Monthly Archives: November 2014

Letting Life Be The Teacher

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Happy LexiThis past summer I did my coastal skipper certification. My instructor was a cancer survivor, who had lived a full and, at times, wild life. He shared a story with me about taking his 60 tonnes certification course.

At the course there was a student that was always late. This drove him crazy, as the group was often waiting for the student. While the students were bothered, the instructor wasn’t phased.

Eventually, my pal asked, “how can you tolerate it?”

The instructor replied, “don’t you worry, the industry will sort it out.”

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A similar lesson, different environment.

When my daughter is overtired and starts hollering at her friends, who are guests at our house.

Rather than yelling at my daughter, to get her to stop yelling, I go for a walk

Later, when the energy has gone out of the situation, I ask her what happened.

Knowing that I’m not keen on yelling… she drops into her justification for yelling, before I even mention raising her voice.

I let her talk herself out, fully.

I hold her in my arms and very gently say, “Sweetie, when we invite guests to our house we should be kind to them. It makes me sad when I hear you yelling at our guests.”

Again, I let her talk herself out, fully.

With her still in my arms, “Sweetie, you are right. Remember that you can be right and speak gently. I love you.”

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When teaching, I try to remember that the relationship comes before the teaching.

  • Let the energy leave the situation
  • Let everyone express themselves fully
  • Demonstrate the lesson via my own actions

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For the important stuff, life has a way of teaching via the consequences of our behavior.

Another lesson is to have the courage to let others experience the consequences of their own behavior.

Life is a great teacher.

The Freedom of Not Knowing

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Flatirons‘Do you believe in aliens?’, she asked.

‘Do I really have to have an opinion?’, I replied.

‘Come on, play the game’, she said.

‘Ugh, ok’, and I gave it a shot.

When my first kid arrived, I quickly learned that insanity would be the result if I didn’t learn to let go.

I also saw that constant correction would ruin my relationship with my kids, and make me miserable.

This was a big change from my 20s, when my game was to compete on all fronts, all-the-time.

So my daughter taught me a powerful lesson for becoming more effective.

Be aware that…

  • The more opinions I need to have
  • The more memories I need to hold
  • The more things I think about fixing

…the more energy I spend thinking.

…and this thinking-energy takes away from my doing-energy.

Creating a habit of not-knowing takes practice. From our earliest memories, we’ve been rewarded for knowing, for remembering.

Like a quiet kid at the back of the class – we can be scared to admit that we don’t have the answer.

So here’s what I told her.

I’ll tell you what I know.

I know that we overstate our importance in the world.

I know that I’m prone to fooling myself about the importance of my opinions.

As for the aliens, E. O. Wilson has a section on them in his most recent book and I saved some energy by defaulting to his opinion.

The Second Stage of Aging

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Barbie Movie NightMy post on The Middle-Aged Athlete was inspired by James Hillman’s book on The Force of Character – author discussing his book below.

The book has nuggets throughout that offer a insight into the experience of “getting old.” The central premise is aging will make us more of what we are. “What we are” being Hillman’s definition of character.

So I asked myself, “What are my central traits?” and, more usefully, “What traits work against the life I’d like to live?”

If you’re like me then, at least initially, you’ll come up with a shopping list of admirable traits – things you like about yourself. So far, I haven’t had the courage to verify this list with my wife!

More useful is to reflect on the traits that might lead one’s self into trouble. Quickly, I came up with two…

  • A preference for isolation
  • A tendency for internal over-reaction

Combine those two, magnify them, accept them for another 20, 30 or 40 years and you’ve got one heck of a cranky Old G.

I suffer disproportionately from my negative traits – particularly the internal reactions, hidden from most people. Fortunately, there’s a well-known fix for training one’s mind.

To the traits above, my wife advised that I “should watch my tendency to let myself go.” So true, my love, so true.

As things inevitably unwind, our personal truth comes to the foreground.

Simple Wealth, Inevitable Wealth

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Happy_EverythingI came across this week’s title via a book recommended in The Reformed Broker’s twitter feed. The author is Nick Murray, who’s been a financial adviser for longer than I’ve been on the planet!

Here’s a link to the book on Nick’s website.

The book is an easy read and the first pass through won’t take you long. It’s a good one to share with your family and discuss. My key take aways…

Volatility isn’t loss – while emotionally painful, adverse movements in asset prices only hurt me if I sell. So long as I can hold through the bottom, price movements have limited bearing on my life.

Dividends are indexed income that comes from appreciating tax-deferred assets. This point really hit home. Sample yields from my portfolio:

  • US Equity – VTSAX => 1.82%
  • US Bond – VBTLX => 2.00%
  • Boulder Real Estate => 3.30%

Both the equity and the real estate have an option embedded via the potential for capital appreciation. The value of the asset can increase (or decrease), thereby increasing my total return on investment.

Nick would say the true risk on my portfolio lies at the far end because a long-term holding of bond-type assets has zero capacity for capital appreciation – I receive return of capital, taxable income and exposure to default risk.

Dollar Cost Averaging with a lump sum is only superior when there’s a crash within 2 to 3 years of receipt of funds. Very similar to the advice Vanguard gave a friend of mine and something I hadn’t fully considered. My lump sum article was written at 5.5 years into a bull market and my holdback capital has an investment rate of 2 to 3 years.

If your goal is long-term wealth creation then you should be close to 100% equity – this is similar to Warren Buffett’s advice for his daughter’s portfolio (90% US Equity index and 10% short-term government bonds). Nick makes the point that dividend income is indexed and we can afford to ride the volatility.

Protect your family by holding enough short-term securities so you don’t have to sell into the inevitable crashes and let long-term compounding do its work.

He also has a great example of the change in total dividends and total profitability across long periods when the market “doesn’t move.” Even when share prices are stagnant, the world makes forward progress.

The book contains very little advice on investment selection because Nick’s take home point is Behavior Drives 90% of Investor Return.

This mirrors my advice to athletes – until you can do, what you do doesn’t matter. Nick’s point is we focus too much on the type of Investment and not enough on making ourselves better Investors.

The final chapter was the best – Optimism is the only Realism. The pessimists in our lives will claim that their views are based in reality. While fear, anger and pessimism are supported by our media, Nick makes the point that long-term optimism is the only position supported by the facts.

Lots to discuss with my family and I recommend it to your own.

Retiring To Paradise

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ParadiseA friend sent me an article about “stress-free living on a tropical island paradise.” The article was a teaser for a subscription-based newsletter about retiring well, on modest means.

The article got me thinking…

  • Why do I find foreign utopias so appealing?
  • What are the components of living well, particularly as I age?
  • What limits my ability to shift towards rewarding, part-time work as soon as possible?

The first thing that I remind myself is satisfaction is never achieved “out-there” in the future. My job is to make a note about the structure of my satisfying days, right here, right now.

Noticing the satisfying parts of my current life lets me define paradise on my own terms.

I guarantee that you’ll find your truth is far different than the marketing brochure!

In my own case, I don’t like to tan, I like to ride my bike uphill and I sleep best in a cold, dry room. Worth reminding myself of these points!

The allure of the tropical paradise…

  • Simplicity
  • Stress-free
  • Natural beauty

What price will I pay for my ticket to paradise? I’ve found two habits that move me away from my definition of paradise – their antidote…

Radical simplification of my life and possessions – all the crap I have in my life provides an endless stream of admin, depreciation and cost of ownership.

Aside from a Sienna Van and high-quality bicycles, none of it is useful. I’ve been chipping away for years. I get a lot of resistance from my family, and I respect their views.

Beach cruiser, surf board, and board shorts…

…I get the allure – yet know that it is simplification, not the tropics, that appeals to me.

Constantly reduce my personal needs – if you are in a high-paying field then you’ll be tempted to delay freeing yourself from full-time work until you “have enough” (to live at a standard that fits your perceived station in society).

My heroes don’t have a lot of possessions but are rich with satisfaction. Choose wisely.

If you’re delaying following your heart so that you can maintain a high spending rate then be sure spending fits your definition of paradise.

Many of the wealthy don’t enjoy spending. It’s how they became wealthy.

If the points above aren’t clear then invert and be honest with yourself.

  • Having so much stuff that I need a team of people to manage my gear, or spend a significant percentage of my life on admin…
  • Constantly increasing my personal needs via the hedonistic treadmill…

This combination, anywhere on the socio-economic scale, is a recipe for misery.

Finally, humans are similar in how we define natural beauty… high view, overlooking park land, ideally with some water.

Think about the most valuable real estate in your local market. It’s likely to have those characteristics.

Most of us will never afford that real estate, which is just another asset to take care of, anyway.

A better solution is to live beside a mountain park and get to a high view as often as possible.

What’s your definition of paradise?

bear

When 99 is more than 100

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As a young man, I spent my 20s focused on taking myself to the limit. In my 30s, I discovered triathlon and shifted my life towards a devotion to personal excellence. In both periods, I was unable to understand why anyone would bother “being average” at anything.

Whether your focus is academics, finance, wealth or sport — if you spend your time in a group that consists of the top 1% then you’ll be at risk for certain errors.

The first error is a skewed definition of “average.”

Athletics is a great field to see this in action as we’re much less likely offend anyone by telling the truth! Here’s a quote from a former coach…

He’s constantly disappointed in himself because he thinks that he should be able to roll out of bed and drop an 8:35 Ironman.

In other words, our friend has a baseline that requires him to outperform 99.99999715% of the planet.

That’s an extreme case but, if you listen to the dialogue surrounding your favorite sports team then, you can see this pattern repeating itself throughout our elite classes.

As an amateur triathlete, I could beat 98.5% of the field at any Ironman race in the world, yet my performance wouldn’t even register for the top 1% of performers, who benchmark themselves on their peers.

My point, isn’t to correct the attitudes of the elites – an extreme way of thinking is useful to drive extreme action.

My point, is to encourage you to stop and ask, “Is It True?”

When your peers lack diversity, your views are at risk from becoming detached from reality. You will see it most easily in your definition of average and decent.

  • What’s a decent athlete?
  • What’s a wealthy family?
  • What’s a successful child?

Outliers living in the 1% are unable to see the extreme nature of their lives and that can lead to ruin.

It’s not just about aging athletes ruining their joints.

I had a very close friend that ended up financially ruined because he was unable to be satisfied with being more wealthy than 98% of his peers.

Others ruin relationships with children, who are unable to measure up to an unreasonable standard.

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Another risk – the best are lazy.

Lazy?

  • …but I train 25 hours a week
  • …but I work 65 hours a week
  • …but I read 100 books a year
  • …but I add more value than anyone at this firm

My capacity for extreme workload requires me to drop everything in my life.

In fact, dropping everything is a “secret” of success.

However, it makes me very lazy outside my domain.

As the youngest partner in my private equity firm, I had staff to shop, to sort my CDs, to open my mail, to cook my meals, to take out my trash… the list went on and on. My approach was to throw other people’s time at any issue that prevented me from spending time on my goals.

Ultimately, behaving like a plutocrat wasn’t the main drawback.

By not placing “love” as a primary goal, I created a pattern of behavior that would have driven every relationship from my life.

It wasn’t until 15 years after my divorce that my family received the dividend of a man becoming a little less successful and far less lazy.

The Price of Admission

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elsaI was reading The Meaning of Human Existence by Wilson and came across an excellent question:

What’s the price of admission to your tribe?

The question got me thinking about the ways that groups enforce conformity and create cohesion.

Here are two areas where my groups have led me astray…

Groups that push me to perform external actions that are different than my internal values — examples here would be the executive that complains that she has to lie as part of her job; or selling a product that hurts people; or working alongside people we don’t respect.

These situations lack integrity because we are choosing to ignore our internal reality in an effort to fit in externally. It’s a stressful situation and most of us adjust by changing our internal reality.

A gradual loss of integrity is how my criminal pals became crooks.

The second thing to watch is the temptation to trade health for money.

Despite having a long-term habit of good choices, I feel this temptation daily! It takes effort for me to protect my healthy living routine (sleep, exercise, stress, nutrition, positive connection to others). The sensation of hanging-on-by-a-thread is something that’s been with me for many years.

Parents, mentors, coaches, bosses, organizations, religions… when our leaders offer us money, fame or recognition for going against what feels right… start working on an exit strategy!

Two of my favorite questions for my kids…

  • What do you feel?
  • What do you think?

A life of integrity is built on harmony between our external actions and internal lives.

It takes effort to look inwards, rather than default to the external dogma of our tribe.

What are the values of the people closest to you?