Tag Archives: behavioral psychology

Managing My Baseline

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As I’ve gained a better understanding of my mind, I’ve made micro changes to improve my daily satisfaction. Most of these changes involve reseting my baseline for expectations.

Two simple examples can be found in my approach to coffee and wine.

COFFEE

I was thrilled when Peet’s Coffee & Tea opened in Boulder. However, I noticed that my baseline quickly reset and drinking coffee elsewhere resulted in disappointment.

My ability to easily access “the best” increased my total dissatisfaction across a month.

What to do?

I switched my morning routine to start with a cup of CostCo brew. It’s a solid brew and gets me rolling.

However, a few months ago, I won coffee-for-a-year from Peet’s and get a pound of beans each month. So I started drinking Peet’s in the morning and everything reset again.

More disappointment resulted when, mid-month, we’d run out.

However, now I see my disappointment as a chance to reset and I anticipate each new month’s shipment.

Anticipation is a key part of pleasure – worth remembering that tip in relationships as well!

WINE

My senses of hearing, taste and smell are all below average. It’s an area, like my driving, where my self-assessment is more accurate than most.

When buying wine, I combine my known sensory deficit with a simple heuristic – never pay more than $15 for a bottle of wine.

This makes it easy for my pals to blow me away with their moderate vintages, has me drinking less and reduces my total annual spend on alcohol. All good results.

Like my three-year old son, I try to make myself easy to impress!

LAIRD HAMILTON

That’s Laird, Gabby and family above. My wife follows them on Facebook and mentioned that she thought they were a well-grounded couple.

All I could do was laugh and say, “Laird’s your baseline for a husband?!”

Apparently, Laird’s “a little soft” but that’s OK because he has three kids.

For some reason, Laird appearing soft didn’t make me feel a whole lot better.

Anyhow, exercising makes me happy and, perhaps, my wife was giving me a nudge to train more.

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Remember what I said about the coffee and the wine, it applies in every aspect of our lives.

Too much luxury can ruin our appreciation for the beauty of everyday life.

Take time to reset your expectations.

Five True Friends

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mooseThe Philosopher’s Mail is one of my favorite sites on the web. Happiness is a recurring theme in their writing, as is social connection. As your doctor can confirm, there is a link between social connection and health.

The good people at Philosopher’s Mail shared Epicurus’ recipe for a good life. The link is to a lovely article with snazzy pics of Paris Hilton. The article is worth your time – it describes an antidote if you find that external success fails to lead to lasting satisfaction.

The philosopher’s antidote

  • Five true friends, that reinforce inner values (not the external values of city living)
  • Self-determination by escaping the tyranny of corporate serfdom, regardless of financial cost
  • Daily time for quiet reflection, ideally with low-intensity exercise in nature

It’s an interesting list because most of us will lack one aspect of the troika. In my case, it takes effort to say “yes” to social interaction.

As well, we are usually attracted to people that have external traits that we wish to emulate. This can be a good thing…

  • A politically-connected friend making us feel gratitude that we don’t have the duties that come with being a very important person.
  • A healthy friend inspiring us to start a streak of daily activity.
  • A champion friend inspiring us to persist a little longer at a difficult task.

I have different pals with all of the above and, when I’m at my best, they reinforce good traits in me.

However… I’ve also noticed that my most human, and occasionally screwed up pals, can leave me feeling grateful, useful and valued – three traits that have a strong link to personal happiness.

So while the need for pals is well known, I can lead myself astray. So it’s worth using my daily time to quietly consider…

  • Do I have five people to whom I can speak plainly?
  • Separately, who are the five people with whom I spend the most time?
  • How do those people make me feel?

Once I have insight, it’s up to me to have the courage to change.

Be brave.

Too Painful To Care

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Monday I wrote about driving energy inwards to improve myself, my marriage, my family.

Related to this lesson, I’ve noticed a habit of avoiding knowledge that conflicts with my core beliefs. This isn’t anything new – human misjudgment is an ever present topic. However, spotting my own misjudgments can make me far more effective.

Being effective, and making better choices, is a more important to me than avoiding change.

A story.

The Tour de France just finished and I didn’t watch any of it. My lack of motivation was unusual and I wondered why.

The legacy of cheating has been to make it too painful to care. In my case, that manifests in a lack of interest in elite sport. In the case of the wider public, there is an element of truth-fatigue. It’s too painful to discover the reality that underlies an obsession with winning.

I’m using sport as an analogy – it’s an easy one for us to feel, and see in others. Choose your favorite sport and you’ll find a tendency to overlook it’s short-comings. If you can’t see it then ask a foreign friend their thoughts (or simply a pal that likes a rival franchise).

The lesson for daily living is deeper.

  • A friend with Alzheimer’s
  • An elder with dementia
  • A sexually abused child
  • A partner that defrauds the community

In these cases, we will feel a strong urge to “give the benefit of the doubt” to whatever causes the least pain. We will default towards inaction and strongly avoid information that compels us to face pain. I feel avoidance strongly in myself – it’s taken many setbacks for me to overcome.

One of the best lessons of hospice is that freedom lies on the other side of fear. Hospice lets me “be with” my fear of death/disease and feel grateful for today. Gratitude is powerful medicine to carry around inside.

Hospice is “easy” – it’s quiet and I’m not expected to solve anything. My home on the other hand… is often loud and I’m in charge. Maintaining serenity in my own house would be transformative for me, my wife and my kids.

So I look for small, daily, opportunities to practice equanimity:

  • Reading a conflicting viewpoint
  • Avoiding “justified” disappointment in a friend
  • Letting a commute unfold without battling my fellow drivers
  • Not playing into a negative emotional pattern with a spouse, child or myself (!)

Overcoming the smallest things, closest to us, can be powerful.

It takes courage to face pain.

Be brave.

Scope Lock

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It’s easy to let short-term news dominate our thinking.

  • Children killed in war
  • Lost airplanes
  • Destroyed airplanes
  • Crashed airplanes

With death, in particular, I was curious.

I asked Google, “How many people die, per day, in the world?”

Google replied, “about 150,000.”

Per DAY.

That helped me put my obsession into context.

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Realizing that my thoughts are largely wasted can create cognitive dissonance.

…but it’s awful

…I need to care (to show I’m a kind person)

I ask myself, ‘is linking worry to goodness effective?’ In my life, worry makes me anxious, not compassionate.

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Here’s what I’ve noticed in myself. There’s a hidden cost to obsession with others.

The more I focus on seeking to change others, the less energy I have to change myself.

What one thing, if it happened, would change everything?

In my case, kindness through daily action in my own house.

Beware of feeding what you want to leave behind. In my case, fear – anger – anxiety.

How Am I Fooled By Fear?

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Monsy in Boulder

The best antidote I know for fear is a good laugh that is followed by asking myself, “What’s best for my wife and kids?”

Once we can see our fears, we discover their impact on every decision in our lives – relationships, office politics, athletics, contract bidding, you name it.

This thinking comes from Your Money and Your Brain, which was recommended in If You Can (link to free eBook). Turns out that I’m a case study for how we fool ourselves.

Extreme Loss Aversion

Periodically, I’m stalked by a fear of being wiped out.

An antidote is to view the world through a bigger lens. Evaluate bad news with regards to my life – most “bad” news has no impact on me but I transfer remote fears into my home life.

Strike It Big!

The flip side of my risk aversion is a feeling that striking it big would solve all my problems. The voice in my head tells me, “then you won’t have to worry about anything.” However, that’s unlikely. I’ve always had fearful feelings.

The antidote is to point out the obvious:

  • we’re in a good position
  • keep doing what we’re doing
  • inappropriate, and unnecessary, risk is one of the few things that can screw us up

It’s a message that I give to others, and I’m repeating it to myself, here.

 

Scoundrels and Rascals

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When I lived in Asia, I was taught that desire is a necessary component of deception.

My desire to “be right” often leads me right back to another deception.

Some tactics follow that might help you avoid trouble with rascals that, truth be told, are often entertaining.

They Might Be Right – I get a guaranteed laugh when I tell my wife, “I might simply be different.” She smiles, “yes, babe. You’re different alright.”

When would the other person’s course of action be right?

If we live long enough then we are almost certain to find our present selves holding different opinions from our younger selves.

The Message Not The Messenger – we share a curious desire to bring down others and a glee in catching people being naughty. My opinion of a person can prevent me from learning from them.

What can I learn from this person? this situation?

Turn People into Adjectives – when I’m locked on a person, it’s far more useful to drill down to a description of what’s triggering me.

Think about a person that’s disappointed you and dig, dig, dig… until you move beyond the person and arrive at the behavior. There is always something inside of me that’s being touched by, what I believe is, an external trigger.

Let The Situation Move Away – hands down, the most useful thing I realized. Nearly all my “problems” move away if I stop feeding them. Usually the best course of action is to chill out and let my problems leave on their own.

This doesn’t mean that I support the injustice that I see. I means that I acknowledge that my most effective antidote is being just in my own actions.

Turn problem people into adjectives and correct their behavior in myself.

  • Honesty
  • Courtesy
  • Reliability
  • Kindness
  • Gentle
  • Loving

A Fiduciary’s Reading List

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I’ve completed William Bernstein’s recommended reading from his eBook, If You Can.

The reading humbled me. With a 1st Class degree in Econ / Finance, and 20 years experience in international investing, I was left feeling intellectually arrogant and ignorant. Each of these books challenged my beliefs while explaining financial history.

I’d recommend making these books compulsory reading for your advisers and key family members.

Good people can be found in the field of finance. I appreciate the significant time that each of the authors spent to educate willing readers.

The Millionaire Next Door – introduces the key concepts of wealth, saving, investment and taxes

Your Money & Your Brain – a solid summary of the latest on behavioral psychology as it relates to finance and investment – why I will always fool myself

The Great Depression: A Diary – an inside look at what it is like for a conservative, professional family to live through a depression – 2008-2010 was easy compared to the 1930s – could your family survive on minimal income for multiple years?

All About Asset Allocation – the early chapters were the most useful – simple explanations of the role that volatility plays within a portfolio – reading this book, you’ll be tempted to seek the perfect portfolio mix – my decision has been to keep it simple

Common Sense About Mutual Funds – a wealth of information – Bogle picks apart the industry by making his case for simple and low-cost investing – the book makes one wonder how brokers and financial advisers can sleep at night – readers will learn about the industry structure that silently fleeces its customers

Side Note: if you worked in finance from 1980 to 2000 be sure to adjust your brilliance for volatility and leverage using Bogle’s updated charts. We had one heck of a tailwind. Humbling!

How A Second Grader Beats Wall Street – don’t be fooled by the child-like title – this book will save your family tens of thousands of dollars in fees and taxes

Devil Take the Hindmost – a history of financial speculation – hedge funds in the 1860s & derivatives in the 1600s (!) – as Taleb says, we’re never going to get rid of greed, the challenge is to build the system so the greedy don’t inflict suffering on the good

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To Bernstein’s list, I’ll add Estate & Trust Administration for Dummies – a good primer to get you thinking outside of your own self interest.

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If you are in an advisory, or trustee, relationship then tick off one book per meeting with your professional team.

Read a book, take notes and discuss how the book impacts your family (or your firm).

Challenge yourself with exposure to the best ideas available.

Studying new approaches can be painful but we all benefit from a bit of cognitive dissonance.

My Financial Domain and Legacy

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You can find my Part One here and Paul’s thoughts on Part One here.

#3 – What are the other things in life that are critically important to me, and for which I will be financially responsible?

This is a great question.

Be sure to run your answer by your therapist.

Why?

Because people that are high-achievers and good savers tend to take on responsibilities outside of their domain. I’ve watched families make themselves miserable by taking ownership of the financial wellbeing of adult relatives.

What’s my financial domain? Myself, my spouse and my minor children.

Watching people that I love struggle is no fun at all. However, I respect the people that had the courage to let me suffer as a result of my own choices.

#4 – What are the risks in the universe which may prevent me from fulfilling my responsibilities to myself and to others, and how might I defend against them or at least mitigate their impact?

Another great question!

Humans are lousy at assessing risk and statistics. An excellent investment you can make is reading Taleb’s Antifragile – please don’t use the book as motivation to set up a personal derivatives strategy!

Pro Tip: use insurance products to insure an identifiable risk, not make investments.

#5 – If I have accumulated wealth that exceeds all of the above requirements, how might I best utilize that wealth to derive the most personal satisfaction available from life?

It’s a shame that it takes so much money for people to realize they had won before they even started.

Value your time, more than your money.

Diversify your time towards helping people that have less of what you think you need. Specifically, teach what you’ve learned.

Improve your family’s human capital, starting with your health, your manners and your gratitude to the society that enabled your success. Start with small, simple changes:

  • Physical movement AM and PM
  • Get strong
  • Eat real food
  • Be a little more kind
  • Be a little more fun
  • Optimize your health markers via diet and exercise (blood pressure, cholesterol, blood glucose, body composition)

If you are a self-made person then love the people closest to you by ensuring that they have the opportunity to prove their self-worth via their own initiative and through their own passions. Tell your kids when they impress you.

Be willing to constrain yourself to create harmony within your family and community.

Laugh out loud.

One Kind Word

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Duty CallsSometimes I watch my friends get caught up in drama, and sometimes I watch myself.

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What’s your mission?

Whether you desire riches, fame or simply want to be loved, it helps to figure out the “why” of your existence. We get a lot of clues through the people that we admire.

Here are some of my whys for living

  • Write Books – help my kids; establish expert credentials; challenge my mind; get my ‘story’ straight
  • Blog – use my best form of expression to connect with like minded people to share my experience so we all feel less alone; experience gratitude from sharing my story; hold myself accountable to the ideas that I express publicly
  • In My Family – fulfill my role as a member of the family; What’s that role? Just love ’em.

At the care center where I volunteer, they have a flow chart that helps the team figure out when to act. I probably walked past the chart 50x before I gave it a read. The first question was revolutionary:

“Is this my domain?”

Each time I’m tempted to engage, I’ve been pausing and asking, “Is this my domain?”

It’s been eye opening to discover how much of my life isn’t my domain. In fact, I can ditch much of my internal strife by sticking to my domain.

Sometimes, it is my domain – take, my kids. With a pause, I get a chance to consider my goals, “teach my kids by my actions.” If I don’t want them to freak out with each other, then it helps not to get caught up in transient dramas.

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Being angry at injustice is a source of energy. If you pay attention to it then you can simply open up to the feeling and change the emotion. Anger, with a bit of time and breathing, can change into a desire for positive action.

That sounds great and I might get there. However, I’m not that Zen, so I convert my negative feelings to a drive to empty the dishwasher, take out the trash, fold the laundry or vacuum.

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Later, I look deeply and consider what’s really driving the response.

Often, I will try to con myself that I want to help others but, in my case, it’s a desire to make the world more like me, or get you to change your opinion to show me you care.

If I’m still stuck then I look for a way to send the person a little bit of love – a kind comment, any small gesture to help alleviate their pain. For people that get caught in hate, there’s always a source of pain that’s hidden from our view.

One kind word can break the chain.

Don’t Know, Don’t Care

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Lexi's Pink BootsA story that runs far beyond your portfolio.

Like most of us, I tend to shun painful thoughts, people, experiences…

However, in reading a book on finance, Your Money & Your Brain, I discovered a better way to think, and live.

Don’t Know, Don’t Care

Rather than getting rid of whatever seems to be bothering me. Why don’t I move my life towards a position where I’m OK either way.

In the finance book, the author was making the case for passive investing.

  • What’s going to happen to… ?
  • Should I sell?
  • Should I buy?
  • Where will interest rates be next year?
  • Corporate profit margins, availability of bank credit, tax policy, insolvency risk, terrorism, politics….

There is no end of worries available to you.

If you’re following a passive strategy with a fixed monthly investment then none of the above matter.

Another benefit is I don’t have to follow the noise that’s constantly pouring out of the media.

Once I saw the logic of changing one area of my life, I started to consider the other areas where I trade happiness, for worry.

Step into the mind of young woman:

  • Will they like me?
  • What will they think about my shorts?
  • Do my shoes match my outfit?

Sweetie, I don’t know but I think you’re terrific.

The “don’t know” strategy doesn’t make me immune to the opinions of others, but it gives me a mantra to occupy my mind on something more useful than worry.

Life is none of my business.