Why I Don’t Invest

People often ask me where I invest my money. I get it—when you run a political risk consultancy that helps businesses navigate the chaos of 21st century politics, it comes with the job. Unfortunately, my answer tends to disappoint most folks—I don’t really invest, but there’s good reason for that.

I only have one real investment, and it’s Eurasia Group. I own the firm, and I pour pretty much everything I have into it and its related subsidiaries (like egx and GZERO Media). So I’m already taking plenty of risk, not just in terms of money, but also in the quality of the research and the analytic calls that the firm is already making.

But that’s not the whole story. Having run Eurasia Group for more than 20 years (!) now, I’ve learned some important lessons about investing, and about myself.

Lesson 1: Investing creates bias. When I'm watching how a portfolio performs with my own money in it, I obviously root for it to do well (even when it's a retirement account; I know because I watched mine intently when I first set it up). And when you're rooting for a team, it makes calling balls and strikes near impossible. I agree with Nassim Taleb that one typically needs to have “skin in the game” (actual ownership and responsibility of outcomes) so that they can be judged on performance. But if it’s my job is to dispassionately analyze what's happening in the world (and it is), I can’t do that in an unbiased way if I have a rooting interest for things to turn out one way or another. 

Lesson 2: I don't like money. Don't get me wrong—I like the things money can buy. But the reason I became a political scientist and not, say, a banker or an economist is that I find politics infinitely more fascinating than capital markets. I'd follow politics as a hobby even if I was in a completely different line of work; I can’t say the same about tracking stock markets. I can think of literally hundreds of things I'd rather do than manage my own portfolio (tennis, poker, piano, read, play with my dog, take a walk, have a nap...).

Lesson 3: I’m satisfied with what I have. I was stunned to read a few months ago that some millionaires in New York City think they need more than $100 million to not worry about money anymore. It helps that I grew up with nothing and never really expected to have a lot. But once I had a house without a mortgage on it and cash for emergency/retirement—something I only achieved about 10 years ago—that felt like enough. Of course “enough” is a lot less than even that; surely my mother, who raised my brother and me in the projects outside Boston, would have thought so. You can always have more, sure. But it's really useful to know what “enough” is, and to always keep that in perspective.

Lesson 4: Not investing avoids unnecessary downside. If you've already got “enough” (and don’t want to worry about keeping it), the idea of risking anything for more is irrational. I can’t tell you how many of my smartest friends were telling me to invest in bitcoin a few years ago. Am I kicking myself now? Not at all. Let's say they were 99% right, and there was only a 1% chance of big downside. Do I want any of that downside? Not particularly. Of course, some people have money to spare that investing doesn’t jeopardize their “enough;” good for them. But for me, I keep going back to lessons #1, 2 and 3.

So no, I'm not investing. But if I were... well, a few thoughts on that next week.