May 14 • 1HR 1M

🎙Nick Maggiulli: Just Keep Buying

“We begin our lives as growth stocks and end our lives as value stocks.”

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Hello everyone,

I’m happy to share my conversation with my friend Nick Maggiulli who writes the excellent personal finance blog Of Dollars and Data. Nick just came out with his first book: Just Keep Buying: Proven Ways To Save Money And Build Your Wealth. Nick combines his empirical research with a personal perspective and I really like that he distills the work down into rules that are effective yet pragmatic. His advice is free from some of the guilt-driven personal finance drivel (save on avocado toast to get wealthy..).

We talked about the book, his writing process, the optimal level of fame, and why he thinks people should not pick stocks themselves.

You can listen to the conversation on your podcast player of choice: Spotify, Apple, at anchor, and via RSS.

“Fear has a far greater grasp on human action than the impressive weight of historical evidence.” Jeremy Siegel

“You have to keep reminding yourself of that quote. It's my favorite investment quote because it's the only thing that keeps me from letting my behavior take over from my logic.” Nick Maggiulli


Some highlights from the conversation:

Nick’s argument against stock picking: how do you know whether you’re good at it? It takes too long to establish a track record that is meaningful:

“Imagine you're trying to get in shape. … You go to the gym for three months, see no difference. Go to the gym for six months, one year, no difference. Then, all of a sudden, you lose 10 pounds. .. No one would do it. With diet and exercise, you start seeing results within a few months. But with stock picking … after one year, no way. … I think it can take a decade or longer. And this is obviously debated in the literature. … How do you know when a factor is dead? It can take you 20 years.

It takes roughly the same amount of time to figure up a manager's really good … Let's just say you did it for 10 years. … My whole life's changed. Five years ago, I just started blogging. I didn't have a book. Imagine I have to do this again and only then would I know if I have skill. After 10 years, oh, actually I shouldn't be doing this.”

Income vs. expenses and guilt-free saving and investing:

“I do these like simulations and say, Hey, if this person is on a steady state of retirement and they get this raise, if they save at least half of it, they're usually good to go. It's about reducing guilt. It's okay to spend a little bit of money. … Cutting spending is not a way to raise wealth in the long run. You can do it in the short term, but the only sustainable path out is I've seen based on the data is raising our income.

Everyone was like, you got to cut your lattes. You're just gonna feel miserable and hate it and guilt yourself. And you're going to end up giving up or you're gonna feel like shit. I'm saying that the way out is raising her income and there's a way to do it. It just takes a lot of work, but it's the only sustainable path out.”

Nick’s writing process:

“I used to have a bunch of drafts which you can imagine as different pots sitting on the stove. Some have just ingredients, there's no heat on them. Some are kind of just simmering. Some are ready to take off, ready to serve. Sometimes I have nothing going and I just have to come up with something. It varies every week. Last week I wrote about inflation, why I think people are thinking about inflation incorrectly. I had this epiphany where I thought about it like, is that true?

I said, oh, that's actually not true. Let's just write about that and see how it does. I like to reframe common things. A lot of stuff logically makes sense and then you run the numbers and you go, ah, that doesn't make sense as much as I thought it would have. A lot of things we just assume to be true and you ask, is that actually true?”

Intuition backed by data:

“I think there's a lot of people that have really good intuition, but they can't explain why it's true. So I ran the numbers and was like, Hey, this person who everyone is saying is dumb … yes, some of the things he said were a little silly, but I think his intuition was a lot stronger and more intelligent.”


Just Keep Buying: Proven ways to save money and build your wealth:  Maggiulli, Nick: 9780857199713: Books