Tag Archives: personal planning

Thinking through consequences

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2019-07-16 08.01.59A friend confided in me that his FOMO (fear of missing out) is running hot. Stories of easy money have got to him and he wants to get in on the action!

This reminded me of 2005 – a year when I was planning a future life of luxury. I had a road map for how I would spend my paper profits… a house in Santa Barbara, a flat in Paris, summers in the high-country. The constant focus on acquiring more should have tipped me off, but I didn’t notice.

For Christmas 2005, I bought myself a copy of Fooled By Randomness.

It humbled, and deeply concerned, me. You should (re)read it.

In my business life, I had a personal guaranty outstanding. The guaranty was a modest amount of my “paper” assets but more than 100% of my liquid assets.

In my personal life, I had established a line of credit to pay my living expenses.

I realized I could be wiped out.

2019-07-16 08.21.00Taleb’s teaching…

There are some games you don’t want to play.

Some risks we should never take.

Across 2006/2007/2008, I secured my financial life. This decision saved me from ruin.

I had NO idea about what was going to happen (still don’t).

I had a clear idea of the scenario that would wipe me out. Approaching 40, with a new wife, I didn’t want to get wiped out.

I addressed what I controlled: my cash flows, my debts and my obligations.

Do you know what could wipe you out? Look to your borrowings, your obligations and your cash flows.

2019-07-16 07.57.56

Do you notice triggers that could create a shock to the system? In what ways is the recent past skewing our vision of the future?

  • Debt-fueled political stability in Asia
  • Negative yielding sovereign/corporate debt in Europe
  • Easy money at a time of multigenerational employment highs in the US
  • Global debt double 2008 levels

Across all markets, a low-interest rate policy:

  • Delaying the consequences of poor decisions
  • Pulling forward future returns
  • Reducing interest service obligations => while global debt has doubled the price of debt has more than halved

It impossible to predict when the credit cycle will play itself out.

It is possible, and advisable, to understand how you are exposed to ruin.

  1. Cash flows compared to fixed commitments (taxes, debt service, core cost of living)
  2. Asset purchases via debt finance => particularly negative yielding luxury purchases
  3. Credit quality => Who can go bust and hurt you?

Things go wrong when people build assets, and debts, to the top of the credit cycle.

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The photos were taken on the Twin Sisters in Rocky Mtn National Park – mountains provide an opportunity to teach about consequences.

Strength & Training Strategy at 50

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2019-07-07 09.01.30Strength gives me better choices.

Specifically:

  1. Maintain muscle mass
  2. Challenge my connective tissue
  3. Strengthen my shoulder complex (to survive my inevitable crashes)
  4. Get the bio-chemical benefits from working large muscle groups anaerobically

2019-07-07 08.45.03

My base period needs to be longer: I was very consistent with strength maintenance across the ski season. As a result, I lost less strength than prior years. However, I was WORKED at the end of the season and my mojo stayed flat for a long time when I returned to more focused strength training.

Two, maybe three, “good” sessions per week: At 50, I go flat quickly! I need to be humble with the load I put into myself.

I split upper and lower body days: in order to do quality exercises, and recover, I split my workouts across the week:

  • Monday/Thursday – lower body
  • Tuesday/Friday – upper body
  • Wednesday/Saturday – plyo (~7 minutes total per day)

Very little sustained intensity: I lose a lot when I get sick and can’t train. Put another way, my ability to go training is more important than my training ability. A calendar of events would certainly push me to do more (likely for less benefit).

I go to the gym to be around people (even if I don’t speak to them!): the core of my program has been the same for 20 years. It would be easy to set it up in my garage. However, part of my “feel better” seems to come from the gym process. The most time-efficient setup isn’t always best.

My aerobic goal is “about an hour, every day.” I’ll go longer when I can hike trails with my wife or son. I do a bunch of walking on top of the aerobic exercise.

Learning to navigate the physical decline of middle age is a benefit of middle age.

The days that start with training are clearly better.

Pay attention to better.

2019-07-07 08.54.56

How Bad Ideas Get Funded

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2019-06-26 14.43.54After a decade of asset price inflation, I’m tempted to shuffle the deck. I remind myself:

  1. Each time I change, I crystalize tax liabilities, pay transaction fees and introduce the possibility for error.
  2. A key benefits of an attractive position is the freedom NOT to change it.
  3. NOT following through on a mediocre idea => can be a great decision.
  4. My greatest investing weakness is the desire for change, for change’s sake.

Against the above, I’ve developed a hunch that assets are going to be cheaper 2 to 3 years from now.

Fully invested, with yields at historic lows, there’s little reason to rush into changing strategy.

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Costly mistakes happen when we overpay late in an expansionary cycle.

Where are we?

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Start with yourself => write out your ten largest items for the last year.

  • Childcare
  • Ski Season Accommodation
  • Food
  • Mortgage
  • Taxes
  • Healthcare
  • College and Retirement Accounts
  • Disney Cruise
  • Ski Passes & Gear
  • Insurance
  • Harry Potter World

How does your current rate of spending compare to 2009/2010? I’m double my bear market rate. Sitting at a 2007/2008 rate of spending (with 3 more dependents).

Are you considering any big-ticket items?

I am:

  1. Vacation property
  2. Trading up my home
  3. New vehicle

There is information in what you are willing to consider. #1 and #2 are rarely on my radar.

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What’s happening locally?

We are doing well in Boulder County, 2% unemployment, significant investment in schools, parks, and recreation facilities.

Some things stand out at the margin,

  1. multi-million dollar homes being left empty by seasonal residents
  2. houses being purchased for ~$1.25 million then torn down
  3. properties selling for double 2007/8 valuations
  4. local governments seeking to borrow HUGE and take technology risk on utilities / broadband

There are many people choosing risks they do not need to take.

There are many people sharing stories about quick money being made.

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Risk being ignored across all levels of society.

State => We have an active State Assembly passing laws and regulations as fast as the Governor can sign => at the margin… they are seeking the repeal of TABOR so they can spend money even faster.

Federal => in the news… medicare for all, national student loan forgiveness and a war of choice with Iran. No constraint on the ambitions of government.

Interest rates => at the top of the cycle, moving away from rate increases and a yield curve showing sub-2% money five years out.

VC to Public Markets => rapid internal dealing to ramp valuations prior to IPO => weak post IPO performance. The smart money is shifting risk, fast.

Every political viewpoint, local to global:

  • acting as if capital is unlimited
  • taking on risks of choice
  • increasing debt burdens
  • agreeing to future commitments of unknowable magnitude

These conditions are how bad ideas get funded.

  • Asset prices at all-time highs => a price umbrella influencing EVERYTHING
  • Cost of debt back at a generational low => easy money

If you are smart then the marginal idea that gets funded might be your own! Right now is THE time to raise money, sell businesses and unload illiquid positions.

If you are concentrated then consider taking money off the table (link is a blog of mine that’s worth your time).

Stay variable.

Winning The Loser’s Game – personal finance book, Charles Ellis

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2019-06-16 08.44.50This one sat on my shelf for a while, probably due to a concern that I might have to change my mind on something if I read it!

Well, just because something is unpleasant to consider, doesn’t mean it’s wrong.

Besides, I can handle bad news.

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Fortunately, there wasn’t much bad news inside this book and it was an excellent read.

Takeaways…

Nearly everyone will be working into their 70s, at least part time. This is a result of success, not failure.

  1. Success in following a healthy lifestyle and benefitting from modern medicine => much longer lifespans.
  2. Success in financial well being => implies our baseline spending at 50, 60, 70… is higher than anticipated.

A working life of 50+ years implies:

  • We will be technically out-of-date before we’re halfway done!
  • Multiple careers, unexpected transitions, continuous technical education
  • Start with something the enables you to get paid well on an hourly basis and become world-class in a niche market
  • If you spent your early career not doing a whole lot then you still have many decades left in your working life. Hit the reset button and get yourself educated without borrowing a ton of money.

Despite “retiring” 3x (!) since my 30th birthday, I’m still working part-time. I had been expecting this to end at some stage. This is not going to happen, and I shouldn’t wish for it to happen.

I should be on-the-lookout for attractive part-time employment and training myself for my next career(s).

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As you’d expect from a bestselling personal finance book in its 7th edition, there are excellent sections:

  • Six self-assessment questions (p 80-81)
  • Living under your means as a form of savings (p 161)
  • Annual personal review questions (p 197-198)
  • Contributing time, talent and money to your community (p 227)

I was also reminded of my personal weaknesses as an investor by the author’s advice to “give compounding time to work.”

Across a 50-year working life, that is a lot of time!

18 Months to Make a Habit

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2019-06-05 05.33.55Dalio’s book (Principles) shares that habits sustained for ~18 months are likely to become permanent.

Aiming for 18 months (~550 days) was a change because my typical time horizon is a 30-day test.

30 days is not enough time for the impact of a change to percolate through your life and impact your peers, family and spouse. Changes are still happening from an adjustment I made in December of 2017.

My main thing was “wake up in the 4s.” I got the “wake up early” from Jocko’s book (Discipline Equals Freedom).

It appealed to me because it fits into lessons I’ve learned:

  • Try faster before going slower – Daniels
  • Prove you can do it by diving into a cold pool – Purcell
  • If it’s important then do it first – Covey
  • 4:55 is more than ten minutes different from 5:05 – Willink

I can make my life experience a lot better by making my daily life a little more difficult.

“How am I going to wake up in the 4s for the next 18 months?” is good problem to have.

The problem (up early) points me towards solutions in other parts of my life:

  • Exercise early (what else is there to do at 5am when the kids aren’t up for another 90 minutes)
  • Drink less alcohol (being binary, I simply stopped)
  • Fall asleep (if not tonight then most certainly tomorrow)
  • Start every day with a win

What does winning look like on the home front?

By 8am:

  • I’ve done a workout (win for myself)
  • My kids have eaten, read and brushed their teeth (win for my family)
  • I’ve done an hour of visible housework (win for my marriage)

There’s a TON of noise associated with the above.

Does it really matter? Is this the best use of my skills? Dude, you’re only squatting 95 pounds! My “career” is taking out the compost every morning?!? Shouldn’t I be sub-contracting the busy work?  Blah, blah, blah. Why so angry, bro?

Apply those thoughts to what happens after 8am.

Your Future Self Will Thank You

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2019-05-03 19.25.51-1As a young man, 50 was well beyond the furthest I could imagine. I find myself living in a future I never imagined and it’s pretty good.

This (enjoyable) future is humbling because, on reflection, I had a tremendous amount of bad ideas along the way!

Fortunately, I failed to execute on my worst ideas.

Watching my kids navigate the world, I see bad ideas appear to be universal – at least in our household.

Two things I’m teaching them to help reduce the impact of their impulses:

First idea, not, best idea // it’s just my first idea. It might not be my best idea. I don’t need to act on, or believe in, everything I think.

Change slowly // I’ll use a recent example. I’ve been thinking about moving across town. As I think more and more about moving, I can get myself worked up about the move. The “move” is purely my creation.

Each time I notice the above, in one area of my life, I see how I create stress from forcing myself to execute my (first) ideas quickly (and these ideas might not be good ones!).

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You are much more likely to predict your reaction to future events than the events themselves.

Here’s your crystal ball… Research from your older mentors, friends and family:

What do people like me value when they are older? There is a rich history of people, like each of us, that have walked the path we follow. While my life is completely different than ten years ago, my values are similar.

Invert the question and watch… What do people like me lack when they are older? The easiest way to understand what the psyche lacks, is to listen quietly to what people say.

  • Control (over schedule, over self, over others)
  • Sex, Connection, Intimacy, Release
  • Stability (financial, emotional)
  • Health & Vitality (strength, energy, capacity to execute)

So perhaps you spend 30 years chipping away at:

  • Spend less than I earn
  • Make myself marriage material
  • Get to know my kids

And you arrive at a wonderful middle middle-age, pat yourself on the back and wonder what’s next?

Where to make an effort?

  • Friends
  • Strength
  • Health

Choose wisely.

Being Fifty

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2019-03-23 14.56.18I expected a lot more physical decline!

The decision to phase out athletic competition was one of my best.

So much chronic fatigue is gone and replaced with healthier pursuits (strength training, human relationships, being-a-better-man projects).

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2019-03-17 08.11.54If I could give you one thing to achieve for your 40s then it would be to write down, how you get in your own way.

That’s one of the best things about getting older. The repeated mistakes make it obvious what’s going on.

Three post-it notes are enough for me:

  1. Don’t act on anger.
  2. Are you sure?
  3. What do you want to have happen? What do you think will happen?

All three are stuck to my computer monitor.

That’s my “what not to do” list.

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2019-03-13 16.07.22What about my “to do more often” list?

My 40s happened to coincide with the Great Recession, preschoolers, the death of my last two grandparents, a massive corporate insolvency and periodic unemployment.

Some years were better than others.

It took a decade to arrive back where I started:

  • A feeling of control over my schedule
  • Daily exercise: ideally, in nature
  • Teaching: kids, instead of clients
  • Seeking Mastery: skiing, instead of triathlon
  • Learning: how to think, act and be better

The core structure of my days, my values and what I enjoy to do… all are unchanged from my 20s.

What remains undone?

Managing Towards 1,000-Day Outcomes

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2019-02-23 09.55.59I can get a lot done, while achieving nothing meaningful, by solving problems all day.

Am I managing towards desired outcomes, or focusing on my problems?

2019-02-23 14.54.54

My favorite thing is doing stuff in nature and I want to have a successful marriage.

So, I try to be open to the experience of sharing things in nature, with my wife.

One catch…

  • 1,000 days ago, my wife couldn’t ski
  • 500 days ago, she was better but we were not sharing the vibe (more like enduring it)
  • So, we both did what it takes so that we could share skiing together, and enjoy it

1,000 days of focus was enough for the two of us to capture the bulk of the benefit (but it did take 1,000 days!).

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The big picture points:

#1 – We managed to strengthen our marriage by doing something neither of us was good at three years ago.

#2 – If your younger self was achievement-oriented then working towards mastery in middle age is extremely satisfying.

This is a game we can play, together, for the rest of our lives.

2019-02-24 09.18.11

1,000 days ago, this guy was Level Zero at the ski school. We kept signing him up for lessons and he didn’t get one tick on his skill list!

He showed NO signs of aptitude, for a year, but he enjoyed the process.

Now he’s skiing the entire mountain and loving it. His price was a whole lot less than mine. It took him ~100 days on snow and a million vertical feet.

If you don’t the work then you’ll never know if you could have achieved the result.

Be wary of letting “problems” get in the way of gradually moving towards desired outcomes.

40s Post Mortem

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2019-02-05 07.30.58There were a lot of good habits in my first firm. One was holding a meeting to review all our dud deals. We tried to get value from our mistakes. Often, it would take many, many repetitions of the same mistake for the lesson to sink in.

So, if I could give you one thing to achieve by the time you are 50… it would be to write down how you get in your own way.

  1. a willingness to rely on competence, rather than kindness
  2. an enjoyment of getting too tired to care
  3. a tendency to not react, or completely over react

Do you know your list?

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Invert your errors and consider… what makes your life better?

  1. Get up really, really early
  2. Daily Exercise – low standard deviation, no zeros, frequency not load
  3. Roll a simple, visible, written schedule

Better, not easy!

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The best decision I made in the last ten years was to stop competing when my oldest turned two.

Take (some of) the energy you spend on competing and focus on being a better person at home.

Why only some?

  1. Because physical energy declines over time
  2. Because older, under-scheduled people think better
  3. Because being “busy” is a trigger for ALL the ways I get in my own way!

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Also because I recommend you don’t give too much to your baby.

I have a hunch that many of the downstream issues in families start with a young parent not defining personal boundaries and getting completely tapped out.

=> infidelity, addiction, anger, abandonment… all forms of release

The best thing you can do for your entire family system is set clear boundaries and remember that it is OK to say no.

Childcare benefits the marriage.

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Before I had real babies in my house, my “baby” was school, work or athletics.

Giving one’s self completely is a great way to live when you are young and single. Once you’re married with kids, there are a lot of unintended consequences of being single-minded.

Leaders keep their houses in order.

What I Learned This Year

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2018-11-23 11.00.48

You’re probably going to feel different about that later.

I say that to myself, a lot.

And I never regret following what flows from it.

Namely…

  • Not acting on anger.
  • Resisting the urge to “say what I really think”

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2018-11-19 16.44.04I recharge in solitude, ideally in nature.

I seek to fool myself that the solution (to everything!) lies in withdrawing from society.

I counter this faulty thinking by saying to myself… “I know you feel that way right now but you’re likely to need help, at some point, over the next 20 years.”

If you’ve ever been in a bad relationship then you might have a similar thought pattern…

…thinking that the problem lies in all relationships, not simply the bad ones.

I don’t have a mantra to help you get past your pain but I can say that my marriage is a great source of strength, stability and happiness for me.

“Better” is out there and it’s worth looking around.

Put yourself in a position to meet someone who shares your values.

Try to make yourself into the person you want to meet.

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2018-10-31 08.09.49My BIG change for 2018 was waking up earlier, way earlier.

I’m up two hours before the rest of my household.

At first I used the time to surf instagram and drink coffee on the couch.

Eventually, I started going to the gym.

“Gym Days” are better.

Not easy.

Better.

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2018-11-07 16.18.42-1

Life is better when I’m stronger,

Even at 49.9 years old, I’m able to be stronger than just about all my peers.

Being stronger is available to you.

Four days per week, 30 minutes per day.

Results in… better!

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Get up early, lift weights, be pleasant to those around you and when you are thinking otherwise remember…

…you’re probably going to feel different about that later.