I’ve recently realised I was dead wrong about my investment strategy, heck almost every strategy in my life I’ve been wrong about, until I read Antifragile by Nassim Taleb who is a scholar, philosopher and expert on risk and he taught me about the barbell method.
What is the barbell method?
The barbell method balances high risk high reward benefits with complete safety.
Let me explain, for example if you wanted to invest then here’s how the barbell strategy might look:
You’d have 90% of your funds in high interest savings accounts or even in cash so that whatever happens with the economy you’ll be completely safe from ruin (invest preferably in something that protects your cash value against inflation).
Then the 10% you could invest in stocks, but whatever you do, do not invest in cryptocurrency it’s one big scam. Or if you don’t want to invest (like me) then you can save your money and then focus all of your attention on gaining more money through your career/ vocation instead of investing in something you don’t understand.
For example, in my own life I have a moderately safe and decently paid job so instead of investing in stocks that I don’t understand I invest my time into writing because with writing one post can blow up and reach millions of people which can result in you earning a lot of money through book sales etc (I also love writing).
The barbell method and working out
I use the barbell method with my workout regimen because for the overwhelming majority of the week I’m relaxing or going on walks (when I’m not working) and I only workout 3 x 45 minutes per week at a high intensity with weights so I get stronger and thus improve my health because it’s better to be strong, and durable than weak and fragile and when you don’t strengthen your your body it becomes fragile.
For most of the week I’m not working out at all, and only for a small minority I’m working out with weights doing exercises like deadlifts, squats, presses, rows etc.
The reason why I only workout at a high intensity for a small minority of my week is because if I were to do it more often I would wear my body down, the body can only take so much high intensity training.
The barbell method and writing
In Nassim Taleb’s book Antifragile where this barbell concept comes from, Nassim writes about a writer called Georges Simenon who was a prolific Belgian writer who only wrote for around 60 days per year but this resulted in him publishing many works throughout his life and becoming a top and influential writer.
Georges was unknowingly using the barbell method because he was spending a minority of his time writing deeply and intensely (60 days a year) while the rest of his week he focused on working his job and living his life.
I like this barbell method especially for writing because I find that writing deeply and intensely every day is a quick route to burnout and that’s why I’m sparing my weekends for my deep writing.
The barbell method and cleaning
I’ve always struggled to develop a good cleaning routine but what seems to work is doing one big major clean of my house (cleaning the full house) on the weekend, then mixed with some easy, small cleaning jobs throughout the week.
Essentially the barbell method balances two extremes, the low intensity/ easy and the high intensity/ difficult and I find that the barbell method is helpful in many areas of my life, some I probably haven’t discovered yet.
Why is it called the barbell method?
It’s because a barbell has two plates, one on one side and one on the other. In this barbell concept one side is the safe side and the other side is the high risk side. What I love about the barbell method, especially in respect to finances is that it completely protects you from ruin.
Why I got my investment strategy all wrong
I used to believe the hype surrounding index fund investing, so I invested a large proportion of my wealth in index funds. The thinking behind index fund investing goes like this:
Don’t invest in one bit of the hay, buy the whole hay stack. And by doing so this diversification will give you profits in line with the index fund that your money is invested in. So if you invest in the S&P 500 the data says that you’ll earn around 8-10% interest per year based on how the fund has fluctuated historically. And in theory it sounds great but I was a sucker to believe it.
This sort of investing is going against the barbell method because instead of having a split of safe assets and high risk, high reward assets you have medium risk assets and you’ve got no safety from ruin.
For example a lot of my wealth was in an index fund similar to the s&p 500 and I admit I was earning a lot of money, but the problem that ultimately made me realise this was a sucker strategy was that if the stock market was hit badly (which it will) I would lose a large portion of my wealth, which is too risky. Maybe the fund will go back up but it might not for a long time and I’m not prepared to take that risk, I would rather sleep stress free and not worry about the stock market, which I couldn’t care less about. I’ve realised that I shouldn’t just wait for the stock market to make me rich, I should earn money the honest way through my career.
The barbell method for creative types
Corporate jobs, similar to index fund investing are medium risk jobs. All it takes is one company merger/takeover and you can be made redundant.
If you want a safe job I would look to jobs like becoming a dentist, dermatologist, doctor, plumber or electrician, because there will always be a need for these type of roles, Ai cannot take over them. If you get a solid, robust job, and you’re a creative type you can write on the side or make videos/art (whatever it is that you’re into).
Spinoza used the barbell method
The influential philosopher Baruch Spinoza used to work a job creating and repairing lenses and then he’d pursue philosophy and writing on the side. This was perfect for him because due to his job being completely different from his writing he was intellectually free. He wasn’t being paid to parrot someone else’s ideas. His safe job enabled him to be a free man with his own ideas.
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