Tag Archives: decision making

Beware Of The Fun Police

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Can you write a list of the things that make you laugh?

Since last summer, I’ve been working on three traits:

Humility – taking the appropriate space for a situation. My work with hospice challenges me to listen, to not-solve and to focus on quiet presence.

Equanimity – practicing not-reaction, not-replying and letting it roll. First in my actions, then in my words and eventually, I hope, in my thoughts. To challenge myself in this department I’ve opened up my social networks a bit. I’m doing well with not replying in writing – less so with not replying in my head!

Enthusiasm – I’ve noticed that the best parents and teachers have managed to hold onto their childish enthusiasm. Discipline, divorce, insolvency, fraud and positive feedback from being serious… have driven away most of my boyish enthusiasm. It takes a lot of exercise, or alcohol, to get me to let loose.

Why is fun important?

I’m awful at predicting what will make me happy. My default response to stress – sleep more, drink more, do less, eat more and take it easy – is a personal disaster for me.

It’s been this way for a very long time and I have learned to cope via two main strategies:

The Big Hairy Goal – via external validation – I wrap my identity around achievement of something most people find too difficult. The “can’t” of others becomes my reason to live.

Habit – flowing from the BHG, I create a plan that requires me to get out of bed and do work.

I’m not convinced that my method works for serving my wife, kids and family.

So I’ve been paying attention to what makes me laugh.

Laughing happens at times, that are very different to what I believe will make me happy.

  • Adversity – especially extreme weather adversity
  • Riding uphill at altitude
  • Jogging in a forest – trees (and oceans) make a difference to every experience
  • High quality coffee – strong – as in, coffee you feel
  • You Tube – the Fun Police would look down on the stuff that makes me laugh
  • The Onion – my #1 news source
  • Memories of Molina, my buddy KP and Penfold – I’m grateful that my mind skews my experience
  • Being with my wife
  • Aussies – the more abrasive the better
  • Chris Rock – this one makes sense
  • My son, Axel – laughing with a two-year old? I thought “less toddlers” was the answer
  • Sunrises – isn’t getting up early supposed to be a hassle?

Combos are even more effective – riding uphill, after strong coffee, in the snow, thinking of Molina… that’s a powerful laughter inducer.

The most dangerous fun police are the ones living in my head.

Letter To My Kids

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Sitting here at 45 years old, I realize that my kids (5, 2.5 and 1.25 yrs old) will never know the man that I am today.

What can I pass along today that might be useful to them tomorrow?

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Choices

Don’t waste energy worrying about decisions. Most of the choices that you will face are win-win in nature.

  • The school you attend.
  • The major you choose.
  • The clothes you wear.
  • The company where you work.
  • The city where you live.

The above influence our lives but they aren’t mission critical.

What’s mission critical? Well, there are some choices that have life changing properties.

Choices that move us away from severely negative outcomes.

An obvious example is “stay out of prison” – drunk driving, chronic speeding and theft have a high risk of a felony conviction.

More subtlety, the best decision that I made in my 20s/30s was replacing drinking with exercise. At the time, I replaced one excess (drinking) with another (elite endurance sport). If you find that you’re obsessive (and many people in our family are) then replace your negative habit (promiscuity, alcohol, addiction, anger) with something less toxic (meditation, nutrition, exercise, yoga, work).

You’re unlikely to be able to transcend your drive. That’s OK. If you can get yourself into your 40s without too many mistakes then your body will naturally slow and you’ll find it much easier to live in your skin.

In our family, moving away from abuse, addition and promiscuity has been a way for us to improve life for everyone that follows us.

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Your Relationship With The Truth

I can catch myself wishing that you’ll be doctors, leaders and externally successful. To the extent that I lay any of that on you know that I’m projecting my own values.

What’s most important?

Remember that truth is relative and pay attention to:

  1. How do the people around you make you feel?
  2. Are you tempted to lie because of your actions, your friends or your work?

Who, and what, ever your become, I promise that you’ll see the world differently at 30, 45, 60, 75 and 90 years old.

So what endures across time?

  • Taking action for what you believe in.
  • The internal peace that comes from living truly, inside ourselves.

Be aware the certain fields have a high risk for poor decisions. I’ve worked in a couple (finance and elite sport).

How will you know if there are risks? Pay attention to the lies. You will see lies in others before you start telling them to yourself. Small lies matter because they can be a symptom of corruption that you’re unable to see.

It will be a huge hassle to change direction when you discover lies – it always was for me. However, it’s the right thing for you to do. Ask me for stories and I’ll share.

Move away from people and situations where you can’t speak openly about the truth.

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Exercise Is Medicine

You have a body that is a high-responder to exercise.

Do something active every day of your life and stop doing whatever prevents you from achieving a daily streak of exercise.

Taking my advice from the start of the letter… Don’t worry about what you do.

Remember that the benefit comes from the doing.

Values Game

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I came across a free eBook from Tony Robbins. In the book, Tony asks the reader to rank pleasure values. His suggested list: love, success, freedom, intimacy, security, adventure, power, passion, comfort, health.

I took the bait and ranked things:

  • Freedom
  • Success
  • Adventure
  • Health
  • Love
  • Power
  • Passion
  • Security
  • Intimacy
  • Comfort

Tony then shared that we will do a lot more to avoid pain than to attract pleasure. So he asked the reader to rank aversions to: rejection, anger, frustration, loneliness, depression, failure, humiliation, and guilt.

Once again I mapped it out:

  • Failure
  • Anger
  • Frustration
  • Depression
  • Rejection
  • Humiliation
  • Guilt
  • Loneliness

In the book, he gave examples on how values conflicts can set up misery. For example, do we know our spouse’s rankings? Do our (more powerful) aversions operate to sabotage our desires. For example, see Success vs Failure in my lists.

Having done the work to rank my pleasure/pain values, Tony recommended writing down the rules associated with our top drivers. I didn’t think too hard and wrote quickly…

  • Freedom – when I control my day and have space in my schedule
  • Success – I am already successful
  • Adventure – when I have new experiences
  • Health – vanity, use my body for adventure
  • Failure – when my kids don’t behave or yell at me
  • Anger – when my kids don’t behave or yell at me
  • Frustration – when my kids don’t behave or yell at me
  • Depression – when my kids don’t behave or yell at me

Pretty clear how my rules are creating periods of parental misery! As well, my rules are completely impractical for living with young kids.

When my oldest was young, she could quickly bring me to tears by crying. I got past that pain by borrowing my mother-in-law’s rule that “babies need to cry.”

I also created my own rule, “when they’re crying, they are alive.” My rule addressing my fear that my kids might die (!) if I didn’t cater to their every whim.

Some mantras:

  • I am free when I breathe through the energy of strong emotions
  • I am successful when I let my actions be the lesson
  • The randomness of life is an adventure in itself
  • Let go of outcome, be the brand

All of the above are lessons that I taught myself in athletics and need to relearn inside my house!

I had a wry smile when I realized that I was closed to Tony’s teaching because of his happiness!

Ten Hour Transformations

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A practical example of why the only way to change everything is to focus on changing one thing.

Thinking through my relationship with my daughter, I came up with the following for a minimum commitment to see results…

Ten hours per week:

  • An hour per day as 30 minutes AM/PM;
  • Twice a week do a trip together for 90-minutes (go swimming, ride bikes, trailer ride or park visit)

This structure has me focus on making the small interactions (first each morning, last each night) quality.

With my kids, where I fall short is working on the quality of the little things. I didn’t notice this until last month when we suspended TV, iPad, electronics. To stick to my guns with the electronics ban, I had to interact with my daughter and she had to learn other ways to fill her time (drawing, stacking blocks and playing house).

I learned a lot from the process. Our daughter’s behavior improved and I was forced to face my laziness with engaging with her.

Just like bedtime routines, maybe acting out was driven by a need to get my attention.

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Another area for applying ten-hour commitment might be improving health. You might apply as:

  • An hour per day as 40 minutes walking/cycling in the AM and 20 minutes eating a mixing bowl of salad in the PM;
  • Twice a week – stock the house with healthy options – an hour each time
  • Twice a week – strength training – 20-30 minutes each time

That’s going to capture nearly all of the health benefit from my current lifestyle. I like to exercise more than an hour per day but that’s for mental wellbeing, rather than physical health.

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The above makes it clear, at least to me, why I can only work on one thing at a time.

  • Wife
  • Three kids
  • Amateur sport
  • Job
  • Reading
  • Writing
  • Yoga
  • Spiritual Development

If I seek to change everything (~100 hours per week) then I’ll become overwhelmed and lose the consistency required to achieve anything!

Choose Wisely.

Changing Everything

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A favorite question:

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

It can be uncomfortable to acknowledge that our current life experience is a result of the (mostly mental) habits that we’ve created to date.

When I ask myself the above question, I compare my answer to where I spent my time over the last week. I often find myself lacking focus.

Creation of Habits + Time = Life Situation

With the above equation, I consider my habits of thought, action and speech. Listen quietly to any person and they will tell you what they think of themselves (by the humor they share about others).

Because we are mostly operating on autopilot, Free Will is found at the margin of our lives. So, to change EVERYTHING, we need to figure out our ONE THING and focus our Free Will.

Some things:

  • Getting fit
  • Family income and expense balance
  • Gaining control of my schedule
  • Losing weight
  • Being able to ride outside in good weather
  • Being able to eat and drink as much as I want
  • Finding love
  • Publishing a book
  • Winning a special race
  • Finding a sexual partner

I’ve had many “one things.”

So many that I joke with my wife, “Honey, I think I’ve finally found THE answer.”

I joke but there have been several things that have proved transformative:

  • A kind spouse that motivates self-improvement
  • Capital to support freedom of occupation and location
  • Weight loss and exercise leading to wellness
  • Shedding disharmony – in my own mind and in my choice of peers
  • A willingness to own, and share, my errors
  • Living in a beautiful place where I enjoy an outdoor life

Right now, I have two things:

  • Reducing the fatigue that I experience from parenting
  • Achieving income/expense balance

What’s your thing?

Awareness is the first step towards transformation.

Sustainable action consists of building the habit of one small action, done first each day.

Taking Money Off The Table

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With markets high and interest rates creeping up, some people might be thinking about selling portions of their holdings.

I’ve had the opportunity to “cash out” on more than one occasion. Looking back, I completely missed how freakishly lucky I was to have the opportunity to choose.

One time I didn’t take the money, the other time I did. Both decisions worked out OK so I’ll share my process.

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First, when I make a buy/sell decision I try to value the asset independently as well as consider what the situation is worth to me.

For example, my current business (consulting) is worth far more to me than it would be to a third party. Unique benefits are: gives me a voice, allows me to get paid for what I like to do, allowances for vehicles/home office, gives me an opportunity to help my local community, brings me close to my friends.

Always consider the non-financial benefits of your current situation – these are hidden to third parties, who rarely give you value for them.

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The biggest decision financial decision of my life was when I chose to hand back a partnership in a private equity firm. I was 31 years old and, while the opportunity cost was huge, I figured that I could get back to my old situation if I was willing to take a pay cut.

Again, I completely missed my extreme good fortune to be able to choose. Not surprisingly, my peers and family thought I was nuts.

Take Home Point: my downside position was my old life back with less money coming in.

Take Home Point: once you get five years living expenses off the table, it gives you flexibility in an uncertain world. I achieved that goal early in my first career and it gave me freedom to take risks. With this goal, the toughest part is lifestyle humility. I was lucky to start my career working for a very humble man.

Implications of Failure/Black Swans: Getting things wrong at 31 wouldn’t have been that big a deal as my fall back plan was asking for my old job back. Consider your fallback plan.

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Roll forward five years:

I was out of the PE business for five years, recently married and co-founder of a company that did property development. In the intervening five years, I co-founded a fund management business that was doing well.

Age – 36 years old, still young but now with a wife and new life that wouldn’t make it easy to return to Private Equity.

Net Worth – illiquid with a personal g’tee into the General Partner of the fund management company. I had placed myself in a position where I could lose more than my total net worth. Not smart!

Implications of failure/black swans – personal bankruptcy, loss of personal freedom, starting from scratch, return to big city living – highly unattractive, especially given my love of inexpensive living (cycling, forests, reading, writing).

I told my business partner that I wanted to sell out and would accept any terms that worked for him. He bought me out over three years at a 50% discount to third party offers we received. He wanted control and the price was good enough.

In this case the intangibles (control) made the deal highly attractive to the buyer. I didn’t get wrapped up in fair value, what I needed was a deal that was “good enough.” When you are selling to the operating management, you are very likely to take a discount on fair value.

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From twenty-five years of spending time with the 0.001%, here is what I’ve noticed about money and wealth.

A – having 5 years living expenses, in cash, gives tremendous flexibility. Whatever that # is for you, it represents the highest utility aspect of your financial life. Nobody can make you do something you don’t want to do when you are able to hit the road and know that you’re OK for a long while. This is huge.

B – if you’ve built a successful business then you’ll never be out of work unless you are permanently disabled (insure that risk now). That said, consider if you are comfortable with the worst case scenario. Reading Taleb saved me from personal bankruptcy.

C – depending on your age, there is a magic number where you will be able to survive without working for the rest of your life. Most the wealthy folks that I know (call them the 2%) scale their lifestyle so they never get there. They don’t even get to the enviable position of being able to work at what they love.

Keep it real. Spending time with people that have 5-10% of your net worth is a smart use of your time.

With fitness, and finances, most people aspire to spend time with people that have FAR MORE than them. This screws you up.

If you want to feel good about your life then teach people that have less.

A couple weeks each year I live like I did when I was a student – I look forward to these weeks as they keep me grounded and get me OK with personal downside scenarios.

Small businesses have limited exit windows. Part of what pushed me to sell was a funding environment that seemed crazy to me. Separate from my views on valuation, I knew that the easy money wouldn’t last. I got the timing wrong on the contraction but it came eventually.

Difficult Conversations

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Over the last year, I have been travelling to learn about my friends’ lives. The trips are short, and we have the opportunity to talk a lot. By keeping the trip short, and going to my pals, the quality of the conversation is high and the inconvenience to my family is small. The trips have a large payoff for me:

  • Gratitude for the life I have
  • Learn what’s good about their lives – try to figure out the payoff from living like them
  • Make sure I see friends that I want to keep in my life
  • Learn about an aspect of their lives where they have different knowledge than me (teenagers, aging, the transition to adulthood, healthcare, performance psychology, grief & loss).
  • Do something random to generate new opportunities.

One of my favorite discussion topics is managing difficult conversations. For example, a challenging situation for doctors is telling the mirror image of themselves about the arrival of their greatest medical fear – cancer or terminal illness.

I ask questions about.. How to cope? How to be effective? What is best practice?

These skills are useful at work and are essential to create an exceptional family web. I’ll share what I’ve learned so far.

Before a difficult conversation, pause and remember:

  • This situation is not about me
  • I am part of the solution
  • Be cautious
  • Understand that I will make incorrect assumptions about everything around me

The points above get me in a relaxed frame of mind, especially when combined with my Big Meeting Protocol. The mental preparation works best when combined with an on-going process of self-reflection (that I like to do while cycling). You’ll be surprised that you can mute your emotional triggers by awareness that they exist.

Understand your hot bottons – examples might be: not caring, not doing enough, letting someone down, past mistakes where I’ve yet to ask for forgiveness, or not addressing areas in my own life where I need to make change.

Know your desired outcome – examples might be: clear communication, exit a relationship, create consensus, make better decisions.

Follow up in writing – if the conversation triggers fear, or anger, in the other person they are unlikely to remember the conversation. Even if you’re hearing each other, everyone hears a different conversation. Certainly, everyone remembers a different conversation.

Focus on helping the other person – I’m more likely to get my desired outcome if I help the other person achieve their own goals. A doctor might ask a terminally ill patient, “is there an up-coming event that we can focus on getting you to attend?” Alternatively, a family member might have concerns about public perception, confidentiality or independence.

Remembering my tendency to make incorrect assumptions – I like to gather information from the other party so I can better serve their needs. Often, a person’s needs are as straightforward as being listened to, respected and valued.

Finally, I remember that my mission isn’t to change others…

  • …because I don’t know best
  • …because I have my hands full with myself
  • …because my life is my source

Antifragile Thinking – New Old Ancient Nature

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How can we use volatility to improve our thinking?

Rank the incoming information according to age – New Old Ancient Nature – if in doubt then choose the older option.

Remember that time will kill most ideas and concepts. Be willing to miss out on the latest/greatest – pay attention to concepts that are proven by time.

I coach a surgeon and his Dad was also a doctor. Now retired, the older doctor noted that “everything I learned in med school turned out to be incorrect.” Now clearly, everything wasn’t wrong! I would love to ask the doc, out of everything you learned, what was right?

We might get a list like:

  • Hygiene – do it
  • Blood pressure as leading indicator of a need for lifestyle change
  • Smoking – avoid it

Thinking back to my own education (economics and finance). What proved to be correct?

  • Track the cash
  • Interest rate trends
  • Mean reversion
  • Compounding

Another field that interests is endurance sport:

  • Consistency
  • Variable Stimuli
  • Strength and Stamina
  • Specific Preparation

Nutrition:

  • Restrict the “new” – refined, processed, modified, engineered
  • Focus on the “old”  – ingredients your great-grandmother could have eaten

In a field that interests you, what are the three concepts that have stood the test of time? Focus on those concepts.

As you discover the power of this concept, you’ll benefit from reducing the fire hose of noise that reaches you daily via the media, advertising and social networks. These sources of info are “new” and. therefore, useless at best. More likely, they are misleading and reduce the quality of our thinking.

To improve my thinking, I need less noise in my head. “Not-thought” is what makes “good thought” clear to me.

Turning this on it’s head… if I can increase the amount of “no-thought” then the depth of my insight will increase and I’ll be able to see the useful info contained in what gets through. Implications:

  • Reduce email – a favorite from Taleb’s AMA is limit to 15 messages per day
  • Restrict media and eliminate the most noisy sources – television, chat forums, Facebook, reality TV, talk radio
  • Schedule breaks to settle mind (exercise, mediation)
  • Replace mental habits that clutter thinking
    • envy replaced by being happy for others
    • over-correction replaced by finding the good
    • Tinkering replaced by letting it ride
    • anger/fear/sorrow replaced by gratitude

I find that I don’t need to be charitable for the above to work. 

“Thank God, I’m free to act differently than that person.” triggers gratitude and let’s me move on.

Risk and Pain

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Reading my last two columns, you may have felt an emotional response. If you aspire to a big house, or send your kids to private school, then you likely stopped reading. Why?

Ideas that conflict with the default decision create pain. Our brains don’t like pain so switch off.

For high value topics, both financially and emotionally, it is worth training the ability to stay engaged and work through the answers. Adding together the last two columns, most of us are looking at $3 to $8 MILLION worth of expenditure. That’s simply two topics – smart decision making is worth serious cash for you, and your employer.

The last sentence is an example of how I stay engaged — make the question “bigger” that the local issue that’s causing you pain. I have to stay engaged with housing and education because my larger issue is an ethical life with meaning (that’s free from unnecessary financial stress).

Making the issue bigger is called “broad framing” and it’s an effective tool for pain management. In addition to framing, I ask:

  • Where is the pain?
  • Is it a gain, or a loss?
  • Is it small, or large?

Kahneman’s book contains a risk matrix that lays out situations where we will seek/avoid risk. What most interested me is that we can frame choices so our “irrationality” works in our self-interest. Kahneman has excellent examples (litigation, negotiation, organ donation) that you may have heard over the years.

Two weeks ago: I asked if the big house is worth $7,400 every single month?

  • I made the financial costs visible
  • I made the financial payments frequent
  • I wrote the article while living alone in a small two-bedroom condo

I made owning my “big house” more painful. Then I asked myself, am I feeling a million dollars worth of pain? Hell no, I replied!

One week ago: I asked if private education is the best way to invest in my children?

  • I framed the question as broadly as possible
  • I made the goal to maximize the overall benefit to my family
  • I used a reference group of other people’s children

This removed feelings of pain. The default option had me thinking that spending on education equals love. That’s an emotional error. The true choice is directing family investment to maximize benefits for everyone. Broad framing is an effective counterbalance when people seek to link spending with love. 

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Let’s consider two more areas where framing might be useful: nutritional supplements and helping family members.

Nutritional supplements remind me of lottery tickets. We accept that they are largely a waste of money but there is a remote payoff of everlasting life.

As a public service announcement, a friend of mine pointed out that we might be increasing our risk of death through unnecessary supplementation. My buddy is a nephrologist, Vice-Chair at the Mayo Clinic and an assistant professor of medicine.

Does that reframing change how I feel when I watch my daughter eat multi-vitamins? You betcha!

Investments of time are often more costly than investments of money. Munger’s Psychology of Human Misjudgment (and many other sources, including Kahneman) point out a few things about how we see our role in the world:

  • We overestimate our ability to influence events
  • We overvalue the recent, the present and the status quo
  • When we think about risk, we overestimate the risk of highly-salient negative events (terrorism, plane crashes, homicide).

Combine all of the above and we are prone to large errors when it comes to people that are close to us (peers, friends, family, kids). That’s hardly news, until you consider the top two emotional drains in your life.

Do it now – what are the top two emotional drains in your life? Do you have key relationships that are more about negotiation, than love?

Unless a supplement-eating friend dies of cancer, the vitamin discussion is unlikely to have a visible impact in your life. There’s a financial cost from buying unnecessary goods but most of us would spend our vitamin money elsewhere, rather than save it.

However, the emotional drain from continuing to pour love and money into the worst performers in our life is worth considering. To help myself here, I set my goals looking to the future:

  • Break the chain – pain that comes to me, stops with me
  • Forgive – by acknowledging that people who bring the pain, received it from someone else
  • Acknowledge – that my ability to impact the world is limited, and mainly achieved via how I improve myself

If that seems a bit soft then consider a risk-policy to never fund a losing situation. In the acquisitions business there is a simple mantra, never fund operating losses. In the markets the mantra is only losers average down.

In human terms, it could mean that I help pay for education, addiction treatment, health care… but we each need to take care of our basic living costs. If someone can’t help themselves then I’ll take the pain (of watching them fail) to create the motivation for a change that will result in future benefits.

The re-framing is a change from “prevent pain” to “create the conditions for positive change.”

These are difficult decisions to make with close friends and family. However, the expected payoff (time, money, emotion, love) is far greater.

Bottom Line: Break the chain and frame wisely.