By faithfully working eight hours a day you may eventually get to be boss and work twelve hours a day.
ROBERT FROST
Once upon a time, I had a keen interest in stock picking. I decided that my route to fortune was going to be as an investor. Of course, I didn't have any money at the time, but I figured you had to start somewhere. I started teaching myself everything I could about investing, and I decided to emulate the greatest investor of all time, Warren Buffett. I subscribed to Buffett's value investing philosophy, read his annual Berkshire Hathaway shareholder letters, and learned from Buffett's teacher, Ben Graham. It was a valuable education in finance and business and was not a waste of my time.
What was a waste of my time was being an active individual investor. Without a sizable chunk of capital to manage, you would be better off spending that time working a second job instead of reading SEC filings. I remember my brother who was also interested in trading stocks telling me candidly that he made more money from his day job than he did trading stocks. That was also the story with me. I came to the conclusion that I was better off putting my money into a mutual fund and letting them manage my investments.
There are more mutual funds in existence than there are stocks on the stock market. What I thought would be a labor saver was as laborious as picking stocks. I was tasked with picking winning mutual funds. That's when I discovered the truth that most actively managed funds underperform the S&P 500. The ones that outperform do so almost out of pure luck. This was the thesis of A Random Walk Down Wall Street by Burton Malkiel. I did not want to believe it, but the numbers didn't lie.
Needless to say, that book and the Efficient Market Hypothesis sparked a debate that goes on to the present day. Even Warren Buffett has argued against the EMH, but he does recommend investing in index funds for the "know nothing" investors like me. Whether the EMH is real or make believe, the reality is that I am one of those know nothing investors who is better off investing in low cost index funds. I am not Warren Buffett. John Bogle of the Vanguard Group took Buffett's place as my investing guru. Bogle popularized index fund investing, and his legacy lives on with the Bogleheads.
I share this story as an example of ambitions. I began with a great ambition but moved to a modest ambition. This is not the only time this has happened to me, but my investing story gives the outline of how I end up moving from great ambitions to modest ambitions. It always begins with a dream. The dream hits reality. I resist the reality until the moment of capitulation. Then, I accept that reality with a dose of humility and end up better off for it.
For me, the moment of capitulation came when I accepted that I was not Warren Buffett and was never going to be Warren Buffett. I don't know if Buffett is a genius or just a lucky coin flipper. I know that I am not a genius, and I have shit for luck in life. So, I am a humble index fund investor now. I also ask myself a fundamental question. How much money do I really need in life? Buffett is a multibillionaire. Bogle was just a multimillionaire. I could live as a multimillionaire. Those additional zeroes are just for bragging rights.
A recent podcast from Walking Is Fitness reminded me of the power of modest ambitions as Dave tells the story of how he moved from being a runner to becoming a fitness walker. Dave became a runner to get into shape in middle age. He was a runner for five years but always hated it. He had begun walking after the runs to meet a step count goal and discovered that he loved walking way more than running. That first mile of running was the worst for him. It was the worst for me, too.
Dave gave up running for fitness walking and has no regrets. But he did confess that for a brief moment he mourned the loss of the running life that he was putting to sleep. Dave enjoyed the races and the finisher's medals and the sense of community among runners. He was going to be giving that up. That was Dave's moment of capitulation. The reality is that the daily grind of training for those events was awful and miserable. Walking was pleasant and fun. The great ambition of being an athlete gave way to the modest ambition of being healthy and mobile into old age.
I don't want to call Dave a hero, but I consider him a hero for taking the bold move of swallowing his pride and embracing walking as his primary fitness activity. I think this country would be better off following this same path. The reason there are so many marathons and road races is because running needs that motivation to keep runners running. Without it, running is just pure misery.
My last example of replacing great ambitions with modest ambitions was my decision to give up the dream of homesteading and become a humble backyard gardener. My accident and traumatic brain injury necessitated this move on my part. I am failing now to keep my lawn mowed while my wife does the gardening. A homestead would have been a colossal disaster versus the modest disaster of my life right now. If you're going to fail, fail in a small way. It gives you a better chance at a comeback.
You could say that my moment of capitulation came with the TBI, but it comes now as I confess that I would have failed at homesteading without the TBI. The reality is that I am given to workaholism and wanted to glut myself with an endless supply of labor. This is insane. It's sad that it took getting my brains smashed in to remedy this insanity.
It is better to take small wins than huge losses. People who tell you to go big or go home are fools. The other fools are the ones who take on a loser mentality because they chose modest ambitions. This would be the "know nothing investors" who take the market's average return or those suffering from failed runner syndrome because they don't have trophies and finisher's medals. This would be the backyard gardener who is "just" a gardener. The reality is that great ambitions are the folly of vain and stupid people. Modest ambitions allow you to escape the trap of vanity and stupidity. That is the power of modest ambitions. Those modest ambitions and moments of capitulation have turned out to be some of the best decisions I ever made in life.
