest fortunes, precisely none were made in U.S. real estate: Lisa A. Keister, Getting Rich: America’s New Rich and How They Got That Way (New York: Cambridge University Press, 2005), 39; “The World’s Real Time Billionaires,” Forbes.com, accessed April 22, 2025, https://www.forbes.com/real-time -billionaires/.

12 long-term, historic return on real estate: Òscar Jordâ, et al. “The Rate of Return of Everything, 1870–2015,” NBER Working Paper Series, Working Paper 24112, Table VII.

Chapter 15: House Hacks and Side Hustles Before Uber and Airbnb

1 removing the stench from a dead body: Reddit, House_Hacking subreddit, “Roommate Death,” https://www.reddit.com/r/House_Hacking/comments/r04k4z /roommate_death/, accessed April 21, 2022.

2 divided the £18 annual rent: Sharon V. Salinger and Charles Wetherell, “Wealth and Renting in Prerevolutionary Philadelphia,” The Journal of American History 71, no. 4 (March 1985), 826–40.

3 social worker in early twentieth-century Chicago: Lewinnek, The Working Man’s Reward, 110.

4 nearly 50 percent of Hungarians and Italian immigrants: David T. Beito and Linda Royster Beito, “The ‘Lodger Evil’ and the Transformation of Progressive Housing Reform, 1890–1930,” The Independent Review 20, no. 4 (Spring 2016), 485–508; Alexander, Daily Life in Immigrant America, 165–67.

520 percent of all homes were renting rooms: Peter R. Shergold, Working-Class Life: The “American Standard” in Comparative Perspective, 1899–1913 (Pittsburgh: University of Pittsburgh Press, 1982), 85–89.

6 immigrant household kept three to four renters at any given time: Alexander, Daily Life in Immigrant America, 167.

7 immigrant and black families increased income by 30 percent this way: David M. Reimers, “Immigrants and Thrift,” in Yates and Hunter, eds. Thrift and Thriving in America, 357.

8 have savings left over at the end of each year: Beito and Beito, “The ‘Lodger Evil’ and the Transformation of Progressive Housing Reform,” 485–508.

9 policeman John Taylor and his wife, Agnes, became homeowners: Kevin McGruder, Race and Real Estate: Conflict and Cooperation in Harlem, 1890–1920 (New York: Columbia University Press, 2015), 17–18, 31–32.

10“most respectable forms of adding to the income”: The Weekly People quoted in Peter R. Shergold, Working-Class Life, 86.

11 national craze for palm-leaf hats: Clark, The Roots of Rural Capitalism, 184–189, on butter 145.

12 prize winning essay in Good Housekeeping: Annie Wade, “Hens and Chickens,” Good Housekeeping 9, no.1 (May 11, 1889), 32–35.

13“same profit that the owner of a store receives,”: Katina L. Manko, “Now You are in Business for Yourself: The Independent Contractors of the California Perfume Company, 1886–1938,” Business and Economic History 26, no. 1 (Fall 1997), 5–26.; Howard R. Stanger, “The Larkin Clubs of Ten: Consumer Buying Clubs and Mail-Order Commerce, 1890–1940,” Enterprise & Society 9, no. 1 (March 2008), 125–164.

14 two leading entrepreneurs of black women’s beauty products: A’Lelia Bundles, On Her Own Ground: The Life and Times of Madam C. J. Walker (New York: Scribner, 2001); Tyrone McKinley Freeman, Madam C. J. Walker’s Gospel of Giving: Black Women’s Philanthropy during Jim Crow (Urbana: University of Illinois Press, 2020); Tiffany M. Gill, “Civic Beauty: Beauty Culturalists and the Politics of African American Female Entrepreneurship, 1900–1965,” Enterprise and Society vol. 5 No. 4 (December 2004), 583–93.

15 It birthed multilevel marketing (MLM): Bridget Read, Little Bosses Everywhere: How the Pyramid Scheme Shaped America (New York: Crown, 2025); Amway, “The Origins of Nutrilite: A Brand Ahead of Its Time,” Amway.com, https://www.amway.com/en _US/amway-insider/amway-voice/our-world/the-origins-of-nutrilite 2023; Mary Kay, Inc. “The Story of Mary Kay Inc.” 2013; William W. Keep and Peter Vander Nat, “Multilevel Marketing: A Historical Perspective,” Proceedings of the 16th Biennial Conference on Historical Analysis and Research in Marketing (CHARM) Vol. 16 (2013), 345–47; Nicole Woolsey Biggart, Charismatic Capitalism: Direct Selling Organizations in America (Chicago: University of Chicago Press, 1989).

16 poor and likely to stay that way: Jessica K. Burch, “Soap and Hope,” Enterprise & Society 17, no. 3 (December 2016), 741–51; John M. Taylor, “The case (for and) against Multi-level Marketing,” Consumer Awareness Institute (2011); Federal Trade Commission, “Multi-Level Marketing Businesses and Pyramid Schemes,” accessed September 6, 2023.

17 George Jenkins: Emily Pawley, “The Balance Sheet of Nature: Calculating the New York Farm,” Doctoral Dissertation (University of Pennsylvania, 2009), 84.

18 The gig economy is not new: I’m referring to the gig economy here in the side hustle sense, not as a system of permanently temporary primary positions. On that, see Louis Hyman, Temp: The Real Story of What Happened to your Salary, Benefits, & Job Security (New York: Penguin, 2018).

Chapter 16: Yes, People Retired Before Social Security

1 No one retired before Social Security: As one example among hundreds of headlines: “Before Social Security, Most Americans Faced Very Bleak Retirement,” The Wall Street Journal (September 15, 2004).

2 Nobody can retire on Social Security: “America’s 60-Year-Olds are Staring at Financial Peril,” The Wall Street Journal ( July 22, 2024); “As Generation X Approaches Retirement, Reality Still Bites,” The Wall Street Journal (August 20, 2024).

3“Most Americans Faced Very Bleak Retirement”: The Wall Street Journal (September 15, 2004).

4“escape the economic problems of old age only by dying”: “Before Social Security, Most Americans Faced Very Bleak Retirement,” The Wall Street Journal (September 15, 2004).

5 D. W. Griffith: What Shall We Do with Our Old? D. W. Griffith (Biograph Company New York, 1911).

6 private pensions for workers: Lizabeth Cohen, Making a New Deal: Industrial Workers in Chicago, 1919–1939 (New York: Cambridge University Press, 1990).

7“the near elimination of destitution among the elderly”: Jonathan Rauch, “America Needs to Radically Rethink What It Means to Be Old,” The Atlantic (December 10, 2024).

8 things you get from economic growth are not the cause of that growth: The best quick summary of this idea is in Tyler Cowen, The Great Stagnation: How America Ate All the Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better (New York: Dutton, 2011).

9 covered around 40 percent of workers: “The Disappearing Defined Benefit Pension and Its Potential Impact on the Retirement Incomes of Baby Boomers,” Social Security Bulletin 69, no. 3, 2009; Mitchell A. Orenstein, Pensions, Social Security, and the Privatization of Risk (New York: Columbia University Press, 2009), 14–15.

10“that I may not rust alive”: John Adams as quoted in Holton, Abigail Adams, 248.

11“as much for amusement as profit”: Emily Pawley, “The Balance Sheet of Nature: Calculating the New York Farm,” Doctoral Dissertation (University of Pennsylvania, 2009), 86.

12 teach old people to have fun: Dora L. Costa, The Evolution of Retirement: An American Economic History, 1880–1990 (Chicago: University of Chicago Press, 1998), 155; Price V. Fishback and Shawn Everett Kantor, Prelude to the Welfare State: The Origins of Workers’ Compensation (Chicago: University of Chicago Press, 2000).

13 give their jobs to younger workers: William Graebner, A History of Retirement: The Meaning and Function of an American Institution, 1885–1978 (New Haven: Yale University Press, 1980), 57, 87.

14 why coddle the old: Graebner, A History of Retirement, 124–25.

15 None of this existed for someone born in 1900: The phonograph was not widely available for home use in 1900 despite being invented in the 1880s.

16 half of all workers over sixty-five had already retired: Costa, The Evolution of Retirement, 20.

17 growing into this retirement thing: Some earlier scholars put the number of retired workers higher, but this appears to be a statistical error that counted seasonal unemployment as retirement. Gordon, The Rise and Fall of American Growth, 248; Costa, The Evolution of Retirement, 1; Graebner lists much higher stats for retirement in the nineteenth century. Graebner, A History of Retirement, 14.

18 farmland could be leased to young farmers: Mitchell A. Orenstein, ed., Pensions, Social Security, and the Privatization of Risk (New York: Columbia University Press, 2009), 11–12.

19 sued for not taking care of elders: Norton Reamer and Jesse Downing, Investment: A History (New York: Columbia University Press, 2016), 100.

20“is independent and self-respecting”: Isabel Ely Lord, Getting Your Money’s Worth (New York: Harcourt, Brace, and Co., 1922), 196–98.

21 peaked in 2000 at 83 percent: https://www.bls.gov/emp/tables/civilian-labor-force-participation-rate.htm; see also “Labor force participation rate of men aged 65+ in the United States,” Our World in Data (accessed January 29, 2025).

221998, and 2001: “Retirement Problems,” The New York Times (January 26, 1958); “Personal Finance: Planning for Retirement,” The New York Times (February 17, 1964); “For Couples, Retirement Brings Joy and Stress,” The New York Times (September 29, 1988); “Social Insecurity; Poof! You Can Retire Rich,” The New York Times (December 20, 1988); “The Way We Live Now,” The New York Times (August 5, 2001).

23 A 1980 bestseller claimed: Venita Van Caspel, Money Dynamics for the 1980s (Reston, VA: Reston Publishing Company, 1980), 4.

24 pretty potent combination: By the 1990s, the median retiree’s wealth from Social Security was three times higher than their wealth from their stocks, bonds, or pensions. Costa, The Evolution of Retirement, 18.

25 the financial returns of retiring in every year since 1877: see firecalc.com for a handy tool. The median 2025 401(k) retiree balance is $88,000 and the average is $272,000. The typical retiree household spends around $55,000 annually (though that is skewed high, since half of retirees spend less than $24,000 and about 80 percent spends less than $48,000). These scenarios use the function that adjusts spending in line with Ty Bernicke’s “Reality Retirement Planning: A New Paradigm for an Old Science,” Journal of Financial Planning 18 iss.6 ( July 2005), 56–61; for a more recent and rigorous study showing similarly poor prospects for historical returns and 410(k)-dependent retirements, see Edward F. McQuarrie and William J. Bernstein, “Expected Outcomes of 401(k) Investing: What Can History Tell Us?” SSRN Paper #5267778 (May 28, 2025).

26 longitudinal study by Gallup: Frank Newport and Jeffrey M. Jones, “Why Americans Are Pleasantly Surprised in Retirement,” Gallup (August 22, 2024).

27 Social Security is worth: The average benefit in summer of 2023 for retired workers was $1,838 per month. If we compare it to a 4 percent annuity (about the middle of going annuity benefit rates) that means the average American retires with about $550,000 worth of extra “net worth.” See: Teresa Ghilarducci, How to Retire With Enough Money and How to Know What Enough Is (New York: Workman, 2015), 100–101; Social Security Administration, “Monthly Statistical Snapshot, July 2023,” https://www.ssa. gov/policy/docs/quickfacts/stat_snapshot/, August 2023, accessed August 23, 2023.

28 Salem, Massachusetts, spent half of tax revenue on poor relief: Lauren Weber, In Cheap We Trust: The Story of a Misunderstood American Virtue (New York: Little, Brown, and Co., 2009), 50.

2920 percent of Americans have only Social Security: Social Security Administration, “Income of the Population 65 or Older, 2014,” Social Security Bulletin 77, no. 2 (2017).

Chapter 17: Immigrants Make the Best Capitalists

1 Pamphlets circulating in Guangdong, China: H. W. Brands, American Colossus: The Triumph of Capitalism (New York: Vintage, 2011), 55.

2 first wave of Chinese immigrants: Betty Lee Sung, Mountain of Gold (New York: Macmillan, 1971), 194–95.

3 Daddy has gone to Gold Mountain: Iris Chang, The Chinese in America: A Narrative History (New York: Viking Press, 2003).

4 savings rates of up to 60 percent: George Anthony Puffer, “From under the Sojourner’s Shadow: A Historiographical Study of Chinese Female Immigration to America, 1852–1882,” Journal of American Ethnic History 11, No. 3 (Spring 1992), 41–67.

5 the laundry business: Sung, Mountain of Gold, 187–201.

6 Chinese families remained renters: Sung, Mountain of Gold, 187–201; F. John Delaney, “Tracking the American Dream: 50 Years of Housing History from the Census Bureau: 1940 to 1990,” US Department of Commerce, Current Housing Reports H121/94–1(May 1994) 29.

7 interestingly, the Mississippi Delta: James W. Loewen, The Mississippi Chinese: Between Black and White (Long Grove, IL: Waveland Press, 1987).

8 All got tarred with the brush of underconsumption: Weber, In Cheap We Trust, 99–128.

9 Immigrants in 1890s Pittsburgh were notorious savers: Frank Hatch Streightoff, The Standard of Living Among the Industrial People of America (New York: Houghton Mifflin Company, 1911), 110.

10 sought jobs in the highest-cost areas: Ran Abramitzky and Leah Boustan, Streets of Gold: America’s Untold Story of Immigrant Success (New York: Public Affairs, 2022), 89.

11 the ship Bachelor: Bernard Bailyn, Voyagers to the West: A Passage in the Peopling of America on the Eve of the Revolution (New York: Vintage Books, 1986), 516.

12 The largely immigrant Ford plant workers: Shergold, Working-Class Life, 226.

13 more upwardly mobile than native born Americans: Abramitzky and Boustan, Streets of Gold, 3–8.

Chapter 18: Scams: The Nigerian Prince is actually From Spain

1“An Old Swindle” had returned: “An Old Swindle Revived,” The New York Times (March 20, 1898).

2 fun features to the New World: W. P. Cumming, “Geographical Misconceptions of the Southeast in the Cartography of the Seventeenth and Eighteenth Centuries,” Journal of Southern History 4 (1938), 476–492.

3“part of Germany as for East-Florida”: Bailyn, Voyagers to the West, 443.

4 Sir George Macgregor: The Poyais story comes from Chancellor, Devil Take the Hindmost, 97.

5“Sundry Humbugs.”: “Many Millions of Dollars,” American Agriculturalist 38 (1879), 8.

6 Humbugs fell into many categories: “The Natural History of Humbugs,” American Agriculturalist 34 (1875), 6; “Honesty is the Best Policy,” American Agriculturalist 38 (1879), 8; “Puts and Calls in Wheat,” American Agriculturalist 39 (1880), 7; “Consolidation of all the Lotteries,” American Agriculturalist 37 (1878), 82; “Too Sudden to be Trustworthy,” American Agriculturalist 42 (1887), 87; “Clark & Co. Adjusters of Claims,” American Agriculturalist 38 (1879), 8; “The Variety of Disguises,” American Agriculturalist 41 (1882), 5.

7 to improve English harbors: de Goede, Virtue, Fortune and Faith, 50–51.

8 most common speculation in colonial America: Lears, Something for Nothing, 70.

9 exotic spiritualism to guide your bets: Ann Fabian, Card Sharps, Dream Books, & Bucket Shops, 142–43.

10 as a reasonable financial strategy: Lears, Something for Nothing, 260–62.

11 trading stamps: For an excellent online history of Stamp Trading by Jeff R. Lonto, “The Trading Stamp Story (or: When Trading Stamps Stuck),” 2013, http://www.studioz7.com/stamps.html, accessed February 27, 2023; Michael A. Turner, “Credit Card Rewards: Context, History, and Value: A White Paper on Credit Card Rewards, PERC Press (August, 2012); James J. Nagle, “Trading Stamps: A Long History,” The New York Times, December 26, 1971.

122.5 percent per transaction to the store: This number varies, and formulas are complex. The Motley Fool reported Visa’s base charge as between 1.29 percent and 2.54 percent, each with a sliding scale of additional fees of a nickel to a dime per swipe. Lyle Daly, “Average Credit Card Processing Fees and Costs in 2021,” April 13, 2021, https://www.fool.com/the-ascent/research/average-credit-card-processing -fees-costs-america/, accessed June 1, 2022.

13 the upper-middle class: Scott Schuh, Oz Shy, and Joanna Stavins, “Who Gains and Who Loses from Credit Card Payments? Theory and Calibrations,” Research Department Public Policy Discussion Papers 10–3, 2010; Ron Lieber, “The Damage of Card Rewards,” The New York Times, January 8, 2010.

14 legislation to restrict or tax stamps and points: Josiah Baker, “Trading Stamps,” Vanderbilt Law Review 11, issue 2 (1958): 567–8; Ernest Gelhorn, “Trading Stamps, S&H, and the FTC’s Unfairness Doctrine,” Duke Law Journal no. 5 (November, 1983), 903–958; Ivan L. Preston, “Unfairness Developments in FTC Advertising Cases,” Journal of Public Policy & Marketing 14, no. 2 (Fall 1995): 318–321.

Chapter 19: Budgets are New; Hating them Isn’t

1 a husband wrote a gleeful letter to the editor: Weber, In Cheap We Trust, 146.

2 a wide range of sub-subcategories: Christine Frederick, Household Engineering: Scientific Management in the Home (Chicago: American School of Home Economics, 1923), 274–77; on the phenomenon within Home Economics see Carolyn M. Goldstein, Creating Consumers: Home Economists in Twentieth-Century America (Chapel Hill: University of North Carolina Press, 2012), 90–92.

3 a “sedentary man” versus an active one: Flora Thurston, “What should we Spend for Food?” The Delineator, October 1925, 21.

4 required computational power: Danielle Dreilinger, The Secret History of Home Economics: How Trailblazing Women Harnessed the Power of Home and Changed the Way We Live (New York: W.W. Norton, 2021), 234.

5“down to the last string-bean”: Marjorie Hillis, Orchids on Your Budget: Live Smartly on What You Have (New York: Bobbs-Merrill Company, 1937), 138–39.

6 like diets, nobody stuck to them: Dominguez and Robin, Your Money or Your Life, 76–108.

7 take Elizabeth Meredith: Branson, “Women and the Family Economy in the Early Republic,” 47–71.

8“a sort of ‘shop boy’ for her”: Sandage, Born Losers, 240.

9 Frances Green’s 1837 The Housekeeper’s Book: Frances Green, The Housekeeper’s Book (Philadelphia: William Marshall & Co., 1837), 18–19.

10 money management to the wife: Some scholarship suggests this broke down by class, with working-class men and wealthy women considered to be most dangerous with money, leaving poor women and rich men to “money train” their spouse. Working-class women, for instance, were more likely to pawn goods and redeem them regularly in cash crunches, often making sure their husbands never found out. Wendy A. Woloson, In Hock: Pawning in America from Independence through the Great Depression (Chicago: University of Chicago Press, 2009); Ellen Hartigan-O’Connor, The Ties That Buy (Philadelphia: The University of Pennsylvania, 2009 ),119–24; Damiano, To Her Credit; Louis Hyman, Borrow: The American Way of Debt (New York: Vintage Books, 2012), 102.

11 spent over half of their total income on food: This and the below information from Gordon, Table 2–2, 38. Technically the 50 percent is 54 percent and includes all perishables including alcohol, tobacco, heating oil, and reading materials. But these were negligible to the price to buy calories. Alcohol expenditures were significantly higher than today.

12 The Latte Factor: David Bach and John David Mann, The Latte Factor: Why You Don’t Have to Be Rich to Live Rich (New York: Atria Books, 2019).

131872 book made the same point, except with beer: Reade, Success in Business, 83; for a female version, Hartigan-O’Connor, The Ties That Buy, 119.

14 seven gallons of alcohol a year: Mike Stobbe, “US drinking more now than just before Prohibition,” AP News ( January 14, 2020). Americans have held steady at a bit over two gallons per person since the 1920s.

15 Booze, tobacco, cars, and a host of other “bad habits”: William A. Schnedler, How to Get Ahead Financially (New York: Harper & Brothers Publishers, 1926), 27–28; Fabian, Card Sharps, Dream Books, & Bucket Shops (Ithaca: Cornell University Press, 1990), 133.

16“avoiding liquor”: Schnedler, How to Get Ahead Financially, 65; Elias St. Elmo Lewis, Financial Advertising (Indianapolis: Levey Bros. & Company, 1908), 839.

17 significantly better than before: Alejandro Drexler, Greg Fischer, and Antoinette Schar, “Keeping It Simple: Financial Literacy and Rules of Thumb,” American Economic Journal: Applied Economics 6, no. 2 (April 2014), 1–31.

Chapter 20: Debt Isn’t (Necessarily) Dumb

1 Most of America was bought on credit: The Young Man’s Guide 2nd edition (Boston: Lilly, Wait, Colman, and Holden, 1834), 111; Sylvia Porter, Sylvia Porter’s New Money Book for the 80s: How to Beat the High Cost of Living—and Use Your Earnings, Credit, Savings and Investments to Better Your Life (New York: Doubleday and Company, 1979), 906–09; Lendol Calder, “Hard Payments: Consumer Credit and Thrift” in Joshua J. Yates and James Davison Hunter, eds., Thrift and Thriving in America: Capitalism and Moral Order from the Puritans to the Present (New York: Oxford University Press, 2011), 323–25; Gordon, The Rise and Fall of American Growth, 290–302; Louis Hyman, Debtor Nation: A History of America in Red Ink (Princeton: Princeton University Press, 2011), 241–64; Louis Hyman, Borrow: The American Way of Debt (New York: Knopf Doubleday, 2012).

2 most widely shared financial advice in American history: Weber, In Cheap We Trust, 42.

3 one in three history teachers’ first name is Coach: Technically 30 percent. Ryan T. Knowles, Andrea M. Hawkman, and Sarah R. Nielsen, “The social studies teacher-coach: A quantitative analysis comparing coaches and non-coaches across how/what they teach,” The Journal of Social Studies Research 44, 1 ( January 2020), 117–25.

4 Boston Celtics tickets: Gary Belsky and Thomas Gilovich, Why Smart People Make Big Money Mistakes…and How to Correct Them (New York: Simon & Schuster, 2009), 34.

5 smartphones increased spending an additional 4 to 10 percent: “Using your phone to pay is convenient, but it can also mean you spend more,” NPR, April 7, 2024.

6 Franklin got his start by going deeply into debt: Benjamin Franklin, The Autobiography of Benjamin Franklin (1793), VII; J. A. Leo Lemay, The Life of Benjamin Franklin, Volume 1: Journalist, 1706–1730 (Philadelphia: University of Pennsylvania Press, 2005), 375–77.

7“raise all the money his friends can spare”: Benjamin Franklin, “Advice to a Young Tradesman, Written by an Old One,” in Leonard W. Labaree, ed., The Papers of Benjamin Franklin 3 (New Haven: Yale University Press, 1961), 304–08.

8“what cream is to a nice cup of coffee”: Freeman Hunt as quoted in Calder, 316.

9 the richest man in the nation: Thomas M. Doerflinger, “Capital Generation in the New Nation: How Stephen Girard Made His First $735,872,” William and Mary Quarterly 72, no. 4 (October 2015), 623–658.

10 fourth-richest American to ever live: Steve Hargreaves, “The richest Americans in history,” CNN Business ( June 2, 2014).

11 mortgages between $500 and $800: Alexander, Daily Life in Immigrant America, 62–63.

12 today’s median student-loan debt burden: “Report on the Economic Well-Being of U.S. Households in 2023–May 2024,” U.S. Federal Reserve (May 31, 2024).

13 Richard Anderson: Harry S. Stout, American Aristocrats: A Family, a Fortune, and the Making of American Capitalism (Basic Books, 2017), 59–110.

14 its own sad history: Anne Fleming, City of Debtors: A Century of Fringe Finance (Cambridge, MA: Harvard University Press, 2018); Woloson, In Hock.

Chapter 21: The Government was Always Involved

1 The government was always involved: Joyce Appleby, The Relentless Revolution: A History of Capitalism (New York: W.W. Norton & Co, 2010).

2 the United States government became the largest bank in the world: Nelson, A Nation of Deadbeats, 41.

3 The cost of transportation dropped: Fraser, Every Man a Speculator (New York: Harper, 2005), 41–42.

4 By 1929 there were nearly 800: Ott, When Wall Street Met Main Street, 174–75.

5 investment trusts managed to perform worse than the stocks they held: Schwed, Jr., Where Are the Customers’ Yachts?, 91.

6 fawned over them, too: de Goede, Virtue, Fortune and Faith, 122; Norton Reamer and Jesse Downing, Investment: A History (New York: Columbia University Press, 2016), 143; Edward Chancellor, Devil Take the Hindmost, 226.

7 It can destroy it, too: Brands, American Colossus, 334; N. D. B. Connolly, A World More Concrete: Real Estate and the Remaking of Jim Crow South Florida (University of Chicago, 2014).

8 Americans could not afford new clothes: Eleanor Roosevelt, “My Day, April 30, 1946,” The Eleanor Roosevelt Papers Digital Edition (2017), accessed January 11, 2025, https://www2.gwu.edu/~erpapers/myday/displaydoc.cfm?_y=1946&_f =md000326.

9“Price Controls: Good Intentions, Bad Outcomes”: Robert Gordon, The Rise and Fall of American Growth (Princeton: Princeton University Press, 2016), 347–48; Lizabeth Cohen, A Consumers’ Republic: The Politics of Mass Consumption in Postwar America (New York: Vintage Books, 2003), 101–09, 406; World Bank, “Price Controls: Good Intentions, Bad Outcomes,” Policy Research Working Paper No. 9261. Washington, DC: World Bank, 2020. SSRN, https://papers.ssrn.com/sol3 /papers.cfm?abstract_id=3575173.

10 America’s leading political thinkers: John Dean, Home Ownership: Is It Sound? (New York: Harper and Row, 1945); Nathan Straus, Two-Third of a Nation: A Housing Program (New York: Knopf, 1952); Rosalyn Baxandall and Elizabeth Ewen, Picture Windows: How the Suburbs Happened (New York: Basic Books, 2000), 106–14.

Chapter 22: Going Broke is Better than Ever

1 James Wilson lived and lost the American dream: This account largely taken from Daniel M. Friedenberg, Life, Liberty, and the Pursuit of Land: The Plunder of Early America (Prometheus Books, 1992), 348–355.

2 explained de Tocqueville: Alexis de Tocqueville, Democracy in America, Vol. 2, (1840), Chapter X.

3 William McKinley and Donald Trump: Technically neither McKinley nor Trump ever declared bankruptcy. McKinley’s failure happened before the 1898 law allowed it, so his political friends set up a trust and he signed over his assets to the trust, essentially a private bankruptcy. Several of Trump’s business enterprises have filed for bankruptcy, but not the man himself.

4 gone to Texas: Lepler, The Many Panics of 1837, 137.

540,000 citizens applied for relief: The accounts of bankruptcy records come from Edward J. Balleisen, Navigating Failure: Bankruptcy and Commercial Society in Antebellum America (Chapel Hill: The University of North Carolina Press, 2001), 2, 49–67.

6 personal overspending played a role: In “the overwhelming majority of antebellum bankruptcies” excessive consumption was a factor. Balleisen, Navigating Failure, 26, 47, 61.

7 died and left the cutlery to someone else: Miriam K. Davis, “My Wife’s Legacy: Chickens Counted that Never Hatched,” Good Housekeeping Vol. 8 No. 7 (February 2, 1889), 157.

8 specified who should provide the barrels: Clark, The Roots of Rural Capitalism, 123.

9“a tree top is a proper place for a cradle”: Schwed, Jr., Where Are the Customers’ Yachts?, 151.

10 buy tools or reserves for lean times: Stuart M. Blumin, The Emergence of the Middle Class: Social Experience in the American City, 1760–1900 (New York: Cambridge University Press, 1989), 115.

11 Jonathon Amory and Henry Leeds: Balleisen, Navigating Failure, 59.

12 The Beef Bonanza: How to Get Rich on the Plains: James S. Brisbin, The Beef Bonanza, or, How to Get Rich on the Plains (Philadelphia: J. B. Lippincott & Co, 1881).

13 Harvard Graduates Magazine: Richard Allen, “Harvard Men in the Range Cattle Business,” Harvard Graduates Magazine 2 (1894), 183–92.

14 Teddy Roosevelt: Edmund Morris, The Rise of Theodore Roosevelt (New York: The Modern Library, 2001),187–212, 363–76, 644; Ray H. Mattison, “The Hard Winter and the Range Business,” The Montana Magazine of History 1, no. 4 (October 1951), 5–21.

15 raised funds to expand their herds: Gene M. Grassley, “Teschemacher and deBillier Cattle Company: A Study of Eastern Capital on the Frontier,” Business History Review 33, no. 2 (Summer 1959), 121–37.

16 give each player a three-card draw: Jackson Lears, Something for Nothing: Luck in America (New York: Viking, 2003),100.

1740 percent rebounded to have financial success: Balleisen, Navigating Failure, 184–90.

18“to be strongly recommended”: Henry Adams, The Education of Henry Adams (1907), 295.

Chapter 23: Marriage (And Dual Incomes) Mattered…A Lot

1 George Washington had diarrhea: Lengel, First Entrepreneur, 37–44.

2“sunny opportunity fund”: Benjamin R. Andrews, Economics of the Household: Its Administration and Finance (New York: The MacMillan Company, 1924), 129.

3 A 2014 study of thousands of couples: Andrew Francis-Tan and Hugo M. Mialon, “‘A Diamond is Forever’ and Other Fairy Tales: The Relationship Between Wedding Expenses and Marriage Duration,” Economic Inquiry 53 no. 4 (October 2015), 1919–30.

4 compared to a lottery: Lears, Something for Nothing, 111–112.

5 Early twentieth-century feminists: Martha Van Rensselaer and Flora Rose, “When George and Mary wish to marry,” The Delineator (September 1925), 21.

6 Top traits for a wife: Light, The Young Merchant, 117; Edwin T. Freedly, A Practical Treatise on Business: or, How to Get, Save, Spend, Give, Lend, and Bequeath Money (Philadelphia: Lippincott, Grambo & Co., 1853), 52.

7 Philadelphia print shop owner: Edmund Morris, Ten Acres Enough (New York: James Miller, 1866).

8“short engagements and long marriages”: George Horace Lorimer, Letters from a Self-Made Merchant to His Son (Boston: Small, Maynard & Company, 1903), 303.

9“we are for early marriage”: Light, The Young Merchant, 116.

10“share and lighten your labor”: As quoted in Rockman, Scraping, 140–163.

11 advertisements from a new widow: Branson, “Women and the Family Economy in the Early Republic,” 47–71; Jeanne Boydston, “The Woman Who Wasn’t There: Women’s Market Labor and the Transition to Capitalism in the United States,” Journal of the Early Republic 16, no. 2 (Summer 1996), 183–206.

12“Plague of the Learned Wife”: Branson, “Women and the Family Economy in the Early Republic,” 47–71.

13 they didn’t get enough hours: Alexander Keyssar, Out of Work: The First Century of Unemployment in Massachusetts (New York: Cambridge University Press, 1986), 98–99.

14 fifty-eight hours on housework per week: U.S. Bureau of Labor Statistics, “Average hours per day spent in selected household activities,” American Time Use Survey (2023).

15“while their husbands learned to farm”: Linda English, By All Accounts: General Stores and Community Life in Texas and Indian Territory (Norman, OK: University of Oklahoma Press, 2013), 92.

16 crash course in dog breeding: J. W. Stephens, The Money-Maker’s Manual (New York: published by the author, 1866).

17 colored ink and peppermint lozenges: How to Get Rich (Boston: A. B. Courtney, 1894).

18 Volume II: Rise of the (Washing) Machines: Jeremy Greenwood, Evolving Households: The Imprint of Technology on Life (Cambridge, MA: MIT Press, 2019). See also Susan Strasser, Never Done: A History of American Housework (Holt Paperbacks, 2013); Ruth Schwartz Cohen, More Work for Mother: The Ironies of Household Technology from the Open Heart to the Microwave (New York: Basic Books, 1985).

19 one year of her life back: Valerie A. Ramey, “Time Spent in Home Production in the Twentieth-Century United States: New Estimates from Old Data” The Journal of Economic History 69, no. 1 (March 2009), 1–47.

20 survey of nearly 40,000 couples: J. J. Gladstone, E. N. Garbinksy, and C. Mogilner, “Pooling finances and relationship satisfaction,” Journal of Personality and Social Psychology 123, issue 6 (2022), 1293–1314.

21 economic mobility in 4,000 families: Singles were 7 percent less likely to get ahead, and nearly all divorced men and women fell backwards. Richard H. Steckel and Jayanthi Krishman, “Wealth Mobility in America: A View from the National Longitudinal Survey (August 1992), NBER Working Paper No. w4137, p.10–11.

22 percent of Americans who were married dropped: Rakesh Kochhar and Stella Sechopoulous, “How the American middle class has changed in the past five decades,” Pew Research Center (April 20, 2022); Richard Fry and Kim Parker, “Rising Share of US Adults are Living Without Spouse or Partner,” Pew Research Center (October 5, 2021); for an argument that selection bias explains this phenomenon, see Robert Nakosteen and Michael Zimmer, “Spouse Selection and Earnings: Evidence of Marital Sorting,” Economic Inquiry 31, no. 2 (April 2001), 201–13.

23 without a live-in romantic mate: David Brooks, “The Nuclear Family was a Mistake,” The Atlantic (March 2020).

24 married mothers under fifty-five: Brad Wilcox, Get Married: Why Americans Must Defy the Elites, Forge Strong Families, and Save Civilization (New York: Broadside Books, 2024), xi, 36–56.

25 The highest levels of financial satisfaction: CFPB, “Financial well-being in America,” (September 2017), 37.

26 not a honeymoon effect: Shawn Grover and John F. Helliwell, “How’s Life at Home? New Evidence on Marriage and the Set Point of Happiness,” Journal of Happiness Studies 20 (December 2017), 373–90.

27 Married black men make more than single white men: “Taking a Closer Look at Marital Status and the Earnings Gap” (September 21, 2020), Federal Reserve Bank of St. Louis.

28 A child born poor with two continuously married parents: 19 percent end in top quintile vs. 17 percent in bottom quintile. Richard V. Reeves, “Saving Horatio Alger: Equality, Opportunity, and the American Dream,” The Brookings Essay (August 20, 2014).

29 The effect of marriage on poor kids’ success: Raj Chetty and Nathaniel Hendren, “The Impacts of Neighborhoods on Intergenerational Mobility: Childhood Exposure Effects and County-Level Estimates,” The Quarterly Journal of Economics 133, issue 3 (August 2018), 1107–1162; W. Bradford Wilcox, Robert I. Lerman, and Joseph Price, “Mobility and money in U.S. states: the marriage effect,” Brookings Institution (December 7, 2015).

30 Results are robust for gay couples, too: U.S. Census Bureau, “Census Bureau Implements Improved Measurement of Same-Sex Couples,” (September 17, 2020); Michael E. Martell and Peyton Nash, “For Love and Money? Earnings and Marriage Among Same-Sex Couples,” Journal of Labor Research 41 (August 2020), 260–94; Lauren Bauer, Veronica Clevenstine, and Moriah Macklin, “Examining the economic status of same-gender relationship households,” Brookings Institution ( January 20, 2022).

31 even twin studies: Kate Antonovics and Robert Town, “Are All the Good Men Married? Uncovering the Source of the Marital Wage Premium,” American Economic Review 94 no. 2 (May 2004), 317–21; S. Alexandra Burt, M. Brent Donnellan, and Mikhila N. Humbad, “Does Marrige Inhibit Antisocial Behavior? An Examination of Selection vs. Causation via a Longitudinal Twin Design,” Archive of General Psychiatry 67 no. 12 (December 2010), 1309–15.

32 do happy successful people get and stay married: For a thorough review of the causation-versus-causality debate, see Brad Wilcox, “Marriage: America’s Keystone Institution” (December 31, 2024). Of note, robust studies show that after divorce, incomes go down, further suggesting that part of the marriage wage premium is in marriage itself. Andrew C. Johnson, Nolan G. Pope, and Maggie R. Jones, “Divorce, Family Arrangements, and Children’s Adult Outcomes,” NBER Working Paper 33776 (May 2025); Wilcox, Get Married.

33 there is a “two-income trap”: Elizabeth Warren and Amelia Tyagi, The Two Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke (New York: Basic Books, 2004).

Chapter 24: Generational Wealth Doesn’t Last Long

1 CNBC wrote an article: Courtney Connley, “3 money lessons from Jay-Z’s 4:44,” CNBC ( June 30, 2017).

2“if you don’t think ahead this will not be”: Abramitzky and Boustan, Streets of Gold, 92.

3 For the middle class it’s nearly a third: Edward N. Wolf, A Century of Wealth in America (Cambridge, MA: Harvard University Press, 2017), 666.

4“makes grandchildren millionaires”: Reade, Success in Business, 60.

5 Cooperstown, NY: Alan Taylor, William Cooper’s Town: Power and Persuasion on the Frontier of the Early American Republic (Vintage, 1995).

6 what Hetty hated—charities: Charles Slack, Hetty: The Genius and Madness of America’s First Female Tycoon (New York: HarperCollins, 2004), 204–26.

7“sure to lose all they inherit”: P. T. Barnum, The Art of Money Getting, or, Golden Rules for Making Money (1880).

8“that might be the end of the estate”: Schwed, Jr., Where Are the Customers’ Yachts?, 174.

990 percent of their grandchildren aren’t particularly wealthy: Slack, Hetty, 206–07; Priti Kalsi and Zachary Ward, “Gilded Age and Beyond: The Persistence of Elite Wealth in American History,” NBER Working Paper 33355 ( January, 2025).

10 Jeffrey and his wife, Zipah: Rothman, Flush Times & Fever Dreams, 31.

11 Irish immigrants of 1850s Newburyport, Massachusetts: Stephan Thernstrom, Poverty and Progress: Social Mobility in a Nineteenth Century City (Cambridge, MA: Harvard University Press, 1964), 150–55.

12 Progressive reformers estimated: Rensselaer and Rose, “When George and Mary wish to marry,” 53.

Chapter 25: People Really Did Get ahead, And You Can, Too

1 Dad regularly voted for communists for president: Technically the communist party was rarely on the ballot in South Carolina after 1984, so he voted for the United Citizens Party.

2 Loray Mill Strike of 1929: John A. Salmond, Gastonia, 1929: The Story of the Loray Mill Strike (Chapel Hill: The University of North Carolina Press, 1995).

3 A study of nearly 1,000 shows: “Businessmen Behaving Badly: Prime Time’s World of Commerce,” Media Research Center ( June 16, 1997).

4 Award-winning works assure us Twain was right: See Gary Nash, The Urban Crucible: Social Change, Political Consciousness, and the Origins of the American Revolution (Harvard University Press, 1979); Billy G. Smith, The ‘Lower Sort’: Philadelphia’s Laboring People, 1750–1800 (Ithaca, NY: Cornell University Press, 1994), 128–138; Billy G. Smith, ed., Down and Out in Early America (University Park, PA: The Pennsylvania State University Press, 2004). See Joseph P. Ferrie, “History Lessons: The End of American Exceptionalism? Mobility in the United States since 1850,” The Journal of Economic Perspectives 19, no. 3 (Summer 2005), 199–215; Steve Fraser, The Age of Acquiescence: The Life and Death of American Resistance to Organized Wealth and Power (New York: Little, Brown, and Company, 2015). See Jefferson Cowie, The Great Exception: The New Deal & The Limits of American Politics (Princeton: Princeton University Press, 2016); Nancy Isenberg, White Trash: The 400-Year Untold History of Class in America (New York: Penguin Random House, 2016); Raj Chetty, David Grusky, Maximillian Hell, Nathaniel Hendren, Robert Manduca, and Jimmy Narang, “The fading American dream: Trends in absolute income mobility since 1940,” Science 356 iss. 6336 (April 28, 2017), 398–406. See Barbara Ehrenreich, Nickel and Dimed: On (Not) Getting By in America (New York: Picador, 2001), 193–221; Peter Gosselin, High Wire: The Precarious Financial Lives of American Families (New York: Basic Books, 2008); Mark Robert Rank, Thomas A. Hirschl, and Kirk A. Foster, Chasing the American Dream: Understanding What Shapes Our Fortunes (New York: Oxford University Press, 2014); Sean Mcelwee, “The myth destroying America: Why social mobility is beyond ordinary people’s control,” Salon (March 7, 2015); Clark, The Son Also Rises. For a more balanced view, see Julia B. Isaacs, Isabel V. Sawhill, and Ron Haskins, eds., Getting Ahead or Losing Ground: Economic Mobility in America (Pew Charitable Trust, 2016).

5 For evidence of mobility in American history, see Thomas Kessner, The Golden Door: Italian and Jewish Immigrant Mobility in New York City 1800–1915 (New York: Oxford University Press, 1977) (over half the immigrants to New York City in the Gilded Age rose above their social station in one lifetime); Hasia R. Diner, Lower East Side Memories: A Jewish Place in America (New York: Princeton University Press, 2000) (the upward mobility of Jewish families); Anbinder, Plentiful Country (nearly half of famine Irish immigrants rose in status in just ten years, and nearly half of all adults ended their lives in white-collar work).

6 the number of people surviving on above $10 per day: The precise threshold is $10.81 in 2018 dollars. Joe Hasell and Max Roser, “How do we know the history of extreme poverty?” Our World in Data (February 5, 2019).

7 President Ford’s America: I adjusted the 2017 figure of $30 in the Our World in Data set based on CPI data to 2021 dollars to arrive at $37. The official U.S. poverty line in 2021 was closer to $35 per day. Therefore, these numbers do not reflect the official U.S. poverty rate, which in 2021 was an even lower 11.6 percent; Joe Hasell, Max Roser, Esteban Ortiz-Ospina, and Pablo Arriagada, “Poverty,” Our World in Data, 2022, https://ourworldindata.org/poverty.

867 percent thought the government should forcibly break up strikes: Harvey Green, The Uncertainty of Everyday Life, 1915–45 (New York: Harper Collins, 1992), 40.

9 a square foot of house hasn’t increased in price since the early 1980s: Mark J. Perry, “New US Homes Today are 1,000 Square Feet Larger than in 1973 and Living Space per Person Has Nearly Doubled,” AEI ( June 5, 2016); this is not the same as claiming construction labor productivity has increased or that input prices have decreased. For these arguments on cost indexes, see Brian Potter, “Does Construction Ever Get Cheaper?” Construction Physics (February 1, 2023).

10 Zoning laws: Kevin Erdmann, Building from the Ground Up: Reclaiming the American Housing Boom (Brentwood: Post Hill Press, 2022); Ezra Klein and Derek Thompson, Abundance (New York: Simon & Schuster, 2025).

11 Studies of Revolutionary-era Philadelphia: Jackson Turner Main, The Social Structure of Revolutionary America (Princeton University Press, 1965); Sharon v. Salinger and Charles Wetherell, “Wealth and Renting in Prerevolutionary Philadelphia,” The Journal of American History 71, no. 4 (March 1985), 826–40.

1228 percent of any city’s inhabitants: Keister, Getting Rich, 44; Blumin, The Emergence of the Middle Class, 120.

13 within ten years of work: Hartmut Kaelble, Social Mobility in the 19th and 20th Centuries: Europe and America in Comparative Perspective (New York: St. Martin’s Press, 1986), 14–15.

14 possessed more wealth than those they left behind: Richard H. Steckel, “A History of the Standard of Living in the United States,” Economic History Association, “EH.Net Encyclopedia,” edited by Robert Whaples ( July 21, 2002) https://eh.net /encyclopedia/a-history-of-the-standard-of-living-in-the-united-states/ (accessed December 13, 2023).

15 overall mobility has slowed: Joseph P. Ferrie, “History Lessons: The End of American Exceptionalism? Mobility in the United States since 1850,” The Journal of Economic Perspectives 19, no. 3 (Summer 2005), 199–215; Katharine Bradbury and Jane Katz, “Trends in U.S. Family Income Mobility, 1967–2004,” Federal Reserve Bank of Boston Working Paper no. 09–7 (August 20, 2009); Gerald Auten, Geoffrey Gee, and Nicholas Turner, “Income Inequality, Mobility, and Turnover at the Top in the US, 1987–2010,” American Economic Review 103, no. 3 (May 2014), 168–72; Richard V. Reeves, “Saving Horatio Alger: Equality, Opportunity, and the American Dream,” The Brookings Essay (August 20, 2014); Michael D. Carr and Emily E. Wiemers, “The Decline in Lifetime Earnings Mobility in the U.S.: Evidence from Survey-Linked Administrative Data,” Washington Center for Equitable Growth (May 2016); Raj Chetty, David Grusky, Maximillian Hell, Nathaniel Hendren, Robert Manduca, and Jimmy Narang, “The fading American dream: Trends in absolute income mobility since 1940,” Science 356, issue 6336 (April 28, 2017), 398–406; Ariel Gelrud Shiro, Christopher Pulliam, John Sabelhaus, and Ember Smith, “Stuck on the Ladder: Intragenerational Wealth Mobility in the United States,” Brookings ( June 2022).

16 precisely the same percentage as in Denmark: Julia B. Isaacs, “International Comparisons of Economic Mobility,” in Julia B. Isaacs, Isabel V. Sawhill, and Ron Haskins, eds., Getting Ahead or Losing Ground: Economic Mobility in America (Pew Charitable Trust: 2016), Table 1.

17 poverty stricken Europe: Erik Bengtsson, “Inequality and the working class in Scandinavia 1800–1910: Workers’ share of growing incomes,” Economic history of Europe: New approaches, new topics 13, issue 3 (October 2017), 180–89.

18 Consumer Financial Protection Bureau found: CFPB, “Financial well-being in America” (September 2017), 32–33; CFPB, “Pathways to financial well-being: The role of financial capability” (September 2018), 9, 16.

19 Hopeful views for the future significantly predicted long-term savings: J. J. Gladstone and J. Pomerance, “A glass half full of money: Dispositional optimism and wealth accumulation across the income spectrum,” Journal of Personality and Social Psychology 128, no. 1 (2025), 147–95.

Conclusion: The Real Lessons of Financial History

1 The only savings rate that never failed was over 40 percent: Edward F. McQuarrie and William Bernstein, “Expected Outcomes of 401(k) Investing: What Can History Tell Us?” SSRN Paper 5267778 (May 24, 2025).

2 an executive at the chain store Montgomery Ward: Russel Napier, Anatomy of the Bear, 4th edition (Hampshire, UK: Harriman House, 2016), 182.

3“Many a doctor who was overlooking his patients”: Eddie Cantor, Caught Short! (New York: Simon and Schuster, 1929).

4“brought misfortune to merchants and manufacturers”: Light, The Young Merchant, 159.

5 typical investor spent just six minutes on research per stock trade: Toomas Laarits and Jeffry A. Wurgler, “The Research Behavior of Individual Investors,” NBER Working Paper No. w33625 (March 2025).

6 only investing during Democratic or Republican presidencies: Barry Ritholtz, How Not To Invest: The Ideas, Numbers, and Behaviors that Destroy Wealth—and How to Avoid Them (Petersfield, UK: Harriman House, 2025), 312.

7“How can I help you?”: Diedre McCloskey, Leave Me Alone and I’ll Make You Rich (Chicago: University of Chicago Press, 2020).

8 one in three Americans changed addresses every year: Yoni Appelbaum, “How Progressives Froze the American Dream,” The Atlantic (February 10, 2025).

9“living in a van down by the river.”: Saturday Night Live, “Matt Foley: Motivational Speaker,” season 18, episode 20, featuring Chris Farley, Chistina Applegate, and David Spade (May 8, 1993), on NBC. Written by Bob Odenkirk.

1095 percent of all businesses failed: Henry Dearborn as quoted in “The Chances of Success in Mercantile Life,” Hunts Merchant Magazine XV no. V (November 1846), 475–77; Balleisen, Navigating Failure, 7–8.

11 Quit rules: Annie Duke, Quit: The Power of Knowing When to Walk Away (New York: Portfolio, 2022).

Index

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Ace of Base, 21

Adams, Abigail, 106–7

Adams, Henry, 233

Adams, John, 106–7, 162

Adamson, Margaret, 105

Advice to a Young Tradesman (Franklin), 36, 206

African Americans:

Fast Time / Slow Time and, 20–21

financial underperformance, 180

Freedman’s Bank, 199, 281

generational wealth and, 251

homeownership and, 218

house hacking / boarders and, 152–53

Jazz Age Harlem and, 145–46

slavery / enslaved people, 12, 26, 28, 35, 54, 66, 199

Afterpay, 204– 5

AI (artificial intelligence), 71, 100

Airbnb.com, 154, 159

alcohol, 199, 225, 242

Alger, Horatio, 266–68, 275

Alice in Wonderland (Carroll), 75

Alien Land Laws, 174

Amazon.com, 58–59, 68, 115, 255– 56

The American Agriculturalist,182– 83

The American Business Woman,36, 106

American Dream, 16, 80, 136, 189–90, 266, 272, 275

American Express, 188

The American Frugal Housewife (L. Child), 66, 197

American Medical Association (AMA), 271–72

American Revolution, 107, 143–45, 196, 224, 267

Amory, Jonathon, 228

Anderson, Richard, 209, 210

angel investors, 63– 64

annuities, 44, 51, 165–66, 170, 282, 293–94, see also Social Security

anti-consumerism, 130, 131–33, 138, 197– 98

Anti-Rent Movement, 145

Apple, 70–71, 115

Appleseed, Johnny, 141

Apple Stocks app, 94–95

apprenticeship programs, 101, 237, 246, 256– 57

Asian Americans, 171, 172–75, 178, 218

financial overperformance, 174, 180

generational wealth and, 251

Asian financial crisis (1997), 95

AskJeeves, 69

AT&T, 107–8, 285

Austen, Jane, 55, 105

Avon, 155–56

Baby Boomers, 76, 137, 148, 270, 278, 287

BackRub (later Google), 69

back-to-the-landers, 132–35

Bankman-Fried, Sam, 100

Bank of England, 104

bankruptcy, 224–34

bankruptcy laws, 14, 20, 86, 186–87, 210, 224–25, 291

bouncing back from, 225, 226, 231–32, 233–34

Cattle Kings and, 229–30

cohort of 1842–43, 227

debt / leverage and, 228

foreclosure investments, 20–21

importance of credit and, 228–29

overspending and, 227

overtrusting and, 229

Panic of 1837, 226, 227

small business and, 227, 228, 231–32

stress and, 224–25, 232–33

of Supreme Court Justice, 224–25

undercapitalization and, 231–32, 233

banks:

Bank of England, female share ownership, 104

early bankers as immoral, 34

early currency and, 28, 30

First Women’s Bank of New York, 110

Freedman’s Bank, 199, 281

scams and, 110

Second Bank of the United States failure, 115

women-only, 110

Barnum, P. T., 253–54

The Art of Money Getting speech, 84

Basinger, Kim, 19–20, 21

Beardstown Ladies of Illinois, 94

beating the market, 89–102

“Cramer Bounce” and, 89–90

Efficient Market Hypothesis (EMH) and, 93–96

as rare event, 100–102

short selling and, 6, 90–91

skepticism concerning, 92–94

technical analysis, 41, 97–98

value investing, 96–97, 98–100, 107

behavioral economics, 41

Bell, Alexander Graham, 285

Berkshire Hathaway, 23, 99, 115

Better Homes & Gardens magazine, 217

Bezos, Jeff, 58–59

Bierbrier, Doreen, 154

BiggerPockets.com, 151

The Big Short (2015 film), 292

Big Woe / Despair Industrial Complex, 265–66, 270, 276, 296

billiards, 87

Billionairely, 54

Birkey, Cordwainer Henry, 151

birth control, 241

The Birth of a Nation (1915 film), 160–61

Bitcoin, 25, 31–33, 53–54

Black Americans, see African Americans

BlackBerry, 70, 71

Black Plague, 34

black-swan events, 16, 95–96

Blakely, Sara, 207

Blunt, Charles, 82–83, 88

B&M Blue Trading Stamp, 186–87

boarders, see house hacking

Bohun, Edward, 256–57

Bolívar, Símon, 182

bond market:

feme covert / feme sole laws, 104–5, 106

as form of gambling, 106

inflation and, 39–40

interest payments, 77–78, 105, 110, 137, 221

Liberty Bonds, 39–40

origins in Exchange Alley (London), 104

price relationship to yield, 122

stock market vs., 39–40, 41, 115, 122

women investors in, 106–8, 109

Borsodi, Ralph, Flight from the City, 133–34

Bostwick, Salmon, 157–58

Boyle, Ruth, 108

Braselton, Georgia, 19–20, 21

Brown, William Wells, 26, 28, 54

Browne, Harry, 47

Brunswick Company, 87

bucket shops, 15, 37–38, 114–15, 291

budgets / budgeting, 15, 193–201

Complexity Keepers vs. Simplicity Savers, 194–95, 200–201, 294

financial independence and, 129, 139

gender and, 195–97

housewife manuals and, 36, 196, 197

inflation and, 40

as modern tool, 194–95

optimism and, 199–200

spending plans and, 197–200

Buffett, Warren, 23, 76–77, 85, 97–100, 107, 280

Buretel, Elizabeth, 105

business cycle, 116–17

California Perfume Company, 155–56

canals, 64–65, 71, 215

capitalism, 213–23

bankruptcy and, 230–32

culture and, 213

Despair Industrial Complex of academics / Big Woe and, 265–69, 270, 276, 296

diversification and, 83

Du Bois and, 145–46

Fast Time / Slow Time and, 214, 220–21

Go Ahead! approach and, 1–2, 7, 35, 278–79

government challenges and, 218–20

government supports for, 213, 215–18

immigrants and, 152–54, 171–79

impact of, 35

increase in personal income and, 268–72, 283

principles of, 213–14

real estate and, 145–46, 147

socialism vs., 263–65, 268–72

Thoreau and, 131–32

women and, 35–36, 104, 110–11, see also women investors

Carnegie, Andrew, 46, 56, 85

Carnegie Steel, 56

Carpenter, Alice, 109

Carroll, Lewis, Alice in Wonderland, 75

Cashflow (board game), 48

Cashing In on the American Dream (Terhorst), 136

Central Pacific Railroad / Stanford U, 285

Certified Financial Planners (CFPs), 47

Charleston, South Carolina mortgage market, 103, 104–5, 110–11, 291

chartists, 97–98

Chateau Elan (Atlanta winery and resort), 20

ChatGPT, 100

Chetty, Raj, 273

Chicago:

Chicago Board of Trade, 208

fire of 1871, 37

chickens, as side hustle, 155

Child, David, 65–66

Child, Lydia Maria, 65–66

The American Frugal Housewife, 66, 197

children:

dowries and, 236–38, 246, 257

financial literacy and, 255–57, 290–91

investing in, 290

see also education; generational wealth

Chinese Exclusion Act (1882) repeals, 174

Chinese herbs, 151

Choi, James, 43–44

Chopra, Felix, 50

A Christmas Carol (Dickens), 183

Civil War, 28–29, 80, 103, 130, 131, 181, 183, 206, 267

The Clansman (Dixon), 153–54

Clark & Co. Claims Adjusters, 183

Clinton, Bill, 116

college education, 14, 71, 174, 216, 246, 265–68

land-grant colleges, 216

student loans, 202–3, 207, 220, 282, 290–91

College for Financial Planning, 47

Collender, Hugh, 87

Common Stocks as Long Term Investments (Smith), 41

communism:

poverty and, 269

union strikes and, 263–65

The Communist Manifesto (Marx and Engels), 264

compound interest, 73–77

adding value to land, 75–76

contradiction with passive income, 74

never interrupting unnecessarily, 77, 281

overreliance on, 281

see also interest payments

computers, budgeting and, 195

concentration, as basis of diversification, 83, 85, 86–87, 281, 290

consumer advocacy, 48–49

Consumer Credit Protection Act (1968), 217

Consumer Financial Protection Bureau (CFPB), 275

Consumer Goods Pricing Act (1975), 218

consumer protection, 217

Consumer Reports magazine, 49

container shipping, 22–23

contrarianism, 45, 90–91, 97, 131

Cooper, James Fenimore, Last of the Mohicans, 257

Cooper, William, 252–53, 257

co-signing loans, 290–91

coverture laws, 104–5, 106, 196

Covid-19, 40, 97, 280

Cowen, Tyler, 12

Cowles, Alfred, 92

Cracker Barrel, 39

Cramer, Jim, 6, 139

Mad Money (TV program), 89–90, 91–92

credit, see debt / leverage

credit cards, reward programs, 185, 187–89

credit reports / credit agencies, 196, 231

Crockett, Davy, 254

cryptocurrency, 25–33, 86, 139

as asset vs. money, 31, 32–33

Bitcoin, 25, 31–33, 53–54

Fast Time / Slow Time and, 31–33

FTX crypto exchange, 100

nature of, 25

net worth and, 53–54, 60

NFTs (non-fungible tokens), 32, 53–54, 70

origins of, 32

value of, 33

currency:

changing values of, 27–29

early banks and, 28, 30

early forms of, 26–32

Fast Time / Slow Time and, 30–32

greenbacks, 30–32, 205

U.S. official currency impact on savings, 30

see also cryptocurrency

Custis, Martha, 235–36

Dayton, John, 231–32

death:

life expectancy and, 15, 76

net worth and, 55, 57–58

debt / leverage, 202–12

bankruptcy and, 228, see also bankruptcy

borrowing carefully, 294–95

co-signing loans, 290–91

credit card reward programs, 185, 187–89

credit reports / credit agencies and, 196, 231

debtors’ prisons, 13, 14, 226, 232

as evil, 202–5

importance of credit, 204–9, 210, 228–29

net worth and, 55–56

real estate and, 147, 202, 211–12, 224–25, 232–34, see also mortgages

regulation of, 217

small business and, 206–7

stress and, 209–10

student loans, 202–3, 207, 220, 282, 290–91

types of debt, 210

in value-added investing, 80–81

in value investing, 98–99

see also bond market

depreciation, 221–22

Despair Industrial Complex / Big Woe, 265–69, 270, 276, 296

d’Harriette, Martha, 105

Dickens, Charles, A Christmas Carol, 183

Discover Card, 187

Dismal Swamp, 281

diversification, 82–88

concentration as basis of, 83, 85, 86–87, 281, 290

human capital and, 83

limitation as basis of, 83–86

limitation-concentration-diversification order and, 83–88, 158–59, 290

need for, 82–83, 85–88

out of order, 157–59

dividends, 44, 65, 77–78, 112–13, 119–20, 125–26

divorce, 238, 244–46, 248, 258, 259

Dixon, Thomas, Jr., The Clansman, 153–54

Dogecoin, 25

dollar cost averaging, 125

Dominguez, Joe, Your Money or Your Life (with Robin), 136, 137

Douglass, Frederick, 35

Dow, Charles, 41, 117, 122

Dow Jones Index / Dow Jones Industrial Average, 41, 113, 117, 119, 122

dowries, 236–38, 246, 257

Du Bois, W. E. B., 145–46

Dunton, Loren, 47

East India Trading Company, 104, 119

eBay, 203

education:

apprenticeship programs, 101, 237, 246, 256–57

college, 14, 71, 174, 202, 216, 246, 265–68

financial literacy, 255–57, 290–91

high school, 14

investing in, 290

learning from failure, 292

online, 69–70, 71

student loans, 202–3, 207, 220, 282, 290–91

Efficient Market Hypothesis (EMH), 93–96

ego, net worth and, 55–56

Eisenhower, Dwight, 216, 283–84

Elizabeth I (England), 184

Emerson, Ralph Waldo, 132

Engels, Friedrich, The Communist Manifesto (with Marx), 264

English Poor Laws, 164–65

EntreLeadership, 207

Equal Credit Opportunity Act (1974), 217

Erie Canal, 64–65, 215

ETFs (exchange-traded funds), 120–21

Ethereum, 54

E*TRADE, 91, 118–19

Etsy, 158

Exchange Alley (London), 104

Exodusters, 287

Facebook, 115

failure, learning from, 292

Fair Credit Reporting Act (1970), 217

Fair Debt Collection Practices Act (1977), 217

farming:

agriculture as next big thing, 66, 75–76, 83, 133–34

back-to-the-landers, 132–35

credit and, 207

farm improvement and, 35

farm land and, 100, 251

homesteading, 134–35, 254–55

retirement and, 162

sugar beet, 65–66, 71

Fartcoin, 32

Fast Time / Slow Time, 18–24

assumptions and, 279–80

bankruptcy and, 233–34

in Braselton, Georgia, 19–20, 21

capitalism and, 214, 220–21

cryptocurrency and, 31–33

currency in, 30–32

defining, 18

distinction between, 21–24, 31

financial history and, 21–24, 280

generational wealth and, 259

government and, 220–21

Great Depression and, 20–21

Great Recession / financial crisis of 2008 and, 284

money in, 29–30, 31

Next Big Thing and, 63–72

in reading history, 21–24

risk and, 295–96

saving and, 29–30, 31

stock market and, 113, 121, 293

strategic uses of, 283–84

taxes and, 222–23

as volatility changes, 30–32

“Fear-Setting” (Ferris), 17

Federal Deposit Insurance Corporation (FDIC), 213

Federal Reserve Bank, 270

Ferris, Tim, 17

FHA (Federal Housing Administration), 106, 151

fiduciaries, 117–18

FI / FI-ers, 136 50

Cent, 225

financial advice, 34–42

of academic professionals vs. popular gurus, 5, 43–52, 89–90, 91–92, 285

basic steps, 38–39

Certified Financial Planners (CFPs), 47

compound interest in, 73–77

concentration and, 83, 85, 86–87, 158–59, 290

diversification in, 82–88

early retirement and, see financial independence

inflation and, 39, 40, 41–42

insurance and, 36–37, 38

investment guides, 37–38, 40–41, 79

limitation and focus, 85, 86

origins of financial planning, 47

passive income in, 73–74, 77–79

past vs. present, 25, 34–42

predictions and, 280

saving and, 38, 50

women investors and, 105, 108

see also budgets / budgeting; improvement culture

financial history, 277–96

author interest in, 4–6

danger of immersive research and, 6

Fast Time / Slow time in, 21–24, 280, see also Fast Time / Slow Time

Go Ahead! approach, see Go Ahead! approach

strategies that did not work, 279–83

strategies that worked, 283–96

time and, see Fast Time / Slow Time

United States in, 11–17

financial independence (FI), 129–39

back-to-the-landers, 132–35

budgeting and, 129, 139

financial independence and retire late (FIRL), 163

Financial Independence Retire Early (FIRE) Movement, 41, 105–6, 129–31, 135–36, 137–38, 289

financially independent, retired early (FI / RE), 136–37

FIRE bloggers, 137–38

freedom from work, 135–36

homesteading, 134–35, 254–55

“loafers” / flaneurs (thoughtful men) and, 131–32

as pecuniary independence in early days, 130–31

ultraism and, 131, 132–33

upward mobility and history, 272–74

Financial Independence at Fifty (Villiers), 41, 135

First Women’s Bank of New York, 110

Flagler, Henry, 285

Flight from the City (Borsodi), 133–34

Florida vacation homes, 67–68

Ford, Gerald, 268–69

Ford, Henry, 206

foreclosure investments, 20–21

forest fuel, 70

401(k) retirement plans, 77, 118, 120, 125–26, 166–68, 170, 289

France, investment bubble (1700s), 55

Franklin, Benjamin, 1, 48, 79, 133

Advice to a Young Tradesman, 36, 206

debt and, 204–6, 209, 210

on marrying for money, 236

Way to Wealth, 204–6

Frazer, Elizabeth, 108

Frederick Christine, 194–95

Freedman’s Bank, 199, 281

Friedan, Betty, 110, 242

frugality, 66, 172–77, 197, 247, 251, 253

FTX (crypto exchange), 100

Fuller, Ida, 164

Galloway, Scott, 285

Gallup, 169

gambling:

lotteries as, 184–85

stock and bond markets as, 106, 115–16

Gastonia, North Carolina, 263–64, 266, 269

Gates, Bill, 87, 100, 206

gender:

budgeting and, 195–97

capitalism and, 35–36, 104, 110–11

coverture laws, 104–5, 106, 196

roles in marriage and, 106–7, 195–97, 230, 247–48

roles in small business and, 196, 230

teen pregnancy, 13

see also marriage; women investors

General Motors (GM), 205, 269

generational wealth, 249–59

critical flaw of, 252–55, 290

early Americans and, 250–51

financial literacy and, 255–57, 290

frugality and, 251, 253, 290

immigrants and, 251, 253

legacy of competence as, 258–59

as marketing concept, 252

real estate and, 251, 254–55

upward mobility and, 255–57

windfalls and, 250, 253, 258–59

Gen X, 77, 101, 137

Gen Y (Millennials), 77, 101, 148

Gen Z, 77, 284

geoarbitrage, 14–15, 136, 287

gig economy / side hustles, 150–59

Airbnb.com, 154, 159

chickens, 155

diversification out of order and, 157–59

house hacking / boarders, 150–55, 159, 196, 286–87

palm-leaf hats, 155

part-time jobs, 137, 157, 158, 159, 163, 240, 288

small business, 155–56, see also small business

smart use of, 286

Uber, 155

Gilded Age, 5, 115, 175, 212, 267

The Gilded Age (Twain), 212

Girard, Stephen, 206

GitHub, 54

Go Ahead! Approach:

capitalism and, 1–2, 7, 35, 278–79

Fast Time / Slow Time and, 283–84

optimism and, 1–2, 7, 35, 278–79

gold:

as backing for money, 27

goldbugs and, 41, 47, 51

gold-mine investments, 38

as money, 27, 30

San Francisco gold rush, 143, 172–73

Goldman Sachs, 37

Good Housekeeping magazine, 105, 108, 155, 194–95, 227

Google, 68–69, 115, 214, 248

Gordon, William, 176–77

Graham, Benjamin, The Intelligent Investor, 96–97, 99–100, 107

Graham, Sylvester, 131

Grant, U. S., 87

Great Crash (1929), 41, 42, 109, 112, 113, 185, 249–50, 280

Great Depression, 14, 20–21, 42, 108, 109, 133–34, 163, 217, 249–50, 267, 269, 280, 284

Great Recession / financial crisis of 2008, 112

Fast Time / Slow Time and, 284

home ownership and, 4–5, 42, 59, 149, 202–3, 211–12

Green, Frances Harriet, Housekeepers’ Book, 36, 197

greenbacks, 30–32, 205

Greene, Hetty, 253

Griffith, D. W., 160–61

Griffith, Melanie, 108–9

grit, 179

groupthink, 93

guaranteed returns, 281

Guthrie, Woody, 21

Hamilton, Alexander, 224, 267

Hamilton, Peter, 117

Harper’s Magazine, 130–31

Harvard Graduates Magazine, 229

Harvard University, 83, 229–30

healthcare costs, 270, 271–72

Hemingway, Ernest, 277

Hewlett-Packard, 284

highways, 216

Hill, Napoleon, Think and Grow Rich, 46–47, 49

home economics, 194–95

home ownership:

cost of land and, 270–71

down payment and, 147, 153, 158, 208–9, 224, 246

financial advice and, 38

Great Recession / financial crisis of 2008 and, 4–5, 42, 59, 149, 202–3, 211–12

home prices and, 142–43

house hacking, 150–55, 159, 196, 286–87

housing shortages, 219–20, 270–71

immigrants and, 172, 173, 174, 247

legislative changes and, 218

net worth and personal residence, 58

retirement and, 168

1031 exchanges of real property, 81, 222–23

wealth and, 220

see also mortgages

homesteading, 134–35, 254–55

Honeywell, 195

Horatio Alger myth, 266–68, 275

house hacking / boarders, 150–55, 159, 196, 286–87

Housekeeper’s Book (Green), 36, 197

Housel, Morgan, 76, 285

housewife manuals, 35–36, 55–56, 66, 105, 196, 197

Howard, Clark, 48–49, 51, 285

Howe, Sarah, 110

Howland, Gideon, 254

How to Lose Your Money Prudently (Kelly), 92

How Women Can Make Money in the Stock Market (Moore), 109

Huber, Nick, The Sweaty Startup, 288

human capital, 59–60, 75–76, 79–81, 83

humbugs, 182–83

IBM, 48

immigration / immigrants, 171–79

from Asia, 171, 172–75, 178, 180, 218, 251

capitalism and, 152–54, 171–79

Cattle Kings and, 229–30

early currency values and, 29

from Europe, 87, 175–78

frugality and, 172–77, 247, 251

generational wealth and, 251, 253

home ownership and, 172, 173, 174, 247

house hacking / boarders and, 152–54

importance of mobility and, 14–15, 177–79, 255

saving and, 172–77, 247

small business and, 87, 174, 175, 178

from South America, 178

Thoreau and, 132

underconsumption and, 175

upward mobility and, 274

wealth and, 171–72, 173–74, 251, 253

0–1 visas (Individuals with Extraordinary Ability), 12

improvement culture, 35–38

farming and, 35

housewife manuals, 35–36, 55–56, 66, 105, 196, 197

investment guides and, 37–38, 40–41, 79

for men, 36

as prequel to financial advice, 35–38, see also financial advice

safety and, 36–37

self-improvement and, 41–42

income:

historic increase in personal, 268–72, 283

marriage and dual incomes, 173–74, 240, 241, 243–47, 248, 283, 285–86

from real estate, see passive income

taxes and, see taxes

indentured servants, 12

index funds, 42, 92, 113, 118, 120–21, 126, 198–99, 217

Industrial Revolution, 70

inflation:

at 0 percent, 78

adjusting for, 270

bond vs. stock market and, 39–40

financial advice and, 39, 40, 41–42

mortgages and, 207–9

post–World War I increase in, 39–40, 41, 78, 116

price controls and, 218–19

real estate prices and, 142–43

trading stamp, 187

insider trading, 94

Instagram, 134, 137

insurance:

accident insurance, 37, 38, 293

annuities, 44, 51, 165–66, 170, 282, 293–94

financial advice and, 36–37, 38

fire insurance, 37, 38, 293

healthcare costs and, 270, 271–72

life insurance, 37, 38, 293

safety and, 36–37

The Intelligent Investor (Graham), 96–97, 99–100, 107

interest payments, 77–78, 105, 110, 137, 221, see also compound interest

Interstate Highway System, 216

investment clubs, 94, 111

investment guides, 37–38, 40–41, 79

Investment Pentecost, 40

investment trusts, 217

Irish Famine, 87

Jackson, Andrew, 67, 115

Jackson, Michael, 119

Jazz Age Harlem, 146

Jeake, Samuel, 93–94

Jefferson, Thomas, 215

Jenkins, George, 157

Jevons, William, 116., 117

Jewish Americans, 171, 175

Jim Crow, 20–21

Jobs, Steve, 70–71

Johns Hopkins University, 163

Jones, Paul Tudor, 97

Josselin, Ralph, 257

The Journal of Finance, 117

JP Morgan Chase, 101

Judd, Sylvester, 130, 136

Juglar, Clément, 116

Kay, Mary, 157

Kelly, Fred, How to Lose Your Money Prudently, 92

Kennedy, John F. ( JFK), 47, 148

Keynes, John Maynard, 78

King, Martin Luther, Jr., 145–46

Kiyosaki, Robert, 51

Cashflow (board game), 48

Rich Dad, Poor Dad, 5, 48, 49

Klarna, 204–5

Korean War, 174

Kozmo.com, 68

Ku Klux Klan, 153–54

Ladies’ Home Journal, 108

land:

adding value to, 75–76

Alien Land Laws, 174

as backing for money, 27

housing costs and, 270–71

investment in, 27

Land Act (1800), 215

Lunar Registry, 141–42

ownership of, 27, 34, 100

speculation in, 67–68

value of, 142

see also farming; home ownership; real estate

land-grant colleges, 216

Last of the Mohicans (Cooper), 257

laundry:

Chinese businesses, 174

washing machines, 241, 242–43

The Law of Financial Success (1907 booklet), 37–38

Leeds, Henry, 228

leverage, see debt / leverage

Levy, Eugene, 20

Lewis, C. S., The Lion, The Witch, and The Wardrobe, 265

Liberty Bonds, 39–40

life expectancy, 15, 76

The Lion, The Witch, and The Wardrobe (Lewis), 265

Living the Good Life (Nearing and Nearing), 134

Loray Mill Strike (1929), 263–64

Lord, Isabel Ely, 165

lotteries, 184–85

Louisiana Purchase (1803), 215

loyalty programs, 185–89

Lunar Registry, 141–42

MacArthur, Douglas, 249

Macgregor, George, 182

Mad Money (TV program), 89–90, 91–92

Madoff, Bernie, 38, 183

The Magazine of Wall Street, 135

Malkiel, Burton, 92–93

Malone, Annie, 156

margin accounts, 90–91, 114

Marginal Revolution, 285

market capitalization, 58–59

Markowitz, Harry, 117

marriage, 235–48

benefits of, 14, 235–36, 285

birth control and, 241

companionate, 237–38

divorce and, 238, 244–46, 248, 258, 259

dowries and, 236–38, 246, 257

dual incomes and, 173–74, 240, 241, 243–47, 248, 283, 285–86

as a financial arrangement, 235–47, 285

gender roles and, 106–7, 195–97, 230, 247–48

poverty and, 245–46

same-sex, 245

small business and, 227, 236–37, 238–41, 247–48

value of work at home, 240–43, 247

wedding cost and, 237–38

Marx, Karl, 265

The Communist Manifesto (with Engels), 264

Mastercard, 185

Mather, Cotton, 206

Maw Maw (grandmother of author), 3–4, 242–43, 249–50, 258–59

McBride, Bill, 285

McDonald’s, 71, 76–77

McGhee, Norman, 20–21

McGwire, Mark, 116, 165

McKinley, William, 225, 229

Meredith, Elizabeth, 196, 247–48

Merrill Lynch, 108, 109

Messi, Lionel, 164

Microsoft, 63, 69, 87, 115

middle class:

Asian, 174

house hacking and, 152–54

Social Security and, 169

Millennials, see Gen Y

The Millionaire Next Door (Stanley), 252

Milne, A. A., Winnie the Pooh, 296

mining company stock scams, 183

Mississippi River, 215, 216

mistakes, learning from, 292

mobility, see moving / mobility

Modern Monetary Theory, 30

modern portfolio theory, 117

Mohtashami, Logan, 285

money:

assets vs., 32–33

backing for, 27

Fast Time / Slow Time and, 29–30, 31

see also cryptocurrency; currency

Monroe, James, 209

Montgomery Ward, 279–80

Moore, Colleen, How Women Can Make Money in the Stock Market, 109

morality, 1, 3–4, 34, 267

Morrill Acts (1862 and 1890), 216

Morris, Ed, Ten Acres Enough, 133

mortgages:

borrowing carefully and, 294

house hacking and, 151–53

importance of, 207–9

inflation and, 207–9

refinancing, 208

women as mortgage lenders, 103, 104–6, 110–11, 291

Motley Fool, 136–37

moving / mobility:

geoarbitrage and, 14–15, 136, 287

importance of, 14–16, 177–79, 255

see also upward mobility

multilevel marketing (MLM), 156–57

Munger, Charlie, 77

Murrell, Jeffrey, 254–55

Murrell, Zipah, 254–55

Musk, Elon, 87

mutual funds, 6, 47, 93

index funds, 42, 92, 113, 118, 120–21, 126, 198–99, 217

NAACP, 145

Nakamoto, Satoshi, 32

Napoleon, 39, 65–66, 283–84

National Textile Workers Union, 264

Nearing Scott and Helen, Living the Good Life, 134

Neeleman, Hannah, 134

Nelson, Willy, 225

net worth, 53–60

as accounting term, 56

augmented wealth and, 57

calculating, 57–58

cryptocurrency and, 53–54, 60

death and, 55, 57–58

housewife manuals and, 55–56

human capital vs., 59–60

importance of, 53, 55–56, 58–60

as measure for personal wealth, 56–57, 59–60

millionaire, as term, 55

as term, 55, 56–57

New Deal, 160, 161, 163–64, 219

Newton, Isaac, 70

New York City:

Anti-Rent Movement, 145

house hacking / boarders and, 152, 153

real estate and Jazz Age Harlem, 145–46

The New Yorker, 13

New York Stock Exchange (NYSE), 109, 118

The New York Times, 163, 167, 180, 198

Next Big Thing, 63–72

agriculture, 66, 75–76, 83, 133–34

AI (artificial intelligence), 71, 100

angel investors and, 63–64

Apple, 70–71

beating the markets, 98–102

Blackberry, 71

canals, 64–65, 71, 215

Florida vacation homes, 67–68

forest fuel, 70

Microsoft, 63, 69

online education, 69–70, 71

railroads, 65, 71

same-day delivery, 68, 71

search engines, 68–69

shale oil, 67, 71

social media streaming, 72

spotting, 63

sugar beets, 65–66, 71

toll roads, 65

NFTs (non-fungible tokens), 32, 53–54, 70

Nigerian / Spanish Prince scam, 180–81, 189

1984 (Orwell), 220

North Dakota, tax on trading stamp companies, 188–89

Northern Pacific Railway, 229, 281

Nutrilite, 156

Nvidia, 115

oil and gas industry, 67, 71, 285

online education, 69–70, 71

OnlineU, 71

optimism, 263–76

Horatio Alger and, 266–68, 275

American Dream and, 16, 80, 136, 189–90, 266, 272, 275

beliefs and, 275–76

budgeting and, 199–200

capitalism vs. socialism and, 263–65, 268–72

Despair Industrial Complex of academics / Big Woe vs., 265–69, 270, 276, 296

Go Ahead! American story and, 1–2, 7, 35, 278–79

increase in personal income and, 268–72, 283

rejecting pessimism, 296

upward mobility and, 272–74

Orman, Suzy, 48, 51, 105

Orwell, George, 1984, 220

palm-leaf hats, as side hustle, 155

Panic of 1837, 115, 226, 227, 239

part-time jobs, 137, 157, 158, 159, 163, 240, 288

passive income, 73–74, 77–79

contradiction with compound interest, 74

from real estate, 38, 77–78, 81, 147–48, 211–12

as successful speculation, 78

value-added investing and, 75–76, 79–81

Paw Paw (grandfather of author), 220, 241–43, 249–50

PayPal, 278

Peale, Norman Vincent, The Power of Positive Thinking, 46

Pelé, 164

Pennsylvania Railroad, 108

pension era, 161–63, 165

pessimism, of Despair Industrial Complex / Big Woe, 265–69, 270, 276, 296

Phelan, Michael, 87

Philadelphia:

house hacking in, 151

lotteries in, 184

as U.S. capital, 145

Pinterest, 35

Pittsburgh, house hacking / boarders and, 152–53

Playboy magazine, 217

Pokémon cards, 86

Pollard, William, 28

Ponzi, Charles, 110

Porter, Sylvia, 47, 51, 88, 195

poverty:

English Poor Laws, 164–65

Great Depression and, 14

historic increase in personal income and, 268–72

marriage and, 245–46

relative levels of, 14, 268–69

The Power of Positive Thinking (Peale), 46

price controls, inflation and, 218–19

price-to-earnings (P/E) ratios, 126

problem-solving, for others, 284

Progressive Era, 56, 153–54, 163, 194–95, 200, 267, 294

Prohibition, 199

prostitution, 34, 146, 149, 236, 253, 277

Prudent Man Laws, 117–18

pyramid schemes, 156

QVC, 48

railroads, 65, 71, 108, 229, 281, 285

Ramsey, Dave, 48, 49–51, 52, 207, 210, 285

debt and, 221

The Ramsey Show (radio program), 50–51

The Total Money Makeover, 5

A Random Walk Down Wall Street (Malkiel), 92–93

Raskob, John, 108

Reagan, Ronald, 56, 221

real estate, 140–49

accelerated depreciation and, 221–22

in building wealth, 76, 147–48, 263–64

challenges of investing in, 264–65

Florida vacation homes, 67–68

foreclosure investments, 20–21

generational wealth and, 76, 251, 254–55

Great Recession / financial crisis of 2008 and, 4–5, 42, 59, 149, 202–3, 211–12

house hacking, 150–55, 159, 196, 286–87

housing shortages, 148, 219–20, 270–71

immigrants and, 178

in net worth calculation, 57

price trends, 142–44

rental properties, 38, 77–78, 81, 144–59, 211–12

scams in, 183

speculation in, 209

taxes and, 81, 147, 222–23

1031 exchanges, 81, 222–23

timber land, 100

value-added investing in, 75–76, 80, 141, 142, 143–44, 148–49, 152

zero-down investors, 20–21

see also home ownership; land; mortgages

Reddit, 151

remote work, 134

retirement, 160–70

activities in, 162, 163–64

annuities and, 44, 51, 165–66, 170, 282, 293–94

avoiding anxiety about, 289

components of, 164–65

defined-benefit plans, 166

defined-contribution plans, 166

early, 41, 105–6, 129–31, 135–38, 289

expectations vs. reality and, 168–69

401(k) retirement plans, 77, 118, 120, 125–26, 166–68, 170, 289

pension era, 161–63, 165

retirement communities, 161, 167–68

Roth IRAs, 57, 165, 223

separating saving from investing and, 289

shadow retirement systems, 163

Social Security and, 14, 57, 160–62, 164–70, 288, 289, 293

stock market and, 118, 120, 121, 125, 126

taxes and, 57, 166, 223

see also financial independence

Rich Dad, Poor Dad (Kiyosaki), 5, 48, 49

risk:

Abigail Adams and, 107

attitude toward, 16–17, 295–96

beating the market and, 89–102

major returns and, 139

Elon Musk and, 87

risk-aversion of professors, 98, 265–69, 270, 276, 296

in value-added investing, 80–81

see also diversification; insurance

Roaring Kitty, 97

Roaring Twenties, 14, 20–21, 109, 133, 146, 249, 254

Robin, Vicki, Your Money or Your Life (with Dominguez), 136, 137

Robinhood, 101, 118, 126

Rockefeller, John D., 193

Roosevelt, Eleanor, 194, 218–19

Roosevelt, Franklin D. (FDR), 160, 161, 163, 208

Roosevelt, Theodore, 115–16, 163, 229–30

Roth IRAs, 57, 165, 223

Rouge, 185

Russian government debt default (2022), 95

safety:

insurance and, 36–37

stock market and, 121

Salatin, Joel, 134–35

same-day delivery, 68, 71

same-sex marriage, 245

Sanders, Bernie, 263

San Francisco:

fire of 1906, 37

gold rush, 143, 172–73

Santiago de Ochoa, D., 180–81

The Saturday Evening Post, 108

Saturday Night Live (TV program), 48

Save-a-Nickel stores, 187

saving:

Fast Time / Slow Time and, 29–30, 31

financial advice and, 38, 50

frugality and, 66, 172–77, 197, 247, 251, 253

habit of, 275–76

immigrants and, 172–77, 247

impact of official currency on, 30

savings rates, 172–77, 199

separating from investing, 289

see also budgets / budgeting

Saving for Happiness and Income Tomorrow (SHIT) Act, 166

scams, 180–90

banking, 110

bucket shops, 15, 37–38, 114–15, 291

credit card reward programs, 185, 187–89

early maps of the New World, 181–82

financial gimmicks, 37–38, 182–89

gullibility and, 189–90

lotteries, 184–85

mining company stock, 183

multilevel marketing (MLM), 156–57

Nigerian / Spanish Prince, 180–81, 189

real estate, 183

stock market, 38, 115, 183

trading stamps, 186–89

Scanlon, Kyla, 285

Science, 273

search engines, 68–69

Sears, Discover Card, 187

Sephora, 185

Seward, Frederick, 29–30

S&H Green Stamps, 186

shinplasters, 28

short selling, 6, 90–91

side gigs, see gig economy / side hustles

Siebert, Muriel, 109

Siegel, Jeremy, Stocks for the Long Run, 118–19

The Simpsons (TV series), 48

slavery / enslaved people, 12, 26, 35, 54, 66, 199

Slow Time, see Fast Time / Slow Time

small business:

bankruptcy and, 227, 228, .231–32

concentration and, 87

debt and, 206–7

gender roles and, 196, 230

geoarbitrage and, 136, 287

government programs and, 288

immigrants and, 87, 174, 175, 178

marriage and, 227, 236–37, 238–41, 247–48

side hustles and, 155–56

simple heuristics and, 200–201

in value-added investing, 80–81

Smith, Anna Nicole, 225

Smith, Edgar, Common Stocks as Long Term Investments, 41

social media streaming, 72

Social Security, 14, 57, 160–62, 164–70, 288, 289, 293

Sosa, Sammy, 165

South Sea Company, 82–83, 104

speculation / speculitis, 37–38, 40, 67–68, 209, 281

spiritualism, 184

spotting, 63

Standard Oil, 285

Standard & Poor’s (S&P) indexes, 71, 94, 117, 293

Stanford, Leland, 285

Stanley, Thomas J., The Millionaire Next Door, 252

Starbucks, 185

stock market, 112–26

in the 1920s, 40–41

bond market vs., 39–40, 41, 115, 122

bucket shops, 15, 37–38, 114–15, 291

business cycle and, 116–17

The Chart, 112–13, 118, 120

crash of 1792, 225

dividends, 44, 65, 77–78, 112–13, 119–20, 125–26

Efficient Market Hypothesis (EMH), 93–96

ETFs (exchange-traded funds), 120–21

extent of stock ownership, 40, 115–16, 118–19, 120, 124–25

Fast Time / Slow Time and, 113, 121, 293

as form of gambling, 106, 115–16

Great Crash (1929), 41, 42, 109, 112, 113, 185, 249–50, 280

human capital vs., 59–60

index funds and, 42, 92, 113, 118, 120–21, 126, 198–99, 217

inflation and, 39–40

investment guides, 37–38, 40–41

key performers in, 122–24

long-run performance of, 118–26

margin accounts, 6, 90–91, 114

natural laws and, 117–18

origins in Exchange Alley (London), 104

Panic of 1837, 115, 226, 227, 239

popular financial gurus and, 51–52, 89–90, 91–92, 285

price relationship to return, 122–23

Prudent Man Laws and, 117–18

retirement plans and, 118, 120, 121, 125, 126

safety and, 121

scams and rug pulls, 38, 115, 183

short sales and, 6, 90–91

speculation / speculitis and, 37–38, 40, 281

stock buybacks, 126

stock charts and, 41, 99–100

stock indexes, 41, 71, 94, 113, 117, 119, 122, 293

T-bill returns compared with, 123–24

technical analysis, 41, 97–98

value investing, 96–97, 98–100, 107

wealth and, 76, 114, 124–26

women as active investors in, 94, 104, 106–10

see also beating the market

Stocks for the Long Run (Siegel), 118–19

Stoicism, 17

Stoneman, Abigail, 105

stress:

bankruptcy and, 224–25, 232–33

debt / leverage and, 209–10

student loans, 202–3, 207, 220, 282, 290–91

sugar beets, 65–66, 71

suicide, 13

Super American Mortgage, 208

survivalism, 47

The Sweaty Startup (Huber), 288

Swensen, David, 100

Swoops, Sheryl, 225

Taft, William Howard, 39

Target, 218

taxes:

cost segregation / accelerated depreciation and, 221–22

double taxation, 217

early currency and, 30

Fast Time / Slow Time and, 222–23

interest deductions from taxable income, 221

real estate and, 81, 147, 222–23

retirement plans and, 57, 166, 223

1031 exchanges of real property, 81, 222–23

on trading stamp companies, 188–89

VAT system, 223

Taylor, John and Agnes, 153

technical analysis, 41, 97–98

teen pregnancy, 13

1031 exchanges, 81, 222–23

Ten Acres Enough (Morris), 133

Terhorst, Paul, Cashing In on the American Dream, 136

Terhorst, Vicki, 136

Tesla, 115

Think and Grow Rich (Hill), 46–47, 49

Thoreau, Henry David, 6, 131–32, 134

Thriller (1982 album), 119

ticker tape machine, 117

TikTok, 1, 137, 138

time, see Fast Time / Slow Time

Time magazine, 47

tobacco, 199

Tocqueville, Alexis de, 225

toll roads, 65

The Total Money Makeover (Ramsey), 5

tractor trailers, 22–23

trading stamps, 186–89

Trading with the Enemy Act (1917), 174

Transcendentalists, 131–33

Treasury Bills (T-Bills), 53, 123–24

Trump, Donald J., 46, 222, 223, 225

turnpikes, 215, 216

Twain, Mark, 1, 267

The Gilded Age, 212

Twitter, 292

Tyson, Mike, 187, 225

Uber, 155

ultraism, 131, 132–33

United States, 11–17

American Revolution, 107, 143–45, 196, 224, 267

Civil War, 28–29, 80, 103, 130, 131, 181, 183, 206, 267

colonial period, 12–13, 181–82, 184, 197–98

debtors’ prisons, 13, 14, 226, 232

early currency types, 26–32

early maps of the New World and, 181–82

in the 1800s, 13, 35, 67–68, 198, 215–16, 268

Go Ahead! American story, see Go Ahead! approach

government challenges to capitalism, 218–20

government supports for capitalism, 213, 215–18

historic increases in personal income, 268–72, 283

immigration to, see immigration / immigrants

infrastructure projects, 64–65, 215–16

mobility and, 14–16, 177–79

relative poverty rates, 14, 268–69

relative wealth and, 11–12, 268–69, 273–74

in the twentieth century, 13–15

wage levels and, 13–14

see also Go Ahead! approach; Social Security

University of North Carolina (UNC)–Chapel Hill, 205

University of Phoenix, 69–70

upward mobility, 255–57

geoarbitrage and, 14–15, 136, 287

history and, 272–74

USDC, 54

U.S. Department of Agriculture, 66, 133–34

U.S. Department of the Treasury, 162–63

U. S. Federal Trade Commission (FTC), 188

U.S. Government Bonds, 88

U.S. Postal Service, 38

U.S. Small Business Administration (SBA), 288

U. S. Steel, 107–8

U.S. Supreme Court

bankruptcy of Justice James Wilson, 224–25

bucket shops and, 115

greenbacks and, 30

loyalty games and, 186, 187–88

Mississippi River and, 214

net worth as term and, 56–57

trading stamps and, 186–88

U.S. Treasury, early currency and, 30

vacation industry, 67–68, 71

value-added investing

debt / leverage in, 80–81

passive income and, 75–76, 79–81

in real estate, 75–76, 79–81, 141, 142, 143–44, 148–49, 152

value investing, 96–97, 98–100, 107

Vang, Cer, 251

Vanguard, 120–121118

VAT system, 223

Vietnam war, container shipping and, 23

Villiers, Victor de, Financial Independence at Fifty (Villiers), 41, 135

Visa card, 188

Vogue magazine, 108

Walden Pond, 131–32, 134

Walker, Madame C. J., 156

Wall Street:

Crash of 1792, 225

Great Crash (1929), 41, 42, 109, 112, 113, 185, 249–50, 280

see also stock market

The Wall Street Journal, 93, 94–95, 97, 117

Walmart, 115, 285

Walton, Sam, 285

Washington, George, 31, 144, 224, 235–36

Washington, Martha Custis, 235–36

Way to Wealth (Franklin), 204–6

wealth:

adding value and, 75–76

Baby Boomer generation and, 76

diversification, 82–83, see also diversification generational, 249–59

home ownership and, 220

house hacking and, 150–55, 159, 196, 286–87

immigrants and, 171–72, 173–74, 251, 253

net worth in measuring, 56–57, 59–60, see also net worth

opportunity and, 210–11

real estate in building, 76, 147–48, 263–64

relative levels of, 11–12, 268–69, 273–74

from small business ownership, 87

stock market and, 76, 114, 124–26

windfalls and, 250, 253, 258–59, 295

see also upward mobility

Weaver, Sigourney, 108–9

Web 2.0, 136–37

What Should We Do With Our Old? (1911 film), 160–61

Whitman, Walt, 131, 132

Wilson, James, 224–25

Wilson, Woodrow, 163

Winnie the Pooh (Milne), 296

women investors, 103–11

in banks, 110

in bonds, 106–8, 109

feme covert / feme sole laws, 104–5, 106

investment clubs, 94, 111

in mortgage lending, 103, 104–6, 110–11, 291

in stocks, 94, 104, 106–10

women’s magazines and, 108

Woodhull, Victoria, 109

Working Girl (1988 film), 108–9

World Bank, 219

World War I, 5, 55, 56, 107–8

oil shortage, 67

postwar inflation, 39–40, 41, 78, 116

World War II, 70, 76, 115, 142–43, 165, 175, 279–80

container shipping and, 22–23

female employment during, 241

Greatest Generation, 13, 249

postwar boom, 273

postwar housing shortage, 219–20, 270–71

postwar stay-at-home moms, 241–42

Prudent Man Laws following, 117–18

Your Money or Your Life (Robin and Dominguez), 136, 137

YouTube, 37, 137, 215, 233

Zillow, 57

About the Author

JOSEPH S. MOORE, PH.D., is an author, historian, and investor whose work has been published by outlets like The New York Times and Oxford University Press.

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The information in this book has been carefully researched, and all efforts have been made to ensure accuracy. It is not designed to be a definitive investment guide or to take the place of advice from a qualified financial planner or other professional. This book does not consider the reader’s individual situation. Given the risk involved in all investing, there is no guarantee that the methods suggested in this book will be profitable. All investing involves risk, including the loss of principle. Thus, neither the publisher nor the author assume liability of any kind for any losses that may be sustained as a result of applying the methods suggested in this book, and any such liability is hereby expressly disclaimed.

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