Finding the Efficient Frontier: A Tool for Optimizing Your Life

Marvin Liao
2 min readJun 6, 2024

--

I’ve been on Tai Lopez kick recently and he introduced a really interesting use case of the Efficient Frontier framework from Harry Markowitz. Famously used on Wall Street by Hedge funds investors, the Efficient Frontier methodology is how you figure out the optimal price and mix for an investment. “The efficient frontier graphically represents portfolios that maximize returns for the risk assumed.”

But Tai actually adopted this for many aspects of life. So for example, he talks about money. Not having any money is bad. We can’t afford to buy anything nice or take care of our families. And if you have no money, good luck on any success on the dating side.

So we start working on a business or get a better paying job. Our life starts getting better. We’re happy. But as we men tend to be extremists, we keep going. Making more and more and more money. Where we start to focus so much on making money that we ignore our family, our health. We start attracting the wrong kind of attention, from frivolous lawsuits or gold diggers. So our life becomes bad again.

Another example he uses is health. For a guy, not having any muscles makes you look weak, and women in general will not find you attractive. So you start to work out and build muscles. You start to get compliments and attention. So go further and use steroids and build crazy muscles. But then you start to look grotesque and women find you unattractive again.

In both cases, we’ve exceeded the optimal point of success.

So the lesson at macro level:

It’s better to be known than famous.

It’s better to be on the rise and then to have arrived.

Be a prince and not an emperor. It’s because you end up with a big target on your back. Everyone wants to take down the emperor.

Basically the point is: know when the optimal point of whatever you are doing. Yes, test the limits, this is where progress and growth is. Sometimes you only know where the top is when you pass it. But don’t overdo it if you can avoid it. Don’t overshoot. Extremism is bad in all things. Find your efficient frontier. As Morgan Housel wrote: realize “the power of enough.”

--

--

Marvin Liao

Ever curious: Tsundoku, Reader, Aspiring Shokunin, World traveller, Investor & Tech/Media exec interested in almost everything! www.marvinliao.com