Apathy As a Strategy

Josh Kaufman, author of the book The Personal MBA: Master the Art of Businesshad a great post recently on what he call strategic apathy. Some highlights:

In my essay on Status Malfunction, we discussed the problem of allowing the promise of social status to warp our decision-making.

We didn’t discuss the solution: making a conscious, deliberate choice to not care about the forms of status that don’t lead us toward the fulfillment of our current priorities or long-term goals.

I call it strategic apathy.

It’s better to choose to care about things that are important to you AND things that you can influence or control. Choosing not to think or worry about things you can’t influence or control is apathy: strategic apathy. Apathy in the name of sanity, efficiency, and effectiveness.

I’ve never seen it framed like this before, but it makes perfect sense. Lifestyle creep is probably one of the biggest problems most people have when trying to save money because it usually forces them into debt. And I think sanity would be the biggest benefit from this mindset. You’re basically standing in place spinning your wheels if you’re constantly worrying about factors outside of your control. It’s wasted energy.

People assume apathy is a sign of laziness, but in this sense being apathetic is a great strategy. Every year I realize more and more that not caring about certain things in life is one of the best ways to avoid unnecessary stress and jealousy. I find myself caring much more as I get older, but about fewer things.

Here are some good examples of things you probably shouldn’t care about in your financial life:

  • Your relative portfolio performance against a meaningless index or benchmark.
  • How billionaire hedge fund managers are currently positioning their portfolios.
  • How much money your brother-in-law is making.
  • What Twitter traders are telling you about the markets.
  • The next fiscal cliff or government shutdown.
  • How many days in a row the market has risen or fallen lately.
  • Whether or not Herbalife is a Ponzi Scheme or the buy of a lifetime.
  • The brand new car or boat your neighbor just purchased (on credit).
  • That really great penny stock your co-worker told you they just bought because of an email tip they received.
  • How much your retirement portfolio has gone down (or up) in the past quarter.
  • How much money people claim to earn on Fan Duel every week.
  • People who call for a market crash every single year.
  • The couple you read about who lucked out and put their entire life savings into Apple stock a decade ago.

Another one that is a difficult concept for most investors to understand is the fact that doing nothing is a decision. This can be either a good form of apathy — if used within a well-defined investment process — or a bad form of apathy — if it means you’re continuously putting off long-term financial planning issues.

Strategic apathy is also a good exercise to align your priorities with how you spend your time in life. It doesn’t always mean living a minimalist life as some in the personal finance world would have you believe.

One of the biggest financial changes I’ve discovered since becoming a parent about a year-and-a-half ago is that I now have a greater willingness to pay for time. In the past I never would have paid money for a cleaning service or lawn service on my house for the simple fact that I could do both of those things myself. It was a matter of principle. Why waste money on something I’m perfectly capable of doing myself? Haven’t you seen the personal finance articles that show how much more that money would be worth in the future if you invested it in the market instead?

My strategic apathy is now that I don’t care about spending that money anymore if it means more time with my wife and daughter on nights or weekends. And it’s much easier to utilize that apathy when I already have my savings on auto pilot each month. It just means I have to care even less about taking spending dollars from somewhere else — another form of strategic apathy. It comes down to spending on those areas that are important to you and cutting back everywhere else.

It’s impossible to completely ignore all the noise out there these days. The sheer amount of data, information and social networks makes it easier than ever to care or be outraged about something new every couple of days. But I agree with Kaufman; it’s a good idea to care about fewer things, especially when they’re meaningless or out of your control.

Strategic Apathy (Josh Kaufman)

Further Reading:
The Worst Part About Making Big Financial Decisions


This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

The Compound Media, Inc., an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here: https://www.ritholtzwealth.com/advertising-disclaimers

Please see disclosures here.

What's been said:

Discussions found on the web
  1. Matt Downing commented on Oct 07

    interesting post. i agree that trying to achieve a certain social status is one of the biggest hurdles to accumulating money in savings and investing. in the US, it is difficult to not spend on things that we think we should be able to have. we tell ourselves things like – I have a good job, i deserve a new car. i have a high profile job i deserve to be in the best neighborhood in a much bigger house. these aren’t bad things to purchase, but many of us shouldn’t be purchasing them and convince ourselves that we are able because of job and wanting to live out a certain social status.

    this is one of the biggest areas i am trying to get under control in my own life. 13monthsecuador.blogspot.com

    • Ben commented on Oct 07

      Yup, spending usually keeps up or even outpaces wage increases. It’s all relative to the amount you’re saving.

  2. LPL Advisor commented on Oct 07

    Wisdom – Training for the mind….

  3. retiredboomr commented on Oct 07

    I agree with this article 100%. In my younger days I didn’t, as I was often chasing the “next big thing” and usually missing it. I wish I had the knowledge and conviction I now have, back when I started investing. I would be much richer today if I had thought to just develop a modestly good risk diversified portfolio and just re-balanced it a couple times a year. I have (with struggles) convinced my son to just trust in the markets and keep his hands off his own retirement portfolio other than to re-balance. When things look bad in the market and his portfolio is down, or it isn’t earning at the same level as the often compared S&P 500 index, he calls me for confirmation and reinforcement that he shouldn’t make some drastic change. I think he will be happy for my ‘strategic apathy’ advice 30 years from now when he heads into retirement.

    • Ben commented on Oct 07

      The markets are just so tempting in this way. They always make you feel like you’re missing out on something.

  4. Dhawal Nagpal commented on Oct 07

    Indeed, it comes from the greek word Apatheia- only worry about things that one can control. It also means eradicating the tendency to react
    emotionally or egotistically to external events one cannot control.

    • Ben commented on Oct 07

      Nice, didn’t know that.

  5. mikedariano commented on Oct 07

    My favorite lesson from Zweig, “I don’t know, and I don’t care.” Godin wrote a post about tracking things and he noted that when we track something we pay attention to it and act on it. If you don’t track (Twitter traders, bitcoin) you won’t act on them. Another nice post, thanks Ben.

    • Ben commented on Oct 07

      Love that quote too.

    • godzi11a commented on Oct 08

      mikedariano, I think that lesson was actually the answer to this question:
      “Which is a bigger problem… ignorance or apathy?”

  6. Ravi Dawar commented on Oct 07

    This is one of your best posts Ben, thank you very much!

    • Ben commented on Oct 07

      Thank you.

  7. Roadmap2Retire commented on Oct 07

    Fantastic post. I havent seen it put it that way either, but I agree that constantly thinking of things out of your control can cause unneeded stress. I try to tune out the noise and at some level employ this type of apathetic approach when it comes to investing, but hadnt really consciously thought about it that way.


  8. John Richards commented on Oct 07

    Nice piece. My one disagreement might be tracking your retirement portfolio. If you are just looking at the nominal value, then yeah, it’s probably not helpful – more likely to prompt you to do something sub-optimal. However, when my portfolio returns are not keeping pace with my benchmark, or exceeding it greatly, It’s an indicator I have a problem…. in the first case with return, the second with risk. In either case, I may not be positioned where I thought I was. That’s useful information. If you are classic 60/40 US, you can compare to VBINX, which is down 2.36% for the year. If you are close to that, then you know you are on track. If not, perhaps you need a tune-up. The hardest part can be finding an appropriate benchmark, I tend to be too sloppy about it… 🙁

    • Ben commented on Oct 07

      I’d say once a quarter or so is plenty for most people. But I say do whatever works for you especially if it keeps you on the right track and helps manage risk.

  9. mugabe commented on Oct 07

    wonderful post

    • Ben commented on Oct 07


  10. K.R. commented on Oct 08

    Excellent post, Ben! I am printing this out and saving a copy. My one issue is similar to the last commenter. The idea of “Your relative portfolio performance against a meaningless index or benchmark.” To me you have to do this. Not daily, maybe not even monthly, but annually it’s a must. if you are underperforming the benchmark, that means you might be better off owning an Index as opposed to individual stocks. And of course, if you are professional investor managing money for others, the relative performance will indicate whether you are truly creating value for your clients. The industry legends: Buffett, Schloss, Tweedy, Munger didn’t outperform every year, but over the course of time, they gave the benchmarks a shellacking.

    • ST commented on Oct 08

      I side strongly with Ben and the avoidance of index-portfolio benchmarking.

      First off, how do you know which index is the correct benchmark? Almost all indicies are composed of assets cobbled together by a committee or management team using their own guidelines and mandates, just as you’ve picked your individual investments. If my stock portfolio consists only of transportation and mining stocks…which index is my benchmark?

      Which leads to the next point, why compare to a stock index when your total return is most likely comprised of many different assets: stocks, bonds, cash, real estate, derivatives, commodities, private equity, collectables, rental income, your job, etc., et al.

      I doubt Buffett et al ever used index benchmarks because their portfolios were constructed much differently, like comparing apples to the whole farm.

      Underperforming an index is only important if your investment strategy is to chase returns. News flash — there will always be something outperforming (and under-performing) your investments.

      To focus on return only is absurd without also focusing on risk. The investor needs to figure out both the desired risk and required return for their total return portfolio and then build a portfolio to match those levels.

      Also of note, and what I’m sure eludes most investors, is the behavioural/psychological driver of why we feel the need to benchmark. Firstly, we humans are a social animal with an innate need to belong to a group, to relate; it’s very difficult to thrive in isolation (a reason solitary confinement is used as a punishment within prisons). Thus we feel the need to attach our investment decisions to that of an exterior grouping.

      Secondly, humans have an overwhelming need to categorise and label everything we can. Instead of having a wide open financial asset universe, we cram everything into specific and specialised corrals — the need to measure overcomes us.

      But, as is so often the case, the specific needs of the individual are often different than the general needs of the group.

      • K.R. commented on Oct 08

        Warren Buffett wrote an essay called “the Superinvestors of Graham and Doddsville” You can read it here. http://www.scribd.com/doc/236910578/The-Superinvestors-Of-Graham-and-Doddsville
        In it, he compares his returns to those of the S&P. You can also read a berkshire hathaway annual report. Every single year. He compares the value of BRK to the performance of an index. You don’t need to make it complicated. Just use the S&P or the Russell, these are both proxies for the overall market in general. You don’t need to have an index that matches your “investment style”. If you compare your returns to the S&P over the long run, that will tell you whether you are better off investing in an index and saving your time and transaction fees. This isn’t about belonging or psychology. If over the course of 5 or 10 years, you would have been better off with an S&P ETF, why make it complicated? Put your money in an index and go spend time with your family. In fact, Warren and Charlie often suggest that the average investor is better off with an index.

        A point of clarification, the average investor doesn’t have investments in P.E., commodities and derivatives. “Your job” is not an investment in your portfolio. It’s a job.

        • ST commented on Oct 10

          The average investor also doesn’t invest in Berkshire.

          I’m sure the annual BRK:S&P comparison is in place to appease the anxieties of shareholders, not for any actual implementation of investment or business practices.

          I’ve read that a Yale study found that Berkshire is basically just a big leveraged insurance/private equity firm, and is essentially a multi-strategy hedge fund running an insurance writing house that operates like an option writing house combined with several global macro strategies including distressed debt, derivatives, forex and private equity.

          The investment strategy of any S&P 500 index fund: long equities.

          Not exactly comparable in any shape or form. So what’s the use of the comparison?

          If Berkshire uses the S&P as its benchmark, and since it has beaten the returns of the arbitrary index for 50 years running…shouldn’t we all be using BRK as our benchmark, or at the very least, as our only investment? Keep it simple, right?

          If one truly must utilize a benchmark to validate their financial aims, one would be better off using a measuring stick with a similar risk profile first, before worrying about any other metrics (e.g. BRK carries greater risk than the S&P index, thus even more reason not to compare).

          And if you think your brain has minimal influence over your investment actions…well, I’ve got some very pretty tulips for sale!

          (As for your job not being an investment, I guess it all depends on your breadth and depth of what you consider to be your “portfolio”. But that’s a whole other topic.)

          • K.R. commented on Oct 11

            Definitely some good thoughts in your response ST! I agree with a couple of your comments, specifically related to varying risk profiles, and then others we will have to agree to disagree. (I think you misunderstood my psychology comment.) No worries! This was a great post from Ben and I rarely comment to posts. I use indexes as a sanity check over time for my personal investments. And then for my clients, i use it to validate that I am earning my fees. I have other metrics to confirm that the risk profile of their portfolios is acceptable. All the best to you!