To Achieve Success, You Need To Become A Financial Veteran


There is a saying that goes something like “newbies know the rules, but veterans know the exceptions.” That disparity in knowledge is a big reason why so many people feel angry and betrayed. For example, think about how many times you’ve heard or read the following sentiments:

“President Obama lied when he said ‘if you like your health plan you can keep it.’”

“My college degree was supposed to be a ticket to a good job.”

“Girls say they want a good guy but they always seem to fall for bad boys.”

“Wall Street is a casino.”

The newbie complains about how the game isn’t being played according to the rules. But a veteran looks at the game and finds the exceptions. His understanding of the game is much different:

“If you like your health plan, you can keep it… if you belong to the 80% of the American people who are covered by an employee-provided health plan”

“A college degree is a ticket to a good job… interview as long as your degree is from a prestigious school, concentrated in a high-demand major with a good GPA.”

“Girls want a good guy… with all of the traits that make ‘bad boys’ attractive, but unless that unicorn falls into their lap, they’d rather shack up with the attractive bad boy.”

“Wall Street is a casino… in the short term, but most long term investing strategies have performed well in any given stretch of time.”

The veteran understands the exceptions, which are the unspoken truths about how the game is really played. It’s not enough just to know the rules. That’s the bare minimum. And in the game of life, where everybody is jostling each other to gain as much of an advantage as possible, knowing just the bare minimum is just asking to get outhustled by those who know better.

And it’s not like the veterans are this monolithic group bent on preserving the advantage for themselves. There are numerous people out there willing to spill trade secrets, oftentimes for free, to anybody who’s willing to listen. The only problem is that all the newbies listen to the most appealing message.

And the most appealing message tends to be the most simplistic message. And it is impossible to convey all of the nuance and messiness of reality into a simplistic, rhetorically pleasing sound bite. But it’s the sound bite that gets played over and over, even if it isn’t really true. People end up believing it anyways because, hey, if so many people are saying it, it must be true. It’s the Big Lie in action.

A few decades ago, you could have gone through life without knowing all the unwritten rules and still come out the other side relatively happy. Take, for instance, the American worker. It used to be that they could go their entire working life without knowing how the stock market works and retire with a sizable nest egg, thanks to a generous corporate pension and a financially sound Social Security program.

But that’s no longer the case. Corporate pensions have been phased out in favor of defined contribution 401(k) accounts and IRAs. Decades of FICA surpluses have finally turned negative (for good, barring significant structural reforms), while the Social Security Trust fund was raided to pay for other spending programs.

What that means is that it takes a lot of individual knowledge and discipline to play the money game successfully now. The result is that there are a few veterans who played extraordinarily well while the newbies kept on playing with flawed strategies, only realizing they screwed up when it became impossible to ignore the disastrous results. The game has changed. And the forces of globalization and technological progress have drastically thinned out the margin for error, which means the price of ignorance has never been higher.

Think about the things in life that are important to you. Relationships and money probably top the list. To succeed in either, it’s not enough just to have a newbie’s understanding. You need to become a veteran. Unfortunately, a veteran’s experience is usually earned through adversity and the results of incorrect decisions.