PRISM: Prioritizing Your Goals

I just skimmed over an email I received from AAII advertising a lifetime membership in the organization. I was a bit distressed and INSULTED to read the following: 

"No one should be investing unless they have a goals-based plan." 😳

So, are they telling me I should not be investing!? I have to admit, I have never, EVER set a single measurable goal related to investing. All my life, I've invested merely to increase my net worth. I never set a figure on it. I never set a time limit on it. And I never thought about what I would do with it (except grow it some more).

Here I am now, at 62 years old, having been able to retire 10 years ago because of my GOALLESS investing activities. On top of that, I'm well within the ranks of the two-percenters because of my GOALLESS investing. But the geniuses who wrote that advertisement tell me I shouldn't be investing! 

For those of you who find the PRISM program too cumbersome and unwieldy, take heart! Having a detailed roadmap and going through all the PRISM machinations is NOT necessary! I will grant that some people might benefit from PRISM, but it is NOT for everybody! You can be quite successful without it.

I am so incensed about that emailed statement that I am going to reply to myself with a little essay I posted elsewhere. 

------------------------------
Rob Adams
------------------------------

In my humble opinion, one problem with this [goals] step is that it doesn't separate spending goals from accumulation goals. The two are diametrically opposed to one another. For example, you can have an accumulation goal of $100,000, or you can have the goal of spending $100,000 on an African safari. You can have both goals, but if you accumulate the $100,000 only to spend it all on the African safari, you wind up right where you started--at zero.

Everyone wants to enjoy their life and the fruits of their labor, and spending goals may play a part in that. But without an accumulation goal, one will likely end up with nothing.

For me, the accumulation goal has always been to maximize the long-term growth of my assets through relative frugality. Relative frugality means that no matter how much you make, you never allow yourself to spend more than a set portion of your income. For example, you could say that 90% of your income is yours to spend. The rest goes into your investment nest egg--permanently. Out of the 90% go taxes, utilities, clothes, all the necessary expenses of life AND all discretionary spending, such as vacations, entertainment, etc. All spending goals must fall within the limit you set. As your wealth and/or income grows, the limits of relative frugality will grow and become easier and easier to maintain while providing funds for more elaborate spending goals. 

Relative frugality can also be stated in the reverse. That is, one can specify a percentage of their income to be saved, but psychologically, it has worked better for me to view a portion of my income as "mine" with the rest going into the off-limits investment nest egg.

In my humble opinion, investing should ALWAYS be a long-term endeavor. Short-term thinking in the investment realm usually leads to attenuated returns or worse. The Forbes list of wealthiest people is full of those who took a long-term approach to investing (many simply invested in their own businesses that grew over decades). But how many on that list got wealthy from short-term trading in their own account? Not many, if any.

The problem with focusing on spending goals without the barrier of an accumulation goal constraining them is that it necessarily leads you to think of accumulation in the short term. For example, saving money to buy a car is a short-term goal. Contrast that with the long-term concept of accumulating assets that will generate enough income to buy the car. Although the latter case requires you to exercise delayed gratification, in the end, you wind up with both wealth and the car.

I would highly encourage anyone using PRISM to separate accumulation goals from spending goals at the outset. Think about what effects each goal will have on your long-term financial well-being. Personally, I believe that if you focus on accumulation goals and keep the spending goals within the limits of relative frugality, you will have a happy financial life. But if you focus on spending goals while neglecting long-term accumulation, well….

------------------------------
Rob Adams

Original Message:
Sent: 12-16-2023 13:40
From: ROBERT ADAMS
Subject: An Alternative View From a Seasoned Investor

I just skimmed over an email I received from AAII advertising a lifetime membership in the organization. I was a bit distressed and INSULTED to read the following: 

"No one should be investing unless they have a goals-based plan." 😳

So, are they telling me I should not be investing!? I have to admit, I have never, EVER set a single measurable goal related to investing. All my life, I've invested merely to increase my net worth. I never set a figure on it. I never set a time limit on it. And I never thought about what I would do with it (except grow it some more).

Here I am now, at 62 years old, having been able to retire 10 years ago because of my GOALLESS investing activities. On top of that, I'm well within the ranks of the two-percenters because of my GOALLESS investing. But the geniuses who wrote that advertisement tell me I shouldn't be investing! 

For those of you who find the PRISM program too cumbersome and unwieldy, take heart! Having a detailed roadmap and going through all the PRISM machinations is NOT necessary! I will grant that some people might benefit from PRISM, but it is NOT for everybody! You can be quite successful without it.

I am so incensed about that emailed statement that I am going to reply to myself with a little essay I posted elsewhere. 

------------------------------
Rob Adams
------------------------------

And I can't leave it at that. I also have a problem with the entire view of risk within PRISM. Volatility and risk are entirely separate concepts, yet the PRISM concept of risk clearly incorporates volatility into the analysis if not flatly equating risk with volatility. PRISM seems to encourage one to "get in touch" with their emotions in deciding what sorts of assets to include in their portfolio and to view volatility in a negative light. Aside from my disdain for the "volatility is risk" concept, I believe incorporating emotions into investing decisions is a recipe for disaster.

I believe novice investors would be better served to know the truth: that long-term gains are maximized by investing in a reasonably diverse array of equities, and that the inclusion of any other asset class in one's portfolio is likely to diminish those long-term gains. A novice investor would be better served to learn to check their emotions and maintain a long-term view. They should know that their portfolio's value will fluctuate greatly, and during their lifetime, they will likely see 50%-or-greater drops in the value of their portfolio--perhaps several times (it's happened twice to me). Trying to time the market, making buy and sell decisions based on near-term events, and trying to avoid such temporary reductions in value is futile and can permanently decimate a portfolio. If your portfolio is reasonably diversified, the best thing to do is stay the course! 

I've taught my children, and I would encourage any novice investor, to simply invest in a low-expense-ratio domestic equity index ETF (or several of them) unless and until they are knowledgeable enough to start buying individual stocks. Bogle was right about index funds. They provide idiot-proof protection to investors. All of the low-expense-ratio equity index ETFs (and I define low-expense-ratio as 0.1% or lower) have fairly broad holdings, certainly broad enough to provide ample protection from permanent loss. Over a lifetime, one can expect a much higher return from these ETFs than fixed-income assets would provide. In fact, if one invested 10-15% of their income into a single ETF of this type throughout the course of their working life, they would be almost guaranteed a comfortable retirement. This is as close to an absolute guarantee as one can get. The only threat would be a collapse of our entire economic system, in which case it wouldn't matter much what type of assets you were holding.

In a nutshell, I think PRISM is unnecessarily complicated and leads novice investors to focus on the wrong things.

------------------------------
Rob Adams

Original Message:
Sent: 12-16-2023 13:48
From: ROBERT ADAMS
Subject: An Alternative View From a Seasoned Investor

In my humble opinion, one problem with this [goals] step is that it doesn't separate spending goals from accumulation goals. The two are diametrically opposed to one another. For example, you can have an accumulation goal of $100,000, or you can have the goal of spending $100,000 on an African safari. You can have both goals, but if you accumulate the $100,000 only to spend it all on the African safari, you wind up right where you started--at zero.

Everyone wants to enjoy their life and the fruits of their labor, and spending goals may play a part in that. But without an accumulation goal, one will likely end up with nothing.

For me, the accumulation goal has always been to maximize the long-term growth of my assets through relative frugality. Relative frugality means that no matter how much you make, you never allow yourself to spend more than a set portion of your income. For example, you could say that 90% of your income is yours to spend. The rest goes into your investment nest egg--permanently. Out of the 90% go taxes, utilities, clothes, all the necessary expenses of life AND all discretionary spending, such as vacations, entertainment, etc. All spending goals must fall within the limit you set. As your wealth and/or income grows, the limits of relative frugality will grow and become easier and easier to maintain while providing funds for more elaborate spending goals. 

Relative frugality can also be stated in the reverse. That is, one can specify a percentage of their income to be saved, but psychologically, it has worked better for me to view a portion of my income as "mine" with the rest going into the off-limits investment nest egg.

In my humble opinion, investing should ALWAYS be a long-term endeavor. Short-term thinking in the investment realm usually leads to attenuated returns or worse. The Forbes list of wealthiest people is full of those who took a long-term approach to investing (many simply invested in their own businesses that grew over decades). But how many on that list got wealthy from short-term trading in their own account? Not many, if any.

The problem with focusing on spending goals without the barrier of an accumulation goal constraining them is that it necessarily leads you to think of accumulation in the short term. For example, saving money to buy a car is a short-term goal. Contrast that with the long-term concept of accumulating assets that will generate enough income to buy the car. Although the latter case requires you to exercise delayed gratification, in the end, you wind up with both wealth and the car.

I would highly encourage anyone using PRISM to separate accumulation goals from spending goals at the outset. Think about what effects each goal will have on your long-term financial well-being. Personally, I believe that if you focus on accumulation goals and keep the spending goals within the limits of relative frugality, you will have a happy financial life. But if you focus on spending goals while neglecting long-term accumulation, well….

------------------------------
Rob Adams

Original Message:
Sent: 12-16-2023 13:40
From: ROBERT ADAMS
Subject: An Alternative View From a Seasoned Investor

I just skimmed over an email I received from AAII advertising a lifetime membership in the organization. I was a bit distressed and INSULTED to read the following: 

"No one should be investing unless they have a goals-based plan." 😳

So, are they telling me I should not be investing!? I have to admit, I have never, EVER set a single measurable goal related to investing. All my life, I've invested merely to increase my net worth. I never set a figure on it. I never set a time limit on it. And I never thought about what I would do with it (except grow it some more).

Here I am now, at 62 years old, having been able to retire 10 years ago because of my GOALLESS investing activities. On top of that, I'm well within the ranks of the two-percenters because of my GOALLESS investing. But the geniuses who wrote that advertisement tell me I shouldn't be investing! 

For those of you who find the PRISM program too cumbersome and unwieldy, take heart! Having a detailed roadmap and going through all the PRISM machinations is NOT necessary! I will grant that some people might benefit from PRISM, but it is NOT for everybody! You can be quite successful without it.

I am so incensed about that emailed statement that I am going to reply to myself with a little essay I posted elsewhere. 

------------------------------
Rob Adams
------------------------------

In my humble opinion, one problem with this [goals] step is that it doesn't separate spending goals from accumulation goals. The two are diametrically opposed to one another. For example, you can have an accumulation goal of $100,000, or you can have the goal of spending $100,000 on an African safari. You can have both goals, but if you accumulate the $100,000 only to spend it all on the African safari, you wind up right where you started--at zero.

Everyone wants to enjoy their life and the fruits of their labor, and spending goals may play a part in that. But without an accumulation goal, one will likely end up with nothing.

For me, the accumulation "goal" (if you can call it that) has always been to maximize the long-term growth of my assets through relative frugality. Relative frugality means that no matter how much you make, you never allow yourself to spend more than a set portion of your income. For example, you could say that 90% of your income is yours to spend. The rest goes into your investment nest egg--permanently. Out of the 90% go taxes, utilities, clothes, all the necessary expenses of life AND all discretionary spending, such as vacations, entertainment, etc. All spending goals must fall within the limit you set. As your wealth and/or income grows, the limits of relative frugality will grow and become easier and easier to maintain while providing funds for more elaborate spending goals. 

Relative frugality can also be stated in the reverse. That is, one can specify a percentage of their income to be saved, but psychologically, it has worked better for me to view a portion of my income as "mine" with the rest going into the off-limits investment nest egg.

In my humble opinion, investing should ALWAYS be a long-term endeavor. Short-term thinking in the investment realm usually leads to attenuated returns or worse. The Forbes list of wealthiest people is full of those who took a long-term approach to investing (many simply invested in their own businesses that grew over decades). But how many on that list got wealthy from short-term trading in their own account? Not many, if any.

The problem with focusing on spending goals without the barrier of an accumulation goal constraining them is that it necessarily leads you to think of accumulation in the short term. For example, saving money to buy a car is a short-term goal. Contrast that with the long-term concept of accumulating assets that will generate enough income to buy the car. Although the latter case requires you to exercise delayed gratification, in the end, you wind up with both wealth and the car.

I would highly encourage anyone using PRISM to separate accumulation goals from spending goals at the outset. Think about what effects each goal will have on your long-term financial well-being. Personally, I believe that if you focus on accumulation goals and keep the spending goals within the limits of relative frugality, you will have a happy financial life. But if you focus on spending goals while neglecting long-term accumulation, well….

------------------------------
Rob Adams

Original Message:
Sent: 12-16-2023 13:40
From: ROBERT ADAMS
Subject: An Alternative View From a Seasoned Investor

I just skimmed over an email I received from AAII advertising a lifetime membership in the organization. I was a bit distressed and INSULTED to read the following: 

"No one should be investing unless they have a goals-based plan." 😳

So, are they telling me I should not be investing!? I have to admit, I have never, EVER set a single measurable goal related to investing. All my life, I've invested merely to increase my net worth. I never set a figure on it. I never set a time limit on it. And I never thought about what I would do with it (except grow it some more).

Here I am now, at 62 years old, having been able to retire 10 years ago because of my GOALLESS investing activities. On top of that, I'm well within the ranks of the two-percenters because of my GOALLESS investing. But the geniuses who wrote that advertisement tell me I shouldn't be investing! 

For those of you who find the PRISM program too cumbersome and unwieldy, take heart! Having a detailed roadmap and going through all the PRISM machinations is NOT necessary! I will grant that some people might benefit from PRISM, but it is NOT for everybody! You can be quite successful without it.

I am so incensed about that emailed statement that I am going to reply to myself with a little essay I posted elsewhere. 

------------------------------
Rob Adams
------------------------------

In my humble opinion, one problem with this [goals] step is that it doesn't separate spending goals from accumulation goals. The two are diametrically opposed to one another. For example, you can have an accumulation goal of $100,000, or you can have the goal of spending $100,000 on an African safari. You can have both goals, but if you accumulate the $100,000 only to spend it all on the African safari, you wind up right where you started--at zero.

I tend toward Barry's comment that goals provide a framework for downselecting appropriate investments and discipline to follow through. I think your safari example is a straw man, easily knocked down. In a realistic scenario, a reasonable person would account for both short and long term expenses and the accumulation needed to service them. The accumulation for the safari would be coordinated with other goals for a balanced package. Going on the safari would get you the once-in-a-lifetime experience and memories to enjoy later, when living off the accumulation you provided for that phase of life.

I think we are tracking together regarding risk.  The PRISM confusion of risk and volatility* is especially ironic to me as just a year or so prior, AAII was promoting that risk is the chance of not realizing your financial goal (dollar amount at some time in the future). Volatility (variance) is the swing in value as time progresses to the goal time.  That was a great realization to me that really clarified my investment thinking:

a) historic performance and statistics guides expectation of general future performance. This can guide which investments are consistent with wealth/time period goals

b) don't worry about value of investments "today". Today's values below average are setting the stage for future above average valuation.

c) specifically, statistics of the S&P 500 leading to the observation, "four years for the market to recover and reach new highs covers 90+% historic events"** encouraged me to be much more confident in investing in equities.  I could budget to able able to wait out down periods and the statistics gave me faith the market would recover.  It converted my attitude from "the sky is falling!" to "what a great buying opportunity!"

*which is consistent with another comment that so much of PRISM feels like recycling conventional textbook investment stuff.  Not particularly adapted to the limits and opportunities available to the individual investor.

** As I generically recall. The AAII articles with specific recovery time / percentage occurrences would be worth including as PRISM references.

------------------------------
Hugh POLING
amateur radio station KC7HP

Original Message:
Sent: 12-16-2023 13:48
From: ROBERT ADAMS
Subject: An Alternative View From a Seasoned Investor

In my humble opinion, one problem with this [goals] step is that it doesn't separate spending goals from accumulation goals. The two are diametrically opposed to one another. For example, you can have an accumulation goal of $100,000, or you can have the goal of spending $100,000 on an African safari. You can have both goals, but if you accumulate the $100,000 only to spend it all on the African safari, you wind up right where you started--at zero.

Everyone wants to enjoy their life and the fruits of their labor, and spending goals may play a part in that. But without an accumulation goal, one will likely end up with nothing.

For me, the accumulation "goal" (if you can call it that) has always been to maximize the long-term growth of my assets through relative frugality. Relative frugality means that no matter how much you make, you never allow yourself to spend more than a set portion of your income. For example, you could say that 90% of your income is yours to spend. The rest goes into your investment nest egg--permanently. Out of the 90% go taxes, utilities, clothes, all the necessary expenses of life AND all discretionary spending, such as vacations, entertainment, etc. All spending goals must fall within the limit you set. As your wealth and/or income grows, the limits of relative frugality will grow and become easier and easier to maintain while providing funds for more elaborate spending goals. 

Relative frugality can also be stated in the reverse. That is, one can specify a percentage of their income to be saved, but psychologically, it has worked better for me to view a portion of my income as "mine" with the rest going into the off-limits investment nest egg.

In my humble opinion, investing should ALWAYS be a long-term endeavor. Short-term thinking in the investment realm usually leads to attenuated returns or worse. The Forbes list of wealthiest people is full of those who took a long-term approach to investing (many simply invested in their own businesses that grew over decades). But how many on that list got wealthy from short-term trading in their own account? Not many, if any.

The problem with focusing on spending goals without the barrier of an accumulation goal constraining them is that it necessarily leads you to think of accumulation in the short term. For example, saving money to buy a car is a short-term goal. Contrast that with the long-term concept of accumulating assets that will generate enough income to buy the car. Although the latter case requires you to exercise delayed gratification, in the end, you wind up with both wealth and the car.

I would highly encourage anyone using PRISM to separate accumulation goals from spending goals at the outset. Think about what effects each goal will have on your long-term financial well-being. Personally, I believe that if you focus on accumulation goals and keep the spending goals within the limits of relative frugality, you will have a happy financial life. But if you focus on spending goals while neglecting long-term accumulation, well….

------------------------------
Rob Adams

Original Message:
Sent: 12-16-2023 13:40
From: ROBERT ADAMS
Subject: An Alternative View From a Seasoned Investor

I just skimmed over an email I received from AAII advertising a lifetime membership in the organization. I was a bit distressed and INSULTED to read the following: 

"No one should be investing unless they have a goals-based plan." 😳

So, are they telling me I should not be investing!? I have to admit, I have never, EVER set a single measurable goal related to investing. All my life, I've invested merely to increase my net worth. I never set a figure on it. I never set a time limit on it. And I never thought about what I would do with it (except grow it some more).

Here I am now, at 62 years old, having been able to retire 10 years ago because of my GOALLESS investing activities. On top of that, I'm well within the ranks of the two-percenters because of my GOALLESS investing. But the geniuses who wrote that advertisement tell me I shouldn't be investing! 

For those of you who find the PRISM program too cumbersome and unwieldy, take heart! Having a detailed roadmap and going through all the PRISM machinations is NOT necessary! I will grant that some people might benefit from PRISM, but it is NOT for everybody! You can be quite successful without it.

I am so incensed about that emailed statement that I am going to reply to myself with a little essay I posted elsewhere. 

------------------------------
Rob Adams
------------------------------

I just skimmed over an email I received from AAII advertising a lifetime membership in the organization. I was a bit miffed at the following condescending statement: 

"No one should be investing unless they have a goals-based plan." 😳

So, are they telling me I should not be investing!? I have to admit, I have never, EVER set a single measurable goal related to investing. All my life, I've invested merely to increase my net worth. I never set a figure on it. I never set a time limit on it. And I never thought about what I would do with it (except grow it some more).

Here I am now, at 62 years old, having been able to retire 10 years ago because of my GOALLESS investing activities. On top of that, I'm well within the ranks of the two-percenters because of my GOALLESS investing. But the geniuses who wrote that advertisement tell me I shouldn't be investing! 

For those of you who find the PRISM program too cumbersome and unwieldy, take heart! Having a detailed roadmap and going through all the PRISM machinations is NOT necessary! I will grant that some people might benefit from PRISM, but it is NOT for everybody! You can be quite successful without it.

I am so incensed about that emailed statement that I am going to reply to myself with a little essay I posted elsewhere. 

------------------------------
Rob Adams
------------------------------

I just skimmed over an email I received from AAII advertising a lifetime membership in the organization. I was a bit miffed at the following condescending statement: 

"No one should be investing unless they have a goals-based plan." 😳

So, are they telling me I should not be investing!? I have to admit, I have never, EVER set a single measurable goal related to investing. All my life, I've invested merely to increase my net worth. I never set a figure on it. I never set a time limit on it. And I never thought about what I would do with it (except grow it some more).

Here I am now, at 62 years old, having been able to retire 10 years ago because of my GOALLESS investing activities. On top of that, I'm well within the ranks of the two-percenters because of my GOALLESS investing. But the geniuses who wrote that advertisement tell me I shouldn't be investing! 

For those of you who find the PRISM program too cumbersome and unwieldy, take heart! Having a detailed roadmap and going through all the PRISM machinations is NOT necessary! I will grant that some people might benefit from PRISM, but it is NOT for everybody! You can be quite successful without it.

I am so incensed about that emailed statement that I am going to reply to myself with a little essay I posted elsewhere. 

------------------------------
Rob Adams
------------------------------

I just skimmed over an email I received from AAII advertising a lifetime membership in the organization. I was a bit miffed at the following condescending statement: 

"No one should be investing unless they have a goals-based plan." 😳

So, are they telling me I should not be investing!? I have to admit, I have never, EVER set a single measurable goal related to investing. All my life, I've invested merely to increase my net worth. I never set a figure on it. I never set a time limit on it. And I never thought about what I would do with it (except grow it some more).

Here I am now, at 62 years old, having been able to retire 10 years ago because of my GOALLESS investing activities. On top of that, I'm well within the ranks of the two-percenters because of my GOALLESS investing. But the geniuses who wrote that advertisement tell me I shouldn't be investing! 

For those of you who find the PRISM program too cumbersome and unwieldy, take heart! Having a detailed roadmap and going through all the PRISM machinations is NOT necessary! I will grant that some people might benefit from PRISM, but it is NOT for everybody! You can be quite successful without it.

I am so incensed about that emailed statement that I am going to reply to myself with a little essay I posted elsewhere. 

------------------------------
Rob Adams
------------------------------

Sad but true. I paid for a lifetime subscription 10 years ago, after paying annually for the prior 10 years. Everything is a paid add-on now. 

I just skimmed over an email I received from AAII advertising a lifetime membership in the organization. I was a bit miffed at the following condescending statement: 

"No one should be investing unless they have a goals-based plan." 😳

So, are they telling me I should not be investing!? I have to admit, I have never, EVER set a single measurable goal related to investing. All my life, I've invested merely to increase my net worth. I never set a figure on it. I never set a time limit on it. And I never thought about what I would do with it (except grow it some more).

Here I am now, at 62 years old, having been able to retire 10 years ago because of my GOALLESS investing activities. On top of that, I'm well within the ranks of the two-percenters because of my GOALLESS investing. But the geniuses who wrote that advertisement tell me I shouldn't be investing! 

For those of you who find the PRISM program too cumbersome and unwieldy, take heart! Having a detailed roadmap and going through all the PRISM machinations is NOT necessary! I will grant that some people might benefit from PRISM, but it is NOT for everybody! You can be quite successful without it.

I am so incensed about that emailed statement that I am going to reply to myself with a little essay I posted elsewhere. 

------------------------------
Rob Adams
------------------------------

I just skimmed over an email I received from AAII advertising a lifetime membership in the organization. I was a bit miffed at the following condescending statement: 

"No one should be investing unless they have a goals-based plan." 😳

So, are they telling me I should not be investing!? I have to admit, I have never, EVER set a single measurable goal related to investing. All my life, I've invested merely to increase my net worth. I never set a figure on it. I never set a time limit on it. And I never thought about what I would do with it (except grow it some more).

Here I am now, at 62 years old, having been able to retire 10 years ago because of my GOALLESS investing activities. On top of that, I'm well within the ranks of the two-percenters because of my GOALLESS investing. But the geniuses who wrote that advertisement tell me I shouldn't be investing! 

For those of you who find the PRISM program too cumbersome and unwieldy, take heart! Having a detailed roadmap and going through all the PRISM machinations is NOT necessary! I will grant that some people might benefit from PRISM, but it is NOT for everybody! You can be quite successful without it.

I am so incensed about that emailed statement that I am going to reply to myself with a little essay I posted elsewhere. 

------------------------------
Rob Adams
------------------------------

Dr. Bob

Thanks for trying to keep this discussion "real."

Having a "goals-based plan" enables new investors a way to measure progress on their terms. It is a first step toward building an appreciation for having discipline. Folks from the School of Hard Knocks ("Sigma Eta Kappa"?) like you and I learned discipline through trial-and-error practice with the motivation of survival. Feedback is essential for improvement. 

So, the goals have to be meaningful. 

------------------------------------------------------------------------------------------------------------------------------------------------

In the 1960s, David McClellan of Harvard wanted to know what motivated people. 

So, he set up a "ring toss" experiment.

Participants were asked to toss a ring at a peg on the floor and get it to stay on the peg.

They were told the goal was to get as many "ringers" as possible. 

He did NOT tell them where to stand. They could stand as near or as far as they chose. 

Obviously, the odds of success varied roughly with the distance and level of skill (learned in pre-school).

------------------------------------------------------------------------------------------------------------------------------------------------

This is what he found.

Some people stood very close to the peg to ensure they made 100% of their attempts.

Some stood at a calculated distance that challenged them to make a high percentage but also provided a challenge that made making a higher percentage more rewarding.

Some stood so far away that it lowered the odds of making ringers so low that the degree of success or failure of their attempts was due to random luck and provided no actionable feedback to improve their performance.  

-------------------------------------------------------------------------------------------------------------------------------------------------

What these experiments disclosed was that people set goals based on some internalized, unstated level of a Need for Achievement.

One group, people who were very successful in their life, stood at a distance -- "just far enough" to make the task challenging and just close enough -- to get feedback on their skill level so their performance would provide a "reasonable" estimate of their success and support their "need for achievement." 

This became the key variable he isolated with these experiments.

McClelland's Human Motivation Theory states that every person has a dominant preference for 1 of 3 driving motivators: a need for achievement,  a need for affiliation, OR a need for power.

These motivators are developed through family, culture, and life experiences. 

People with a high need for "achievement" like to solve problems and achieve their goals.

Socrates said, "To know thyself is the beginning of wisdom." Erasmus said the same thing 1,000 years later but called it free will.

Our goals tell us who we are and how much risk we are willing to bear. 

Maybe the AAII PRISM goal-setting exercise is a simulated ring-toss experiment to learn to "know thyself" and to learn the approximate level of your Need for Achievement and how much risk you can bear to take and still leave "reasonable odds" to succeed. These traits (aka "discipline") have to be learned through trial and error... like you and I did.

If someone had asked me to set up a ring-toss experiment, I would have turned it into a system to achieve my real goal - create "reasonable" odds that make the amount of money I wanted to make. That's how "Sigma Eta Kappa" pledges do it if they want to get through hell-week.

Merry Christmas, Dr. Bob, and all ya'll.

PS - Great job with this project, Jenna. Learning this one lesson is worth the price of an AAII membership.

------------------------------
BARRY JOHNSON

Original Message:
Sent: 12-16-2023 13:40
From: ROBERT ADAMS
Subject: An Alternative View From a Seasoned Investor

I just skimmed over an email I received from AAII advertising a lifetime membership in the organization. I was a bit miffed at the following condescending statement: 

"No one should be investing unless they have a goals-based plan." 😳

So, are they telling me I should not be investing!? I have to admit, I have never, EVER set a single measurable goal related to investing. All my life, I've invested merely to increase my net worth. I never set a figure on it. I never set a time limit on it. And I never thought about what I would do with it (except grow it some more).

Here I am now, at 62 years old, having been able to retire 10 years ago because of my GOALLESS investing activities. On top of that, I'm well within the ranks of the two-percenters because of my GOALLESS investing. But the geniuses who wrote that advertisement tell me I shouldn't be investing! 

For those of you who find the PRISM program too cumbersome and unwieldy, take heart! Having a detailed roadmap and going through all the PRISM machinations is NOT necessary! I will grant that some people might benefit from PRISM, but it is NOT for everybody! You can be quite successful without it.

I am so incensed about that emailed statement that I am going to reply to myself with a little essay I posted elsewhere. 

------------------------------
Rob Adams
------------------------------

I'm sorry, Barry, but I just can't find a lot of value in PRISM. I know the folks at AAII worked hard to produce it, but the whole program is so infected with conventional/academic wisdom, I think alternative views of "how investing is done" should be presented as Surgeon General warnings to its users.

I'm not suggesting that my approach to investing is the only way--or even the best way--but the purveyors of PRISM seem to be suggesting exactly that for their program. The number of methods for successful investing is infinite, but some methods are better than others. If PRISM were a college football team, I would not expect it to appear in a bowl game. 

I think novice investors seeking direction should be presented with an honest array of methods along with objective appraisals of their benefits and shortcomings. Debate over methods is more illuminating than the promotion of a single faulty paradigm.

------------------------------
Rob Adams

Original Message:
Sent: 12-24-2023 12:27
From: BARRY JOHNSON
Subject: An Alternative View From a Seasoned Investor

Dr. Bob

Thanks for trying to keep this discussion "real."

Having a "goals-based plan" enables new investors a way to measure progress on their terms. It is a first step toward building an appreciation for having discipline. Folks from the School of Hard Knocks ("Sigma Eta Kappa"?) like you and I learned discipline through trial-and-error practice with the motivation of survival. Feedback is essential for improvement. 

So, the goals have to be meaningful. 

------------------------------------------------------------------------------------------------------------------------------------------------

In the 1960s, David McClellan of Harvard wanted to know what motivated people. 

So, he set up a "ring toss" experiment.

Participants were asked to toss a ring at a peg on the floor and get it to stay on the peg.

They were told the goal was to get as many "ringers" as possible. 

He did NOT tell them where to stand. They could stand as near or as far as they chose. 

Obviously, the odds of success varied roughly with the distance and level of skill (learned in pre-school).

------------------------------------------------------------------------------------------------------------------------------------------------

This is what he found.

Some people stood very close to the peg to ensure they made 100% of their attempts.

Some stood at a calculated distance that challenged them to make a high percentage but also provided a challenge that made making a higher percentage more rewarding.

Some stood so far away that it lowered the odds of making ringers so low that the degree of success or failure of their attempts was due to random luck and provided no actionable feedback to improve their performance.  

-------------------------------------------------------------------------------------------------------------------------------------------------

What these experiments disclosed was that people set goals based on some internalized, unstated level of a Need for Achievement.

One group, people who were very successful in their life, stood at a distance -- "just far enough" to make the task challenging and just close enough -- to get feedback on their skill level so their performance would provide a "reasonable" estimate of their success and support their "need for achievement." 

This became the key variable he isolated with these experiments.

McClelland's Human Motivation Theory states that every person has a dominant preference for 1 of 3 driving motivators: a need for achievement,  a need for affiliation, OR a need for power.

These motivators are developed through family, culture, and life experiences. 

People with a high need for "achievement" like to solve problems and achieve their goals.

Socrates said, "To know thyself is the beginning of wisdom." Erasmus said the same thing 1,000 years later but called it free will.

Our goals tell us who we are and how much risk we are willing to bear. 

Maybe the AAII PRISM goal-setting exercise is a simulated ring-toss experiment to learn to "know thyself" and to learn the approximate level of your Need for Achievement and how much risk you can bear to take and still leave "reasonable odds" to succeed. These traits (aka "discipline") have to be learned through trial and error... like you and I did.

If someone had asked me to set up a ring-toss experiment, I would have turned it into a system to achieve my real goal - create "reasonable" odds that make the amount of money I wanted to make. That's how "Sigma Eta Kappa" pledges do it if they want to get through hell-week.

Merry Christmas, Dr. Bob, and all ya'll.

PS - Great job with this project, Jenna. Learning this one lesson is worth the price of an AAII membership.

------------------------------
BARRY JOHNSON

Original Message:
Sent: 12-16-2023 13:40
From: ROBERT ADAMS
Subject: An Alternative View From a Seasoned Investor

I just skimmed over an email I received from AAII advertising a lifetime membership in the organization. I was a bit miffed at the following condescending statement: 

"No one should be investing unless they have a goals-based plan." 😳

So, are they telling me I should not be investing!? I have to admit, I have never, EVER set a single measurable goal related to investing. All my life, I've invested merely to increase my net worth. I never set a figure on it. I never set a time limit on it. And I never thought about what I would do with it (except grow it some more).

Here I am now, at 62 years old, having been able to retire 10 years ago because of my GOALLESS investing activities. On top of that, I'm well within the ranks of the two-percenters because of my GOALLESS investing. But the geniuses who wrote that advertisement tell me I shouldn't be investing! 

For those of you who find the PRISM program too cumbersome and unwieldy, take heart! Having a detailed roadmap and going through all the PRISM machinations is NOT necessary! I will grant that some people might benefit from PRISM, but it is NOT for everybody! You can be quite successful without it.

I am so incensed about that emailed statement that I am going to reply to myself with a little essay I posted elsewhere. 

------------------------------
Rob Adams
------------------------------

I didn't really intend to launch a discussion about AAII's product offerings and advertisements in general, but now that the can has been opened, I have to say I share the concerns others have voiced about where AAII is heading. I realize that any organization has to remain economically viable, but I wonder what happened to all those lifetime dues that were collected. Were those memberships sold too cheaply? It seems to me that if they were priced appropriately, the revenue they generated could have been invested in something like an S&P500-based index fund, with 4% of the previous year's ending balance withdrawn annually to provide funds for future operations. Has the organization done something similar, or has that money already been expensed?

I value AAII and its original mission, but I wonder whether all these add-on products are interfering with that mission. Like other members, I am annoyed at the marketing tactics used to sell those add-ons. I start reading an interesting email from AAII only to scroll down and find out I have to buy something to read the rest of it. Maybe that works with some people, but it's a total turnoff to me.

------------------------------
Rob Adams
------------------------------

Original Message:
Sent: 12-27-2023 15:59
From: ROBERT ADAMS
Subject: An Alternative View From a Seasoned Investor

I'm sorry, Barry, but I just can't find a lot of value in PRISM. I know the folks at AAII worked hard to produce it, but the whole program is so infected with conventional/academic wisdom, I think alternative views of "how investing is done" should be presented as Surgeon General warnings to its users.

I'm not suggesting that my approach to investing is the only way--or even the best way--but the purveyors of PRISM seem to be suggesting exactly that for their program. The number of methods for successful investing is infinite, but some methods are better than others. If PRISM were a college football team, I would not expect it to appear in a bowl game. 

I think novice investors seeking direction should be presented with an honest array of methods along with objective appraisals of their benefits and shortcomings. Debate over methods is more illuminating than the promotion of a single faulty paradigm.

------------------------------
Rob Adams

Original Message:
Sent: 12-24-2023 12:27
From: BARRY JOHNSON
Subject: An Alternative View From a Seasoned Investor

Dr. Bob

Thanks for trying to keep this discussion "real."

Having a "goals-based plan" enables new investors a way to measure progress on their terms. It is a first step toward building an appreciation for having discipline. Folks from the School of Hard Knocks ("Sigma Eta Kappa"?) like you and I learned discipline through trial-and-error practice with the motivation of survival. Feedback is essential for improvement. 

So, the goals have to be meaningful. 

------------------------------------------------------------------------------------------------------------------------------------------------

In the 1960s, David McClellan of Harvard wanted to know what motivated people. 

So, he set up a "ring toss" experiment.

Participants were asked to toss a ring at a peg on the floor and get it to stay on the peg.

They were told the goal was to get as many "ringers" as possible. 

He did NOT tell them where to stand. They could stand as near or as far as they chose. 

Obviously, the odds of success varied roughly with the distance and level of skill (learned in pre-school).

------------------------------------------------------------------------------------------------------------------------------------------------

This is what he found.

Some people stood very close to the peg to ensure they made 100% of their attempts.

Some stood at a calculated distance that challenged them to make a high percentage but also provided a challenge that made making a higher percentage more rewarding.

Some stood so far away that it lowered the odds of making ringers so low that the degree of success or failure of their attempts was due to random luck and provided no actionable feedback to improve their performance.  

-------------------------------------------------------------------------------------------------------------------------------------------------

What these experiments disclosed was that people set goals based on some internalized, unstated level of a Need for Achievement.

One group, people who were very successful in their life, stood at a distance -- "just far enough" to make the task challenging and just close enough -- to get feedback on their skill level so their performance would provide a "reasonable" estimate of their success and support their "need for achievement." 

This became the key variable he isolated with these experiments.

McClelland's Human Motivation Theory states that every person has a dominant preference for 1 of 3 driving motivators: a need for achievement,  a need for affiliation, OR a need for power.

These motivators are developed through family, culture, and life experiences. 

People with a high need for "achievement" like to solve problems and achieve their goals.

Socrates said, "To know thyself is the beginning of wisdom." Erasmus said the same thing 1,000 years later but called it free will.

Our goals tell us who we are and how much risk we are willing to bear. 

Maybe the AAII PRISM goal-setting exercise is a simulated ring-toss experiment to learn to "know thyself" and to learn the approximate level of your Need for Achievement and how much risk you can bear to take and still leave "reasonable odds" to succeed. These traits (aka "discipline") have to be learned through trial and error... like you and I did.

If someone had asked me to set up a ring-toss experiment, I would have turned it into a system to achieve my real goal - create "reasonable" odds that make the amount of money I wanted to make. That's how "Sigma Eta Kappa" pledges do it if they want to get through hell-week.

Merry Christmas, Dr. Bob, and all ya'll.

PS - Great job with this project, Jenna. Learning this one lesson is worth the price of an AAII membership.

------------------------------
BARRY JOHNSON

Original Message:
Sent: 12-16-2023 13:40
From: ROBERT ADAMS
Subject: An Alternative View From a Seasoned Investor

I just skimmed over an email I received from AAII advertising a lifetime membership in the organization. I was a bit miffed at the following condescending statement: 

"No one should be investing unless they have a goals-based plan." 😳

So, are they telling me I should not be investing!? I have to admit, I have never, EVER set a single measurable goal related to investing. All my life, I've invested merely to increase my net worth. I never set a figure on it. I never set a time limit on it. And I never thought about what I would do with it (except grow it some more).

Here I am now, at 62 years old, having been able to retire 10 years ago because of my GOALLESS investing activities. On top of that, I'm well within the ranks of the two-percenters because of my GOALLESS investing. But the geniuses who wrote that advertisement tell me I shouldn't be investing! 

For those of you who find the PRISM program too cumbersome and unwieldy, take heart! Having a detailed roadmap and going through all the PRISM machinations is NOT necessary! I will grant that some people might benefit from PRISM, but it is NOT for everybody! You can be quite successful without it.

I am so incensed about that emailed statement that I am going to reply to myself with a little essay I posted elsewhere. 

------------------------------
Rob Adams
------------------------------