Three Lessons on Life, Money, and Freedom

Editor’s Note: The Brownstone offices are closed for Juneteenth today, so we’ve got something a little different for you – an insight from a friend of Brownstone.

See, you can learn a lot from the game of chess…

Colleague Nomi Prins first learned the game from her father – a remarkable man who used it to cope with the constant fear and anxiety that came with a difficult childhood spent in Holland during World War II.

And it was through chess that he taught Nomi some important lessons on life, money, and freedom…

Lessons that she’ll share with you today.

My father taught me a lot about life, money, and freedom.

He had a difficult childhood. He spent much of it in Holland during World War II.

From the ages of eight to 12, he moved from orphanage to orphanage, family to family, often hidden in the dead of night with the help of the Dutch resistance.

The Nazis had taken his parents to concentration camps. And he lived in constant fear that something might happen to him.

To occupy his mind, he learned the game of chess.

He spent hours alone in tight quarters practicing moves. It helped him divert his attention from a future he couldn’t control.

But chess also involved thinking ahead. (He published a book about his life, called One Step Ahead, a few years before he died.)

Dad told me that chess is what allowed him to stay sane and alive during the war. It made the anxiety of wartime more manageable.

When I was five, he taught me how to play. More than that, through chess, he taught me my first valuable wealth-building lesson.

Lesson 1: Focus on the End Goal and the Steps Along the Way

Chess is similar to building wealth over time.

It unfolds piece by piece. Sometimes you gain a piece, sometimes you lose one. And you can’t always control how your opponent will move.

But the key to success is to focus on the end goal as well as the steps along the way.

For long-term wealth creation, the goal is financial security. The steps are the many investment choices we make along the way.

Whether you’re buying artificial intelligence (AI) stocks, commodities, or Bitcoin – building wealth takes time.

Each step you take helps you get there. But if you’re not careful, bad decisions can set you back, too.

That’s why I always encourage people not to invest all their money in one sector, company, or commodity. And don’t invest it all at one time.

Because the markets will throw you curve balls. You will take losses on some investments and gains on others.

But if you stay committed to the long game, and you manage your risk, you will emerge a winner.

Lesson 2: Live Within Your Means

My dad never wasted money. He never bought anything he couldn’t afford. And the only money he ever borrowed was as a mortgage.

When I was a little girl, he’d take me with him to shop for groceries at the local Stop & Shop in Poughkeepsie, New York.

We’d traverse the aisles, and he would ask me how much I thought different things cost.

How much is that gallon of milk?

How much is that bunch of grapes?

How much is that box of cereal?

In the beginning, I’d guess random numbers. But then I started noticing how prices changed.

In 1973, I saw the cost of a gallon of milk rising. It wasn’t rising by pennies anymore. It was rising by several cents each time we went to the store.

Dad told me it had to do with President Nixon. As a five-year-old, this was my first foray into the political economy!

Many years later, I wrote about that period of high inflation in my book All the Presidents’ Bankers.

Nixon’s price controls, among other world events, led to unintended consequences.

For instance, during the Nixon administration, the purchasing power of the dollar declined as prices rose. Inflation more than doubled to 8.8% in 1973. By 1980, it was at 14%.

When Nixon then, at the bequest of Wall Street, abandoned the gold standard, the dollar’s purchasing power dropped further for Americans. The dollar has lost more than 80% of its purchasing power since.

The lesson my dad taught me from those grocery outings was to live within your means. That’s because prices can change suddenly.

You need a cushion to navigate those tougher times without having to borrow. So, like my dad, my only debts were mortgages.

My dad also used those principles of patience and living within your means as a way to guide his investing.

His approach was to make slow, steady investments to accumulate wealth. He tended to invest in high-quality bonds, gold, and silver coins.

I’ve passed on similar lessons to the younger generations in my family.

Lesson 3: Never Stop Learning

Dad worked at IBM’s headquarters. He was a world-renowned statistician and a math genius. At IBM, he created what would evolve into today’s AI.

Dad taught me to question everything. That philosophy shaped me in life as much as in investing.

There are a lot of facts out there. There’s a lot of misinformation too. So it’s on each of us to decipher what truths to follow. It’s how we form our own opinions and grow our knowledge.

For instance, my dad was the first person in his family to get a Ph.D. He did that while he was working full-time at IBM and raising three kids.

I was the second person in our family to get a Ph.D. It took me a lot longer than him, though.

I started a Ph.D. in statistics at NYU before I took a job at Bear Stearns. I completed all the coursework, but I didn’t finish the degree.

I chose to travel the world instead. First as an investment banker, then as a journalist and author.

For years, I worked and researched global trends in Japan, China, Brazil, and so many other countries.

At Bear, I became a senior managing director. I built and ran my own analytics group in London. I then became a managing director at Goldman Sachs, where I ran two teams.

This all gave me more insight into geopolitics and economics than a Ph.D. in statistics would have.

But I didn’t give up on getting that doctorate.

A few weeks before Dad died, he asked me if I was going to complete my “second” Ph.D. I told him I would. And so, I did.

Two decades after I set aside that first Ph.D. in statistics, I completed my doctorate. Except this time, it was in International Political Economy.

My educational path wasn’t conventional. But I have no regrets.

The point is that the path to higher knowledge isn’t always a straight line. And it’s never too late to follow your aspirations.

So, this year, I urge you to think about something you want to learn or understand better. And set aside the time to do just that. You won’t regret it.

Regards,

Nomi Prins
Editor, Inside Wall Street With Nomi Prins