What Is Good Advice?

One of the best pieces of advice I ever received came from the most unlikely of people in the most unexpected of places. During my senior year in college I worked part-time driving a taxi in New York City. It allowed me to work odd hours and earn much more than the typical kind of minimum wage jobs generally available to college students.

On my first day at work I was standing near the dispatcher’s office waiting to be assigned a taxi when one of the older cabbies walked up to me. Something about his manner and appearance gave me the sense that he had been working way too long. He had that kind of wild look Christopher Lloyd made famous years later in the sitcom “Taxi.” Without so much as an introduction he said to me, “Son, if you want to survive on the streets of New York, just pretend that every other driver was recently released from a mental institution. Then you’ll be fine.”

With that he walked away and I never spoke to him again. I don’t know if it was the circumstances of the moment, his slightly odd demeanor or the absolute brilliance of his insight; but that little piece of unsolicited advice from a clearly unstable source took immediate residence in my psyche. As a result I was able to remain amazingly calm for the two years I battled New York City traffic and the decades of freeway driving that followed here in Los Angeles.

That experience and the years I’ve spent in the investment business have provided me with considerable time to ponder this thing we call advice. More recently, as the value of investment advice from traditional sources is being increasingly challenged publicly, we are compelled to grapple with the question: What is good advice? Is the distinguishing factor between good advice and bad advice only in the outcome, or can we know it in advance?

Does advice have to come from another person, or can we read it in a book or access it from an algorithm? Is advice defined by its being given or only by its being received? Or is advice just so varied and so broad in how each of us perceives it, that the only intelligent thing we can really say is what Supreme Court Justice Potter Stewart famously opined (about pornography): “I know it when I see it.”

Common Elements

I Googled phrases like “the best advice I ever received,” and spent a few days going over a few hundred recollections of good advice various individuals had gotten (and in many cases, actualized). My goal was to see if there were any obvious common denominators that connected all this disparate good advice. Here are just a few examples: “Have no regrets.” “You’re not that important, it’s what you do that counts.” “An investor should think like a business owner, not a renter.” “Take the long-term view.” “Have an exit strategy.” “Everything matters, but nothing matters that much.”

My personal favorite is especially relevant in our age of information overload: “Feed the eagles and starve the turkeys.” There are only a few things that really matter—know what they are and put your energy in them. The turkeys will always be right in front of you, pecking around, making noise and demanding attention. Just ignore them.

I was able to identify four common elements present in every example of good advice that these individuals recounted: The advice was simple, it was understandable, it was factual and it was relevant to their lives. And while not every piece of advice that contains those elements will necessarily turn out in the way we would like, the more of these elements that are present the more likely that the advice being offered is good. There is lots of advice floating around in the world—if we take just a little time to evaluate each of these elements it might help us more easily avoid the bad stuff.