Book Review and Summary: Outliers by Malcolm Gladwell

Outliers by Malcolm Gladwell is a best selling book. An outlier means something out of the norm, and the outliers in this book are the success stories of Bill Gates, The Beatles and many more. The subtitle is "the story of success", I didn't know anything about Malcolm Gladwell, his background, or his style of writing before reading this book. I assumed from the title that the book was about a successful entrepreneur that told his story, decisions and lessons learned in his life. Outliers is not this kind of book.



As with many books I read, the first few chapters seem to be the most captivating, and have the biggest impact on my thinking. To sum up the whole book Malcolm Gladwell tries to prove that the success of an individual, group or company is not just due to unexplained "natural talent", there are many factors that contribute to these successes such as age, opportunities that they are presented with, cultural background, and hard work. These are all interrelated of course and also require some sort of intelligence and natural interest to turn these things into a success story. In the book Malcolm Gladwell explains that success is also due to chance, not just the individual, and he achieves convincingly what he means by this, he also doesn't take away credit of the individuals own drive. The book is not about the individual, it's about how many other factors help the individual which is down to chance.

Book Summary:

Chapter 1

A very interesting an dshocking first point in the book was that your age and birthday is very important to what you can achieve (and what you are given the chance to achieve). Malcolm Gladwell gives the examples of Canadian hockey players, how one day he noticed that nearly all top Canadian Hockey players were born between January and March. This had a simple explanation. Due to the dates in the year trials started and ended, the kids born near the start of the year were bigger and had more experience, and were picked out as the "elite", and from there joined "elite" programs which developed them more, kids born in near the end of the year couldn't catch up.

Gladwell also investigated other sports and saw the same pattern. One interesting point he mentioned as well was this was also true with the school system. Kids born near the start of the school year had at least a 6 month advantage in learning and maturity.


In the case of hockey players the rule of "you can only be a successful hockey player in Canada if you were born in January, February or March" was nearly an iron tight rule with little exceptions. For the education system, the patterns were still present but not as defined.



Chapter 2

"10,000 hours of practice is how long it takes to become an expert"

Gladwell analysed many so-called experts and virtuoso's and tried to find a pattern with this rule. The rule never failed. He gave examples of virtuoso violin players, Bill Gates, Mozart and The Beatles. Bill Gates by the age of 21 already clocked up over 10,000 hours of programming practice, and The Beatles with their time in Hamburg playing 8 hours gigs for 7 days a week also clocked up over 10,000 hours before they became successful. He also mentions in the book that to get this amount of practice the individual will initially be working hard by themselves, but to get this 10,000 hours, most could only achieve this because of special situations, such as, chance (in the case of Bill Gates, as he was born and lived exactly in the right time when access to computers was available only in his area). In the case of hockey players they could only clock up this time after getting into specialist programs because of their "talent", which is also linked to the first chapter of age, they would only be recognised for "talent" because they had an advantage.


Malcolm Gladwell doesn't aim to say this is all that is required, he is just saying that these things make a difference, otherwise why didn't all the kids, the same age as Bill Gates's in his neighbourhood become programming experts.



Chapter 3: Genius's

Does the genius actually exist? Well, it depends on what you define as a genius. If you define genius as simple as a high IQ then Chris Lagnan is the current genius. However Gladwell shows that although Chris Lagnan has a high IQ and high intelligence, he can never be influential in the world because he hasn't got something basic for life " social intelligence". Chris Lagnan couldn't even stay in school and made up excuses of why the education system let him down, but the truth is he gave up and got angry at simple problems with required a certain social intelligence. I was interested in seeing Chris Lagnan and after reading this section searched on youtube for him. The half hour show on him did show he was intelligent, his vocabulary and the way he spoke showed this, and he is also working out calculations and theories of the universe in his private study. I also noticed the youtube comments below, it was filled with other wannabe genius's, and no doubt they have a high intelligence as well. But what occurred to be is that these people (including Chris Lagnan) have no social intelligence, and no respect for others, and that's why they cannot get respect and recognition in their intelligence, they were all the same. If Chris Lagnan was associated with a university then he may get the resources, recognition and be revolutionary in his theories about the universe, but instead he's a farmer that makes notes to himself that will never be recognised, I will also note that Chris Lagnan's ideas on how to improve society are ridiculous and further prove that he has no social awarness.

Gladwell writes about how a high IQ is not the answer to success, you just need to have a high enough IQ. There is less correlation between ability and IQ for IQ's above 120.

Other topics in the book: Cultural influences, language and communication, Why Asians are better at Maths, Working hard will get you results.

Conclusion
This book is not actually a business book, it's an analyses of success and the factors deeper than an individual that allow success to occur. What I've learnt from this book is that you have to make the most of your opportunities and act upon it, otherwise something great may never happen. Malcolm Gladwell correlates hard work with results, and puts down the idea of "Genius's" and "a self made man", he makes a great argument that you could say is conclusive. Gladwell promotes hard work and persistence, however he doesn't aim to say that that is all that is required.

Why We Want You To Be Rich by Robert Kiyosaki and Donald Trump book review

Donald Trump and Robert Kiyosaki two of the best selling business authors, their advice is priceless and they certainly know what they are talking about. Robert Kiiyosaki is a millionnaire, Donald Trump is a billionnaire, however their thinking about the worlds economy and personal goals and finance are the same. They are both teachers, and therefore want to teach us, everyones abilities are different, however, everyone has the ability to do something, and what this book motivates is for people to make the most of what they have, develop it, and be smart about how they approach things.


This book had less of an impact on me as "Rich Dad, Poor Dad", but what it has done is motivated me more. This book in my opinion is a Robert Kiyosaki book, with commentary from Donald Trump the views he shares with him. In fact, that is how the book is structured, Robert Kiyosaki says his view first, and Donald Trump expands. However, it is still interesting the similiarities and differences in the views.

Some of the points in the book that made me think more:
What kind of investor are you? - Are you someone that doesn't invest at all, a passive investor (safe investor), or aggressive investor. The aggresive investor is the investor that plays to win and will do the work to achieve it.

Have fun making money - You may think to yourself, of course people will have fun making money, who wouldn't? Well, in the real world the majority of people are not having fun. If you enjoy your job you may say you're having fun making money, your wrong, you are making money for somebody else and they are paying you. The risky investor in the stock market is also not having fun, he is waiting to sell as soon as the share price drops, how many times in the news have you seen a "rich" stock broker suicide? Robert and Donald see making money as a game, they see money as a game, they enjoy it and want to get good at it. The fear of losing is what destroys someones spirit in this game. How do you erase the fear? You take control of it, look at what your scared of and understand it, then you will be in control of yourself.

Leverage - One interesting point I heard from the book is how rich people use leverage. The definition of leverage in the book is:

"the ability to do more, with less"

Robert Kiyosaki also warns that you should not use leverage unless you have the financial education or ability to use it. Robert explains the term "work hard", when people hear this they immediately think about themselves working hard, but Donald and Robert also think of other people working hard for them, this is leverage.

Borrowing money - Rich people that are financially smart borrow money to get richer, unlike the majority of people that have gotten poorer. Donald and Robert use debt as leverage, and can do so because they are smart enough. Don't get me wrong don't be negative and think you are not smart enough, you need to work hard to be smart enough, and anyone can achieve it.

Time - Make the most of your time. How many people take time to lookat their life, investments and financial situation and seriously think about improving it, furthermore, how many people actually take action and do what they are thinking. Robert explains that you can watch a movie every night or play computer games, but how is this developing yourself. Yes, you can get enjoyment and relaxation from these activities but there should be a limit. These activities would only improve your financial situation if you are for example, a film critic, actor or in the business. People need to stop wasting so much time with short term enjoyment and look to improve their future, once you've built your future you can enjoy these things much more.

Why We Want you to be Rich, in my opinion is not a revolutionary or life changing book like Rich Dad Poor Dad, or some of Donald Trump other books. I recommend this book to people who have already read other books by Robert and Donald, this book will restructure and remind yourself of what you need to do and how to organise yourself, motivation is a difficult thing to follow up with as it can wither and fade so easiliy.

The Intelligent Investor by Benjamin Graham Book Review

The Intelligent Investor by Benjamin Graham is another best seller that has held true over the years that it has been out in print. The stock market changes constantly and there are up and downs, huge bear and bull runs, and disasters, stock market crashes and recessions around the corner. No one can fully predict the stock market, not even the brokers and the experts, but what people can do is minimize their risks. A huge amount of people lose money from the stock market, whether they are experts or not. The version I read was the most current edition with edits from Benjamin Graham himself highlighting some key factors which he thought wasn't emphasized enough in the previous editions and further examples of more current (at the time of editing) stock changes to show that what he said in the 1950's was still true. The version I read also had commentary after every chapter by Jason Zweig a student/employee/friend of Benjamin Graham. The commentary helped me a lot to digest what Graham was trying to say after every chapter.



The Intelligent Investor by Benjamin Graham Book review - Conclusion
How can a book about an ever changing and unpredictable thing such as the stock market be relevant over 50 years after its first publication? The answer is that things don't really change, things aren't as unpredictable as you think they are. Compared to most theories and strategies about the stock market, Benjamin Graham's has held true and outlasted the others. He gave core values in which you have to follow to beat the stock market, and it's still a bestseller. I admit I didn't digest all the information that was given in this book on the first read, it's a lot to take in, but after reading I felt I can approach the stock market with more confidence and belief in myself, not blind belief, belief from sound research and analysis and decisions. To fully understand everything that Benjamin Graham presents in this book you'll probably have to ready the book a few times and each time you won't regret discovering something new. If you feel your following a strategy in the stock market that you don't understand, check out this book, it will make things so much clearer, and although you may not be able to achieve instant stock market success your brain will be halfway programmed into thinking the right way

Key Points in the book:
A nice addition in the more recent editions with commentary is the analysis of other books and strategies and how they have broken down, these include:
- Cash in on the Calender
- What Works on Wall Street by James O'Shaughnessy -
Follow "The Foolish Four" ....... and many more......

Think with your brain not your emotions - i.e. Be and Intelligent Investor
This is a key point that is highlighted in nearly every business advice. For the stock market you need to take what everyone is saying and what you read with a pinch of salt, don't ignore it, but don't take is as the truth, the system is designed like a Casino, the house always wins, so the house will also lure you in with bold claims to get you rich quick, be patient and research before you dive in. The book gives an example of Sir Isaac Newton buying stocks and selling when he felt it would go bad, however, soon after this he bought back more stocks in the company at a higher price with the belief that it will increase further due to the fact that it was still increasing and the influence of his peers. In the end he lost £20,000 in that stock(over $3 million in today's money). This example was just to show that the most intelligent person in the planet was not an Intelligent Investor, he was influenced by his emotions. Be an investor not a speculator, if you feel tat your investment relies mostly on speculation, don't invest until you know enough to call it a real investment.


Minimise your risks
The basic principles to minimise risks when investing is:

Know your stock - You need to research the stock thoroughly and think about the risks of losing money. Check the financial reputation of the company and its underlying business. Benjamin Graham gave an example of airline stocks back in the 1970's, how it was a sure bet that the market would increase and air travel will become more and more common. This was true, however in many companies it was managed poorly and due to over expansion and other poor management, even though it became a huge business, it made a loss.

Check that the price that you are buying isn't too expensive. Analyse stock prices, what has influenced them in the past, what may influence it in the future, and set strict criteria in buying and selling.

You must protect yourself against serious loses - This is reduced by the first point, but if for example a natural disaster, a war or the stock market crashes, then you need to still be financially able. Depending on the situation you could sell before anything serious happens, or manage your stocks in a way that you will not be in debt if you lose it all. When people see a "hot stock", many confident and over enthusiastic players will borrow money to make the most of it, but this game has a even higher risk if you lose, you will be in even greater debt, this reminds me of the film James Bond film "Casino Royal" remember what happened to that guy?

Aspire to adequate profit - Don't get too greedy, analyse the market, have a target price and sell when appropriate. Think with your brain.

Another nice quote I found is:

"invest only if you would be comfortable

owning a stock even if you had no way

of knowing its daily share price"

Bonds and Shares and inflation
Benjamin Graham advises investors to aim to have equal amounts in bonds and shares, however, they must also change the percentages according to the market and other factors, for example when prices are high or low, or when inflation has an influence. If you've locked all your money in bonds and inflation rises then you could even make a loss from the bond, but that does mean stocks are always a better investment in the long run. Benjamin Graham explains how to make the judgment on how much to invest in bonds and shares in a detailed analysis.

Defensive investor vs Enterprising investor
The defensive investor as described in the book is the investor that will invest to make as little mistakes as possible and leave the stocks without looking at it's progress or researching changes that may occur. The enterprising investor is the opposite, they will research thoroughly, will check constantly, but will do high risk investments. Benjamin Graham devotes chapters of his book to analyse the psychology of both and risks and strategies that both need to be aware of.

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The Intelligent Investor

Rich Dad, Poor Dad by Robert Kiyosaki Book review

Robert Kiyosaki's best selling book Rich Dad, Poor Dad has been read by millions worldwide. If you haven't read this book then your missing out. Robert Kiyosaki had a rich dad and a poor dad, the poor dad had a stable job but didn't manage money well and therefore was poor, the rich dad built an empire and managed his money like a rich person even though at the start he was poor. He teaches about financial intelligence. What's financial intelligence? Financial intelligence is knowing how to make money, how to money can make money. Here's some of the key points in the book:

Acquire assets, reduce liabilities
One of the main points in the book that made a lot of sense to me is to acquire assets and reduce liabilities. This seems like a simple idea that a lot of people try to do, but Kiyosaki explains that there are millions of people doing it wrong! Your house and car is not a asset, if you have a mortgage it eats away at your money. Assets are things that make you money such as stocks, real estate that you acquire to sell on for a profit, or a business that you own.

Cash Flow
Robert Kiyosaki designed a simple diagram of the cashflow of a poor person, middle class person, and the rich. The poor and middle class's money comes in and out. The rich circulate their money to make more money.

Wealth
Some of the "middle class " consider themselves wealthy due to the fact they they have a nice car, house and are enjoying the luxuries in life. But Robert Kiyosaki thinks differently, he measures true wealth from how long you can survive if you lose your job or retire. Robert Kiyosaki retired in his mid 30's, cause he felt like had enough wealth and could continue his lifestyle with what his assets were giving him, and decided to work only when he needed more money or felt like it, when he said work, that just meant actually doing something to make money, not getting a job and working for someone else. Wealth is measured by the ability to be financially independent without doing much work, he explains how this is possible through his asset/liabilities ideas.

This book is not a get rich quick scam, this book is just a guidance on the basics of how to think about money.