Tag Archives: behavioral psychology

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.

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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.

😉

What I Know But Cannot Prove

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sxm_beachI came across a finance blog asking about the limits of statistical proof in the world of investing.

It reminded me of an old surgeon who shared, “Half of what I learned in med school turned out to be wrong.”

So I ask you…

What do YOU know but can’t prove?

You may talk about your faith.

But for me, the lesson runs deeper.

What is the ONE thing of which I can be certain but can’t prove?

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I start by asking myself, what did my grandparents believe that we now know is false?

I came up with smoking and trans fats. You’ll probably get a more exciting list!

Anyhow, the lesson isn’t to switch margarine brands…

The lesson is to be skeptical with my own beliefs.

I can be certain that some of what I now know will turn out to be incorrect for my grandchildren.

However, I can’t prove which of my current facts are incorrect.

I can only be certain that some of my knowledge is wrong.

So I should be careful when I find wise people on both sides of an issue.

I might be best served by acting as if they were both right.

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This article influenced by Russell: Sceptical Essays (first edition 1928!).

The Lindy Effect is a good way to sort knowledge. The longer an idea lives, the greater its life expectancy.

Wins, Pain, Anticipation and Endings

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grumpy_catLast Sunday, I was puttering around the house waiting for my daughter to wake up from her nap and caught myself in a thought-trap. I was thinking:

Well, here’s another ride that I’ll be missing

Note the connection I was making between a small loss (missed ride) and my daughter.

Not Good.

A habit of creating frequent mental losses is guaranteed to make us miserable.

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There are four areas I tweak to manage my mood.

Wins

Because bigger isn’t (much) better, spread ’em out.

  1. Each morning I wake up (win)
  2. Cup of coffee (win)
  3. Second cup of coffee, heck ya! (win)

Three wins before anyone is awake.

This morning, I tacked on a run. Four wins by 7AM.

Coffee, meals, workouts, articles, work assignments, chore completion => all of these make me happy, so I’ve made them smaller, and more frequent.

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Pain

The opposite of winning isn’t losing. It’s pain.

  • A whining three-year old => pain
  • The cacophony of three overtired kids in my car => pain

painI have four tactics that I use with pain. I’ll give examples as a father but I use them everywhere (work, athletics, family).

Temporary – everything ends, maintain perspective

Meaning – my behavior is an example I set to prepare my children to care for my demented future self

Schedule Myself – every day has at least two slots for me – a slot might be as small as a 15-minute walk around the neighborhood – I free myself to serve others by acknowledging that I served myself already.

Wins – see my pain as another person’s win // I prefer to deal with kid insanity on my own, rather than with my spouse => makes me feel like a hero because I am enduring to spare another

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Anticipation

  • Vacations
  • Bonuses
  • Performance reviews
  • Exams
  • Pitch meetings
  • Prospecting

The corporate world is filled with events where we can anticipate a win.

Anticipating a win feels good.

You can use this effectively within a marriage.

  • Step up to take a bunch of pain (send your spouse on vacation without the kids)
  • Sex dates
  • Date night
  • Couples retreats
  • Large purchases (works great even if you NEVER buy)

Remember that the win need not be large.

Anticipate small wins.

This is what makes Facebook such a powerful medium.

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Endings

If you pay attention to your pain memories then you might find that the most painful are ones where peak pain happened at the end.

  • Sports (Packers, anyone?)
  • Divorces
  • Bankruptcies
  • Life, then Death

With parenting, I need to allow time to unwind after things go crazy.

Previously, I would be in a rush to get the kids to sleep so I could get to bed. When things didn’t go easily, which was often with my oldest, I would be ending every single day with peak pain. It was exhausting. My oldest grew up and that worked itself out.

However, our middle kid started having difficulty with his bedtime routine. Applying a little behavioral psychology, we shortened his nap, napped ourselves (when required), and made sure we had 90 minutes awake after putting him to sleep. It made the same situation, seem a lot less painful.

Move the pain away from the ending.

Ideally, take it early.

pancake

These tactics work well and you can find more info in Kahneman’s Thinking Fast & Slow

Navigating the Jockstrap Dilemma

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khumbu_yakA buddy has a magic jockstrap that he likes to wear ALL the time.

He claims it helps his performance and recovery.

Normally, his jockstrap would not be an issue for me. However, I’m one of his advisers and he asked me what I thought.

What to do?

We often find ourselves faced with a friend, client or family member that has beliefs we find ridiculous.

Here is what I do.

Pause

I know my first response with jockstraps is likely to offend my friend or, at least, create cognitive dissonance. So it’s better to wait and consider things carefully.

Give me a bit of time, I’ll need to do a bit of research on that… 

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Context

Is the jockstrap on the critical path? Is it the difference between success and failure?

Magical clothing, and other superstitions, are rarely the difference between success and failure.

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Action

What is the jockstrap’s impact on behavior?

My pal is motivated, thinks he’s performing better and not focused on something that might screw up his performance.

There can be adverse consequences from the effective treatment of superstitions!

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Can I Prove The Opposite?

I happen to think that jockstraps don’t impact performance.

Can I prove my point of view? Am I sure?

The placebo effect is real, and proven.

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One Thing

What’s the one thing, if addressed, will have a material positive impact on performance?

Focus on the “one thing” together.

Don’t spend time tweaking items that have no impact.

Use influence sparingly, then strongly.

The greatest influence on the world is via my own behavior.

My buddy can easily see that I don’t wear a jockstrap.

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Most importantly, after I didn’t call him out, I went for a walk and asked myself…

What’s MY jockstrap!!!

😉

What I Learned Last Year

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biscottiTwo themes have dominated my goals for the last couple of years: my relationship with my eldest daughter and my finances.

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Kids – my daughter worked herself out, no input from me. I didn’t change her nature, I accepted it, and we enjoyed the inevitable progression from preschooler to school-age girl.

For my pals with kids – avoid abandonment and retaliation – everything else is details.

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Optimism is the only worldview borne out by the facts.

At the end of 2008, I wrote-off 65% of my family balance sheet, was unemployed, owned a loss-making business and was facing civil liability relating to large-scale fraud.

You may have forgotten but everything we were reading was doom and gloom. In reality, that was one of the most useful periods of my life because I was forced to face the gross inefficiency of my spending choices.

The changes that result from earlier setbacks lead to an appreciation of a more simple life and I’ve continued to strip away non-core activities.

My wife is stumped when asked, “What does Gordo do?”

I enjoy my life and serve my family

Act in the spirit of service to the people that love you.

Act as if things will work out.

Keep simplifying.

Free yourself to spend time on what matters.

For the pessimist in your head that likes to point out that we’re all dead in the long run… be wary of overstating your importance in the world.

My death will be a setback for a few people but it won’t change the positive trajectory of history. I will play my role then hand off to the younger generation.

There will be tears and that’s OK.

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Human Capital & Family Finances

What can each of us bring to our families, and communities?

Strong relationships built on mutual respect and strengthened via self-improvement.

Six years ago, I was left with a home and cash assets. With interest rates moving towards 200-year lows, I realized that I had to be invested. I made an error by going all-in with real estate. Why an error?

  • I was geographically concentrated – the bulk of the portfolio was within two miles of each other.
  • I invested too much – I failed to understand the short-term cash needs of my young family, which arrived in 2008/2011/2012.
  • Each asset represented many years of living expenses – lumpy assets are inefficient when you’re moving towards retirement.
  • Real estate takes a long time to sell. With a traditional portfolio, a gradual sell down is easier to achieve.

My purchases had a margin of safety and I was able to trade my way out of the situation – 4 out of 8 addresses have been sold. Start to finish, it will take 8-10 years for me to change my asset allocation. Our family financial structure gave me time to make the change, we earned income, and we had exposure to asset appreciation.

Time worked things out – we did well but so did all others that were invested from 2009 to 2014.

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The final lesson – I am greedy in irrational ways. I can soothe my ego by noting that my flaws are widely shared.

I am susceptible to the Endowment Effect. I overvalue what I have – my wife had to force me to sell our old house, I wanted to hold out.

I overvalue future desires. I’m constantly fooling myself that MORE will make a difference.

My antidote:

  • Write down my desires (steam shower, truck, boat, kitchen appliances, vacations, clothes, car, office, ski chalet) then wait and let desire pass
  • Make the wealth cost of “more” both painful and visible
  • Note the choices that create my best days (train AM/PM, help someone, learn, write, teach, spend time with my wife, under scheduled)
  • Spend money to create true luxuries (childcare, time to think, time to learn)
  • Schedule my happiness essentials (time in nature, time with my wife, quiet time to think)

Keep it simple:

  1. Notice the good in life
  2. Write good things down
  3. Do more good things

Behavior Not Protocol

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winterIn any given field, the bulk of our performance comes from choosing appropriate behaviors rather than optimizing protocol.

Take wealth, I’ve been reading a second book by Nick Murray and he makes the point that behavior is the single greatest source of wealth creation. He goes further to make the point that it has a greater impact than all other factors combined.

In reading the book, it struck me that he could easily have been describing athletic performance.

  • Balanced program
  • Frequent small contributions towards the goal
  • Most people beat themselves
  • Train yourself to overcome human bias and misjudgment

For every wealth behavior, I can find a similar fitness behavior. Works the same with common errors (selling in fear, chasing performance, not resting, fear of fatigue).

Looking forward to 2015, what behavior is required to achieve your goals? Don’t focus on more than three.

What are the most common mistakes that “everyone else” makes in seeking similar goals? Individual experience is a mirage. What are the most common errors made in my field? How best to create a system so I avoid repeating the mistakes?

Regardless of your field…

  • One small daily step – keep chipping away
  • Drive experience inwards – take all external irritations and change them in MYSELF
  • Let go of non-core – our best work requires a clear mind, a clear mind comes from letting go
  • Refuse to make predictions – pundits do worse than random – stay focused on behavior
  • Spend no more than 10% of your time on tweaking protocol – the greatest returns flow from consistent core behaviors

What are the behaviors required for a life with meaning?

Health, kindness, shared experience, close to nature.

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.

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

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?

Panic Early – stress testing my family finances in October 2014

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2014-10-25 11.24.20-1I was on a business trip in Asia when the call came through from my wife…

Are we OK?

The markets had come off 5% and the news media had cranked their fear machines to full throttle. You can see the dip below. I got the call at the bottom of the “U.”

Screenshot 2014-10-27 08.36.45

The next chart shows why everyone freaked… memories are short. Here’s the one-year view of my US Equity Fund…

Screenshot 2014-10-27 08.37.02Looking at the chart above, I got the call at the bottom of the right-hand “V.”

So I opened up my tracking app to see how we were doing.

Despite the 24/7 coverage of the impending financial apocalypse, our family net worth hadn’t moved.

Strange.

I opened up my Vanguard app to see how our financial investments were performing. Down about 1% in total – not bad considering the financial pundits were acting like we’d plunged off a cliff.

Why so little movement in my life?

1 – I focus on the total portfolio position, not the elements inside the portfolio, which are constantly changing. I check in on the portfolio monthly and rebalance the asset mix quarterly.

2 – Aside from a modest 30-year fixed rate mortgage, there is ZERO debt in my financial life. Leverage magnifies the impact of changes in asset prices.

NOTE – If you have a financial advisor in a Big Bank then I bet they’ve been trying to sell you margin loans on your portfolio. The cost of your margin loan is greater that my expected rate of return for my portfolio – therefore, I view your margin loan as a direct wealth transfer from your family to your adviser’s firm and bonus. I have pals that make a living selling these products – my choice is to send my kids to public school and make less money.

Know that you can get better advice from Vanguard for far less money – plus Vanguard products cost you less than a tenth of what the Big Banks charge.

3 – I’m exposed to more than US Equities. The key components of my family’s balance sheet are:

  • US Equities (VTSAX)
  • Int’t Equities (VTIAX)
  • US Intermediate Bond (VBTLX)
  • US Short-Term Government Bond (VSBSX)
  • Boulder Real Estate

When the equity markets freak out, sometimes my bonds appreciate due to people swapping into US government securities. This is nice but I don’t really care because…

I hold the bonds to reduce the volatility of my total portfolio and to provide capacity to buy more equities when the market tanks.

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After checking things out I told my wife that we were OK and she said…

So, I guess the lesson is not to panic?

My reply, “Actually, I panicked when the market was down 2%.”

The difference is my capacity to act on my plan, rather than my emotions.

The lessons are:

If you can’t do the plan then it’s the wrong plan!

I’ll end with the five-year chart for an index of 500 large stocks that are traded in the US.

Screenshot 2014-10-27 08.38.34

If you thought October was a rough ride, you ain’t see nothing yet, it wasn’t even a blip.