The Worst Economic Mistake I Ever Made
I do not spend a lot of time thinking about the mistakes of the past. There is nothing I can do to cure them, so I do not spend a lot of time thinking about them, except in so far as thinking about them reminds me that my situation today is very good, and I have no way of knowing whether my situation would have been terrific had I not made the mistake.
I did not figure out what was the worst economic mistake of my life until over half a century after I made it. That saved me a lot of grief, since by the time I figured out, it was way too late to worry about it.
I will tell you about a man I know who did not make the mistake that I made. He was the kid brother of a close friend of mine. His name is Al Jardine. After high school in 1960, Al went to a local community college, El Camino College. He dropped out after a year. He decided that college was not for him. So, he got together with three brothers he had known in high school, along with their cousin, and formed a band called the Pendletones. You probably have not heard of the Pendletones. That is because someone at the obscure record company that released their first record had, without permission, changed the name of the group. They decided to keep the name. The new name of the group was the Beach Boys. For him, this move gave him what few people ever have: a unification of his job and his calling. The job paid a great deal of money.
A year earlier, I could have done something similar. I graduated from high school in 1959. It never occurred to me to enroll at El Camino College. It was a junior college. I regarded junior colleges as third-rate educational institutions. I wanted to go a first-rate school. I did. I enrolled at Pomona College, which is one of the three or four most prestigious undergraduate colleges on the West Coast. I transferred out after one semester, going to the University of California, Riverside, which academically was just about the same as Pomona College. But, in any case, I did not give El Camino College even a first thought.
From a strictly economic standpoint, I should have attended El Camino College, and then finished at the newly created California State College, Dominguez Hills, which opened in 1960. It would have had no academic prestige, but I could have lived at home and driven to college all four years. This would have saved my parents a great deal of money.
I should have worked out a deal with my parents. If I went to El Camino and then Dominguez Hills, in exchange they would have given me their equity position in the small house that they owned two blocks from the Pacific Ocean on 23rd Street in Manhattan Beach. They had paid about $8000 for that house a decade before. Today, if that little 900 square-foot house still sat on that property, it would easily be worth $1 million.
Second, had I known about it in 1959, I would have bought a copy of the 1959 book, How I Turned $1,000 into Three Million in Real Estate in My Spare Time, by William Nickerson. I would have dedicated my career to pursuing his strategy. I would have gone into real estate sales, but I would have gone into this only to put food on the table. My goal would have been to find properties to buy as an investor, using Nickerson's method, at a rate of one property per year. If I had done this, beginning in 1963, I would have owned 20 homes by 1983. By that time, it was clear that Manhattan Beach was becoming one of the prime real estate investment locations in the United States. I might have kept buying properties in the beach areas, despite the fact property prices were higher, and by now I would probably own 30 houses on a debt-free basis. They would be worth at least $30 million. They would generate at least $4000 a month rental income. These would be prime houses.
That would have been the best possible job I could ever have had. I would have sold real estate to earn my basic commissions until such time as I was managing the properties on a full-time basis, searching for new properties, and negotiating. If I had been really energetic, I would probably own 40 or 50 houses on a debt-free basis today.
That has to do with money. But if I had done this, I doubt that I would have gone into writing as a career. I would not have written a lot of books, and if I had written them, they would probably be on some aspect of real estate investing. I would not be known outside of a limited number of real estate investors. The best I could hope for would to be better known than John Schaub in Southern California. Maybe he and I would give Schaub--North seminars every year in Costa Mesa.
The problem with making these evaluations is this: we never have enough information. Information is not a zero-cost resource. I had not heard of Nickerson's book in 1959. So, never having heard of it, was my decision to go off to college a mistake? Was it really a lost opportunity? An opportunity which is not perceived does not count as an opportunity cost when it is ignored.
Similarly, if I had read Nickerson's book, and if I had adopted his program as my life's work, I might never have read most of the works of Mises, Hayek, and Rothbard. I would have read some of them, because I did read The Freeman in the late 1950s, but I doubt seriously that I would have bothered to submit my first article to The Freeman in 1966. I might have continued to work with Fred Schwarz's Christian Anti-Communism Crusade, but I doubt that I would have gone into print. It takes a lot of work to do this, and it takes a lot of reading. I do not think I would have done this reading had I been constantly in search of beachfront properties that would produce positive cash flow.
In other words, my job would have replaced my calling. A portfolio of debt-free investment properties would today be my legacy. This is a perfectly good legacy, because the houses could be given away to nonprofit organizations, and those organizations could do good things with the money. But, in terms of anyone remembering who I was 10 years after my death, the odds would be against it. The odds that anything I would say or do today would have any impact, merely because I owned several dozen debt-free homes on the beaches of Southern California, would be very low.
So, the path that I could have gone down, but which I never gave any thought to, would have led to a condition that today I would regard as a gigantic mistake. But, of course, had I gone down that path, I would no more envision my situation today than I in fact envisioned my house-rich situation in 1959. In 1959, I did not see the possibility of what the World Wide Web has become, and the uses that I have been able to make of the World Wide Web. There was no way that anybody could have envisioned the tools that a writer has today. We have gone through a revolution since 1995.
I was in a position to take advantage of this revolution, beginning in 1996, only because I had spent three decades in the trenches writing articles for small-circulation magazines. Line upon line, article upon article, I built up an inventory of published materials, and I gained the skills to write fast. That is why I can write about 50 articles week, plus a book, plus lesson plans for an online homeschool curriculum. I could not possibly do this if I had spent four and a half decades building up my skills at buying houses, renting houses, and minimizing federal taxes.
My job would have replaced my calling. My job would become my calling. My calling would have been to amass a lot of money. I do not think that this is the best calling a person can choose for himself. That is the calling that I probably would have had.
So, my biggest economic mistake, to the extent that not seeing an opportunity and therefore not acting on it is a mistake, would have had an extremely high price: the legacy of my writing.
I think our lives are package deals. I think that all of our choices are part of an overall plan that is above and beyond our choices. I am a Calvinist. But my more important point -- the point of view of this essay -- is this: it does no good to second-guess yourself a decade or a half-century after you have chosen a particular path. I caution people not to do this. It is better to concentrate on the benefits that taking a particular path have produced rather than concentrating on the lost opportunities that taking this path necessarily imposed.