Monthly Archives: February 2015

Thriving In An Imperfect World

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pants

At the start of the month, my wife received some “bad” news. She was reminded that one of our pals was probably cheating. It’s wasn’t a big cheat. Well below a felony. But it created some cognitive dissonance for her.

She sighed… “but I thought he was one of the GOOD guys.”

It’s a thought that I often have myself…

…especially in February, when frauds and felons can become the focus of my endorphin starved brain!

I’ve been coping much better this winter and want to share some quick tips that might help you thrive in an imperfect world.

Parenthood has shown me the value of loving an imperfect person

You might think that I’m talking about my love for my kids.

Nope.

It’s is my kids’ constant forgiveness of my own shortcomings that is most valuable. Their forgiveness helps me become a better person.

So, I remind myself that it’s OK to love an imperfect person.

That said, past choices are a powerful predictor of future outcomes. Put differently, people that consistently make poor choices are more likely to have bad outcomes.

So, it’s OK to file away that I don’t want a close relationship with someone that doesn’t share my values. I will even go so far as to write it down in my diary. I’m a sucker for charismatic charlatans!

The other observation I shared with my wife is that she is a good person. It is transformative to believe in the goodness of the people around you.

What’s the inner emotional trigger when we find out someone has been naughty?

That the world might find out about all of my own shortcomings!

So the best antidote might be to own my disappointments and fix them in myself.

Finally, even with all the shortcomings, it’s great to be alive.

Freedom of Occupation – Choosing Personal Freedom

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Lexi_airportOver the last year, I have been offered attractive opportunities to return to full-time work.

In evaluating the opportunities, I realized the interaction of two variables.

  • The value that we can add to a situation. Call it my “value-added per hour.”
  • My core cost of living.

In the course of my career, I’ve lived the life of an athletic coach as well as an executive. Sometimes I’ve done both at the same time.

An excellent coach, or personal trainer, might net $35 per hour.

A skilled executive will be closer to $500 per hour.

Who has more personal freedom?

When I was younger, I was inclined to believe that more pay results in more freedom.

I’m not sure.

When I think through my pals, the individual who’s daily life most closely resembles my own isn’t who you’d expect. He is a $35 per hour consultant. My friend can live well on $500 per WEEK and has no net assets. He’s created a life where he has freedom of occupation and can say “no” to anyone.

Because of the value-added per hour differential, my buddy works about 25 hours per week. He nets more than his baseline needs. He lives an abundant life, free from financial pressure. He travels internationally. He can work from anywhere and enjoys freedom of location.

What about the executive?

A corporate lifestyle is highly variable, bouncing from 20 to 65+ hours per week. Sleep is often sacrificed and it’s common to spend much of the year nudging health back on track. Vacations are spent immersed in passions that take a back seat to the primacy of career (hobbies, sports, marriage, family).

My point is we all make trades => to get more, of what we think will make us happy, we can be tempted to pay in health, in failed relationships, in reduced freedom and, occasionally, in ethics.

When I speak with highly-paid professionals, they focus on the need for increased assets, and passive income, to attain the freedom they desire.

They ask my help to create a plan that results in freedom.

Freedom to do what?

The freedom to be healthy, to be serene, to be a great spouse, to do my job the right way.

Freedom might be closer than you think.

Managing My Endurance Passion

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G-BoraRecent media reports have linked “extreme” exercise to shortened lifespan (versus moderate exercisers). There is not an agreed definition of what constitutes extreme but, even at my current noncompetitive level of activity, I qualify.

My endurance pals have responded like Charlton Heston at an NRA rally.

If you want me to change then you can pry my fitbit from my cold, dead hands…

Ultradistance athletes are the true believers of endurance sport (links to classic book).

Many of us have replaced a previous passion, sometimes a negative addiction, with endurance sport.

Some of us are managing our “bad habits” via exercise.

All of us are terrified about the implications of change. Listen to our thoughts about anyone with a normal BMI.

Having watched friends revert to previous lifestyles, and having no desire to make a return myself (!), I thought I’d offer some practical ideas for managing our passion.

As always, I start by asking myself questions:

  • Where can things go wrong?
  • Is a multi-decade strategy to continually rip the legs of my aging competition wise?
  • What’s the minimum change required for maximum harm reduction?

Hands down, the worst thing that can happen to any aging athlete is losing the ability to train. Physically, strength losses are slow to return. Mentally, we are prone to depression via inactivity.

I’d be willing to compromise quite a bit to protect my ability to keep on trucking!

You are not going to get a lot of lifestyle modification by telling me that “strenuous” exercise isn’t good for me.

Not going to happen!

You see, I know how I was living without exercise in my life.

You might get me to change a little by pointing out the risk of:

  1. Dying via bike crash
  2. Orthopedic damage
  3. Concussion risk
  4. General malaise from soreness and fatigue

In fact, you didn’t have to bring it up. I see it all around me and have modified my lifestyle to take the above into account.

  • Highway riding avoidance
  • Adding front/rear lights for improved visibility
  • Rarely train in a group
  • No more bike racing
  • Main bike is full-suspension mountain bike

These small changes have improved my risk profile but I have ignored them when training for an event that required them, and when spending time with friends that could care less.

So, like any behavioral modification, my changes are only as sticky as my ability to choose wisely with peers and events.

I’ve written about low standard deviation training HERE and HERE.

Here’s what I’ve been doing:

  • Aim to train every AM and PM
  • Workout defined as leaving my house
  • Focus on frequency (AM/PM), not duration, not load
  • Wide variation in effort, from walking to max
  • Lots of hills
  • Don’t measure (other than a weekly weight check)

I end up with 11-14 doses per week and remain inside the “extreme” segment of recent physiological studies.

I’d estimate my current plan at 30% less hours, 60% less load and 90% less fatigue/soreness.

I exercise a lot, but less than I used to. I suspect the taper will continue as I age.

The small changes have improved my risk profile and increased the non-competitive benefits I receive from exercise (mood, motivation, creativity, sex drive).

++

I don’t expect you to change…

…but this is an alternative that reduces the chance you might have to shut down your endurance passion

…or end up replacing it with a prior negative addiction!

In times of injury, stress, divorce, despair… I hope you will remember this article.

Exercise has been a very good friend to my family.

The Fountain of Youth

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2015-02-10 16.55.59When I was a student at McGill University, I took a course about insurance. Our teacher worked in the life insurance industry. He had us fill out a lifestyle risk assessment.

I was surprised that my risk was off-the-charts.

Of course it was.

It’s adaptive for young men to be clueless.

As I tell my wife…

Men under 30 lack the capacity to access risk 

Some of us grow out of it.

Some don’t.

To make it easy for the guys, the teacher gave us three things:

  1. Don’t speed
  2. Wear a seat belt
  3. Don’t smoke

All three became life-long habits.

What’s that have to do with aging?

My professor was recommending that we eliminate choices that kill students early. He was speaking to lifespan (don’t smoke), and what kills teenage men (speed and seat belts). He knew that telling us to drink less would have been futile.

I have been reading about healthspan (links to Washington Post article).

Healthspan means optimizing my choices for independent living and being able to share experiences with the people I love.

If you’re smoking and/or speeding without a seatbelt, then focus on those first.

How do we extend, and protect, our healthspan?

Treat being mortal like heart disease

Via diet, stress and exercise

My recipe

  1. Identify and jettison stress
  2. Move my body in nature
  3. Eat real food
  4. Sleep enough that I often wake up before my alarm

Keep it simple.

What is your value added – Streamlining low-value busy-work

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ax_valThis was a coaching question but it applies to anyone with a boss, client, student or colleague.

Novice coaches often mistake inefficiencies with dedication.

Spending hours, upon hours, on administration and busy-work that add very little value to their client, or boss.

Specifically, there is a reluctance to use templates and recycle work. In fact, they think that anything not built from scratch is cheating.

Under what conditions are templates cheating?

  • don’t work
  • not fun
  • lower compliance
  • fail to meet goals

What to do?

  • Aim towards continual efficiency improvements at what you do
  • Save your work – you have limited number of keystrokes in your life
  • Check with bosses, supervisors and clients on what they value – so you can work on the right things!
  • Pay attention to what limits your performance and enjoyment – admin will make you miserable, especially when it can be avoided
  • Notice, and keep, what works
  • The cost of (an inefficient) status quo is hidden
  • Frequently pause and ask… What is important now?

As an advisor, remember that performance is driven by behavior, not protocol – the best protocol is the one that motivates effective behavior.

Personal inefficiencies don’t motivate effective behavior in others.

What are your most effective behaviors?

Be the brand.

Keep it simple.

The Beer and Rice Noodle Cleanse

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valentineOne of the most poignant memories of my childhood is being a “fat kid” and wishing that I could have a second chance with my body. I’m certain childhood pain drove a lot of my ambitions as an adult.

Across my life, I’ve been given second, third, fourth, fifth… chances at health and fitness.

It’s only been the last eleven years that I’ve managed to hold a stable weight.

++

Towards the end of January, I noticed that I had edged over my “winter ceiling weight.” I have a range that I move between (165-170 pounds).

Because my weight can move 4 pounds in an hour, I watch trends over time. For example, I need to be over 170 pounds for a couple weeks before I’ll take that weight as real.

Typically, when a little heavy, I will schedule a week-long cycling trip and sort myself out by adding a ton of exercise. However, that’s not possible this year so I needed to come up with something different.

I start by looking at the low-hanging fruit…

The week before I decided to take action, I had eight beers and four dinners of Pad Thai noodles. So I latched onto that and came up with the cleanse.

The fact that I was choosing a lot of beer and noodles told me something about all of my choices!

Keep everything the same, ditch two things that are holding me back.

The game is..

  • Little changes, early, before I need them
  • Microchanges are more of an inconvenience, than painful

The result => I’m highly likely to make the changes stick

Then sit back and see what happens.

This leads me to the next stage and I’m reminded that…

Good things happen slowly => I thought I’d be off this thing in less than a week but, absent excessive exercise, my body changes slowly.

Look at the why => week three of living without the “comfort” of beer and Pad Thai showed me that they really weren’t comforting at all. I feel the same. Maybe a little better!

These two “facts of life” are obvious from the outside but I’m prone to fooling myself and need reminders.

This cleanse is relatively easy. The tougher changes are the one’s that touch on our spiritual, emotional and intellectual nutrition!

How Leverage Kills

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Ax_snow2In 2008, I was invited to give a strategic overview to a board meeting. One observation that I worked into my presentation was, “the assets aren’t generating any net cash flow before interest expenses.”

One of the directors asked me to clarify, “Do you mean after interest expenses?”

“No, there isn’t any cash generation before interest.”

The CEO talked about timing issues with the refurbishment of existing properties and the conversation moved onwards.

A little over a year later, the entire group was insolvent. The CEO filed for personal bankruptcy and left the country.

+++

How is the above relevant today?

Once again, debt is readily available to finance assets with low, no or negative yields.

This is a good mantra to repeat out loud.

I will never borrow money to buy an asset with a cash yield lower than my cost of borrowing

Why?

You will never, ever, ever, ever… have the same discipline with borrowed money as you do with a cash investment.

  • Land speculation
  • Gold & silver
  • Residential buy-to-rent
  • Vacation homes
  • Fancy cars, boats and RVs

By forcing ourselves to pay cash, we buy far less of these assets.

++

Why do we like to borrow?

  • We can consume more, earlier
  • We can buy more, quicker
  • We can increase the rate of equity appreciation

When greed and ego are involved… pay cash!

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For whom does leverage work best?

  • Managers that receive a share of gains but have no responsibility for losses
  • Brokers that receive commissions when you borrow or buy
  • The owners of firms that are valued based on assets under management

Look for the above when advisers tell you to borrow more.

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Many asset classes have had three, or more, years of gains. Our brains are hardwired to assume the last 1,000 days are going to continue indefinitely.

When low yields combine with momentum and easy finance… things can get ugly suddenly.

We’re all going to live through bear markets. They will happen.

Bear markets crush people with debt service greater than operating cash flow.

My friend, the CEO, had personal debt service of $50,000 per week, then his bank went bust, then his employer went bust, then he went bust.

Some risks aren’t worth taking.

+++

This article was triggered by hearing an Australian lawyer rave about a (negative cash flow) buy-to-rent deal. I thought it was going to be decades before I saw that asset class overheat again. Same story, different hemisphere!

Siblings Competing For Love – Living With Kids

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peace2When my family is tired, our filters come down and the raw emotion flows freely.

With six, three and two year olds under the same roof it can get crazy at times.

Here are three simple techniques we use to give the kids the comfort they need and maintain our sanity.

#1 – the one-on-one play date

You’ve probably noticed that little people can struggle to play with more than one person at a time.

For play dates, and PARENT dates, we aim for one-on-one activity. This is particularly useful for the relationship between my wife and my oldest daughter. They do things together, they acknowledge that they are together and my daughter gets to choose the activity.

The conversation might go…

L: It’s not fair, you’re always spending time with the baby.

M: Well Sweetie, remember that Tuesday afternoon is YOUR day. We will be swimming together and going out to dinner where you want.

This technique won’t solve every issue but it will cut them in half, while making you feel better about your allocation of time.

#2 – is it true?

A family member screaming “you’re not giving me what I need” is an extremely effective, and painful, appeal.

Adult children, and parents of adult children, can continue to use this tactic.

As a parent, understand that the child is programmed to make the appeal and you’re programmed to feel pain.

It’s nothing personal.

But is it true?

The pain is coming from a sense that I’m not doing what I should. So I ask myself, am I giving my child what she needs? Usually, I am.

If not then am I able to give my child more? Some times things get worse (for me AND my child) as I give more of myself.

Is my child correctly identifying her issue? Most meltdowns are an appeal for love and understanding. They have very little to do with my child’s current obsession and can be overcome with a hug, recognition or the passage of time.

#3 – failure is an option

As I wrote in A Necessary Failure – the relentless demands of our children are designed to break both of us down. It’s an essential part of growing up.

Remember to hold onto the good times.

Here’s a picture of my children not fighting. It happens more often than I think!peaceOur minds have a habit of remembering pain more than serenity.

 

The Do-Something Investment

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Ax_snow1I saw that Clinton’s son-in-law took some big losses at his hedge fund by making bets on Greece. People are speculating that the Clinton family lost a lot of money in the deal.

While the scale might be different, I see this error in every family that I get to know.

We err by making an investment to help someone “do something.”

Some examples from my own investment history:

  • I’m self-employed and have often been tempted to buy myself an office so I can have a place to do something
  • I’ve offered to back friends in start-ups so they can have the funds to create a business and do something
  • I backed myself in a low-return business, where I didn’t understand the market, so I could have something to do
  • I guaranteed the debt of a friend’s business so he could borrow additional money for his start-up
  • I purchased a property so a friend could have a job acting as my property manager

To limit the damage, I have two questions that I ask.

First: What is the purpose of my family balance sheet?

  • Maintain independence and dignity of elders
  • Educate the kids
  • Share experiences with each other
  • Produce a growing stream of cash flow to fund my future living expenses
  • Support a feeling of security and freedom of occupation

You might have a different list. I’d encourage you to write your list down because the checklist might help prevent expensive errors.

Second: How well have I done with predicting my life on a ten-year prospective basis?

While my life has been rewarding, it’s path has been unpredictable on a ten-year rolling basis.

The unpredictability of life means there is value in maintaining a straight-forward balance sheet that isn’t concentrated in any individual, geography or company.

Put plainly, I’m nearly certain to continue to get the future wrong – especially when I try to predict my family’s needs, desires, location…

+++

Let’s say an investment can get past those two questions.

It is time to keep it real.

#1 – Are we backing the best members of our team?

The best people don’t need the help of connected parties.

Because…

There is plenty of money available for good people with good ideas.

Therefore, by definition, most family investments are focused on the weakest members of the team.

Don’t do it.

#2 – Can we afford to lose our maximum exposure immediately?

Concentration kills.

If you can’t afford to lose your full exposure, immediately, then don’t do it.

+++

If you’re struggling to say “no” then

  1. say “yes” to spending time to help raise funding from a third party
  2. lease instead of buy
  3. focus on enjoying each other’s company, rather than investing together
  4. make an introduction to an expert in the industry to facilitate a working apprenticeship
  5. pay for expert instruction

These options have had a great rate of return in my life.

The Body You Want

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When my wife was a teenager, she really wanted curves.

coach_monsyThings worked out.

My teenage desires were different, but common. I wanted to be jacked.

gordo_crunchThat worked out too.

By the time we both got exactly what we wanted, we wanted something else.

We wanted to be whippet skinny so we could run fast.

We wanted to look like tall, but ripped, 14-year-olds!

G_WhipThat worked out, again.

I spent twenty-five years only to get right back where I started.

I noticed that there is an enduring feeling of my body being slightly unsatisfactory.

Once I noticed this pattern with my body, I saw it elsewhere.

Personal safety, other people’s driving, my house, my finances, my life situation… In many situations, there is a slight feeling of unsatisfactory.

I’m always striving to attain satisfaction that’s is just-out-of-reach.

As a young man, I might have seen striving as a good thing. My drive for improvement, my competitive urges, a desire for self-improvement… we have lots of names for the feeling.

Some cultures call it misery.

See what it feels like for you.

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When I work with others, we use a simple technique.

  • Write down what will make you satisfied.
  • Write down what will make you less afraid.
  • Write down what will make you feel secure.

Out of your list, choose one thing and work towards it.

Work slowly, pay attention, write things down.

Give yourself at least 1,000 days.

Ten years might be better.

You might get there quicker.

With my body, I didn’t start to notice my pattern until I’d been at it for twenty-five years!

With finances, I was lucky, I saw my pattern after a decade, took a leave of absence and enjoyed my first retirement.

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The fact that the lesson took a long time was helpful.

Good things happen slowly.

It’s tempting to short cut the process via cosmetic surgery, performance enhancing drugs, or cutting corners (fraud, tax evasion, deception).

Short-cuts rarely work because we fail to notice the slightly unsatisfactory feeling is following us everywhere,

My victories didn’t work, either. My successes left me wanting more and the feeling followed me around.

++

So I tried enjoying myself…

Pleasure can temporarily mask the unsatisfactory feeling and many use drugs, alcohol, fatigue and other techniques.

The trouble is… the associated hangovers are increasingly unsatisfactory as I age.

What to do?

If you can see the unsatisfactory nature of things then you might ask “who’s not satisfied?”

Once I could see the “unsatisfied person” it was easier for me to decide he wasn’t going to run the show.

At least, some of the time.

😉