Tag Archives: family values

Buffett and Munger For Familes – My Wife’s Cats

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Two Cool CatsWhat can a family learn from one of the most successful investment partnerships of my lifetime?

Last month, I read Tren Griffin’s book on Munger and re-read Warren Buffett’s Owner’s Manual for Berkshire Hathaway.

I read them NOT to figure out how to make money. I read them for ideas to make myself more useful to my family and make less mistakes in my decision making.

A successful partnership is characterized by:

  • Shared responsibility and shared benefits
  • Trust and open communication
  • Confidentiality, only when necessary, rather than secrecy

The role of the managing partners:

  • Allocate capital
  • Structure incentives
  • Seek to embody shared values
  • Communicate via stories
  • Resist the urge to seek an edge

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Financial Strategy, for capital allocation

This is important. Even financially-sophisticated families get caught up in the noise that constantly surrounds us.

Keep It Simple

  1. Focus on sustainable cash flow divided by capital employed
  2. A fundamental reference point is the 30-year rate on US government securities
  3. Treat deferred tax as a valuable, unsecured, non-recourse loan from the government

My recent article on the Boulder real estate market used the above.

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Understand the value of deferred taxation

If you sold everything you owned (right now) then how much tax would you have to pay?

Many would be proud of a low number. I know that it would make me feel safe.

Buffett and Munger would argue that you want this number as high as possible.

In my family’s case, we would have to pay 6% of family assets, on a portfolio with an average investment age of less than five years.

Historically, we’ve earned ~15% per annum on family capital. I don’t expect that to continue, so let’s assume the family earns 7.5% going forward.

What’s the value of NOT selling and letting the 6% deferred tax asset continue to compound?

7.5% of 6.0% is an extra 0.45% per annum.

Let’s make that number real.

Express it in dollars and compare to your family budget.

  • In our family, it’s equivalent to our federal income tax bill
  • In a friend’s family, it’s equivalent to what they pay for professional advice
  • In another family, it is more than they save each year

If your advisers churn your assets then they are costing you much more than their fees.

View percentages in dollar equivalents.

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Berkshire has bought sub-par business in the past. However, so long as the businesses have decent management, good labor relations and generate a little cash… they stick with them.

It’s like my wife’s cats.

  • When she goes out of town, they pee on our bedding and furniture.
  • Most weeks, they barf a few times around the house.
  • However, the kids love them and are aware of their faults.

By sticking with the cats, despite their faults, I demonstrate loyalty to the entire family.

That said, I’ve made the point…

We’re not replacing the cats.

 

 

 

 

Teaching Up The Tree

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cottonwoodLast spring, a friend asked for my advice.

He felt his elders were making mistakes and wanted to get through to them.

I drew a blank on his question and have been considering it for some time!

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2015-10-05 16.05.12I saw two components…

  1. a desire to help others
  2. an opinion that someone else is wrong

For the first component, I asked myself, “What is the most powerful form of teaching that I can bring to my family?”

If I’m looking to maximize my impact then nothing beats sharing stories about how I repeated one of my family’s most common mistakes.

So… I pay attention to what needs fixing in the elders, notice when it needs fixing in myself and share a funny story about my error with my kids.

My kids love hearing about my mistakes.

Adults hearing about their own mistakes?

Less so.

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IMG_4860The second component of my friend’s desire to teach…

I asked myself, “Am I sure?”

  1. Am I sure that my way is correct?
  2. Are there circumstances that would make my way incorrect?

My buddy and I were discussing long-term financial security. At the time, we were 100% certain that “our way” was the right way. I agreed that his elders were mismanaging their affairs.

As fate would have it, a few months later I heard a story about a pensioner.

An elderly woman had most of her life savings sitting in a local credit union (earning 0.1% per annum). Instead of telling her that she had to change, her family initiated a discussion to understand why that decision made sense to their mother.

It turns out the lady had thought through her rationale in detail. Her strategy recognized a personal lack of knowledge, a lack of trust in financial advisors, fear of loss and zero personal upside from positive investment returns.

Sometimes it is my lack of understanding that needs to change.

 

Food, Sex and Money

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IMG_1573This week, I am holding down the fort (with a lot of help) and my wife’s away on a retreat.

She’s spending time with a bunch of smart ladies, most of whom are slightly older than herself. It’s an environment similar to the camping trip that I wrote about.

Before she headed off, I made the following observation…

If you listen closely then you’ll hear most minds focusing on food, sex and money.

Taken together, they are an influence strategy that you’ll see reflected in most scandals.

This coming week, you have a unique opportunity to tap into the life experience of older women, who understand the life heading your way.

Why don’t you ask them what to expect, what they learned and how best to cope with the inevitable changes of the next 15 years.

Love you, babe.

cheers

Deciding Who’s To Blame

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sharing

Today’s picture is my seven-year old sharing her birthday candles with her siblings.

Watching unconditional sharing in my oldest child showed me that I am not seeing things as they are.

My daughter has far more kindness than I perceive.

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bigbearListen to people discuss their difficulties and you’ll hear about the shortcomings of others.

How I can counter my tendency to fool myself within my key relationships?

Acknowledge stress – illness, injury, financial hardship, noise, lack of sleep – when I am under duress, I’m much more likely to “blame” people, rather than owning situations.

A house filled with little people is a stressful situation, certainly if you’re not used to it. Be watchful that you don’t form a negative view of others, simply because you’re under duress.

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2015-10-10 10.48.53Slow down – stress, combined with rushing, is my optimal state for making mistakes!

I can cut my error rate in half with well-placed pauses and noticing when I am holding my breath.

How often do you hold your breath? In what circumstances?

As I coach, I would teach cyclists to corner better by breathing-through-the-turns.

Like a nervous athlete descending a mountain road, we might not realize when we are holding our breath.

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happyChange externals – When I am falling out with people, consider if “people” are the problem.

If I want to make things work with an individual then focus on frequent small actions to reduce their stress.

With every person I see (especially my internal life), what is the scorecard of negative vs positive interactions?

A simple way to improve my interactions with others is to improve my own attitude.

What kinds of emotional fingerprints do I leave?

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Go deep – remember that it’s rarely about what it’s about.

External circumstances and basic needs drive most of our behaviors. What’s the unmet need that’s driving this behavior?

When you get the hang of manipulating others with the above… 😉

…then you can tweak your key relationships

…and, perhaps, yourself

Survival Tips For A Sad Parent

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2015-09-18 19.23.04A father with two young children asks, “Is there anything you could recommend to make my family life less awful?”

I can’t wave a wand and make it enjoyable. However, I take comfort in the knowledge that there are many people that enjoy young children.

Let’s start with some tips for maintaining your personal sanity and your marriage.

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2015-09-09 18.36.01Perspective

Listening to parents talk about their kids, and the scars of their own childhoods, it’s universally reported that little kids are challenging people to live alongside.

My current experience is one day out of ten is very tough. If I want to get dramatic, then I can extrapolate to 40 days a year that are awful… more than a month a year in suffering!

However, if I look deeply then it is closer to 100 hours a year, and I’m with my kids a lot.

Looking even deeper… I break it down to a couple “moments” each day where I need to resist my urge to retaliate and settle a sensation of internal panic.

Five years ago, it was closer to ten “moments” a day, and I spent far less time with the kids.

It’s important to recognize the positive trend line in our lives.

So what seems like constant bedlam (to my remembering self) is, more accurately, twenty moments a week when I need to be skillful, or simply not make the situation worse!

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2015-09-10 11.40.34A Hard Truth

From the time your oldest turns two until your youngest enters first grade — it’s not about you.

If you were the prettiest girl in high school, the captain of your varsity sports team, or the highest achiever in your firm then this reality will come as a shock.

I understand that you are shocked by your situation.

I was also shocked.

We should both set a date to get over it.

Your kids are going to present you with an opportunity to become better than you are.

Take the opportunity because a self-serving attitude will become one of the key regrets of your life.

Ask around.

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2015-09-12 18.48.03All We Have Is Time

Most of the pain I felt in the early years had to do with a conflict of choice => further external validation versus doing what’s best for my family.

So I jettisoned the easy stuff – anything that cost significant time and money – went.

What has worked is redirecting the additional spending towards childcare that enables me to spend time with my spouse and alone (in nature, in silence).

You might find it tempting to let your spouse get overwhelmed – losing health, embracing addiction, breaking down mentally.

Make a pact that you won’t let each other go that far. The kids will grow up and neither of you will want to be married to that sort of person.

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What You Control

What changes can I make to offer my family a better version of myself?

  1. Say no to non-core
  2. Practice not-response

I work on a small scale and life consistently gets better.

Give A Minute

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minuteA simple way to reduce the noise in your head.

  • When you can feel yourself closing off,
  • or anger rising,
  • or have been asked to do something that you’re rather not…

…give a minute

2015-08-30 18.20.58

  • When my kids aren’t listening to me…
  • or I think they aren’t complying…
  • or they are arguing with each other…

…give a minute

2015-08-20 17.02.24By giving bits of time, I immediately removed half the conflict out my life and was able to leave the past, in the past.

It’s wonderful.

2015-08-30 19.43.37

You are going to tell yourself that you don’t have the time to give a minute.

I can feel rushed as well.

Perhaps you can start small.

I started by giving seconds away when driving.

Yield.

If you start then pay attention.

Pay attention to what happens after.

By giving time I feel less pain.

Yes, I am a little slower when we are together but this is more than compensated by peace of mind when we are apart.

You’ll be surprised at how little time it takes to transform yourself.

Stay open.

Alpha Child

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If you have a high-energy youngster living under your roof then this might prove helpful.

The first thing I remind myself is there’s nothing, and no one, to fix. My kids are happy and the feedback from the outside world is positive.

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I ask myself, “With this child, what’s my role?”

My role is to avoid becoming the problem.

Which implies…

  • taking care of my sleep, my body, my mind and my habits
  • ensuring that I get enough silent time (alone and in nature)
  • steering away from the urge for revenge, aggression and anger

Ideas!

All Day Engagement – a bored alpha child makes everyone miserable, including herself. While some kids can putter and amuse themselves (see below), our oldest does best with a structured day with unstructured breaks.

Ritual & Routine – from birth, my wife has done an excellent job of conditioning the kids to relax when their heads are wrapped in a soft cotton blanket. It works so well that our oldest will resist when she doesn’t want to relax. Ritual and routine are soothing to an anxious child.

Parent Like Dora – if you’ve watched Dora the Explorer then you’ll know that each show features three steps.

To give my kids something to latch onto, I’m always explaining the next three steps…

  • Dinner, Bike, Shower
  • Bath, Pajamas, Story
  • Socks, Shoes, Car

2015-08-23 18.51.51Spread The Energy – I use high chairs, assigned seating, cold drinks and air conditioning to reduce stress when we’re packed together.

  • For drives, my Sienna is set up with staggered seating so the kids can’t whack each other. Throwing things in the car is highly frowned upon!
  • As they develop, we find that different kids push our buttons. To dial down the house, I’ll take a little “disrupter” on a trip. The trips last anywhere from an an afternoon to a week. Sometimes I take more than one kid.

2015-08-21 09.53.08Do you know your parenting preference?

Mine is a shared activity with one person – I sign up for that a lot.

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It’s proven much easier to change my attitude, habits and approach than the core personality traits of my children.

Be Skillful.

A Young 46

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boatingSomewhere beyond your 30th birthday the world might begin to tell you that you look young for your age.

If you say this to me, I might smile and reply, “This is what 46 looks like.”

Likewise, many people say… “but I don’t feel my age.” To them I note, that’s what your age feels like.

They might follow that up with… “I wonder what 50, or even 75, is going to feel like?”

It’s going to feel like right now.

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The practice of accepting my age helps me accept all phases of life…

  • The overtired toddler
  • The anxious teen
  • The sociopathic 20-something
  • The fearful cancer patient
  • The crabby elder
  • The grieving spouse

If we are fortunate to live a long life then we will move through most these phases of experience. At midlife, they surround me.

If we happen to be “young for our age” then it might take a few more years for us to arrive at the phase where we “look old.” But it’s coming.

So I will try to enjoy this day and I will try to accept whatever day you are going through.

And when I am scared, or angry, or tired…

I’ll pause, try not to pass it on and remember to live as best I can.

 

 

Wealth Habits: Are we there yet?

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2015-07-09 11.30.50A question I ask athletes is, “Why did you start?”

When sitting down with a family, I change the question slightly, “What is living well?”

Write down detailed answers.

Answering these questions honestly will surface your values and help you make better choices.

The answers will also help you understand when you’ve achieved victory, and you might discover something rather strange about winning.

You feel just the same.

Because you feel the same, you’ll be tempted to change your strategy. You will forget why you started and lose sight of what it takes to live well. You’ll strive for more.

The exact nature of your “more” will be influenced by your peers. Unsure? They will be happy to tell you. Just ask a room full of buddies… “What’s your proudest accomplishment?”

Look inside and see if you’re tempted to strive towards their goals.

With my academic, financial and athletic friends – I can feel the temptation to strive.

Striving towards another person’s answers might not fulfill you, especially as only a minority bother to consider the “why” behind their daily choices.

You may find that it takes a surprising amount of faith to stay the course. My list is exercise, write, read, love, help others and sleep.

It’s important to remember your answers. They are an effective antidote against the temptation to strive. In my case, striving is a result of desire: to buy assets, to make money, to compete against others, to go shopping and other variations of more more more.

  • In a family
  • In a marriage
  • In a company
  • In your life

How will you recognize success?

It might feel different than you expect.

 

Unmet Needs

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number_oneI have many traits that can lead to poor outcomes:

  • I’m prone to hurry
  • I overestimate my capacity to impact external situations
  • I have a bias towards action
  • I’m stressed by noise and crowds

All of the above, work against my ability to help people and can lead to misery.

To get along better with others, I’ve started asking myself:

What’s the unmet need that’s driving this behavior?

Here’s a link to my article about how to help others: quiet presence, listen without knowing and compassionate action.

With my kids, I’ve noticed that most anti-social behavior stems from six sources:

  • Hunger – lack of food
  • Thirst – lack of drink
  • Sleep – lack of recovery
  • Boredom – lack of engagement
  • Need For Compassion – lack of connection
  • Habit / Temperament

The above are easy to spot in babies, toddlers and preschoolers.

Once you can see them in your kids, try to feel them in yourself. Through self-awareness, you may start to see what drives the behavior of people around you.

The antisocial effects of hunger, thirst, sleep and boredom are why I resist changes to the underlying routine of my life: train AM/PM, eat/drink real food, sleep in a cool room, read and write.

I have a desire to be effective in all my relationships.

Do you?

If you don’t that’s OK. I certainly didn’t care about anyone other than myself for long periods of my adult life. If you don’t care then own it.

My difficulties with people make sense when viewed from the lens that I didn’t care and had significant unmet needs (health, exercise, solitude, nature).

Own my needs.

Address my needs.

Slowly, I have the capacity to focus outside myself.

How to meet that need for connection?

  • Put my phone down
  • Relax my inner experience with a two slow breaths
  • Listen, without knowing, until the person has spoken fully
  • Smile, nod and comment about an area of agreement

This works magic. The entire cycle takes less than a minute.

Connection is the solution.