Cullen Roche at Pragmatic Capitalism has been a fixture on the financial blogging scene for some time now. He was named by Josh Brown as one of the “five best financial bloggers.” Not surprisingly book publishers came calling and he recently published a fine book: Pragmatic Capitalism: What Every Investor Needs to Know About Money and Finance.*

Cullen has been out talking about the book including a Q&A over at The Reformed Broker and a Trendfollowing Podcast with Michael Covel. The book was also positively reviewed over at A Wealth of Common Sense. Long-time readers of Pragmatic Capitalism will find some familiar topics in the book including a discussion of the concept of “monetary realism.” In addition Cullen dives deeper into some topics around building a portfolio and downright philosophical in discussing each our roles (and responsibilities) in our current economy.

The following is an excerpt from Chapter 9 of Cullen Roche’s new book Pragmatic Capitalism: What Every Investor Needs to Know About Money and Finance from Palgrave Macmillan. Copyright (c) 2014 by Cullen Roche.


Six Essential Principles from Pragmatic Capitalism: What Every Investor Needs to Know About Money and Finance by Cullen Roche

1)    The big picture matters more than ever. As the world’s population expands, technological advances grow and the emerging market’s middle class demands a higher living standard, the global economy will become an increasingly interconnected and tiny place. This will force changes in the use of global resources, the way governments engage in the economy, and a shift in the way we all interact and engage in the economy and in the markets.

2)    The best investment you’ll ever make is likely to be in yourself. The best investments do not always involve the purchase of a claim on someone else’s business. Instead the best return on investment you are likely to generate is an investment in yourself and improving the way you can provide value to other economic participants, thereby maximizing the income stream that drives your total portfolio.

3)    We are often our own worst monetary enemy. Although we created money to simplify our economic lives, we are ill equipped to handle many of the behavioral problems that come with having a monetary system. Our inherent biases and deficiencies will often make us our own worst enemies. Identifying potential errors and flaws is the best way to protect yourself from yourself.

4)    We have a fiat monetary system, not a hard money or barter-based system. Analyzing and understanding the modern monetary system means we must understand the system we have and not the system we want. We do not reside in a commodity-based monetary system or a barter system. Therefore when we analyze and understand the system we must always approach it from the reality that we reside in a fiat monetary system that is credit based. Any discussions about barter or commodity money are largely inapplicable to our modern monetary reality. If we’re going to resolve the issues we have with our current system, we must understand it for what it is and not what we want it to be.

5)    Money is not the same as “true wealth.” Money is the medium of exchange. It is the thing that gives us access to the show that is the economy. Mistaking money for wealth is like mistaking the theater ticket for the performance. The reality is that the ticket is the means to the end. For most of us true wealth includes things like shelter, food, water, security, companionship, family, and things that money may or may not give you access to.

6)    Good capitalists serve themselves best by serving others. The capitalist system is most efficient and productive when its users are providing goods and services that enhance the lives of other participants within this system. The private, profit-motivated, and competitive nature of the capitalist system is operating best when its users understand that good capitalists serve themselves best by serving others.


You can read more by Cullen Roche at Pragmatic Capitalism or purchase the book at Amazon.

*I received a review copy of the book from the publisher Palgrave Macmillan.

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.

Please see disclosures here.

Please see the Terms & Conditions page for a full disclaimer.