Making travel free

In my experience there are two broads ways people tend to view the benefits of travel hacking. For fun, let's call the two groups "budgeters" and "savers." Their behavior is not systematically different in any way — they might both apply for the same number of cards each year, manufacture the same amount of spend with them, and redeem their points for the same awards. But they talk about their techniques in very different ways.

Budgeters stretch their budget

You'll catch a budgeter saying something like, "I have 2 weeks of vacation per year, and a $4,000 travel budget. Before I started travel hacking, I could only take $4,000 vacations. Now, my $4,000 budget gets me vacations that would cost $20,000 or $30,000!" These are the kinds of stories you read about on the websites of Bankrate employees Brian Kelly and Daraius Dubash.

In practice, might mean spending $4,000 on fees (or losses if the budgeter is also a reseller), then redeeming the miles and points they earn for international business class or first class flights and five-star hotels, while before they spent the same amount on domestic economy flights and discount hotels.

In this way, the budgeter's travel budget takes them farther and in greater comfort than it did before they discovered the wonders of travel hacking.

Savers spend less for the same amount of travel

A saver says "I can't believe I used to pay full price for my travel. I used to pay $9,421 for my family's annual week-long Christmas trip to the Andaz Maui at Wailea Resort, and now I pay a flat $1,750 in Ultimate Rewards points!"

In other words, the saver takes destinations, comfort, and style as a given, and seeks to pay as little as possible for it by signing up for credit cards, manufacturing spend, and all the other crazy things we do to earn our travel hacker merit badge.

The happy medium is probably somewhere in between

Realistically, most people aren't entirely budgeter or entirely saver: if you generate enough miles and points per year to cover all your travel expenses, you're probably paying slightly less than you would in cash and traveling slightly more, or in greater comfort, than you would if you paid entirely in cash.

You can make travel free (but probably shouldn't)

There's another extreme which I've run into somewhat less often, but has its own special kind of appeal: make travel free by reimbursing yourself for all the fees you incur manufacturing spend.

To make this work, you need to be earning points that can be converted to cash or redeemed for travel in another, potentially higher-value way. Here are a few examples:

  • Manufacturing spend with a Chase Ink Plus at office supply stores, you may pay $27.55 for 4,634 Ultimate Rewards points. If you redeem 2,755 of those Ultimate Rewards points for cash, you've generated 1,879 Ultimate Rewards points worth of travel at no net cost.
  • Manufacturing spend with a US Bank Flexperks Travel Rewards card at a grocery store, you might pay $12.60 for 2,024 Flexpoints. Redeem 1,260 of those Flexpoints for cash, and you're left with 764 Flexpoints at no net cost.
  • Manufacturing spend with a Barclaycard Arrival+ card at an unbonused merchant, you might pay $4.30 for $10.61 in Arrival+ miles. By being sure to redeem 41% of your Arrival+ miles on refundable reservations, your remaining Arrival+ miles are redeemable for truly free travel.

The reason you probably shouldn't do this is that it's not necessary. When you have enough miles and points to pay for your travel, you don't have to manufacture any more — you can simply earn cash back, or redeem your excess points for cash back. By manufacturing your most valuable points first (the points you're actually going to redeem), you need never find yourself in a situation where you're redeeming miles and points for cash, rather than deploying them to save money on more expensive reservations than their cash value — with the exception of points, like Barclaycard Arrival+ miles, which are worth the same when redeemed against refundable reservations as they are against reservations you intend to keep.

Conclusion: how much is your time worth?

There is a very small group of people for whom time is money.

  • For Uber drivers, time is money: every minute spent doing anything but driving for Uber is time that could be spent driving for Uber.
  • For many lawyers, time is money: as long as there's work that can be billed to clients, every 6 minutes doing anything but working for clients is time that could be billed to clients.
  • For waiters at high-end, understaffed restaurants, time is money: as long as there's someone who can't make it into work, there's a shift that could be worked.

But most people have free time.

It may not feel like free time, because there may be a baseball game on you really want to see, and if you really want to see it, you can't exactly be out manufacturing spend during the ballgame.

I love HBO's hit series Game of Thrones. If I had cable TV, and HBO, you better believe I'd watch Game of Thrones every Sunday night — that's time I wouldn't be free to manufacture spend.

But there's a very common tendency for people to describe their time as being "too valuable" to manufacture spend, when what they really mean is they'd prefer not to. Preferring not to manufacture spend is a very understandable impulse — it can be tedious, frustrating, and stressful.

But unless you would otherwise be driving for Uber, billing clients, or picking up extra shifts at Chez Panisse, you should find another word than "valuable" to describe your desire to use your time doing something else. Because in all likelihood, your time is free.

Excited about Ultimate Rewards transfers to Flying Blue? Let's talk about it

In case you've been staying in a buddhist travel hacker monastery for the last week, the big news to come out of the loyalty world this week was the unannounced addition of Flying Blue, the loyalty program of Air France and KLM, as a transfer partner for "flexible" Chase Ultimate Rewards points.

This post is going to come across as a bit cynical, so in the hopes of heading off sniping in the comments, let me first explain why this is phenomenal news.

Korean Airlines is not a great Skyteam program

While it's true that Ultimate Rewards already had transfer partners in oneworld (British Airways), Star Alliance (United), and Skyteam (Korean Airlines), Korean Airlines SKYPASS is a notoriously complex program to work with, with the gaping drawback that you can only book award tickets for relatives — and if you take them at their word, that even excludes stepchildren!

By contrast, Flying Blue has an online award search engine that allows you to book award tickets for anyone you like (as long as you don't get caught in one of their fraud traps).

Ultimate Rewards is a vibrant and growing program

Any expansion of a loyalty program to include new ways to earn or redeem points is an objective positive. If I never book a Flying Blue award ticket, I'll still be glad to know that it's someone's job at Chase to hunt down loyalty programs, negotiate transfer agreements, and implement the technology required to expand our Ultimate Rewards redemption options. To me that's a sign that the program still has a degree of vibrancy and is not yet ready to stagnate, like American Express Membership Rewards.

With that out of the way, let's talk about Flying Blue redemptions.

Delta makes life as hard as possible for their partners

To understand how difficult it is to redeem Flying Blue miles on Delta, it's important to understand how Delta makes award space available to its own members and to partners.

Delta dynamically prices awards for its own members. It's no longer rare to find cases where the constituent flights on a connecting award ticket are more or less expensive than the complete itinerary. Here's an itinerary connecting in Minneapolis that's more expensive than either of the constituent flights on their own:

The constituent flights price at 12,500 SkyMiles:

And 11,500 SkyMiles:

Unrelated to SkyMiles pricing for their own members, Delta makes some seats on some flights available to partners for awards.

Let's see those same three searches using Alaska Airlines Mileage Plan. Here's the first leg (it's 25,000 instead of 12,500 because I'm searching for one-way flights):

Here's the second leg:

Here's the catch: Delta doesn't make that complete itinerary available to partners, which we can only surmise is because it prices higher at the 15,500-mile level. Here are the only options Alaska shows when doing a one-way search between BWI and MSO on September 19:

Fortunately, Alaska allows you to construct your own Delta routing as a "Multi-city" flight search. By feeding Alaska the flights I know have award space (because I checked earlier), I can easily produce my desired award:

It's important to understand exactly what's happening here: Delta is making its cheapest award space available to its own members and to partners on individual segments, but charging its own members more on the complete itinerary and not making that complete itinerary available to partners. The reason the Alaska workaround works is that Alaska is willing to search for each leg individually in a multi-city search, and then price the entire itinerary according to its own routing rules, which make it a valid one-way itinerary.

Flying Blue does not allow multi-city awards to be booked online

This is what Flying Blue's multi-city search engine looks like:

Flying Blue doesn't let you construct Delta itineraries online because your final destination must be your originating airport.

I assume you could construct this itinerary over the phone

Good luck with that.

Conclusion: how I'll be using Flying Blue

So Flying Blue isn't the key to unlimited cheap flights on Delta. That doesn't mean it's useless! On the contrary, it's going to be one of my first stops along with Alaska, British Airways, and United, each time I start planning a new trip. The search engine makes it easy to see at a glance whether there are award seats available, and if there are, they will usually be among the cheapest, not because of their great award chart or their low fuel surcharges (on the contrary, they have a fairly standard award chart and pass along fuel surcharges to customers), but because the miles themselves are so cheap when transferred from a Chase Ultimate Rewards account.

To make the same point another way, a redemption of 12,500 SkyMiles manufactured with a Delta Platinum American Express card costs $188 in opportunity cost ($8,929 manufactured on a 2.105% cash back card), while a 12,500-mile Flying Blue redemption costs just $125 in Ultimate Rewards points: a 33.5% discount.

I don't expect those redemption to be very frequent — but I do expect to make them each and every time the opportunity presents itself!

Techniques I don't write about (but you should know about!)

The range of topics I write about here is pretty freewheeling. I have an open mind about any and all approaches to travel hacking and manufactured spend, and am willing to at least dabble in anything that sounds lucrative enough.

On the other hand, my own travel needs are met almost exclusively with US Bank Flexpoints, Chase Ultimate Rewards points, Delta SkyMiles, and Hilton HHonors points. All four are cheap and plentiful, and between the four currencies cover easily 90% of my annual travel budget at discounts of 75-85% off retail.

Consequently, I'm perfectly aware that the blog has developed a few blindspots: programs that are objectively lucrative, but which I don't interact with on a daily or monthly basis. With that in mind, here are a few programs that I've "undercovered" compared to their objective utility.

Southwest Airlines Companion Pass

Obviously there's no shortage of Southwest Companion Pass coverage thanks to their periodic 50,000 Rapid Rewards-point signup bonuses. But even if, like me, you don't chase signup bonuses, you should still consider simply manufacturing $110,000 per year on Chase's co-branded credit cards.

Why? Because if you fly Southwest regularly (and would otherwise pay cash), you're earning over 3 cents per dollar of unbonused manufactured spend. Using the linked example of 1.59 cent per point, you'll earn 3.18% cash back on your Southwest credit card spend, compared to the 2.105% cash back of a Barclaycard Arrival+ or 2.625% cash back of a Bank of America Travel Rewards card (enhanced with Preferred Rewards at the Platinum Honors level).

Thanks to Southwest's annual devaluations, this isn't a strategy you should use to earn Rapid Rewards points speculatively (I don't think you should earn miles or points speculatively at all!), but if you redeem Southwest points aggressively, this is a great deployment of your unbonused manufactured spend.

Interestingly, once you've earned 110,000 Companion Pass qualifying points, you're actually better off manufacturing your unbonused spend on a Chase Freedom Unlimited and then simply transferring the 1.5 Ultimate Rewards points per dollar spent with that card to your Southwest account.

So why don't I write about the Companion Pass more? Because Southwest doesn't serve my local airport!

Reloadit cards

If you have access to accommodating or oblivious cashiers, and registers that haven't been hard-coded against accepting credit cards, then Reloadit cards can provide access to cheap, or even free, bonused manufactured spend.

I actually do have access to accommodating cashiers, and cash registers that aren't hard-coded against credit cards. But I still don't buy Reloadit cards.

The reason is that you're now required to liquidate Reloadit cards using the official Reloadit website — you can no longer load prepaid cards through those cards' own portals. This matters because the Reloadit website is terrible.

First, each Reloadit account has a limited number of "devices" that can be registered to it. To track these "devices," Reloadit installs a cookie in your web browser and asks you to name your device.

Now, I do all my browsing in incognito mode, so all my cookies are deleted each time I close my browser. Which leads Reloadit to ask me to register my device again. Etc., etc., ad nauseam.

To incorporate Reloadits into my manufactured spend practice, I would have to either start using a special browser just for Reloadits, or muck about with different user profiles in Google Chrome. And the payoff? Saving $50 or $60 per month on activation and liquidation fees.

If that's worth it to you, you should definitely shop around for Reloadits and friendly cashiers. But it's not worth it to me, so you won't find many breaking news updates about Reloadit on this blog.

Citi ThankYou Rewards

With the slow but steady demise of manufactured spend at gas stations, the best current combination of Citi ThankYou cards seems to be the Citi AT&T Access More card combined with a Citi Prestige card. The former earns 3 points per dollar spent on online retail purchases, and the latter allows you to redeem those points for 1.6 cents each towards paid American Airlines tickets, or transfer them to one of Citi's travel partners.

This combination is tailor-made for resellers who source their products online and know how to get good value from their ThankYou points. It is expensive, though, with a $95 annual fee on the AT&T Access More card and a $450 annual fee on the Citi Prestige.

I personally don't pursue this strategy because US Bank Flexperks Travel Rewards give me a roughly similar value (up to 4 cents towards airfare on any airline per dollar of spend, compared to 4.8 cents on American Airlines or 3.75 cents on other carriers), at a far lower cost (a single $49 annual fee). Moreover, I do my best to avoid flying American Airlines, and I don't engage in more than a cursory amount of reselling.

It's a potentially powerful combination, but it's not for me, so I don't write about it much here on the blog!


In the real world, people constantly operate under misinformed, poorly-informed, or uninformed prejudices. That's to be expected.

But we don't have to do so blindly! By being aware of my prejudices, like my preference for lower annual fees over higher ones, I can consciously work to evaluate conflicting ideas on their merits, instead of on my own preconceived notions.

The payoff of that work may take a long time to appear, but it's ultimately a concrete improvement in the quality of my decision-making.

Anniversary post: what I've learned in two years of blogging full time

How time flies. It's been an entire year since I wrote my first anniversary post, about your economy, which means I must be due for another post commemorating my second year of working for myself — and working for you!

If my first anniversary post was a retrospective on how I came to be where I am, then I want to use this post to reflect on everything I've learned in the two years since I left graduate school and started blogging full time.

Lesson: the world is hungry for quality content, because there is almost no visible supply

I started this website because, after a year or so of reading FlyerTalk and visiting the most popular travel hacking blogs, I realized that it was almost impossible to find answers to the simple question: "how does it really work?"

The people who knew were too busy promoting their credit card affiliate links, and the people who didn't know weren't curious enough to ask the right questions. But I was curious, so I started investigating and writing about how loyalty programs work in practice.

For example, how do refunds from US Bank Flexperks redemptions work? There's only one place on the web to find out.

And of course, once you spend any time at all sincerely investigating how loyalty and rewards programs work in practice, you invariably stumble over unadvertised opportunities to save money or get outsized value from them.

If you have something good and true to say, and it's not being said elsewhere, you're likely to be able to find an audience of people eager to listen.

Lesson: changing minds is impossible

My goal in my travel hacking practice is simple: to travel whenever and wherever I want, and no more.

To that end, I advocate that readers honestly assess their travel goals and plan out the cheapest possible way to achieve them, using all the techniques I write about here and in the newsletters I periodically send out to blog subscribers.

In two years of full-time blogging and, before that, 16 months of blogging as a side gig while I was in graduate school, I do not believe I have convinced a single person of the merits of my approach, and no longer believe that changing minds is a realistic or even desirable goal.

People who come to my blog intent on experiencing every A380 first class seat will leave with the same goal in mind. Likewise readers who come interested in earning cash back to supplement their income will leave with, hopefully, a useful trick or two for doing so.

Being able to engage readers is an honor, even when you never change a single mind.

Lesson: you can encourage people to think harder and better

While you may never change anyone's opinion, that doesn't mean you can't encourage them to examine their settled opinions more critically.

When people angrily disagree with me, I'm happy to see them angrily disagree with me by subjecting their assumptions to the same analytical scrutiny I apply to my own views.

When I compare that to affiliate bloggers who make a practice of assigning garbage "values" to different point currencies based on which way the credit card payout wind is blowing, I'm satisfied that even readers who don't agree with a single word I write are at least doing the hard work of developing a rewards strategy that works for their actual lifestyle — not some affiliate blogger's.

Challenge people to be their best selves, not your best self.

Lesson: my readers are the best

It's no secret that the internet, like middle school, is full of trolls anxious to tear down anyone who shows a glimmer of creativity or outside-the-box thinking.

As long as I've been writing this blog I appear to have been blissfully exempt from that rule. My readers furiously disagree with me all the time, and very occasionally call each other names, but in over 3 years of blogging I've never felt the urge, let alone the need, to delete or censor any comments here.

I don't know why I'm not subject to constant internet harassment, but I like it.

Lesson: every deal dies eventually

If a travel hacker went to sleep in January, 2012, and woke up today, there's scarcely an element of the landscape they'd recognize. Vanilla Reload Network reload cards off-limits at CVS. OneVanilla prepaid debit cards useless at Walmart. Bluebird and Serve shut down for many or most (they would have slept through Target Prepaid REDcards, of course). Formerly cooperative 7-Eleven store locations refusing credit cards for prepaid debit cards. ISIS!

The lesson some people take from this experience is to not depend excessively on any one deal, but I don't think that's quite right. Leaning heavily on each of those deals as long as it lasted was a fantastically lucrative choice, which I wouldn't dream of second-guessing.

It's a mistake is to believe that any given deal will last forever — it won't.

Lesson: there will always be more deals

Looking at a list of the deals that have died in the last 4 years, you might despair that manufacturing spend must, today, be completely impossible!

I don't think it's interesting or necessary to compare the atmosphere today with that of any previous era.

But I will say that every serious travel hacker I know is manufacturing more, not less, spend today than they were even in the era of unlimited CVS Vanilla Reload Networks cards. They may be doing so at greater (or lesser) expense and greater (or lesser) convenience, but there is no obstacle for a serious US-based travel hacker to manufacture as much spend as they need to meet their travel goals.

Travel hacking is a game that rewards long-term, reciprocal relationships — one more reason you're unlikely to get good advice from affiliate bloggers.


I've come a long way since I started blogging, and even further since I started blogging full time.

I have a lot more respect for deals that give access to a steady stream of moderately-priced points, rather than big, cheap windfalls.

I've become more realistic about the few rewards currencies that give me consistent access to the flights and hotel properties I need, rather than accumulating large speculative balances across programs.

And, as this post suggests, I've become a lot humbler about my role in this travel hacking ecosystem: on my best days, I can help people arrive at the right conclusion for their situation, but on no day will I convince anyone that my approach is the right one for them.

That's a little bit sad (since I'm right!) but it's also a little bit of a relief: we're all stumbling our way forward together, and at the end of the day there are no bonus points for being right first or penalties for being right last.

Membership Rewards points aren't worthless, but they are worth less

If you follow the miles and points bloggers who churn out a constant flood of material on signup bonuses, you already know that earlier this week there was an untargeted offer available for the American Express Platinum card which earned 100,000 Membership Rewards points after spending $3,000 in 3 months of card membership.

After the first day or so of unceasing posts about the offer I responded uncharitably on Twitter.

Since the blogosphere is going to keep trying to shove these offers down your throat, let's do a quick recap of why chasing offers like this is unlikely to be a great use of your travel hacking time and money.

Statement credits are worth (much) less than cash

When I wrote a post of this name, reader MJC helpfully suggested in the comments:

"The Amex Platinum 'airline credit' is also as good as cash, given that you can book a Delta ticket without attaching a Skymiles number to it, then pay for Economy Plus after the reservation is made, then cancel the reservation within 24 hours, and Amex Platinum will always refund your Economy Plus fees even though Delta refunds them as well"

Perfectly true — someone could do this over and over again until they'd redeemed their entire $200 airline fee statement credit each calendar year.

But, and I don't want to sound patronizing, are you going to do this? I ask because a lot of people get into travel hacking thinking they're one type of person, only to discover they are, in fact, the type of person who pays $95 annual fees on the Chase Sapphire Preferred year after year out of habit, fear, and/or greed.

Most importantly, the people trying to convince you to sign up for American Express Platinum cards aren't asking you whether you're the type of person who's actually willing to jump through all those hoops. And if they won't, I'm sure as hell going to.

Global Entry statement credits are worth $100 (to almost no one)

If you don't have Global Entry, and were just about to apply and pay for it, then you are fully justified in treating the American Express Platinum $100 Global Entry statement credit at its face value of $100.

But if you already have Global Entry and are planning to use your statement credit on a friend, or family member, or even sell it online, then it would not make sense to value it at $100. After all, you weren't willing to pay someone else's Global Entry fee if you had to pay out of pocket. That's what we call a "revealed" preference for cash over others' participation in Global Entry.

Membership Rewards points are valuable if you redeem them. Will you?

Finally we've come to the crux of the problem: are 100,000 Membership Rewards points worth a lot, or a little?

And my answer is an emphatic: maybe.

I was speaking yesterday to a subscriber who had already spent $50,000 on his American Express Delta Platinum card, and didn't have any good remaining options for earning large numbers of Delta SkyMiles easily (at least until next calendar year). He applied for the 100,000 Membership Rewards point offer because he knows how valuable SkyMiles are for flying from our local airport, and I congratulated him. That's as good as money in the bank.

Likewise, if you are planning a high-value Hilton vacation, being able to transfer 100,000 Membership Rewards points to 150,000 Hilton HHonors points and pay just $450 in fees (less whatever statement credits you're able to wrangle) is an easy one-off source of points.

But if you're signing up because, as one person responded on Twitter, "Singapore?" then you need to take a nice long walk around the block and decide when, exactly, you are planning to go to Singapore. Next month? The next six months? The next 10 years?

This matters because the longer your time horizon is, the more likely you are to be able to accumulate the needed points in better, cheaper ways than with a one-off Platinum signup bonus. A single Chase Ink Plus lets you earn up to 250,000 Singapore miles per year by manufacturing spend at office supply stores. But even more importantly, the Chase Ink Plus and Ultimate Rewards points in general are more valuable than Membership Rewards points, so you're unlikely to need to do an emergency transfer of points to Singapore (or any other program) in order to avoid paying a second (or third, or fourth) annual fee on the Platinum card.

I'm not angry, I'm just disappointed

Longtime readers know that I do not find arguments centered on "personal responsibility" particularly convincing. But there is one kind of responsibility that you are literally the only person who can take: knowing what kind of person you are.

Bloggers I consider irresponsible promote travel hacking as a way to experience the lifestyles of the rich and famous, as if all we can ask for out of life is a glass of champagne at 35,000 feet. If that is, indeed, all you can ask for out of life, then there's a flight to Singapore with your name written all over it.

But if you never felt the slightest longing to see the storied Singapore food courts before this 100,000 Membership Rewards point offer came around, it would be very strange indeed for such a promotion to instill such a longing in you at this late date.

Is that you, or is that the steady drumbeat of bloggers trying to sell you more and more expensive credit cards?

The chief business of the American people is business

Cool Calvin Coolidge, in a 1925 address to the American Society of Newspaper Editors, told the assembly:

"After all, the chief business of the American people is business. They are profoundly concerned with producing, buying, selling, investing and prospering in the world. I am strongly of opinion that the great majority of people will always find these are moving impulses of our life."

And yet whenever I discuss the superiority of the Chase Ink Plus small business credit card over the worthless Chase Sapphire Preferred, readers invariably remark how difficult it is to get the Chase Ink Plus "without a genuine business."

Normally I keep my business ideas close to my vest, but out of an overabundance of altruism, I've decided to share three easy ways to turn you from an employee into a proud self-employed American.

The gig economy makes business easy and fun

If you're a driver for the ride-sharing services Uber or Lyft, you've got a lot of expenses that you should be keeping strictly separate from your personal expenses: gas, vehicle maintenance, and car insurance for starters. Likewise if you do work through an app like TaskRabbit, you'll need to carefully separate any expenses you incur while on the job in order to correctly report your self-employment income come tax time.

Note that this is true no matter how much gig work you actually perform.

You don't have to be good at reselling to make it a business

Reselling is of course a term of art in the travel hacking community for folks earning miles, points and cash by buying up goods they think they'll be able to sell to others at a small, medium, or large markup, while pocketing the rewards currency of their choice.

But you don't need to a reselling savant to turn it into a business. Have you heard of random crap? Well before you start reselling random crap, you'll want to open a small business credit card to keep your random crap reselling business expenses separate from your personal expenses.

We are all content creators now

If you have something to say, you're definitely going to need your own website. That's going to come with all kind of expenses: hosting fees, maintenance fees and image licensing fees, just to name a few. And those are all fees you're definitely going to want to charge to a small business credit card.

Conclusion: unsuccessful businesspeople are businesspeople too

The Chase Ink Plus small business credit card exists so people will carry it. Those people are businesspeople. But if Chase limited card membership to people with longstanding and successful businesses, they wouldn't have very many cardholders at all, would they?

Your job, therefore, is to be the kind of small businessperson that gives Chase a reason to say "yes" to you and your small business.

I listened to every episode of "Masters in Business." Here's what I learned.

In March, I asked on Twitter for suggestions for podcasts about business and finance since I found the Planet Money podcast from NPR and the Slate Money podcast to be infuriatingly juvenile.

One of my followers suggested the Bloomberg Radio podcast "Masters in Business," hosted by Barry Ritholtz of Ritholtz Wealth Management.

Ritholtz interviews some of the most famous names in business and finance and explores their background, philosophy, and investment strategy in wide-ranging, free-form interviews. It's fantastic.

In the last two months, I've listened to every episode of the podcast. Here's what I learned about success in business and investing.

Read books

Personally, I like to go down to the public library and check out dead-tree books. You might prefer to read books electronically on your phone or on a dedicated Kindle or Nook. But every one of Ritholtz's guests has a list of books they've either read recently or are in the process of reading.

Have a list, and find the time to read. Work your way through your list, and always be on the lookout for new titles to add to it.

Own Stocks

Share prices are an inflation-protected asset, in that the revenue and expenses of the companies held in a sufficiently diversified stock portfolio will rise at the same rate as inflation in the overall economy, unlike a portfolio of fixed-income investments.

So own stocks: it's good for you.

Successful businesspeople are obsessed with bad evolutionary analogies

It is embarrassing listening to Ritholtz and his guests make constant references to "the savannah" where human psychology supposedly evolved oh-so-many millions of years ago, with "lions" waiting in the shadows to snatch unwary humans from around their "campfires."

I don't blame Ritholtz and his guests for this, and I don't even really blame the evolutionary psychologists for promoting this nonsense: they're just talking their book.

I blame the cultural anthropologists who have abdicated the field of popular non-fiction to these charlatans who preach that the behavior of early hominids on their mythical "savannah" explains human behavior in the advanced economies of the 21st century.

But let me be clear: the quick resort of successful capitalists to evolutionary analogies is no harmless affectation. If most people make investing mistakes because of their primitive evolutionary heritage, the ability of a select few to achieve success in investing must make them more evolved, more sophisticated, more worthy exemplars of the race.

And that, handily, excuses their worst excesses.

Jack Bogle is the only person on Earth who believes in passive indexed investing

Jack Bogle is the legendary founder and former chairman of the Vanguard Group.

Jack Bogle will sell you and manage for you a market-capitalization-weighted S&P 500 index fund for 5 cents per $100 invested.

If you prefer a wider stock index, he'll sell you and manage for you a market-capitalization-weighted total stock market index fund for 5 cents per $100 invested.

You should take him up on this offer. But you won't. No one does.

Passive indexed investing has one big advantage and one big disadvantage.

The one big advantage is that it's free. Since Vanguard passive index funds are market-capitalization-weighted, they are never rebalanced. If a stock goes up in price, it becomes a bigger portion of the index. If it goes down in price, it becomes a smaller portion of the index. Shares are not bought and sold to rebalance the portfolio, since the price movements themselves perform that function. No trading means no trading costs.

The one big disadvantage is that when you contribute money to a market-capitalization-weighted passive index fund you're buying expensive stocks when they're expensive, and when you redeem shares in a market-capitalization-weighted passive index fund you're selling cheap stocks when they're cheap.

Jack Bogle will tell you the one big advantage outweighs the one big disadvantage, but you won't believe him.

Probably because of the savannah.

Bonus fact: Barry Ritholtz blocked me on Twitter

At the end of every episode Barry Ritholtz tells listeners to follow him on Twitter. I thought this was a pretty good idea, so I checked out his account @Ritholtz, and somehow he had already discovered my subversive tendencies and blocked me:

What do I think about the 100,000 Hilton HHonors Surpass offer?

Yesterday blog subscriber JH wrote to ask me, "what's your opinion on the current 100k Hilton card offer?" JH is referring to the current offer of 100,000 Hilton HHonors points after spending $3,000 within three months on the Hilton HHonors Surpass American Express. The offer is available until May 4, 2016. Incidentally, I don't include personal referral links here on the blog, but you can find the relevant offer on my "Support the Site!" page.

Since I wrote JH a detailed answer, I thought it may be useful to share and expand on it here.

Higher signup bonuses are better than lower signup bonuses

In general, if you've been going through life vaguely considering signing up for a Hilton HHonors Surpass American Express, but have been waiting to sign up until the bonus goes up to an all-time high, well, you're in luck: the bonus is at an all-time high.

If that's you, this is the time to sign up.

What do you call 100,000 Hilton HHonors points?

A good start.

The fact is, 100,000 HHonors points is not an interesting number of HHonors points. The key characteristic of the Hilton HHonors program is that award nights at desirable properties are extremely expensive (up to 95,000 points per night), but Hilton HHonors points are easy to earn at bonused grocery store and gas station merchants using the Hilton HHonors Surpass American Express.

Two approaches to an unusually high signup bonus

There are two ways to approach a 100,000 Hilton HHonors point signup bonus.

If you are already planning an expensive vacation to a Hilton HHonors property, signing up for the Hilton HHonors Surpass American Express with a 100,000 points signup bonus will get you a minimum of one night free at that property (and breakfast, if you don't already have Hilton HHonors Gold elite status). That could mean saving real money compared to your cash rate!

Alternatively, you can use this unusually high signup bonus as an impulse towards earning large numbers of Hilton HHonors points on an ongoing basis in bonused spending categories.

But most readers shouldn't care about signup bonus fluctuations

The third approach, and the one I personally take, is to not pay any attention to the barrage of blog posts and twitter feeds dedicated to identifying the highest and shortest-lived signup bonuses.

The difference between a 50,000 and 100,000 Hilton HHonors Surpass American Express signup bonus is $8,333 in grocery store or gas station spend. If it wasn't worth spending that much on the card before the 100,000 signup bonus came around, what makes you think it is now?

These increased signup bonuses occupy an outsized portion of the attention of the travel hacking blogosphere, and the best thing you can do for yourself is to simply ignore them.

"Where Are the Customers' Yachts?" is a pretty good book

This is a review of "Where Are the Customers' Yachts?" by Fred Schwed Jr. You can find all my previous book reviews here. If you're interested in buying a copy, I hope you'll consider using my Amazon Associates referral link.

I have a technique I like to call "reverse showrooming." In retail parlance, "showrooming" is when a customer comes into a physical store to inspect a product, then ultimately orders it for a lower price on I "reverse showroom" by keeping track of books I'm interested in reading by adding them to my Amazon wish list, then checking them out for free from the public library.

"Where Are the Customers' Yachts?" is the first book I've ever checked out from the public library that was so good I immediately ordered 2 copies from Amazon in order to lend them out to friends and family.

It isn't the only book you'll ever need to read about investing in the stock market, but it should be the first book you read about investing in the stock market.

History doesn't repeat itself, but it rhymes

Fred Schwed Jr. originally published "Where Are the Customers' Yachts?" in 1940. Despite the intervening years, with all its wars and revolutions, there's scarcely a single word in the book that doesn't apply just as accurately today as it did when it was written (with one exception, below). Moreover, a vast corpus of economic research has developed to provide statistical proof for what Schwed learned from practical experience.

Schwed is much funnier than I am, but I will attempt to do justice to his basic attitude towards investing:

  • Making predictions is hard, especially about the future;
  • If someone can consistently and accurately predict future price movements, they are able to command vast sums for doing so;
  • But even someone who consistently and accurately predicts price movements is almost certainly just lucky.

Schwed predicted almost every development in the world of investing

Decades of economic research have now established that active mutual funds perform no better than passive index funds, after management fees. But Fred Schwed doesn't need your decades of economic research. In 1940, he wrote:

"The subject of choosing profitable financial investments does not lend itself to competence. There is almost no visible supply."

It is breathtaking to read Schwed recommend — in 1940 — a primitive system of passive index investing:

"The average small investor needs a certain amount of diversification, but he can get it for himself by buying five-share lots instead of hundred-share lots. The added expense of doing his business this way is negligible. If his funds are too limited even for that procedure, the only diversification he needs is to put some of his money into life-insurance payments, some into the savings bank, and the remainder into his right-hand trouser pocket."

Michael Lewis catalogued the difficulties large investment banks have buying and selling large blocks of shares in his 2014 book "Flash Boys." Fred Schwed described them in 1940:

"An investment trust [i.e. mutual fund] should be good and large, because this tends to make the expenses of running it a negligible percentage of the whole. But when the trust is big in size, the investing problem becomes increasingly difficult. A fifty-thousand-share position is a hard thing to buy and usually a harder one to sell. If the quotation on such a position rises twenty points in the newspaper, the trust scores up a million-dollar profit on their book value, but of course actually realizing on profit on such a block is apt to be quite a different thing."

Schwed is curiously obsessed with margin investing

The only part of "Where Are the Customers' Yachts?" that doesn't seem as relevant today as it was when it was written is his discussion of "margin." Margin, for those born after 1930, refers to the regrettable willingness of brokers to allow their customers to buy stocks not with money, but with a line of credit backed by a small amount of collateral. As Schwed explains:

"We assume that it is a wise and profitable venture to buy 100 shares of United Fido at ten, paying $1,000 for it. Ergo, wouldn't it be even better to buy 200 shares paying the same $1,000? And even better to make it three or four hundred if we can find a sufficiently kindly broker to do us this favor?

"The answer is no. But I only know one way of proving it to you conclusively. Go try it."

While investing on margin is still legal and, I assume, encouraged by the more unscrupulous stock brokers, it doesn't occupy the American imagination in the way it seems to have when Schwed was writing. Although in fairness, Tim Geithner did something indistinguishable when he borrowed money from JPMorgan in order to back his stake at his new Warburg Pincus gig.

Let's check back in 10 years to see how that plays out.

In 76 years, investor psychology has changed not one jot nor tittle

Ultimately, "Where Are the Customers' Yachts?" is a book about psychology: specifically, the psychology of people who decide to put a little bit of money to work for them in the stock market. If you don't recognize yourself in it, then you've probably never put a little bit of money to work for you in the stock market.

Fortunately, you have one great tool Fred Schwed Jr. and his clients and customers didn't have and indeed didn't imagine: low-fee, passive, indexed Vanguard mutual funds.

Unfortunately, you can only take advantage of those funds if you can convince yourself to actually invest in them. And as much as it pains me to say it, neither Schwed nor I are going to be any help in that department.

What happens when a Flexperks reservation is refunded to the original payment method?


For a recent trip to Washington, DC, I used US Bank Flexpoints to book my partner's ticket on the only daily nonstop flight home from Washington National Airport. Since economy tickets cost $264 while first class tickets cost $343.10, either option would have the same cost to me: 20,000 Flexpoints (an example of what I call "price compression"). I used Delta denied boarding vouchers to pay for my own $264 ticket in economy.

When I checked us in the night before our flight, I found that my partner had been seated in economy, although her ticket correctly showed her first class fare. My first move was to reach out to Delta's Twitter handle @DeltaAssist to see if they could resolve the problem:

Since my partner needed to get back in time for work the next morning, I decided not to push harder over Twitter and instead resolve the issue once we got back home.

Filing a Department of Transportation complaint

Since Delta wouldn't offer a refund over Twitter, I filed a Department of Transportation complaint, explaining that Delta had neither offered a refund nor reaccommodated my partner in the class of travel I paid for. I asked for a refund of the $79 price difference between first class and economy and any other compensation she was entitled to.

Response from the Department of Transportation

My first response from the Department of Transportation was a lengthy e-mail, reading in relevant part:

"Based on the information you have provided, your complaint appears to fall under the Department's rules. I will forward your complaint to the airline and ask the company to respond directly to you with a copy to me. Airlines are required to acknowledge receipt of a consumer complaint within 30 days and provide a substantive response to the complainant within 60 days. I will review the airline's response. If you need to contact me, please include your name and case number (see above). I will make every effort to reply to your message within one business day."

Response from Delta

Three days later, I received an e-mail from Delta's refund department, saying:

"I’m happy to help with your request regarding a refund.

We’re sorry you weren’t seated in the forward cabin as planned. An adjustment has been made for the fare difference between the class of service purchased and the class of service flown.

A refund for you
We processed a refund on April 8, 2016 as follows:


Now, obviously, I don't have a Visa card ending in 5853: that's the account number used by the travel agency contracted by US Bank to book Flexperks reward tickets.

US Bank is clueless

My first thought was to call US Bank and see if their customer service agents knew what happens to Flexperks ticket refunds. They don't.

But they were able to transfer me to, and give me the direct number for, "The Rewards Center," the travel agency they use to book revenue flights. That number is 1-855-516-9182.

The Rewards Center is slightly less clueless

To communicate with the Rewards Center, you don't need your credit card number, your Flexpoints number, or even your airline record locator. You need your "Trip ID," the 12-digit number that is e-mailed to you when you make a Flexperks Travel Rewards redemption.

The frontline Rewards Center customer service agent had no ability to understand what I was talking about; he kept trying to transfer me back to US Bank. But once I said the word "refund" enough times, he finally was willing to check with his supervisor, and eventually came back to say that no refund had been processed for my reservation.

How Flexperks reservations are refunded

At that point I decided to wait and see how this played out. And it turns out, with no additional action on my part, my $79 refund was processed automatically — back to my Flexperks Travel Rewards Flexpoints account.

Remember that I paid 20,000 Flexpoints for a $343.10 first class reservation, getting roughly 1.72 cents per Flexpoint.

On April 20, 2016, 12 days after Delta e-mailed that they were processing my refund request, I received a "Points Adjustment" of 4,605 Flexpoints into my account.

For those doing the math at home, 4,605 Flexpoints for a $79 refund comes to 1.72 cents per Flexpoint — a refund of the exact number of Flexpoints corresponding to the original redemption rate.

Conclusion: when booking first class, go ahead and snap an economy screenshot

In this case, I actually had an economy ticket booked within minutes of the first class ticket I redeemed US Bank Flexpoints for, which allowed me to upload my economy receipt to the Department of Transportation complaint website.

But that won't usually be the case! My recommendation is, out of an abundance of caution, whenever using Flexpoints (or any other fixed-value rewards currency) to book revenue airline tickets in business or first class, take a screenshot of the economy fare as well. If an equipment change lands you in economy, you'll be glad to have some evidence supporting your refund request for the amount you actually overpaid for the premium cabin you didn't get to sit in.