Hello friends,
What do you think the best way to invest your money is? What is the best way to strike a balance between risk and reward?
Today weâre going to talk about The Barbell Strategy.
The Barbell Strategy was popularised by Nassim Taleb - a genius of mathematical finance, in his book Antifragile.
Now, you might be wondering why Iâm talking to you about finance in a newsletter about breaking free from the mainstream system.
Well firstly, everyone has to decide what the best thing to do with their money is, so thereâs that.
Secondly, while The Barbell Strategy was designed for maximising the return of investment of money while balancing risk, you can use it to maximise the return on something much more scarceâŚ
Your time.
So what is The Barbell Strategy?
The Barbell Strategy involves placing most of your assets in low-risk, low-reward options, because that gives you the ability to invest in highest risk, highest reward options, with a small portion of your assets. But the key, is avoiding the middle.
It means being very conservative in most of your activities, so that you can take big risks and be extremely focused and intense for a small portion of the time.
What does that look like ?
In investing, it means putting most of your cash in low-risk, low reward options like fixed interest rate accounts, and then a small amount in the highest risk investments you can tolerate, like early stage startups, or crypto for example. It also means avoiding the medium-risk, medium-reward assets like the stocks of large companies.
(Although, if you believe the current financial system is going to collapse, then your âlow-riskâ investment could be in land and food systems, and your high-risk investment could be funding your own business)
Itâs a sound strategy for money, but this applies to many other areas in life.
While many people champion moderation, it often leads to mediocre results.
For example, whatâs the best way to work?
If you wanted to produce the highest quality work, would you do 4 hours of deep, focused effort, followed by light tasks or complete rest...
OrâŚ
8 hours of staring at a screen broken up with constant notifications from messages or emails?
I know which one I'd choose.
Or for another example...
Whatâs the best way to eat? (Hint: Itâs not âeverything in moderationâ).
Most of us would agree, itâs eating the âextremesâ.
What does that mean?
Eating meals of succulent grass-fed beef of the highest quality, combined with vegetables grown by your local farmer, and occasionally allowing yourself to scoff down an indulgent Tiramisu. Far, far better than a diet of processed âhealth foodsâ from the supermarket (granola).
Tucking into a large, nutrient-dense meal at appropriate mealtimes, then fasting the rest of the timeâŚ
or constantly eating small meals (snacking) throughout the day?â¨
Again, the answer is pretty clear to me.
How about the best way to train for all-around fitness and health?
Short bursts of intense activity (sprinting and strength training) combined with deep rest and light activity like walking or yoga, or a medium amount of monotonous activity like jogging?
You see the pattern.
The key thing to remember is that, what this strategy looks like in your life, is determined by your individual tolerance, and what you consider extreme.
If youâre 70 years old, intense activity doesnât necessarily mean you have to be sprinting up a hill, it could be walking up a hill at the fastest pace you can for 1 minute.
Ultimately, this strategy is about improving your resilience, becoming Antifragile.
How?
It makes you less vulnerable to unpredictable events and allows you to handle more chaos.
For example, if youâre a busy parent, youâre far better off carving out an extremely focused hour of deep work in your day, rather than trying to schedule work in throughout the day around your huge responsibilities to your family (you never know what may crop up).
Or if youâre a 70 year old trying to keep fit and healthy, you could occasionally push your limits close to your maximum, and then only doing light stuff most of the time. That will maintain your ability to withstand the unexpected physical challenges life will throw at you, without getting injured, while allowing your body to rest and recover from the intense effort.
As a personal example, rather than spending most of my monthly pay on living in a moderately priced flat (in the city) and a mediocrely comfortable lifestyle, I moved into a van.
Some may not consider that extreme, but at the time, it felt like it to me. I lived very minimally by most peopleâs standards.
That gave me much more freedom to travel for long periods of time, and more importantly, take a risk, like helping to start Wild Minds Community instead of scrambling to find another job when I got made redundant.
I wouldnât have been able to do any of that (without going broke), if I had to pay rent or a mortgage and support a comfortable lifestyle.
Likewise, One Tree Farm wouldnât exist if Billy and Alfie hadnât rejected the âsafeâ middle ground (aka mainstream "success"). Selling your house, business, and most of what you own to buy some land and start a farm is a pretty extreme move, and it got them the result they wanted.
Avoid mediocre mildness. Make bold moves. Be extreme.
To your freedom and independence,
Rob
Wild Minds Community
PS.
If you want to make bold moves but you're not sure where to start, Billy's put together a free video to help you define your vision and gain direction in your life.
đClick here to check it out
If however, you have a clear vision and you are ready to take the leap, Wild Minds Premium is the place for you đ Click here to join
