Suitable for beginner to early intermediate investors. As you'd expect from Tony Robbins, it does a good job pumping you up: to get investing, to save aggressively, to get on top of your financial situation and to stay the course. All helpful.
However, there is little particularly special about this book. It's competent, workmanlike, and the authors enjoy exclamation points. You'll get all the basic, foundational ideas: how to think like a long-term investor, how not to get shaken out by corrections or crashes, how to understand the impact of excessive investment fees and avoid paying them, and how to find a good advisor (uh, if you really want one).
If you're already a well-read, experienced investor, this book is not for you.
One chapter worth noting is Chapter 7, which tells a disturbing story about how Tony Robbins narrowly avoided severe iatrogenic harm from an entire crew of doctors. Feel free to review my notes below for key themes and takeaways from this unsettling chapter, which has little to do with investing but everything to do with handling uncertainty.
A final comment: this guy's blurb game is incredible. Everyone from Ray Dalio and David Pottruck (former Schwab CEO) to Paul Tudor Jones to Alan Greenspan to Serena Williams, Oprah, Bill Clinton... It's worth noting, however, that too many blurbs can be a contrarian indicator of the value and quality of a book--blurbs are just packaging, not substance.
Notes:
Chapter 1: Unshakeable
1) Grappling with uncertainty. On the idea that there are a few people out there who "have the answers" and Robbins talks about how he spent seven years interviewing "masters of the financial game" to get those answers. [I think this is a dangerous assumption and it shouldn't be put this way, it's misleading. It's a terrible ludic fallacy to assume that there are answers that can be known: most people who first encounter the investment world start off thinking that somebody "knows" what's going to happen, which stocks will go up, etc. Once you know that "nobody knows anything" (borrowing the famous quote from Samuel Goldwyn) only then are you ready to begin.]
2) On controlling what you can control not what you can't: "Control what you can control. That's the trick. And this book will show you exactly how to do it."
3) "The decisions you will be equipped to make after reading this short book can bring you a whole new level of inner peace, fulfillment, comfort, and financial freedom that most humans only dream of achieving. I know that sounds like hyperbole. But as you will discover for yourself, it's not." [Standard Tony Robbins pump-up here.]
4) "... I've coached Paul Tudor Jones, one of the greatest traders of all time... [He] helped to open a lot of doors for me."
5) The point of this book is to distill the ideas from his prior book Money: Master the Game into a form that can be read over a weekend and can reach as many people as possible, "a concise companion."
6) "...knowledge is only potential power... it's useless if you don't act on it."
7) On anticipating winter rather than reacting to it, financially speaking.
8) On the famous Dalbar study, which showed people significantly underperformed the market (3% return versus the market's 10% return) over a multi-decade time period; the delta in returns was partly due to fees but also due to buying at the wrong time and selling at the wrong time: likely buying late in bull markets (right before corrections) and then getting panicked out during those corrections.
Chapter 2: Winter Is Coming... But When?
9) This chapter covers handling the fears of corrections and crashes.
10) On appreciating the value of compounding, using here a standard example of the person who saved starting an age 19 and quit saving 10 years later versus the person who started saving 10 years later and saved right until he was 65, showing that the person who started later is way way less wealthy, despite the fact that he put away more money.
11) "Freedom facts": some of these are actually quite useful and thought-provoking, see for example the idea that there's a correction (10% selloff) almost every year, thus you could metaphorically think about "winter" happening every year, and know therefore not to get shaken out but rather to stay in the market; also note that only 20% of corrections become true bear markets (20% selloff).
12) On [the clown] Nouriel Roubini, who predicted a significant stock market correction in 2013 wrongly, and then predicted recession in 2004, 2005, 2006, and 2007, etc., but then [allegedly] got his 2008 recession call correct. Tony Robbins is absolutely right here: if you listen to clowns like this, no matter how intelligent and articulate they seem, you will get separated from your money. A much better strategy is when pundits like this appear in the media predicting doom, you buy any resulting market declines--you do the opposite!
13) On what typically happens in the stock market in terms of intra-year declines (on average about 14%); likewise a typical individual stock can have a 50% intra-year price change in any given 12 month period. [Another way to think of this is: these intra-year declines give you nice entry points to buy a little extra in addition to the dollar cost averaging you're doing already.]
14) On bear market (20% selloff) periodicity: about every 3 to 5 years roughly.
15) On the outstanding performance of the stock market after serious corrections; typically there will be long-term significant bull markets following major corrections, hence Warren Buffett's famous quote "be fearful when others are greedy, be greedy when others are fearful." "This record of incredible resilience has made life relatively easy for long-term investors in the US market."
16) It is interesting however to contemplate Japan as a contra-example, where the Nikkei went from 38,957 in 1989 to 7,055 in March 2009, a decline of 82% over 20 years. [Robbins does a good job by including this Japan factoid for context. It's helpful in the same way thinking about the US market during the fateful 1968-1982 period is helpful, where the DJIA went from 800... to 800... while inflation eroded your purchasing by some 70% over that period. It really helps to file away these factoids just to sort of bracket the range of expectations that you might have about future reality in the markets.]
17) Another good quote here: "Thanks to inflation, the price of almost everything is at an all-time high almost all the time." [Remember, yes the stock market "goes up" but is it going up or is the "unit of account" (the dollar that we measure it in) being debased? You have to consider this way of thinking about it.]
18) On how costly it is to miss the "best days" of a bull market; this is another example that is commonly used to explain why you need to stay in the market all the time because much of the returns may come from a fairly small number of days, and you won't know which days they are.
19) "...market turmoil isn't something to fear. It's the greatest opportunity for you to leapfrog to financial freedom." [This is a quote that's actually more wise than it appears--it says more than it says--you can actually leapfrog your economic cohort during times of economic distress.]
Chapter 3: Hidden Fees and Half-Truths
20) An enormous percentage of people believe they're not even being charged fees. Jack Bogle's example of the 2% cost of the average fund compounding to as much as two-thirds of your capital in the long run; on other costs beyond just fees, like trading costs, tax costs, etc., particularly when you put money into a mutual fund that trades heavily. Compare this to a typical index fund with very little turnover, very low fees and very low tax implications.
21) Good discussion here of "the Morningstar problem": the fact that once a fund earns a five star rating from Morningstar, typically it will mean revert back to poor performance. Also on the "incubation fund problem": where a firm will launch several funds and later heavily market the one that (randomly) did the best.
Chapter 4: Rescuing Our Retirement Plans
22) More discussion here of what Michael Hudson would call "the rake": the concept that the banking and financial system rakes off what appear to be relatively modest fees, but in the long run they represent a tremendous portion of our retirement savings, if thought of in compounding terms.
23) [Painfully obvious] advice on avoiding funds with sales loads. [Of course it's necessary advice and if it's not obvious to the reader the reader absolutely needs to learn about it!]
24) On how teachers get "mugged" [this is Tony Robbins' own word] the worst on investment fees because of the way products are sold to them and the types of products sold to them (variable annuities, tax sheltered annuities, etc.)
25) See also pay-to-play rules where 401K managers get payments from mutual funds that they offer through their plans, like selling shelf space in a store.
Chapter 5: Who Can You Really Trust?
26) On finding an advisor, choosing from the huge range of designations, wealth managers, financial advisors, investment consultants, etc. Note that 90% of these advisors are brokers paid to sell product and collect fees. "Does this mean they're dishonest? Not at all. But it does mean they're working for the house." [This chapter could be boiled down to Charlie Munger's famous phrase "show me the incentives and I'll show you the result." You must understand the fee and incentive structure of any advisor otherwise you will make him wealthy instead of yourself.]
27) Brokers (who have to follow the "suitability" standard) versus registered investment advisors and other fiduciaries (who have to follow a "fiduciary" standard). Note also that 401k and IRA accounts now require a fiduciary standard. Note here however: the dual-registered advisor (which requires both fiduciary and broker standards) can be switched as needed, if your advisor is working as a broker on a particular transaction he'll have a lower standard! [I actually didn't know about this nuance.]
28) There's a well-done soft sell here of the co-author's registered investment advisory firm Creative Planning.
29) Also a very good question in the section here on key questions to ask an advisor: "Where will my money be held?" This gets to the idea that a true fiduciary advisor should always use a third party custodian to hold your funds (like Fidelity or Schwab). This question should protect you from the Bernie Madoff problem where the advisor can steal, lose or misrepresent your funds in some way.
Chapter 6: The Core Four
30) This chapter covers Tony Robbins' four core beliefs behind the most successful investors. "The best investors understand that these principles must be obsessions. They're so important that you need to internalize them, live by them, and make them the foundation of everything you do as an investor."
31) Core Principle 1: I don't lose
The best investors are obsessed with avoiding losses; see Buffett's rule number one [or see Mohnish Pabrai's dictum "heads I win, tails I don't lose much!"; Ray Dalio's quote "I have to design an allocation that, even if I'm wrong, I'll still be okay."
32) Core Principle 2: asymmetric risk/reward
[This is really pretty much the same as the first core rule to be honest] the author talks about investing in undervalued assets during periods of mass pessimism, citing examples of Buffett constructing different preferred investments in Goldman Sachs during the GFC; or Tony Robbins himself making a personal loan at 10%, but collateralized by a home at only 50% LTV, etc.
33) Core Principle 3: tax efficiency
[The easiest way for most people to follow this principle is just don't over-trade; hold your assets for more than a year, avoid high turnover mutual funds, etc.]
34) Core Principle 4: diversification
Some useful thoughts here about diversifying not just across different asset classes, but also diversification across time (examples could be using dollar cost averaging, or thinking in terms of investment themes and over what period those themes might play out, etc.
Chapter 7: Slay the Bear
35) [This was quite a striking chapter: Tony Robbins tells a frankly shocking and disturbing story about how he was rag-dolled by the healthcare industry: he has a blood test come back indicating excess growth hormone; his doctor instantly decided Robbins had a brain tumor; another doctor basically almost forced him to get brain surgery, he goes to get a second opinion, and that doctor prescribed an experimental drug that was later found to be carcinogenic; Robbins ends up basically extricating himself from all these docs and basically does "watchful waiting" ... and nothing ended up happening to him at all. Read pages 115-118 and you'll be permanently redpilled against over-interventionist healthcare providers, holy cow.]
36) Good notions here on not relying on others for certainty: you can only find it inside yourself. [With investing, whenever you "outsource your certainty" you're going to be in deep trouble, you're going to be rudely separated from your money.]
37) [It's also interesting to hear Tony Robbins talk about moving "from uncertainty to unshakable certainty" with his medical situation: for me this makes me wonder to what extent "certainty" is even possible, is it essentially an illusion? Instead of seeking certainty, perhaps it's best to instead work to maximize your adaptability, to work on your ability to accept reality (the nature of which you usually won't know because we cannot know the future). Furthermore, most of the "decisions under uncertainty" we have to make need to be reversible or readjustable later--your decisions have to include some form of implicit optionality built in. And thus I would argue the proper mindset here is flexibility, adaptability and contingency-based thinking, not "unshakable certainty."]
38) Section here on his co-writer Peter Mallouk's firm's experience through the 2008 crash: On learning to welcome bear markets, on recognizing that if you get shaken out during a crash you suffer permanent financial damage, whereas if you're in a position to at least hold on you'll survive [and of course if you can buy a lot of new equities during this period you can leapfrog into a meaningfully better financial situation.]
39) Basics on stocks, bonds, alternative investments; this guy likes REITs as an asset class, it's also interesting how he openly dislikes gold.
40) The key technique that this guy's firm did is they had their clients in a mix of stocks and bonds, and when the market crashed they simply rebalanced: selling some bonds and buying into a much lower stock market. Basically a basic rebalancing strategy.
41) On the "misguided" approach to use a person's age to determine the percentage of bonds in his or her portfolio. The author considers this too simplistic [and he's right], it really depends on the individual situation, likewise it's misguided to do the standard "broker questionnaire" to determine your risk tolerance.
Chapter 8: Silencing the Enemy Within
42) This part of the book discusses the psychology of wealth. "...the human brain is perfectly designed to make dumb decisions when it comes to investing." "...the parts of the brain that process financial losses are the same parts that respond to mortal threats."
43) Interesting discussion here where Tony Robbins was coaching Paul Tudor Jones and together they established a checklist of questions that would prevent PTJ from being his own worst enemy (Jones essentially became overconfident after having huge returns after the 1987 crash). The questions involved asking:
* whether the investment was asymmetric and to what extent: 3 to 1 or 5 to 1
* what is the breaking point for other investors, what price will get so low (or high) that they will get out? [This is a tremendously well sculpted meta question here]
* use these insights to arrive at a target price for exiting and the target price for entering a position
* [also an interesting one here, this is basically the Guy Spier technique] no orders processed during the session: it meant that you were reacting to the market.
44) Six money mistakes and how to avoid them:
* Mistake 1: Seeking confirmation: The best investors want to hear the contra-argument; seek qualified people who disagree with you. Good quote here from Ray Dalio: "It's so difficult to be right in the markets, so what I've found very effective is to find people who disagree with me and then find out what their reasoning is."
* Mistake 2: Mistaking recent events for ongoing trends: This manifests in things like recency bias, chasing returns, chasing stocks that are going up, etc. The basic solution here is to use rebalancing.
* Mistake 3: Overconfidence: Everyone thinks they're an above-average driver; also examples of people with success in one domain assuming their expertise or skills will transfer to investing or some other domain, etc.
Mistake 4: Greed, gambling and the quest for home runs: "...the best investors are obsessed with the idea of not losing." The investment industry exploits our physiology and psychology; Guy Spier on suggesting we check our portfolios only once a year, that checking stock prices is like "feeding candy to your brain... Move away from the candy!"
Mistake 5: Staying home: On home market bias, investing disproportionately in your own country's markets (or worse, your own employer's stock).
Mistake 6: Negativity and loss aversion: We have amygdala-based learning systems that cause us to have "negativity bias" (to remember that fire hurts for example) but these are the wrong instincts when it comes to investing. On being meta-aware of this tendency and using rebalancing, having an investing co-pilot, etc., to help you through periods of loss and stress.
Chapter 9: Real Wealth
45) Every day, think as you wake up, "Today I am fortunate to be alive, I have a precious human life, I am not going to waste it." --The Dalai Lama;
46) Being financially free is not enough, it's only one life domain.
47) On three key steps to achieving anything you want: focus, massive action, and grace.
48) On the art of fulfillment; fulfillment versus achievement, internal versus external/intrinsic versus extrinsic; principles or behaviors to model in order to achieve fulfillment: first, you must keep growing things ("grow or die"); second, you have to give.
49) On Tony Robbins' idea of an "energy-rich state" versus an "energy-poor state" or a "beautiful state" or a "suffering state"; and his mental decision to live in a beautiful state. On the idea that wherever you choose to focus your thoughts dictates which of these two emotional states you live in.
50) "Suffering triggers": loss, less, never; suffering because you experience a sense of loss, suffering because you have less or will have less, or suffering that you'll never have something in the first place.
51) Robbins' tools for staying in the beautiful state, including "the 90 second rule": "whenever I start to suffer, I give myself 90 seconds to stop it so that I can return to living in a beautiful state." He steps aside from his mind and observes it, observes the crazy thoughts going by, then finds something to appreciate--even if it's to appreciate the awareness to see that I am suffering in this moment. Also a funny blurb about how when he first started using this technique he should have called it the four-hour rule or the four-day rule because it took him so long to stop suffering and regain his equilibrium (!) but with practice you can build this skill and shorten the period of suffering.
52) A simple two-minute gratitude meditation here on pages 179ff; also see unshakeable.com for an audio version.
Step 1: pick an aspect of your life where you have unfinished business, something you need to change or resolve.
Step 2: set aside that situation: place both hands on your heart, feel it beating, close your eyes and breathe deeply into your heart.
Step 3: as you breathe deeply, feel grateful for your heart. Feel what a gift your heart is.
Step 4: as you breathe into your heart, feeling deep gratitude for your heart, I want you to physically feel your heartbeat. As you're doing this think of three experiences in your life for which you feel incredibly grateful.
Step 5: of the first experience, step into it right now is if you're there, reliving it. Feel it, breathe it, own it, and feel so grateful for that moment. You can't feel grateful and angry simultaneously. You can't feel grateful and worried simultaneously. Next, think of a second experience for which you feel so grateful. And then think of a third moment for which you feel so grateful. Again step into each experience.
Step 6: now, think of one more experience, but this time I want it to be an experience that was a coincidence: something you hadn't planned for but that which you're very grateful for. Fill yourself up with gratitude to the universe, or God, or whatever you believe in.
Step 7: now, as you breathe into your heart and feel this tremendous gratitude, remember the issue that was upsetting you earlier. As you stay in this beautiful state of gratitude ask yourself: all I need to remember about the situation, all I need to focus on, all I need to believe, all I need to do is... what? Your first instinctive heartfelt thoughts are usually the right ones.
Appendix: Your Checklist for Success: Fortifying Your Kingdom--How to Protect Your Assets, Build Your Legacy, and Ensure Against the Unknown
53) [There are some useful ideas and insights in this appendix, see especially the part on umbrella liability insurance, also various gift tax exclusion ideas as well as revocable and irrevocable trusts.]
54) Four checklists: one for health, one for wealth, one for insurance, and one for charitable giving.
55) Checklist 1: for health
* Healthcare proxy
* Financial power of attorney
* Living will
56) Checklist 2: for wealth/estate planning
* Setting up a will
* Trusts
* Estate tax planning (paying for childrens' or grandchildrens' college education expenses, gift tax exclusion payments ($14,000 per person per year), pay for medical expenses of a friend or family member, charitable giving, also note here the current IRS rule is that you can give away $5.45 million over your lifetime or at your death without paying any taxes, your "lifetime exemption", note that married couples can combine it to $10.9 million, and further note that this is separate from the $14,000 annual exclusion amount)
* Revocable living trust (these assets avoid probate)
* Irrevocable trust (this is an asset protection mechanism, "own nothing and control everything" via a trust is separate and not subject to estate taxes when you die (as long as you set it up more than three years beforehand); also this can protect assets from creditors while you're alive, an "asset protection trust"; see also the idea of holding life insurance inside an irrevocable trust, an ILIT, irrevocable life insurance trust: proceeds from a life insurance policy are not subject to income tax, but they are subject to estate tax, so holding it within a trust helps you avoid both.)
57) Checklist 3: insurance
* Life insurance: term, permanent and variable life, deciding how much you really need
* Disability insurance
* Long-term care insurance
* Homeowners insurance
* Umbrella insurance: this is another asset protection policy effectively, another interesting way to think about this is that an umbrella policy effectively purchases the ability to access the insurance company's attorneys in that liability issues that come up will be settled by this team of lawyers. [This is a really useful insight, a way of thinking about it that I hadn't considered.]
58) Checklist 4: leaving a legacy: Ideas for handling charitable contributions here, including: using your IRA to distribute money to a charity rather than to your children or heirs because the IRA will be taxed when distributions are made; if you have another asset like land or non-tax sheltered accounts those assets can be distributed to your heirs tax-free instead; also gifting appreciated stock, and donor advised funds; at higher net worth levels you can set up private foundation which can also pay a salary to family members.
To Read:
Tony Robbins: Money: Master the Game
David Swenson: Unconventional Success: A Fundamental Approach to Personal Investment