There are several reasons why I'll pick up a new book to read. Most often I've read other works by the author and want more from them. Sometimes I'll get a strong recommendation from a friend or family member who knows my tastes and interests. Occasionally a review or article will catch my attention. I think this is the first time I've read a book solely because of a dumb meme. I wasn't familiar with the reference, did a little Googling, discovered that the book in question was at my library, picked it up and expanded my horizons a bit!
The book in question is "She" by H. Rider Haggard. I haven't read anything by him before; he's best known for "King Solomon's Mines", which I've heard of, definitely haven't read, and don't think I've seen any adaptations of.
MINI SPOILERS
She is an adventure novel, written in the late 1800s and set in a fictional area of Africa. As the (modern) introduction explains, Haggard had a fair amount of personal experience with the more developed ( / exploited / colonized ) areas of Africa, but he intentionally cast this novel in the style of a more mythologized and mysterious Africa. Several decades ago, most of the interior of the continent was represented on maps with a big blank space; by the time he was writing, those maps had mostly filled in, but the idea of "darkest Africa" still animated the reading public.
Like other novels of the era, there's a pat wrap-around in which the author comes to explain how this document came into his hands, very much like Frankenstein or Dracula or something of that sort. Also like those books, there's a focus on a singular, ambiguously antagonistic subject: someone you can easily describe as "evil" but who has some intriguing characteristics, whether charisma, pity or resolve.
The exotic setting of the book made me think a little of H. P. Lovecraft, but without the same level of weirdness. Lovecraft (and most fantasy novels) posit that the world is fundamentally different from how we think it is, with powerful magical forces that may be hidden but influence how things work. She has more of a mystical feel to it, the idea that there are little nooks and crannies that we haven't discovered yet: hidden lands, certain properties of life. Late in the novel She emphasizes that nothing She does is magic, just science that they don't yet understand.
Overall I feel most comfortable describing this as an "adventure" novel, but I think most "adventure" books I've personally read are set in mostly barren, desolate or otherwise uninhabited lands: Robert Louis Stevenson, Jack London, Robinson Crusoe and so on. Here, there is a unique, imaginary land, but it's also filled with an entire new (invented) civilization, headed by this one mysterious, alluring, captivating figure.
Really, what I think this book most reminds me of is Indiana Jones and the Temple of Doom. There's gawking at bizarre customs, traveling to an exotic land, a strong sense of mysticism. I think that Indiana Jones was based on old radio serials, which in turn were likely inspired by H. Rider Haggard, Edgar Rice Burroughs and other writers of adventure novels.
The titular She of this book doesn't appear until a good hundred pages or so in - it's a very slow burn. The book is narrated by Horace, a middle-aged man who is described by everyone (including himself) as very ugly. Horace adopts a young boy named Leo, who, we learn, descends from a two-thousand-year-old lineage of Greeks, who have maintained a family legend of a fantastical escape from a hidden land in Africa. Along with their faithful servant Job and a Muslim trader named Muhammed, they follow the instructions on ancient artifacts to find their way to this ancestral location. (More plot in Mega Spoilers below.)
Probably because of that introductory meme, I did think of "Lord of the Rings" a decent amount while reading this, although oddly enough not so much with Galadriel. But the character of Job reminded me a lot of Sam in Lord of the Rings. I don't think that Tolkien based Sam on Job; rather, I think that both English authors were reflecting a certain class dynamic. This type of character is a beloved servant who is basically a member of the family, looked on kindly but also with some indulgence. It's a paternalistic mindset, loving but unequal. Both Job and Sam are blunt, honest, brave, resourceful, slightly dumb: many things go over their heads, but they have unquestionably good hearts.
While reading this, I was reminded of an essay I read a while back (which of course I can't find now) about English fairy tales. From the middle ages up through the present day, fantastical English stories tend to follow a similar pattern: the protagonist is a regular person from the "real" world; they leave home and travel to a different place; they have adventures there, solving problems in that place but also personally improving; and at the end they leave the different place and return home, bringing their memories and hard-earned wisdom. As America follows the English tradition, this seems very normal and we don't really question it (and folks like Joseph Campbell describe it as a universal structure); but not all traditions are like that. In other countries, fairy tales may feature traveling to another land, but then staying there, shaping that land to reflect their own home. Or the strangeness may enter into our own land, and either be integrated or fought off. Anyways, She and Lord of the Rings both very much follow the standard English pattern, but most fantastical English novels do so again I think it's more a matter of the authors writing within their own traditions than intentionally copying one another.
MEGA SPOILERS
As soon as I learned that this book was set in Africa, a question I came prepared to ask was, "How racist is this book?" My answer is that it's a bit racist, but not as racist as I was expecting for an English novel of this era and setting. The Amahagger tribe in particular is more surprising than stereotypical; they lack the technology possessed by the Englishmen (particularly firearms), but overall seem confident, stable, and, if not exactly prosperous, certainly not deprived. They have some interesting and surprisingly interesting views on gender, with women initiating courtship and ancestry being traced matrilinearly. The individuals we meet like Billali and Ustane are very admirable: they're honest, compassionate (within the bounds of their culture), and brave. But, like in The Temple of Doom, there are also shocking and gross aspects to their culture, in particular a cannibalistic ritual of "hot potting".
The Amahagger would have killed the English, except they received word from She to expect white-skinned visitors, and warn them to spare them for her own inspection. There's a lot of build-up to She, and it mostly pays off: she's the most eloquently spoken character in the book, has the most interesting backstory, is by far the most powerful. Introduced as a sorceress, she is apparently over two thousand years old, having previously loved Leo's very distant ancestor. There are some hints in the text that she's not actually the same person, that occasionally a young child is taken and groomed to be a successor; but as far as the words of She go, there's only been the one.
She goes by many names. The Amahagger give her the full name of She-Who-Must-Be-Obeyed, which I instantly recognized as a line from Rumpole of the Bailey - it always cracked me up, and it's funny that decades later I finally realize that it's a reference! Her original name was Ayesha, apparently pronounced "Ashha".
Like many novels of this era the pacing can feel pretty slow and odd to modern readers like me. It's subtitled "A History of Adventure", and feels like it should be pretty action-packed, but most of it is characters walking around, looking at things, and talking with one another, often about history. (Again, not entirely dissimilar to Lord of the Rings!) There's basically a shipwreck, one fight scene, and a dangerous leap over a rocky chasm... and that's about all the (physical) excitement over three hundred pages.
I was really curious how She would resolve, and got increasingly nervous as the end of the novel approached without much development. It didn't seem like there would be enough pages to wrap things up. It does end up being a pretty satisfying ending, though, with some surprises and a good amount of resolution.
END SPOILERS
I'm really glad that I read this book. Not so much on its own merits - it's fine - but it feels like it fills in an important gap in the history of books that I care about, spanning from Beowulf through David Mitchell. Its Victorian setting and fantastic material are adjacent to some of my current passions, which heightened my enjoyment of this and also helps contextualize more modern works that riff off of it or just extend that tradition.
"Railsea" is a super-fun China Mieville book. It stands on its own without tying into his other worlds, but will feel familiar to readers, as it similarly conjures an original, remarkable world. I find myself often thinking "How did he think of that?!" as his imagination barrels forward in ever more unexpected directions.
MINI SPOILERS
The central conceit of Railsea emerges relatively early on; unlike, say, The City & the City, where it can take quite a while to intuit exactly what's going on, Railsea has some helpful passages of exposition, carefully spaced throughout, in which the omniscient narrator speaks directly to you and lays things out. Between this and characters explaining things to one another through dialogue, the oddness is more clear. (I wouldn't say I necessarily prefer this approach, as I generally prefer spec fic that leaves it to the reader to suss things out, but it does make this a more approachable read without dumbing anything down.)
Anyways: To oversimplify a bit, the "railsea" of the title is, literally, a "sea" made out of endless railroad. There are tons and tons of tracks, branching off, switching, joining, occasionally changing gauge. The rails run over a very hazardous earth, and underneath the earth are a huge variety of monstrous predators, including enormous molerats, earwigs, earthworms, rabbits, owls and more. They will periodically "breach", emerging from the earth to feed and wreak havoc. Trains serve the role of ships, traveling along the rails, navigating through safer or more dangerous areas.
While the novel almost entirely unfolds on the railsea, we learn about the overall cosmology as well. "Islands" of land emerge from the railsea, on which live most of the people, forming cities and farming and such. Far up above the islands are multiple layers of heavily polluted sky, poisonous to anyone who enters; "divers" will occasionally suit up and ascend into the murky reaches above.
The book as a whole feels like an homage to, and partially a pastiche of, Moby-Dick. The protagonist Sham stands in for Ishmael, the mole-hunter Medes replaces the Pequod, Captain Naphi plays Captain Ahab, Mocker-Jack represents Moby Dick, Mbendo replaces Queequeg, and on and on. Naphi is obsessed with her Great Southern Mole-Rat and risks much in pursuit of her quarry. A fun aspect of this novel, though, is that this is not at all unusual in the railsea: we learn of dozens of captains who likewise have a single, larger-than-life quarry that they relentlessly pursue; not only that, but they have a term for them, "philosophy", and ascribe them deep symbolism and purpose: one captain's "philosophy" might represent loss, another's dangerous knowledge, another's mortality, another's community, another's the sublime, and so on. The whole thing ends up feeling like a really fun, winking commentary on English Literature classes.
The writing itself is really fun. After the first few chapters, the omniscient narrator (who seems to be someone from this alternate world and not Mieville himself) gets increasingly chatty, commenting on what is happening, how you might be feeling about it, and so on. One of my favorite parts is a chapter that digresses on the text's use of the "&" symbol. This is one of the more striking aspects of the novel; a typical sentence might read like:
A storm of faces hanging on him & listening as off in other bits of wherever they were Kiragabo & Vurinam were dancing together, & someone gave Shame another drink, & someone said "So what was is you found on the wreck?" & "Aaaaaah," he was saying, tip-tapped the side of his nose, never you mind, secrets, that was what.
As the narrator eventually explains, many centuries ago writers would have used the word "and" in these situations, but in the world of the railsea, where everything curves on itself and folds over and splits and combines, the "&" symbol is far more appropriate. Which I love! I also love the later sections where the narrator reluctantly stops writing about a particular storyline to focus on something happening elsewhere, then grows increasingly apologetic at how long it's taking to return to the cliffhanger we left on.
All of this writing is really fun and original. I do have to say (not at all as a slight on this book, just in praise of the original) that Moby-Dick itself is probably even more creative and original. I haven't read that book since college, and reading this sparked a lot of memories for me and makes me want to revisit it. I remember being amazed as the novel abruptly shifts into a Shakespearean play, or a Borges-style catalog, or a scientific treatise.
Near the end of the novel, the narrator wistfully recounts some of the other possible stories that could have been told instead of this one - the wild horses that gallop along the tracks, or the political intrigues of two evenly matched islands. This seems to be a very common thing in China's novels: he creates an amazing world that's wholly original and wholly compelling, which could serve as a fertile basis for a writer's entire career (in the style of Lovecraft or Howard or Tolkien); and yet, with the partial exception of the Bas-Lag books, he'll only write a single story set there and then move on. Which I guess does make me kind of think of Tolkien after all, as there's something especially compelling about encountering a single tale that seems to be floating in a sea of other tales, each untold but adding weight to the one we do read.
A final thought: I really liked Sham, and thought he's one of the best Mieville protagonists I've run encountered. He's not especially good at what he does, but has a good heart and good instincts. He doesn't always act on those instincts, but I can relate to his indecision.
Oh! Post-final thought: it's interesting that one author has written two entirely separate novels about fantastic trains, between this and Iron Council. They are kind of opposite conceits in some ways, as Railsea has a multiplicity of overabundant rail, while Iron Council has free-roaming track that moves along with the train. Both of them seem to arise out of a loose adaptation of a deep understanding of the historical development of the railroads, particularly the over-investment and over-development of rails and the self-inflicted wounds capitalism inflicted on itself in the mid-to-late 1800s. As a Brit, Mieville is probably drawing on his homeland's experiences, but they're basically identical to America's, just experienced a few decades earlier. Anyways, this ended up being yet another unexpected entry in my recent run of books about the follies of destructive competition in early railroad development.
END SPOILERS
I ended up enjoying Railsea more than I thought I would. It isn't often mentioned as a favorite book among Mieville fans. I wouldn't say that I like this more than, say, The City & the City or The Scar, but I'd put it on a similar tier with them. It's less macabre than the Bas-Lag books and a slightly quicker read while still feeling weighty and interesting.
So, in an unusual development, I am writing up a review of a game I did not finish. My brother generously gifted me "Shadow of the Erdtree", the long-anticipated expansion to Elden Ring. I made it to the final boss and have died a ridiculous number of times, so rather than letting my positive feelings get overwashed with frustration I think I'll call this the end. The journey has been so fantastic that I still want to capture my thoughts and opinions!
The consensus is correct that this is a significant amount of new content; it's shorter than the base game, but long enough to plausibly be a stand-alone came in its own right. For the most part it's more of the stuff from Elden Ring and not so much new mechanics: new lands to explore, dungeons and legacy dungeons, bosses, weapons, spells, spirit ashes, ashes of war, remembrances, NPCs, quests, and so on. The main adjustment from the base game is a parallel leveling mechanic: you can still gain XP and levels as usual, but a more important progression is collecting Scadutree Fragments and Revered Spirit Ashes, which respectively buff your character and your summons, but only within the new areas of the DLC. There aren't any more Golden Seeds or Sacred Tears to increase your Flask potency or uses. You might be able to do some stuff here from the late-mid or mid-late game, but I doubt you could beat it (at least at my skill level) before coming close to finishing the base game.
From my limited pre-playing information, I had gotten the impression that there's less exploration in the DLC, but that is not the case: there's still plenty of terrain to roam around in, random points of interest to discover, beautiful vistas to see. I'm really glad, since the free-roaming open world was probably my single favorite aspect of the base game.
There are fewer basic dungeons in the expansion, which is mildly disappointing - those were my second-favorite part of the base game, and I really adored the rhythm of finding, exploring, and defeating a mid-sized chunk of content in a single play-session. There are still a few here, but it feels like there are as many of the massive Legacy Dungeons as the simple basic dungeons. Legacy dungeons are cool, but can also feel overwhelming to navigate.
There have been a few patches between the time the game came out and when I played it, and I think I'm glad I waited; from what I've read, the difficulty was very overtuned on release. By the time that I played it fit the "tough but fair" mode that I've come to expect from Elden Ring. As a sorcerer, my MO is to stay at range and try to nuke down enemies before they can reach me; for boss fights, I typically use my Greatshield Soldier Ashes to try and keep the boss occupied while I take care of business. This isn't always feasible, which keeps things fun and interesting.
One aspect that was present in the base game but far more pronounced here is the creative use of vertical space. Looking at the map can be very deceiving; two areas may look close together, but be separated by thousands of vertical feet, and you may need to travel to the other side of the map to find a way to climb up or down to the right level and then retrace your steps.
I was occasionally frustrated by just how to find certain areas of the map. This was true in the base game as well; I don't think I ever would have found the Consecrated Snowfields or Mohg's Palace without looking up online guides. In Shadow of the Erdtree, I reached the final boss with roughly half the map still undiscovered. I was able to organically find a few of the routes by revisiting and re-exploring nearby places, but needed to search online for a few others.
When I did reach those unexplored places, they generally were much more barren than the rest of the game. There are quite a few huge areas that might only have a single treasure or a boss and nothing else. Still, even if there isn't a ton of gameplay they are still visually really distinct and fun to explore.
MEGA SPOILERS
The writing also maintains the high standards of the base game. The lore is very opaque and vague, which I adore. But there are a few stretches that seem significantly clearer than the base game, particularly Count Ymir and the various knights following Miquella.
Some things seem to reference and build on existing lore from the base game. You can meet the Lord of Frenzied Flame, and there's a chain of dragon encounters that refers to Placidusax. The main story, of course, revolves around Miquella, who is frequently referenced in Elden Ring but never seen. It seems that Miquella has the ability to inspire love, which sounds wholesome but unsurprisingly has an ominous overtone in the context of this game.
Giving some more detail to what I said before: I've cleared most of the game that I'm aware of, though I haven't been following any guides and I'm sure there are things I'm missing. I've reached level 18 for the Scadutree Blessing and level 9 for the Revered Spirit Blessing. There was one dungeon with a miserable Death mechanic that I nope'd out on. I haven't been able to defeat the huge Sunflower thing or Promised Consort Radahn; for Radahn, I've gotten to the second phase a couple of times but haven't gotten close to beating them.
END SPOILERS
I still haven't decided whether to head back and play the previous FromSoftware games in the Dark Souls franchise, but Elden Ring has been such a fantastic experience that I remain tempted to do so. Apparently they have a long-standing reputation for meaty and enjoyable expansions, and it's great to see them maintaining and expanding that faculty here. I think Shadow of the Erdtree is more than worth the price, and it's given me many weeks of gaming fun that I think I'll still remember fondly even without having finished it.
So, a little bit of a curveball: just recently, I wrote that I seem to keep reading personal finance books not to get any new ideas or to tweak my strategy, just to reaffirm my path and maybe gain a deeper understanding of why passive investing works so well. I was expecting something similar when I picked up the new 2023 edition of "The Four Pillars of Investing" by the brilliant William Bernstein. While it certainly overlaps with a lot of my beliefs, particularly the virtues of index funds and long-term investing, it's causing me to significantly rethink some aspects of my investment plan, particularly as it comes to retirement. I'm not going to make changes any time soon, but it feels a little refreshing to have something new and concrete to play around with.
I'm pretty sure I first learned about Bernstein through the Boglehead universe, but my previous exposure to him was through his books on economic history, The Birth of Plenty and A Splendid Exchange. I've been meaning to dip my toes into his personal finance books, and Four Pillars seems to be the most popular and recently updated. In an unusual move for me, I picked up the Kindle edition; I almost always prefer reading paper copies, but have had a hard time locating a recent print edition at my library, and am trying to limit my personal print library to a few specific authors. It's been a while since I read a Kindle book, and from a tech perspective I do like how they work: you can easily zoom in on graphs and tables, and there's a good system of highlighting passages that automatically bookmarks them for future reference. (Thus, it's easy for me to find and repeat here my favorite sentence in the book: "Since Morningstar is located in Chicago and staffed by Cubs fans, they have a special affinity for losers.") As with other Kindle books I've read, there is a little clunkiness to this book which makes me wonder if it was generated from a pre-copyediting draft, with some ideas seeming to repeat in nearby paragraphs and the odd typo here or there. On the whole the prose felt a bit less polished than the other Bernstein books I've read, while still being good and entertaining.
I came into the book with a small amount of skepticism just based on the title; The Birth of Plenty seemed to also be about "four pillars", with multiple concepts shoved into the fourth pillar, and I was prepared for something similar here. This book's thesis is pretty uncontestable, though. The title stems from the idea that, in order to be a successful investor (that is, to make rather than lose money at investing), you need to understand four things: The theory of investing, the history of investing, the psychology of investing, and the business of investing. That's all pretty compelling, and I think I agree with him. It's also encouraging: it suggests that, while there is definitely a high degree of uncertainty, investing is not just a matter of luck, nor of extraordinary ability, and that by learning and absorbing some specific knowledge you'll significantly increase your success.
I'll run quickly through the four pillars, then the aspects that interested me the most, and finally what thoughts it's sparked for my own portfolio and investment strategy.
Understanding the theory of investing includes topics like how businesses generate money (non-zero-sum), the tradeoff between risk and reward (investors will demand a greater return in exchange for greater uncertainty), and the differences between stocks (equity) and bonds (debt). This section overlaps with books like "A Random Walk Down Wall Street". I've said in the past that it isn't necessary to understand the theory behind investing to invest well, and while that's technically true, in practice I think it is important for verifying that a given portfolio or strategy is important for your situation and stage of life, and for understanding what's happening when you see major declines in your portfolio.
The history of investing means being aware of the major bubbles and crashes in the past. That includes recent events, like the 2008 great financial crash, 2000 dot-com bust, 1970s inflation and so on; but also ones further back, like the bond bear marked from the 1940s-1980s, the confiscation of assets during the Communist revolutions, bubbles at least as far back as the South Sea and Tulip Mania bubbles. Bernstein makes an interesting point that the importance of understanding a profession's history varies depending on the profession: you can be a very successful surgeon or engineer without knowing much about the history of surgery or engineering; but diplomats and lawyers need a very solid understanding of their fields' histories. Airline pilots benefit greatly from reading about crash reports; from learning about the mistakes other pilots made, they can avoid repeating them. Financial markets have existed for centuries, while our personal investing lives only last several decades. It's important to avoid "recency bias", where we assume that the last few years' trends will continue indefinitely; understanding the different ways markets have behaved in the more distant past enables us to better understand the possible risks that could occur and prepare for them. It's also helpful to understand that booms and busts are inevitable, and that you're always better served by being "fearful when others are greedy and greedy when others are fearful". If you encounter your first market crash, and all the financial news is talking about how everything is terrible, and you sell out of your depressed holdings, then you'll do permanent damage to your portfolio; but if you realize that these crashes happen roughly every decade and always recover, then you'll see this as a buying opportunity, and do permanent good for your portfolio. And if you're facing your first bubble, and everyone is talking about how "the rules have changed!" and justifying historically high P/E ratios, then you'll feel FOMO and jump on the bandwagon, setting yourself up for disappointment; but if you understand that there's always a return to the mean, you'll stick with a more sustainable asset mix and be much better positioned when the bubble inevitably pops (as it has many times before you were born and will many more times after you pass).
I think this may be the pillar where Bernstein raises the really helpful distinction between what he calls "shallow risk" and "deep risk". "Shallow risk" is part of the normal ups and downs we expect from investing in equities and can be endured simply by riding it out. In 2008 stocks fell by half, which felt terrible at the time, but they bounced back within two years, so everyone who stayed the course did well (and, if they continued buying during the dip, even came out ahead); this falls under "shallow risk". "Deep risks" are the less likely but more devastating possibilities that you can't just ride out and that can permanently damage your financial life. Bernstein identifies four of these: from most likely to least likely, they are inflation, confiscation, destruction, and deflation. Inflationary periods, like 1920s Germany, 1930s-1940s US and UK, or more recent episodes in Chile, can utterly devastate financial security. (As in previous works, Bernstein serves as a kind of mirror to Thomas Piketty in offering an opposite viewpoint of the same phenomenon: Piketty notes how these inflationary periods helped reduce inequality between the very rich and everyone else, and allowed governments to more easily retire their debts, while Bernstein focuses on the perspective of those who were fortunate enough to assemble small or large fortunes and then saw them decimated.) By "Confiscation", he means both the wholesale seizure of assets like happened in Russia and China after the Communist revolution, and various "land reform" actions in the developing world, but also extremely high taxation. (Again, a great mirror to Piketty here!) "Devastation" refers to the physical loss of value, usually through war or natural disaster; not so much your dollar bills burning up or gold melting, but more the loss of value in existing companies due to destruction of productive capacity or markets. Finally, deflation can also wreak havoc, not just on individual portfolios but on entire economies: fortunately, deflation is extremely unlikely to occur in our era of central banking and fiat currency, so it's the least of our concerns.
Inflation is the most likely "deep risk", and fortunately also the easiest to prepare for. For retirees, Social Security is indexed to inflation, so maximizing your Social Security benefit by delaying retiring until 70 is the best thing to do, even if it means selling some assets to delay the time until you start collecting. It's also easy to buy TIPS, Treasury Inflation Protected Securities, which are bonds that automatically rise in value based on inflation. You can have some minor protection against inflation by holding commodities (Bernstein likes commodity-producing stocks rather than futures), value stocks, and to a lesser extent real estate. (Interestingly, historically gold has not been a great hedge against inflation; there are exceptions like the 1970s, but it tends to not keep its value very well.) The worst possible thing would be to be locked into long-term nominal bonds, which was exactly the situation that wiped out so many fortunes in the early 1900s (and more recently brought down Silicon Valley Bank).
The other "deep risks" probably aren't worth preparing for; they're highly unlikely and harder to prevent, and if they do hit then protecting your portfolio will likely not be your top concern. Still, it is helpful to remember that most countries have faced these problems at some point in the past. You could protect against confiscation or destruction by holding a portion of your assets outside the country; but this does incur significant cost and government scrutiny, and would you really be willing to flee your country if it came down to it? In the rare event deflation occurs, holding a large amount of cash should see you through; Bernstein recommends doing this anyways for unrelated reasons (keeping "dry powder" to be able to buy on market dips).
Moving on to the third pillar: given that any investor's lifetime will have at least a few major up and down markets, it's really important to understand our own emotions and thought process. Bernstein doesn't present this as a moral judgment, more a description of the physical, biological, evolutionary reasons why we think and act the way that we do, and why that leads us into trouble. We adapted to make split-second decisions, to focus on danger, to listen to stories over data. All of those things helped our ancestors escape saber-toothed tigers, but those exact same instincts can cause people to make impulsive decisions that can set back their retirement by a decade or more. Much like with history, just understanding what's going on and how it works can help prepare us to act wisely in times of crisis.
The final pillar is the business of investing, understanding the various people you may encounter along your journey (stockbrokers, investment advisors), types of investments (mutual funds, ETFs), what incentives people have, what types of things to look for and avoid. This is the area that overlaps most strongly with the writings of John Bogle and the various Bogle-adjacent writers I tend to favor. For better or worse, you're best off ignoring the vast majority of "news" and services, and sticking with simple indexed funds and ETFs from low-cost brokerages.
I should note that, while Bernstein does emphasize "simple", he is definitely not as simple as the vast majority of Bogleheads that I am familiar with. As one extreme, the late John Bogle favored just holding two funds, the Total (US) Stock Market and the Total (US) Bond Market. Vanguard's core portfolio recommendation today has four parts (Total US Stock, Total US Bond, Total International Stock and a currency-hedged Total International Bond). I think Burton Malkiel recommended including an REIT fund as well. Anyways, Bernstein seems to believe that there's nothing wrong with a simple portfolio, but he does believe you can reasonably outperform with a much more granular approach. He gives several examples of increasing complexity, with the most complex including something like ten holdings, including funds tilted towards value stocks, towards small-caps, direct exposure to commodity producers, separate holdings for various international regions (Europe, Pacific, and emerging), real estate and more. He gives some solid justification for these, mostly building off the "history" pillar: going back for several centuries, value stocks have tended to outperform growth stocks; for the last 20+ years, growth have outperformed value stocks, and while we cannot predict the future and certainly can't anticipate when any shift would occur, previous experience strongly suggests that value stocks are overdue for a relative increase in valuation.
After the four pillars, Bernstein spends a chapter or two walking through specific advice he has. Open up an account at either Fidelity, Vanguard or Schwab. Take your time to think through your investment needs, develop a strategy, and then implement it. He repeatedly says that being able to stick with a sub-optimal strategy is significantly better than alternating between optimized strategies. If you're young, start with a lower equity allocation until you encounter your first real bear market and get a real-life sense for what your actual risk tolerance is: having years of lower gains at the start of your career is much better than getting spooked and withdrawing after a crash.
Doubling back to earlier in the book: One of my big take-aways is rethinking just what is meant when people talk about "risk". It's common for a questionnaire or survey to ask about your risk tolerance, which I tend to think of as a matter of emotion or courage: how badly would your stomach hurt if the market drop? As Bernstein looks at it, though, it's more of a mathematical description of the odds of achieving an outcome. If someone has an investment portfolio of $750k and wants real inflation-adjusted returns of $50k per year over the next 30 years, then that portfolio has moderate risk: it can probably provide the desired outcome, but if the market crashes in the early years and has a slow recovery, then it may fail. If someone else has a portfolio of $5m and also wants real returns of $50k per year over 30 years, then there is virtually no risk: no matter what the market does, you'll be able to achieve your goal. Looking at it this way, risk is more a matter of reality than of opinion, which I like.
While reading this book, I thought a lot about a great collection of videos I watched last year from the Bogleheads conference about retirement funding: This one from Dana Anspach:
As I mentioned in my writeup on "How to Make Your Money Last", this is actually an area I haven't thought much about: I've been focusing on accumulating and felt pretty good about my acumen, but realized I haven't given much thought at all to how the draw-down phase will go. I think these videos were the first time I started to think about the goal of retirement planning being to "minimize the odds of failure" versus "maximizing returns". Bernstein goes into this topic with even more depth, including some very helpful hypothetical situations and a look at historical results.
My biggest new take-away from this book has to do with the transition from a volatile investment portfolio to a stable income portfolio. Throughout our working lives, we're ideally saving money for retirement. As we approach middle age, the size of our portfolio may be substantial, and will swell during boom times and crash during busts. Once we start seriously thinking of retirement, we can start putting specific numbers together: how much would we want to receive today to live how we want to live? We can guarantee an inflation-adjusted income in the future by buying TIPS today. If, say, you're planning to retire at 65, and delay Social Security until 70, want to plan for income until you're 95, need $50k to live comfortably this year, and expect to get $40k per year from Social Security, then you can buy $50k worth of TIPS that mature the years you turn 65-70, and $10k of TIPS that mature the years you turn 70-95. This is a "TIPS Ladder", kind of similar to a CD ladder or a bond ladder, but intended for consumption rather than rolling. (He also calls it a LMP, "Liability Matching Portfolio", which is a portfolio calibrated to precisely meet anticipated spending needs rather than to maximize returns. It's probably most accurate to say that it's a LMP that primarily relies on TIPS and Social Security.)
In Bernstein's view, once you get to a point where you can buy that ladder, you should do it, which will then lock in and guarantee the stability of your future retirement. If you delay, the risk is that a market crash (like 1987, 2000, 2008, 2020, etc.) may destroy the real value of your portfolio just as you need it.
This whole approach is very different from my working assumptions to date, which have more followed the idea of a "glide path" that gradually shifts from equities to fixed-income as you age. Bernstein's argument is powerful, though: from looking at specific years and sequences, there are many cohorts that COULD have retired at, say, age 55, but once they reached 56, they had to continue working until 68 to regain their position. His phrase is something like "once the market has given you what you need, you don't need to keep playing: you've won."
Importantly, this is not about market timing: you aren't trying to "get out at the peak" or predict when a crash is coming. It's all about the present value of your funds and your predetermined calculations for what you need. Maybe the market will double after you exit: that's okay! You've got what you need for retirement.
Once you do have this locked-in TIPS ladder, you can continue working and retire on schedule. If you have extra money beyond what you need, you can do what you want with it, which may be something like 100% invested in equities: since this isn't money you need, you're really investing for the benefit of your heirs, and can take advantage of their longer time horizon. He refers to this as an "RP", or "Risk Portfolio", which is a separate bucket from the LMP. (Of course, you could always sell equities to fund "wants", like first-class tickets or a fancy new car; if the market does poorly, maybe you fly coach and get a used Corolla. Again, it's fine, your needs are all covered by TIPS and Social Security.)
I've been aware of TIPS for as long as I've been investing, but have never bought any, and hadn't previously looked into how to buy them. From the book I found the fantastic website tipsladder.com; like many of the best sites it looks like it was designed in the 1990s. I've also started exploring purchase options on my brokerage, and learning a little about auctions.
There are still some fundamental questions I need to work through - most importantly, when would I want to retire? But by eliminating the major unknown variables of future inflation and future market returns, it becomes possible to run through some scenarios. It's super-encouraging to be able to see specific numbers, like "It would cost me $X to buy inflation-adjustment payments of $Y/year from age Z until I turn 70". I can compare $X to my current portfolio to see how much on track I am. I can also do some simple comparisons, like buying vs. renting or carrying a mortgage vs. paying off early: I can adjust the monthly costs that I'd need in retirement, and see if I'd still have the funds available to buy the ladder to fund it.
For comparison, what I've been vaguely considering up until now is basically saving as much as I can in a diversified portfolio (US and international stocks and bonds) and following the "4% rule" - withdrawing 4% of the principal value (including dividends) in my first year of retirement, then adjusting each following year based on inflation, probably adopting some bumpers to limit withdrawals in years with significant market declines and allow higher withdrawals after a hot streak. There are some major differences between these approaches. A big one is that, since a TIPS ladder is to fund spending, when it's done, you're just out of money; with a portfolio of stocks and bonds, the 4% rule supposedly covers the worst-case outcome, but in most cases you'd be left with significant assets after that time to leave to heirs. Another one is that the 4% rule was based on historical studies from the late 1800s through the 1990s, and there's no guarantee that the future will have the same kinds of returns, but it's much more likely that the US government will honor its obligations.
It is kind of gut-dropping to contemplate selling a massive chunk of the assets I've been assembling over my working life and drastically shifting from equities into TIPS. I'm not sure yet if I'll do it. If I do, it would probably be gradual - I might dollar-cost-average over a year, or make a longer-term plan to fill in a ladder through auctions.
But, if I am going to do it, I don't want to wait too long before pulling the trigger. Again, the goal isn't to time the market, but it does seem like mid-2024 is a relatively good time to dial down equities, capture the historic gains we've been seeing and lock in the relatively appealing interest rates.
Once again, though, this comes back to just when I think I might retire. I probably still have a couple of decades of gumption to keep working if I want to / need to, and with that kind of horizon, I probably am better off maximizing equities. BUT this is the sort of thing I should ideally be planning, say, a decade or so out, so I can make shifts when they make sense without being forced to make changes at the last minute with an unfavorable market. I dunno. Which probably means that inertia will keep me on my current course - not necessarily the worst thing!
It is kind of funny to think back to the very early investing posts I made on this blog. At that time I was buying CDs instead of bond funds exactly because of the low bond yield. After the 2008 crash I kept waiting for bond rates to rise, belatedly realized that they hadn't and might not for some time, and eventually switched over, mostly because owning an indexed bond fund is a lot easier to manage over the long term than maintaining a rolling CD ladder. Bernstein is actually pretty positive in this book about CDs, and I may be seriously looking at CDs for cases where TIPS don't work.
Okay, this has felt like even more of a shaggy dog story than most of my posts - for what it's worth, though, this is probably less than half of the thoughts I'd had about a TIPS ladder, let alone the follow-up research I've been doing. I may or may not post again when I come up with a clearer plan for how to proceed.
For now, I'll wrap up to say that the new edition of "The Four Pillars of Investing" is probably the most thought-provoking investing book I've read since "A Random Walk Down Wall Street". It's clear, cogent, actionable, occasionally daring. I wouldn't necessarily recommend this to a new investor; it helps to already have a deep understanding of the conventional wisdom around passive investing to realize the significance of Bernstein's suggestions. It's probably best suited for "enthusiastic amateurs" like me: people who realize that their investments won't make them rich and aren't chasing for unrealistic returns, who enjoy understanding the dynamics of finance, and would consider putting in a lot more effort for a few basis points of results.
I'm a little surprised that I haven't read any Erik Larson yet. I've been hearing good things from friends and family members about "The Devil and the White City" for some time now, and I've enjoyed dipping into other works of novelistic histories (as opposed to historical novels). My friend Dan recently mentioned that his favorite book so far this year was "The Splendid and the Vile", which was enough of a recommendation for me to finally pick it up.
This is a very focused book that almost entirely limits itself to describing the first year of Winston Churchill's term as Prime Minister, which included the fall of France and evacuation from Dunkirk, the increasingly brutal attacks of the Luftwaffe as part of The Blitz, and his wooing of America to provide support through the Lend-Lease Act. While centered on Churchill, it also looks at the members of his circle, including family, employees, and key advisors, as well as occasional glimpses at ordinary English folk; across the Channel, we get periodic reports from Goring, Goebbels and Hess.
The book feels pretty evenly balanced between grand matters of strategy (particular in how Churchill processed decisions and enacted them) and slice-of-life vignettes that seek to convey what it felt like to live in England at this time. I was slightly surprised by just how much of the book is focused on the Blitz; there is some occasional mention of U-Boat combat in the Atlantic and codebreaking at Bletchley Park, but probably less than 1% as many words as that devoted to raids, defenses and counter-raids. On further reflection, though, that does make sense, since Churchill and the rest of his government personally experienced the bombings; naval warfare in the Atlantic was similarly important, but did not directly impact their lives.
While this isn't necessarily a topical book, I did find it particularly resonant while massive bombing campaigns against civilian infrastructure continue in Ukraine and Gaza. You get a strong sense for the fear of attacks, the horror of mangled bodies and demolished homes, as well as the stiffening resolve to carry on and the desire to hit back.
I think I was already familiar with a lot of the information from this book, but really enjoyed how it was presented. Churchill comes across as very eccentric: working for hours out of his bathtub, surrounded by secretaries and ministers; wandering down the halls in a one-piece romper suit; putting military marches on the record player and demonstrating rifle maneuvers to party guests at 2AM. We see how he tries out some of his famous oratory in personal conversations to see what kind of a response it gets before deploying those phrases in his famous speeches.
Of course, I learned a lot too. One major character is The Prof, another smart and eccentric person, a devoted vegetarian who helps explain complicated concepts in a simple manner. The Prof is a helpful resource, but also seems to send Churchill down wild goose chases, in particular some fanciful inventions like balloon-tethered aerial mines. Those ideas sound ridiculous; but at the time they probably seemed much less ridiculous than, say, the navigation beams Germany was deploying.
A few of the "side-stories" kind of plodded for me. In particular there's a long-running and kind of interminable "plot" for Colville, one of Churchill's secretaries. Colville has unrequited feelings for a woman, wants to join the RAF, and eventually does it after getting contact lenses. That's it; but more words are spent on that than the Battle of the Atlantic, North Africa, the Middle East, Yugoslavia and Greece combined. I'm sure some other people will enjoy that story, but personally I found it the least interesting and longest of the book.
Overall, I thought this was a good, fresh look at one of the most famous people in history. It definitely isn't a hagiography, but Larson clearly is entertained by Churchill and admires his courage and strength in the face of adversity. It's an interesting combination of humanizing someone while showing their larger-than-life, almost mythical qualities.
