Category Archives: Uncategorized

Dealing with Difficult People

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2019-07-09 08.06.27We rolled through 14 years of marriage last week. So good!

My marriage is my most important, and easiest, relationship in my life.

This is surprising because I have a track record of being a very difficult person to live alongside.

A favorite bit of advice, paraphrased…

If you are surrounded by difficulties then remain open to the possibility that you may be playing a small role in creating them.

In my 20s, everyone tried to get through to me. Friends, co-workers, mentors, bosses, family… they were ineffective with their attempts to improve me.

Some might think the lesson is not to try.

That’s not my experience.

My experience has been to “try smarter” by focusing on: (#1) myself and (#2) getting expert advice on what those around me are likely to value.

In applying expert advice, I found it easiest to remove little bits of the “small role” I play in my relationship difficulties.

2019-07-04 19.17.39Bit #1 => my attitude is the main source of my (relationship) problems

I’m lucky to live with two people that are VERY easy to get along with (my son and my wife). They are my “canaries in the coal mine” – if they start to bother me… something is out of whack.

This is a major improvement for me. I used to get to the point where everyone, everything… would be bothering me.

When I’m on the other side of “everyone,” I pause and reconsider.

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Bit #2 => I can stay mad for DAYS

This is more common than any of us let on.

The good news… anger only becomes a problem if I act on it.

If I’m wandering around the house doing power-housework then my anger is only making myself miserable (see #1).

The payoff… once I settle down, there’s no emotional cleanup.

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Bit #3 => treat others the way they wish to be seen

The deep reservoir of goodwill I have for my wife and son comes from the match between their instinctive treatment of me and my deepest desires.

I am often unaware of my values & desires but I can intuit them by reflecting on the people I like to hang around.

For other people, I can sit quietly, listen and tweak my approach.

Call out culture does us a huge disservice, I have yet to regret leaving negative thoughts unsaid.

Better to keep my mouth shut and use the energy to improve myself.

2019-07-04 17.38.43-1

Strength & Training Strategy at 50

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2019-07-07 09.01.30Strength gives me better choices.

Specifically:

  1. Maintain muscle mass
  2. Challenge my connective tissue
  3. Strengthen my shoulder complex (to survive my inevitable crashes)
  4. Get the bio-chemical benefits from working large muscle groups anaerobically

2019-07-07 08.45.03

My base period needs to be longer: I was very consistent with strength maintenance across the ski season. As a result, I lost less strength than prior years. However, I was WORKED at the end of the season and my mojo stayed flat for a long time when I returned to more focused strength training.

Two, maybe three, “good” sessions per week: At 50, I go flat quickly! I need to be humble with the load I put into myself.

I split upper and lower body days: in order to do quality exercises, and recover, I split my workouts across the week:

  • Monday/Thursday – lower body
  • Tuesday/Friday – upper body
  • Wednesday/Saturday – plyo (~7 minutes total per day)

Very little sustained intensity: I lose a lot when I get sick and can’t train. Put another way, my ability to go training is more important than my training ability. A calendar of events would certainly push me to do more (likely for less benefit).

I go to the gym to be around people (even if I don’t speak to them!): the core of my program has been the same for 20 years. It would be easy to set it up in my garage. However, part of my “feel better” seems to come from the gym process. The most time-efficient setup isn’t always best.

My aerobic goal is “about an hour, every day.” I’ll go longer when I can hike trails with my wife or son. I do a bunch of walking on top of the aerobic exercise.

Learning to navigate the physical decline of middle age is a benefit of middle age.

The days that start with training are clearly better.

Pay attention to better.

2019-07-07 08.54.56

Alpha Tween

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I’ve noticed that a couple mornings each month, she arises with one goal in mind…

Test. Pack. Hierarchy.

She has a go with random acts of sibling violence and a Marie-Antoinette approach to manners.

It’s tiring but far better than when she was an Alpha Pup, each of those days was a grind.

+++

We’ve tweaked our approach as she gets older.

Written schedule – always visible – seven days forward. Without the anchor of the school week, this is a huge help. Keeps me relaxed as well.

Binary choices – One of her weaknesses is self-directed time, so offering simple choices works for everyone. Frankly, I don’t care what she does (so long as she does something). Since her first birthday, when she’s not engaged… it’s been challenging.

With the top two in mind => Listen, consider. change later. In order to run the house, we need a schedule.

She understands “change later” and we make it clear when we’re adjusting the plan based on her feedback.

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If you have a go-with-the-flow personality then all the structure, rules, discipline… you’ll be asking, “Is this really necessary?”

If your home life is calm then “no, it isn’t.”

However, if you have a young person (or husband 😉 ) who is constantly trying to take command then they might do better with structure, routine and scheduling.

For a few days each month the conflict is real. For the rest of the month, she relaxes into the hierarchy and our mutual expectations.

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It helps to remember my goals for the kids:

  1. Daily physical activity
  2. Polite => most importantly, to people with no recourse
  3. Learn to teach yourself and live independently

I am at my most effective when I lead by example.

When I need to give guidance: immediate consequences and always follow through (especially when inconvenient).

She has a nose for inconsistency and weakness.

How Bad Ideas Get Funded

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2019-06-26 14.43.54After a decade of asset price inflation, I’m tempted to shuffle the deck. I remind myself:

  1. Each time I change, I crystalize tax liabilities, pay transaction fees and introduce the possibility for error.
  2. A key benefits of an attractive position is the freedom NOT to change it.
  3. NOT following through on a mediocre idea => can be a great decision.
  4. My greatest investing weakness is the desire for change, for change’s sake.

Against the above, I’ve developed a hunch that assets are going to be cheaper 2 to 3 years from now.

Fully invested, with yields at historic lows, there’s little reason to rush into changing strategy.

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Costly mistakes happen when we overpay late in an expansionary cycle.

Where are we?

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Start with yourself => write out your ten largest items for the last year.

  • Childcare
  • Ski Season Accommodation
  • Food
  • Mortgage
  • Taxes
  • Healthcare
  • College and Retirement Accounts
  • Disney Cruise
  • Ski Passes & Gear
  • Insurance
  • Harry Potter World

How does your current rate of spending compare to 2009/2010? I’m double my bear market rate. Sitting at a 2007/2008 rate of spending (with 3 more dependents).

Are you considering any big-ticket items?

I am:

  1. Vacation property
  2. Trading up my home
  3. New vehicle

There is information in what you are willing to consider. #1 and #2 are rarely on my radar.

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What’s happening locally?

We are doing well in Boulder County, 2% unemployment, significant investment in schools, parks, and recreation facilities.

Some things stand out at the margin,

  1. multi-million dollar homes being left empty by seasonal residents
  2. houses being purchased for ~$1.25 million then torn down
  3. properties selling for double 2007/8 valuations
  4. local governments seeking to borrow HUGE and take technology risk on utilities / broadband

There are many people choosing risks they do not need to take.

There are many people sharing stories about quick money being made.

+++

Risk being ignored across all levels of society.

State => We have an active State Assembly passing laws and regulations as fast as the Governor can sign => at the margin… they are seeking the repeal of TABOR so they can spend money even faster.

Federal => in the news… medicare for all, national student loan forgiveness and a war of choice with Iran. No constraint on the ambitions of government.

Interest rates => at the top of the cycle, moving away from rate increases and a yield curve showing sub-2% money five years out.

VC to Public Markets => rapid internal dealing to ramp valuations prior to IPO => weak post IPO performance. The smart money is shifting risk, fast.

Every political viewpoint, local to global:

  • acting as if capital is unlimited
  • taking on risks of choice
  • increasing debt burdens
  • agreeing to future commitments of unknowable magnitude

These conditions are how bad ideas get funded.

  • Asset prices at all-time highs => a price umbrella influencing EVERYTHING
  • Cost of debt back at a generational low => easy money

If you are smart then the marginal idea that gets funded might be your own! Right now is THE time to raise money, sell businesses and unload illiquid positions.

If you are concentrated then consider taking money off the table (link is a blog of mine that’s worth your time).

Stay variable.

Chronic Endurance

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A friend’s question gave me a nudge to flesh this out.

My pal asked, “am I damaging my health by pursing my endurance dreams?”

The science seems clear => you are very, very unlikely to screw up your health by exercising. Most everyone could benefit from exercising a little more often.

+++

However…

My demographic is different than the general public.

Call us the “screw the limit” exercisers.

What about us?

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I’m fortunate to have a group of endurance mentors that are moving through their 60s, 70s and 80s with many, many, many (!) years of chronic endurance training under their belts. Some of their hearts, and joints, are coming off the rails.

It’s tempting to “blame” exercise for their issues but that ignores the problems they avoided through exercise (high blood pressure not received, depressions not experienced, diabetes not developed, harmful addictions successfully managed).

+++

That said, whenever I find myself asking a question about excess, the fact that I’m asking is, in itself, part of the answer.

If you’re already exercising daily then you’re not going to find any doctor to advise you that you need to ramp that up by a factor of 2-5x.

…and you may find yourself reaching out to someone like me to get comfort that it’s OK to do a little less.

In doing a little less, but continuing to exercise daily, you will reduce your risk of ruin.

“Ruin” being the loss of the benefits from daily exercise.

Risk of ruin is what encouraged me to do less.

Immune system failure, bike crashes, lower leg injuries, death by avalanche/car accident… each is extremely inconvenient.

In doing less, I discovered unexpected benefits of eliminating chronic endurance => improved sex drive, better cognitive ability, happier joints, less cravings and additional muscle mass.

If you’re under 50, or pre-menopausal, then my benefits list will make more sense in a few years!

+++

What about that Tour de France study about longevity? (abstract linked)

While extreme, I’m not writing about Tour athletes.

Chronic endurance is about chasing podiums for decades after your elite career.

It’s not surprising TdF athletes live longer than their peers. The constitution required to get to the start line creates a special cohort.

A better cohort to review is “masters age-group champions” across 10, 20, 30, 40 years and compare them to “daily exercisers”.

There’s not much money to be made studying healthy people so I wouldn’t hold your breath on seeing my alternative study!

Frankly, I wouldn’t expect there to be much difference in longevity. You’d be studying two healthy populations.

Our findings underpin the importance of exercising without the fear that becoming exhausted might be bad for one’s health.

Lifespan isn’t the point.

Being exhausted is horrible for our relationships.

Look around and you will see that relationships are what we lack in later life, particularly if our favorite hobbies involve being alone… 😉

Quality of life and keeping a lid on my risk of ruin… that’s what interests me these days.

None of these benefit from chronic endurance.

Winning The Loser’s Game – personal finance book, Charles Ellis

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2019-06-16 08.44.50This one sat on my shelf for a while, probably due to a concern that I might have to change my mind on something if I read it!

Well, just because something is unpleasant to consider, doesn’t mean it’s wrong.

Besides, I can handle bad news.

+++

Fortunately, there wasn’t much bad news inside this book and it was an excellent read.

Takeaways…

Nearly everyone will be working into their 70s, at least part time. This is a result of success, not failure.

  1. Success in following a healthy lifestyle and benefitting from modern medicine => much longer lifespans.
  2. Success in financial well being => implies our baseline spending at 50, 60, 70… is higher than anticipated.

A working life of 50+ years implies:

  • We will be technically out-of-date before we’re halfway done!
  • Multiple careers, unexpected transitions, continuous technical education
  • Start with something the enables you to get paid well on an hourly basis and become world-class in a niche market
  • If you spent your early career not doing a whole lot then you still have many decades left in your working life. Hit the reset button and get yourself educated without borrowing a ton of money.

Despite “retiring” 3x (!) since my 30th birthday, I’m still working part-time. I had been expecting this to end at some stage. This is not going to happen, and I shouldn’t wish for it to happen.

I should be on-the-lookout for attractive part-time employment and training myself for my next career(s).

+++

As you’d expect from a bestselling personal finance book in its 7th edition, there are excellent sections:

  • Six self-assessment questions (p 80-81)
  • Living under your means as a form of savings (p 161)
  • Annual personal review questions (p 197-198)
  • Contributing time, talent and money to your community (p 227)

I was also reminded of my personal weaknesses as an investor by the author’s advice to “give compounding time to work.”

Across a 50-year working life, that is a lot of time!

Better Relationships

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2019-06-12 15.56.43June’s a happy month for me.

June 2000, June 2004, June 2005, June 2011 => milestones of a better life.

Before I arrived at better, I had a lot of experience with making my life more difficult than it needed to be.

“Relationships” was a particularly weak area.

When I got married (for the second time), I had no experience of being in a good marriage.

However, I had a willingness to look carefully at my role in creating a divorce.

Invert.

Do less of what moves you away from your goals

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As a coach, I would advise my athletes to:

  1. cut your intake of alcohol, sugar & cheese in half
  2. pay attention to what causes you to binge
  3. pay attention to what causes you to miss training

What were we doing?

  1. Learning how to take things out
  2. Learning how to get out of our own way
  3. Training the ability to look at our shortcomings and, gradually, address them

+++

What are the things that screw up relationships in my demographic?

Avoid being away for long periods of time. With no kids this meant business trips under 14 days duration. With three kids (6, 8, 10) this means I’m rarely alone.

Why’s the above important?

Let’s see…

Athletic couple, physically attractive, raising their heart rates independently, frequently apart.

Don’t come home tired. My wife put this on me a decade ago and it made an immediate difference. I’d go further…

Be seen to help out. When you’re smoked, don’t park yourself in the middle of the house and do nothing! I’ve made a habit of puttering around doing housework. It serves me well.

Away a lot, coming home tired, not assisting… if I wanted to create the perfect storm for my spouse to burn the relationship down (and feel relieved doing it) then that is a good place to start.

+++

Anyhow, we got to “better” and then we had kids!

Six years ago, our crew was 0, 2 and 4 years old.

Back then, my wife’s goal was pretty simple… Get. Through. The. Day.

Working through that period is when we noticed 1-2-3 (above) resulted in better.

Better, not easier!

+++

But the kids grew up and it does get easier.

And I looked around and discovered that I know what a great marriage looks like.

Nothing like what I would have expected!

 

Cash Holdings in Context

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2019-06-09 07.03.52The Algebra of Happiness is a great read. Professor Galloway has a hit on his hands.

In the book (page 83), Professor G says “I’m 80% in cash.”

I am used to hearing about wealthy guys’ portfolio allocations, I didn’t give it much thought.

However, his statement caught my wife’s attention (Big Time) and I spent a while explaining why I’d give the Professor an “incomplete” on this short section (of an excellent book).

Here’s what I said…

Start by laying out your sources of income:

  • Social security
  • Day job
  • Consulting gigs
  • University professorships
  • Unearned portfolio income
  • Rental property income
  • Tech fund consulting
  • Royalties from bestsellers
  • Spouse’s income

The segments, and the total, are useful to review.

These are figures you should know, roughly, off the top of your head.

Now, consider the information against your core cost of living.

I guess Professor G’s core cost of living is well covered by his sources of income. I’d further guess that his balance sheet has his family’s living expenses covered for the next hundred years. He is unlikely to be hurt by any investment strategy he selects.

The spread of your income sources will show concentration and diversification. Concentration can ruin life as you know it. You are likely to have skin in this game.

Addressing concentration can save you from ruin. Tweaking asset allocation, less so.

+++

Next, consider the areas of your life that hold option value:

  • Youth
  • Education
  • Ownership (bi-coastal real estate, start-ups, portfolio investments)
  • Wealthy relatives
  • Carried interest in tech firm general partnerships
  • Fame
  • Bestsellers
  • The ability to spend less
  • Equity stakes people toss you for being an entertaining non-executive director
  • World-class skills in well paying, niche specialties

When successful people talk about holding a lot of cash, they rarely mention the MASSIVE option value in the rest of their lives.

+++

What is cash?

As I write this I have six weeks’ living expenses in cash.

Seems really low!

  1. What if I add my US government bond portfolio?
  2. What if I net my unearned income sources from my core cost of living?
  3. What if I take a part-time job in one of my niche specialities?
  4. What if I downsize my house by moving?

In that case, my six weeks of cash should see me through to my 75th birthday.

Incidentally, I did all of the above 2009-2012 after my professional life was crushed.

Thankfully, I had a large cash holding at the time! 😉

+++

What should you hold in cash?

When allocating capital, most people want to receive a forecast of the unknowable.

Avoid pundits, forecasters and the predictions of others. They are worse than useless.

Each time I make an important decision, I write a file note to myself. Sometimes I publish these notes! Do this for 30 years and you’ll have a written record of your strengths and blindspots.

I use my limited attention to consider the implications of being wrong.

Overweight in cash and I am right:

  • Rich already => no implication, if you’re not satisfied with what you have today then you will not be satisfied with more tomorrow
  • Rest of us => Need to decide when to invest
  • Rest of us => Need to decide what to invest

The track record of “rest of us” is clear. We do an awful job at market timing and dynamic asset allocation.

Overweight in cash and I am wrong:

  • Rich already => no implication, my unborn grandchildren inherit less unearned capital
  • Rest of us => my widowed wife runs out of money in her 80s
  • Rest of us => I become a financial burden on my adult children

Some games you don’t want to play.

 

18 Months to Make a Habit

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2019-06-05 05.33.55Dalio’s book (Principles) shares that habits sustained for ~18 months are likely to become permanent.

Aiming for 18 months (~550 days) was a change because my typical time horizon is a 30-day test.

30 days is not enough time for the impact of a change to percolate through your life and impact your peers, family and spouse. Changes are still happening from an adjustment I made in December of 2017.

My main thing was “wake up in the 4s.” I got the “wake up early” from Jocko’s book (Discipline Equals Freedom).

It appealed to me because it fits into lessons I’ve learned:

  • Try faster before going slower – Daniels
  • Prove you can do it by diving into a cold pool – Purcell
  • If it’s important then do it first – Covey
  • 4:55 is more than ten minutes different from 5:05 – Willink

I can make my life experience a lot better by making my daily life a little more difficult.

“How am I going to wake up in the 4s for the next 18 months?” is good problem to have.

The problem (up early) points me towards solutions in other parts of my life:

  • Exercise early (what else is there to do at 5am when the kids aren’t up for another 90 minutes)
  • Drink less alcohol (being binary, I simply stopped)
  • Fall asleep (if not tonight then most certainly tomorrow)
  • Start every day with a win

What does winning look like on the home front?

By 8am:

  • I’ve done a workout (win for myself)
  • My kids have eaten, read and brushed their teeth (win for my family)
  • I’ve done an hour of visible housework (win for my marriage)

There’s a TON of noise associated with the above.

Does it really matter? Is this the best use of my skills? Dude, you’re only squatting 95 pounds! My “career” is taking out the compost every morning?!? Shouldn’t I be sub-contracting the busy work?  Blah, blah, blah. Why so angry, bro?

Apply those thoughts to what happens after 8am.

Memories of a credit crunch

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2019-05-28 06.43.39I’ve been offline for a bit.

Spending time with my family in Mexico.

+++

I’m fond of reminding myself that the cost of the status quo is hidden.

I like to take breaks from my “status quo” and pay attention to what I have been missing.

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Since last July, I’ve been pulling the plug on the internet for 5-7 days at a time and writing notes in a memo pad.

Via my breaks, I am able to see the cost of constant connectivity…

….reduced creativity, clarity and cognitive ability!

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It’s tempting to think great opportunities will never come again.

It’s also human nature to forget anything that is further back than about three years.

So I’d like to share memories of what happened coming out of the 2008/2009 credit crisis.

Ancient history in the collective memory!

2019-05-28 13.59.14

In 2010-2012…

  • I bought two buildable lots, one with an older house, for under $300 per sq ft.
  • I then bought a two-unit downtown site for $375 per (very, very old) square foot. This seemed like a stretch. I didn’t expect the deal to show much progress for a long time.
  • I was able to buy Tucson condos at $49 per sq ft. Shouldn’t have furnished these! Sold them early as I was running tight on cash (due to living in a big house with no yield).
  • My last decision was NOT to buy a 5,000 sq ft house in Gunbarrel (City of Boulder) because I was concerned about the “hassle” of cleaning it up. This deal could have been had at $99 per sq ft! What was I thinking! Instead I put everything I had into a well-constructed home at $244 per sq. ft.

Cost to build (excluding land) is now around $400 per sq ft.

The figures above included land and building.

In hindsight, for three years, Mr. Market was giving land away in the City of Boulder.

Are you ready for the next tightening of the credit cycle?