"Killing Sacred Cows" or, "Portrait of Hubris", a Grasshopper Manifesto
There's a guy named Garrett B. Gunderson who made a bunch of money in his twenties and made the mistake of thinking he was smart, not lucky. He wrote a book called "Killing Sacred Cows: Overcoming the Financial Myths that are Destroying your Prosperity", copyright July, 2008, (except his website shows a self-published version he released in April, 2007.)
I'm struck by a few things after reading this book. One is how incredibly young he is. This is a book written by someone who has never known a bear market, never seen asset prices plummet. He just doesn't understand why you wouldn't kill the cow. I'll tell you why: because the cow will give you a steady stream of milk that can sustain your kids at a subsistence level, whereas killing it will give you a couple of good feast days at most.
This book is all about feasting now. It's a grasshopper manifesto.
To say I found this book offensive would be wrong. Mostly I felt like pointing and laughing at a guy who is surely hurting right now. He mentioned a couple of times how smart he was to get me to shell out $25 for his book and I was smugly pleased each time to note that I got it out of the library.
He had just enough smatterings of insight about what's involved with becoming financially well-off that it tainted the message of utter Wrongness with Correctness in a few short paragraphs. I find this worrying more than offensive. I sincerely hope whoever gets it out of the library realizes that the lines underlined in pencil were the places he was dead WRONG, not insightful gems. (It not being my book, I didn't make margin notes beyond occasionally underlining to use for this review.) If you're interested in how to overcome middle-class views on entrepreneurship, risk-taking and buying real estate to flip, a better read would be Rich Dad, Poor Dad by Robert Kiyosaki. But my advice is to get that one out of the library, too.
I'm struck by a few things after reading this book. One is how incredibly young he is. This is a book written by someone who has never known a bear market, never seen asset prices plummet. He just doesn't understand why you wouldn't kill the cow. I'll tell you why: because the cow will give you a steady stream of milk that can sustain your kids at a subsistence level, whereas killing it will give you a couple of good feast days at most.
This book is all about feasting now. It's a grasshopper manifesto.
Myth 1: The Finite Pie. He counsels that people will be richer if they stop acting like resources are scarce and start acting like everything is limitless. He explains that he went from making $133,000 the year he graduated from college to making $450,000 the next and he did it by cooperating with others and not being all stingy, so scarcity is bad, mmkay. I wondered if he meant to imply that everyone he cooperated with ALSO made $450,000 that year. I also found it interesting that he found $133,000 to be a reasonable starting wage for a hard-scrabble new graduate.
Myth 2: You're in it for the Long Haul. In this chapter he explains that it's silly to live within our means as the road to wealth never comes from reducing expenses, it comes from flaunting it to attract more wealth, and, besides, sometimes people die young so what's the point in saving, as you'll never really use that retirement money anyway. Oh, and it's selfish and shortsighted to be frugal, as you're keeping the velocity of money down by not spending now.
Myth 3: It's All About the Numbers. In this he reveals that money isn't worth anything, the only true value is in how much enjoyment you can get from it now. He laughs at people who are trying to save up for retirement, explaining that more money won't make them happier and they're likely going to be skewered by higher tax brackets. Thing is, he completely misses any concept about storing excess labor now while you're young and strong to help support you later, when you're old and decrepit. He has no concept of "rainy day" in his thinking.
Myth 4: Financial Security. I tended to agree with a lot of his points about people being responsible for their own financial freedom and security, but he went too far and laughed at Enron retirees for trusting their pension plan was okay. Even when I agreed with some of his philosophies here (a few paragraphs on page 101), the logic of his sentences is seriously flawed in many places. Around now I started wondering whether he was a Jehovah's Witness, as he was starting to remind me of a Watchtower publication. There's a strong evangelical element to his writing that backs that up, although it reminded me of Mormans, too. Whatever it is, it's rooted in faith rather than reality at a core level. For example, he makes a distinction between Consumers who rely on things like the SEC (fools!) and Producers who are the "responsible, innovative, and creative people who create all the products and services that we buy and use. They are more concerned with giving than with receiving." ORLY? That doesn't exactly describe the people I know making the products and services that *I* buy and use.
Myth 5: Money is Power. This is a throw-away chapter in which he explains that having money isn't a source of power because anyone can go get as much as they want anytime they want. Yes, you can be just like John D. Rockefeller just by promoting a really good business plan - people will throw money at you because of your superior soul purpose. (He completely neglects to consider that your soul purpose might be a poorly compensated activity like feeding the hungry or tending the aged.) Oh, BTW, money isn't evil, because you can give to nice charities. This read like he was rebutting his grandmother's chastisements that he was too concerned with money.
Myth 6: High Risk = High Return had a nice section on page 147 on gambling versus investing that I wish more people understood. But he goes on a few pages later to explain that there is no such thing as a risky investment. Those ships carrying spices from the Orient - they should have been appropriately hedged. Done his way, no one ever loses money. Uh. yeah. Did I mention that he's REALLY young? Also, that this was published in 2007? He made me glad that most of my own stock holdings are in the field of reinsurance. (His way is still a gamble, but one where the house always gets a good cut either way.)
Myth 7: Self-insurance is a chapter where he explains that you should pay money for all sorts of insurance and hedges so you don't have to keep any money sitting around in savings. He considers it the job of a clever person to figure out all forms of risk and hedge them. He considers himself to be clever enough to have foreseen all possible problems he'll face in life.
Myth 8: Avoid Debt Like the Plague. Instead of having pesky savings sitting around doing nothing, you can leverage all your savings into tons of sub-prime real estate which you will easily be able to flip whenever you get into a cash flow crunch from servicing all that debt. Do I really need to comment on this advice? I think I do not. There is a nice paragraph or two on page 200 about good debt versus bad debt, though.
Myth 9: A Penny Saved Is a Penny Earned explains that we need to live large, buy the most expensive of everything and really seek out value. There's no such thing as not being able to afford something - just put it on debt! He laughs at people who don't run the air conditioner as being silly in their frugality and view of the world as having scarce resources. Live it up!
Through-out the book there's some pseudo-religious crap about living to your highest Soul Purpose and how that requires you drive the best cars ($200,000 ones!) and wear the most expensive sneakers (tell the clerk money is no object!) and attend the most expensive seminars (his!). He seems to think that he's not just smart, he's divinely ordained to live large.
Myth 2: You're in it for the Long Haul. In this chapter he explains that it's silly to live within our means as the road to wealth never comes from reducing expenses, it comes from flaunting it to attract more wealth, and, besides, sometimes people die young so what's the point in saving, as you'll never really use that retirement money anyway. Oh, and it's selfish and shortsighted to be frugal, as you're keeping the velocity of money down by not spending now.
Myth 3: It's All About the Numbers. In this he reveals that money isn't worth anything, the only true value is in how much enjoyment you can get from it now. He laughs at people who are trying to save up for retirement, explaining that more money won't make them happier and they're likely going to be skewered by higher tax brackets. Thing is, he completely misses any concept about storing excess labor now while you're young and strong to help support you later, when you're old and decrepit. He has no concept of "rainy day" in his thinking.
Myth 4: Financial Security. I tended to agree with a lot of his points about people being responsible for their own financial freedom and security, but he went too far and laughed at Enron retirees for trusting their pension plan was okay. Even when I agreed with some of his philosophies here (a few paragraphs on page 101), the logic of his sentences is seriously flawed in many places. Around now I started wondering whether he was a Jehovah's Witness, as he was starting to remind me of a Watchtower publication. There's a strong evangelical element to his writing that backs that up, although it reminded me of Mormans, too. Whatever it is, it's rooted in faith rather than reality at a core level. For example, he makes a distinction between Consumers who rely on things like the SEC (fools!) and Producers who are the "responsible, innovative, and creative people who create all the products and services that we buy and use. They are more concerned with giving than with receiving." ORLY? That doesn't exactly describe the people I know making the products and services that *I* buy and use.
Myth 5: Money is Power. This is a throw-away chapter in which he explains that having money isn't a source of power because anyone can go get as much as they want anytime they want. Yes, you can be just like John D. Rockefeller just by promoting a really good business plan - people will throw money at you because of your superior soul purpose. (He completely neglects to consider that your soul purpose might be a poorly compensated activity like feeding the hungry or tending the aged.) Oh, BTW, money isn't evil, because you can give to nice charities. This read like he was rebutting his grandmother's chastisements that he was too concerned with money.
Myth 6: High Risk = High Return had a nice section on page 147 on gambling versus investing that I wish more people understood. But he goes on a few pages later to explain that there is no such thing as a risky investment. Those ships carrying spices from the Orient - they should have been appropriately hedged. Done his way, no one ever loses money. Uh. yeah. Did I mention that he's REALLY young? Also, that this was published in 2007? He made me glad that most of my own stock holdings are in the field of reinsurance. (His way is still a gamble, but one where the house always gets a good cut either way.)
Myth 7: Self-insurance is a chapter where he explains that you should pay money for all sorts of insurance and hedges so you don't have to keep any money sitting around in savings. He considers it the job of a clever person to figure out all forms of risk and hedge them. He considers himself to be clever enough to have foreseen all possible problems he'll face in life.
Myth 8: Avoid Debt Like the Plague. Instead of having pesky savings sitting around doing nothing, you can leverage all your savings into tons of sub-prime real estate which you will easily be able to flip whenever you get into a cash flow crunch from servicing all that debt. Do I really need to comment on this advice? I think I do not. There is a nice paragraph or two on page 200 about good debt versus bad debt, though.
Myth 9: A Penny Saved Is a Penny Earned explains that we need to live large, buy the most expensive of everything and really seek out value. There's no such thing as not being able to afford something - just put it on debt! He laughs at people who don't run the air conditioner as being silly in their frugality and view of the world as having scarce resources. Live it up!
Through-out the book there's some pseudo-religious crap about living to your highest Soul Purpose and how that requires you drive the best cars ($200,000 ones!) and wear the most expensive sneakers (tell the clerk money is no object!) and attend the most expensive seminars (his!). He seems to think that he's not just smart, he's divinely ordained to live large.
To say I found this book offensive would be wrong. Mostly I felt like pointing and laughing at a guy who is surely hurting right now. He mentioned a couple of times how smart he was to get me to shell out $25 for his book and I was smugly pleased each time to note that I got it out of the library.
He had just enough smatterings of insight about what's involved with becoming financially well-off that it tainted the message of utter Wrongness with Correctness in a few short paragraphs. I find this worrying more than offensive. I sincerely hope whoever gets it out of the library realizes that the lines underlined in pencil were the places he was dead WRONG, not insightful gems. (It not being my book, I didn't make margin notes beyond occasionally underlining to use for this review.) If you're interested in how to overcome middle-class views on entrepreneurship, risk-taking and buying real estate to flip, a better read would be Rich Dad, Poor Dad by Robert Kiyosaki. But my advice is to get that one out of the library, too.
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