An interesting book I'm reading (_Fooled By Randomness_) had some critical comments about _The Millionaire Next Door_. First, if performance has a strong component of luck as well as skill, we can expect a slice of the top-performers to include, not the best performers, but the highest-variance performers. It is mathematically consistent that we might have a higher expected income pursuing a more conservative strategy, but that most top performers pursued a less conservative strategy (ie investing).

Second, the book was written after the greatest bull market in history, when investing in stocks achieved extraordinary returns. So those who did so ended up with the most money - but that only means that strategy was right for that time period, not that its right in general, or during some important time period, like whenever you are plotting a strategy for. "Saving & Investing" seems like a pretty good way to make money, but the extreme positive results in the 80's and 90's are probably not a good reflection of its expected future success.

Finally, it seems rather intuitive that the less money we spend, the more we save, and the richer we are likely to be. But the goal should be to maximize happiness, not wealth. Money is for spending, and it seems a bit strange to idolize the foolishness of forgetting to do so. This is no argument for profligacy, of course, we must remember both that saving now can let us spend more later, and that we have a high discount rate, hardwired from a time when the future was much less certain than it is now. Just remember that a sample of millionaires will be biased towards those who overcorrect too much.

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