My wife asked me to share ideas about our marriage.
I’m better in writing, so I figured I’d leave this for my kids, and you.
16 years – it went by in a flash.
My inability to feel duration, can make me a little sad. I have a hunch that soon I’ll be an old guy wondering what just happened!
Acknowledging the reality of the fleeting nature of time… it is useful at helping me stay focused.
No time to waste.
VP Pence took heat for his rules of marriage. To me, they were OBVIOUS and reflect how I act.
I met my wife at the pool. As a result, I don’t train with attractive, athletic females (other than her – she’s very attractive).
I don’t consume alcohol with females, or anybody else.
I don’t find myself 1-on-1 with females, especially other people’s spouses.
The above is a simple risk mitigation strategy. Applied across domains, over 50+ years, it works.
I keep myself away from situations where a poor decision results in ruin.
I pointed this out with regard to Andy’s accident and it applies everywhere. The decision is best made before you have to make a decision.
How do you stack up?
So many have conflicts over money.
Since the late-1990s, I’ve paid the living expenses of everyone (male/female) who’s lived with me. By the time, our youngest graduates high school the bill will be over $6 million.
My favorite wife-quote about family finances is when she said to me, “What do you know about money?”
I just smiled.
I know how to make it, when to stop reaching for it, and what’s more important than money.
My financial knowledge has enabled our family to live a good life AND I have been able to educate my kids.
Most parents want to see their kids grow up. I made a choice to go one step further. I’m educating our children in how I see the world. These lessons will endure into the next century.
Invert => how much of your family’s financial wealth from 1950 do you have right now?
My ancestors legacy is good ideas, memories of what didn’t work, a debt-free education and a life-changing introduction to my first boss in finance.
To finance our life, I need one good idea per decade. The rest of the time I avoid mistakes, and manage spending.
It takes a lot of effort to avoid mistakes. I write this blog to help my kids identify their inevitable mistakes.
Mistakes are effective teachers, I “manage” by:
letting things go wrong
letting other people be wrong
surfacing, considering and fixing my own mistakes
Across 50-100 year time horizons, wealth habits add up. A simple annuity calculation (laid out many times in previous blogs) will show that my choice to avoid financial conflict will end up “costing” my heirs millions.
The human capital I am building will more than cover this amount.
Ruin Not Experienced (divorce, substance abuse, spending, investment)
There is deep, multigenerational wisdom when we act with long time horizons. In my current life, I try to be the parent I’d like my grandkids to experience.
What are the choices that caused your family tree to lose capital, lose members and lose productivity?
Be as open as possible about errors, they tend to repeat.
Two years ago, my son decided to hold up his finger and yell, “BOOGER!”
Yes, there was a nasty one hanging there!
As I sorted his booger, I decided to fire every staff member in my life.
An unimpeachable moral authority stemming from out-working everyone around me
Relentless attention to detail (in myself) – no days off, no exceptions
A schedule that enables me to follow up on the above, especially when it’s inconvenient
Before talking to others… How do I measure up?
Confidence comes from knowing you can outwork your competition over long time horizons. My kids are very confident, with good reason.
Tough to beat.
Let’s talk about staff.
We got through the highest stress period of our marriage (babies and preschoolers) because I had the courage to make a poor financial decision. I spent money so we could maintain some sort of life between the two of us.
Our recent trip to Death Valley let me price opting out (of living in the real world).
160 student contact days ($50)
Leaves 205 non-student contact days ($200)
365 overnights ($50)
Multiply that out, gross it up for payroll taxes => $80,000 per annum and I can watch someone else deal with my kids boogers… 😉
I’m sure many professional people cut that number in half when calculating the exit cost from an unhappy marriage, or when feeling overwhelmed (as we all do) with a young family.
But is that winning? Before blowing up a marriage, look two generations out, consider your unborn grandkids.
I don’t serve anyone by having my family see me opt out.
Queen Elizabeth comes to mind. Still grinding!
The goal of life is not to opt out of the obligations of citizenship, or be worshipped for position. To build a successful organization, requires a long term commitment to service.
Even then, there’s going to be scandals, setbacks, challenges and very good reasons to quit.
Keep moving forward and be comfortable with what you control (your actions).
Goodness, in action, inoculates one from the options of others.
Finding => Be the person you want to marry => you’ll have a positive influence on everyone around you and, when things don’t work out, you’ll be well placed to keep moving towards better.
Retaining => Be clear about your minimums => cleaning, sex, financial contributions, social engagements => table everything you hear your friends complaining about.
Optimizing => Take care of yourself => knowing it is better being married to an athletic spouse… I need to be an athletic spouse.
Being Effective => Do not manage from the couch => If you don’t care enough to stand up then let it go.
Willful Blindness Is The Seed of Bitterness => Be clear about what you don’t want => very few people want to be left alone and, even the kindest partner, is likely to grow bitter when the “division of inconvenience” is out of whack.
Knowing actions matter, I watch => in myself, and everyone around me…
What is done first?
Ruthlessly honest inventory of time allocation. Do not fool myself by saying something is important, when I allocate little time to it.
What am I doing when I am willing to inconvenience myself? My core values live here.
Is there something small I can do, daily, to support the people who are essential to me? Have I asked?
I try to stay humble by remembering how each chapter of my family’s story will end.
Iterate towards better. Document, then share what works.
Often, when sharing my experiences verbally, the listener thinks I am:
talking about their life
giving them advice
suggesting they are wrong
Any one of these is enough for a conversation to go sideways.
Better to blog!
There are a couple areas of life I know well.
I know these areas well because I have been able to live the lessons of the largest mistakes that have been made around me. This is my superpower.
So, I guess, when sharing my opinion on sensitive topics, it would be best to preface my observations with…
You could do that, you would certainly be justified. In fact, my family tried that a few times. However, for us, that course of action ended in a multigenerational disaster.
My mom died last year, so she won’t mind me sharing a family anecdote to illustrate my point.
Many years ago, I visited mom in Vancouver (our hometown). On the visit, she said she wanted to introduce me to a friend. I agreed and we headed off…
…to the courthouse!
Her friend was a security guard at the courthouse.
I didn’t get served with a summons but the introduction was a little weird. The guard was polite and we exchanged small chat before heading on our way.
Over the 1990s, mom had whittled down her peer group to a security guard at the courthouse. Social isolation did not have a positive impact on her mental health.
Her mental health descent was a biggie.
I have a childhood memory of mom being the cover story on Vancouver Magazine. It was a time when she was busy, engaged, productive and socially connected. One of the most successful businesswomen in town. Beautiful, happy and a very good mother to me.
FWIW, I look at the Free Britney movement and think we should give that family space. Many elements of that story fit pieces of my family history.
In a war, disagreement or divorce… at some point, someone has to stop fighting, regardless of the facts.
A few years after her Cover Story, mom’s life started to fall apart. In the process, she got into a habit of not letting go, of anything.
Mom sued everyone possible, for as long as possible, and achieved nothing but negative consequences for all parties.
I inverted and applied this lesson, the lesson of watching what happens when we don’t stop fighting, as the guiding principle of my adult life.
My adult life truly started when I stopped engaging the toxic personalities in my life and… used money to avoid BS, the highest utility spending I know!
One example, I bought the contents of my home when I got divorced. I’d purchased everything in the first place, and paid off my spouse’s debts when we were married. So it seemed silly (to me) that I had to purchase everything again.
But I’d learned the lesson.
…and the check was small relative to the BS that would have resulted.
When you are thinking about using money for revenge… …better to use it for a clean exit, that moves you towards your long-term goals.
By the way, I could tell you all kinds of stories about “what was done to me” during my divorce.
My former spouse could do exactly the same.
We’d both be right.
Our stories would be true, and some would appear diametrically opposed.
Rather than arguing truth…
Sit back, pause and consider…
What’s best for the youngest members of the family?
What actions should I take with their interests in mind?
Ironically, in my divorce, I was the youngest person involved.
I took great care of my future self.
This isn’t always the case.
Kids bear all the pain from family conflict and receive none of the benefits.
Do you want to hear what was done to me? Actually, no. That wouldn’t be helping you, or the youngest members of your family.
What’s the outcome you want 10 years from now? Get to work on that.
A online physics course reminded me of the ways we get ourselves in trouble. I tried to explain this to a buddy and he replied, “there’s simply too much to worry about.”
I’ll give the explanation another shot.
Better thinking is not building the capacity to worry constantly, about more things. Better thinking is about training ourselves to focus on making a limited number of excellent choices, given imperfect information.
When to worry?
Where to focus?
Limits to Knowledge
Snowflakes: even if a human mind could know everything there is to know about water molecules, it would not be possible to predict a snowflake’s structure.
Mobs: understanding individuals, in isolation, tells us very little about the actions of mobs, or markets, or cities, or nations.
Lots of other examples: DNA to elephants; Neurons to consciousness; the patterns of a sandbar; the shape of a cloud, politics, wars, life sciences.
Clouds are a current favorite of mine – a reminder to stay humble with any bet that requires me to be correct about outcome.
I’m currently debt-free. As a result, I’m able to make more mistakes, be less correct and less impacted by outside factors. The value of this position doesn’t show up in conventional analysis.
Properties that emerge, at scale, make prediction impossible. Joe Norman’s presentation at RWRI helped open my eyes to this aspect of our reality.
I don’t need to become a complexity expert to apply this knowledge. What is essential is understanding the nature of the system in which we find ourselves.
Are we in a complex system?
Are we in a system subject to extreme events?
To answer my friend’s question, “when to worry?”
Complex systems, subject to extreme events… exposures here are worth the time to carefully consider.
You don’t need to be the CEO of AIG to get bitten on the butt by complexity. If you’ll get fired for the mistakes of one of your direct reports then, given enough time, you’re fired.
Sudden unemployment is one way the nature of universe can come home to roost. Happened to me in 90-days at the end of the last boom.
Here’s another… if you woke up and discovered an undisclosed $20 billion dollar loss in an important counterparty then what would that mean to your life?
What about your family, your employer and your portfolio?
Concentration is a risk we can mitigate. It’s why I have unrelated jobs and several cash flow sources. Here again, conventional analysis fails to capture the value of this position.
In 2021, in a very benign financial environment, we’ve seen multi-billion dollar losses pop up in a week, or less. Rapidly emerging, massive losses are a feature of our system.
Things, that have been stable for a very long time, can disappear quickly.
Prediction: our minds love to predict, to assign causation and to tell stories about the world around us.
Grasping for a “why” is a waste of time.
When operating in complex environments, most importantly when surprises can bite me in the butt, I need to constantly remind myself NOT to make predictions.
For myself, I actually need to go further, I need to implement a policy of NEVER making predictions and NOTING surprises. There is useful information contained in every surprise.
Even further, I shun input from individuals (especially smooth talkers) who make predictions. A reason why I try to never watch videos — too persuasive.
I’ve found that even a little prediction, it leads me down a path of wasting thought.
What’s likely to happen – what happens to me if the opposite happens?
What’s the worst that can happen – can I mitigate?
Does the situation appear reasonable – given the above
There are games, investments, relationships and opinions… I don’t need to play, make, engage or have
There are a lot of business where “the burden of the worst” falls outside of the beneficiary class (government, general partners, VC, private equity, OPM, CEO-class, banking).
We can waste a lot of energy railing against the system, I’ve found it much more useful to make sure I understand…
My family cannot afford to take the same risks as my employers, my shareholders and my government.
This is a lesson I learned through, rather expensive, experience when I left Private Equity.
No Prediction => focus on getting rid of ruin => subject to not becoming a casualty myself… education of youth “buys” more than portfolio returns, or my personal savings rate.
Conventional analysis fails to capture the present value of teaching how to avoid future mistakes.
Risks => practices that make sense for large entities, given time, will wipe out my family
So my point was…
There is more to reality than we are capable of comprehending.
Stable situations can become fragile at scale.
There are certain domains where acting “irrationally conservative” can make rational sense.
We are going to be surprised over, and over, and over, again.
Philosophically, one could say reality is pointing towards a deeper form of intelligence.
From a more linear point of view… the next time you are on an airplane, write a list of your concentrations and counterparty risks. Blow them up, one-by-one, and carefully consider if you need to mitigate.
I was going to take a break from posting but this topic gives me an opening to share something useful with you.
So here goes.
First, I know next to nothing about crypto.
Fortunately, my life has been set up to take into account that I am clueless about many things!
I think we can start by agreeing that crypto is volatile.
So I’d suggest you start by thinking deeply about how you, your significant other, your family and your coworkers tolerate volatility.
I don’t need to think deeply. My family abhors volatility. They get nervous about stuff we don’t own.
Personally, I tolerate volatility but tend to sell early. By way of example, I am absolutely certain that I would have sold Amazon 20+ years ago. Grateful I didn’t short it.
So, regardless of the fundamentals, I’m not a good fit for the asset.
About those fundamentals, I can’t see them.
I could learn about crypto but, while learning about an asset class that isn’t a good fit, I am not working on something else.
Let’s repeat that… while thinking about one thing, I am not thinking about another thing.
The opportunity cost of mis-directed thought.
Say I get there – I’m comfortable with the asset class, and I’ve gotten myself and my investment committee past the volatility issue.
Will it make a difference?
Buying, not buying, selling, not selling. Being right will not make a difference in my life.
The opportunity cost of incorrect focus. Big one.
If asset classes don’t make a difference then what does?
I was thinking about this on my run this morning. So let’s start with that… dropping fat, maintaining a stable weight, daily movement in nature, improved strength… big difference!
Since shifting my primary focus away from money, my body has had the opportunity to do a lot of cool stuff.
Trying to get more, of what I don’t need, can prevent me from getting something useful.
Leaving => I wrote about considering if an asset is a good fit for an owner. What about life?
Leaving makes a difference.. every single time I realize I have different values than my peers, I exit => patiently, quietly, doing a good job on the way out.
I need to watch this tendency. Making a habit of leaving is not going to take me where I’d like to go. Stay where I belong.
Building => Don’t look for easy money, build something.
I helped a friend build a business. Unfortunately, he lied to me and stole money from the investors. Interestingly, when the dust settled, that didn’t make a huge difference. If someone isn’t trustworthy then it’s better to know, as soon as possible. In the end, I learned a lot and walked away with 25-years living expenses.
Learning, while building capital => made a difference, up to a point of rapidly diminishing returns.
As you age, I recommend you transition your focus from money to relationships. Because…
Family => marrying well, raising my children to be exceptionally kind and athletic… makes a huge difference, much more than spending the last ten years building wealth would have done.
Having the courage to change, so my kids’ values are a better fit with my own.
We tend to over-value what we see.
We see crypto rocketing and we think it must be a good idea. It might be. Like I said, I know nothing about it.
But what we don’t see is often more important.
Thinking about that on my run… the decision “to not” has helped in ways I will never see.
Errors not made.
Not smoking, not using scheduled drugs, not taking sleeping pills, not giving into anger, not quitting…
1/. Will this make a difference?
2/. Will “not this” make a difference?
A useful filter on where to focus, and what to avoid.
The moms who interact with our family (pediatricians, teachers, coaches and tutors) notice our kids have a different attitude towards work.
Recently, my wife was asked “How do you do it?”
She gave an excellent answer explaining it’s a mixture of leading by example, high standards and routine.
To gain useful insight for you, I took her answer and flipped it.
What’s different about my household?
How does my approach vary from what’s used by excellent parents in my community?
For 25 years, I have acted on this belief…
Only rarely will the biggest problem in my life coincide with what I need to be doing.
Problems, toxic relationships, habits of self-harm – intractable issues and people.
Let them go.
Stalkers, trolls and neurotics – I ghost without seeking to prove I am right, without seeking to justify my actions, without seeking to turn their community against them.
COVID and things I do not control – eliminate their ability to cause further harm.
This saves energy and frees my mind.
That extra energy…
That lack of distraction…
…is the difference between success and failure.
I have another quirk.
I enjoy inconveniencing myself to do what I think is right.
Now, the sensation inside of me is not enjoyment. In fact, I spend a lot of time feeling pissed off.
However, I’ve been around long enough to know there is a hidden payoff in every repeated action. Perhaps, I’m hooked on being true to myself. Frankly, I don’t know the cause. I do know it’s useful.
I believe both of the above are trainable. They’ve played a key part in my successes.
Let’s rephrase… if you’re prone to fixating on your problems then you need to let that stuff go. Letting go is what’s going to help you get past the distractions that prevent you from consistently moving your life forward.
I’ll end with an observation on 360-degree fatherhood. It’s how I choose friends, mentors and coaches.
Spend time sharing positive experiences with exemplars, while they sustain their good habits.
Over the last six years, our discretionary budget has been simplified to vehicles, skiing and vacations.
Let’s start with vacations.
Most families with kids, place their vacations before considering Childcare and the size of their mortgage/rent payment. I recommend you reconsider your priorities. Earlier I explained why, I sold assets so the grown ups could maintain their health and relationship.
When I was living with a 4, 2 and 1 year old – my favorite kind of discretionary spending wasn’t a vacation, it was “more childcare”.
Always, more childcare.
To be a good investor, you need to know your opportunity cost.
Same deal for being a good spouse!
The Bora Bora vacation (above, still on my fridge) is the equivalent of 150 date nights.
When I was working through a decade of bedtime dramas… I priced my life in date nights (time with my wife, time without a kid melting down).
Date nights where someone else can put the little ones to sleep, and you can alternate the following morning with your spouse.
Alternate the routine so each spouse gets a slot where they are “off” from 5pm to 10am.
“Sweetie, I just need two nights a week where nobody is yelling at me.“
I was willing to do whatever it took to achieve a nervous system reset 2x per week.
Still want to head out of town? These were my rules for luxury spending:
make it “fridge-worthy” (re-live the vibe over-and-over)
book it way in advance (create anticipation)
take a lot of pictures
The trips were a good bang for the buck, we spread them out, got stuff done and had something to look forward to.
We found shorter trips were better – if we left for more than a few days, our Alpha Pup would try to take over the household!
We left the kids at home, in their normal routine – never risk the sleep schedule!
Take a look at your budget, are you making time to enjoy each other?