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What Is Good Advice?

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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.

1. Good advice is simple. One of the most common misperceptions I’ve observed is the assumption that simple is the same as “easy.” Simple is easy to remember, harder to do and often close to impossible to sustain. The most obvious example of this is the old adage: “Keep it simple.” For any adult living in today’s world this is such an obvious and logical goal it hardly needs to be said. But it does need to be said, and often repeatedly. The challenges to keeping your life simple are unending and unrelenting.

I’ve got wonderful memories of a few weekends spent years ago in a mountain cabin miles from the nearest road and the simplicity and solitude it brought to me. But I’m not moving there. I live and work in a large crowded urban area, and I spend most of my day in front of one screen or another interacting with emails, texts, tweets and phone calls—and when that’s done I have family and community obligations to attend to. I do my best to simplify as much as possible, but I have to be vigilant or things can quickly get out of control.

2. Good advice is understandable. This is the reason why good advice is so often contained within memorable and easily understood phrases like “never look back with regret,” or “sleep on it.” If you don’t understand the common sense of whatever investment strategy you are considering, don’t do it—no matter how attractive the returns or how long the track record. Ask anyone who chose to put their money with Bernie Madoff.

3. Good advice is factual. Eula Biss is an exceptionally thoughtful and accomplished essayist. Her latest book, “On Immunity,” interweaves an insightful and coherent narrative of the history and current events surrounding the issue of immunization, juxtaposed against her own concerns as a new mother for the safety of her child. She casts a wide net in search for clarity about the facts, revealing a much more nuanced and interesting reality than the current emotional and politicized debate over vaccination.

Even though many of Biss’s friends were academics like herself, she concluded that their advice (not to vaccinate) was being driven more by emotional and social biases than facts. Behavioral biases are obstacles to clear thinking and smart and educated people are as vulnerable as anyone. Biss’s situation could be encapsulated by another piece of wisdom I uncovered during my Internet research: “There are three sides to every argument: your side, their side and the truth.”

4. Good advice is relevant. If I hadn’t taken that job driving a taxi, and by sheer coincidence met the same crazy guy while I was on the subway (which happened to be a block from the taxi garage), and he gave me the exact same advice, I might have remembered it for a while simply because it was so brilliant—but without the repeated opportunity to actualize it, the advice would not be relevant and it would not have changed my driving experience. Advice that isn’t relevant to you in some meaningful way won’t have a chance against the inevitable challenges that are lurking out there in the uncertain future.

Potter Stewart wasn’t being tongue-tied when he stated his famous phrase. Rather, the brilliant jurist was teaching us an important lesson: Whether pornography or good advice, its definition is in the hands of whoever is considering it. The need for good advice is constant—everyone wants it all the time. For those of us who want to dispense it and those of us who want to get it, our shared goal should be to say with complete confidence: “I know it when I see it.

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