Scoundrels and Rascals

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

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

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

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

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

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

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

What can I learn from this person? this situation?

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

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

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

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

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

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

A Fiduciary’s Reading List

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

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

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

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

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

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

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

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

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

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

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

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


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


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

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

Challenge yourself with exposure to the best ideas available.

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

Conversations With Hollywood

Yankee Doodle Lake

I have a friend that is a Hollywood producer and is willing to visit me in Boulder.

Hollywood, LA, TV… it’s a long way from the life that Monica and I have chosen for our family. I knew that there was something I could learn.

HollywoodWhat’s good about living in LA?

The two best things are the wealth of opportunity and the diversity of humanity with whom you can work.

In a sentence, my pal summed up the benefits of working internationally.

Being social creatures, we all share a bias towards our “in-group” – whatever group that might be – gay, straight, white, hispanic, Chinese, Malay, athletic, Jewish, firm, family, team, tribe… you name it.

My pal placed his family right in the middle of one of the most diverse places in the world.


What’s your secret?

Young people that experience significant success are often asked their secrets…

Never underestimate the value of luck

It’s takes uncommon self-awareness NOT to attribute success to individual skill. As a young man, I lacked the humility to see the massive tailwind that led to success.

Above Ten Thousand FeetGratitude

Over the last few days, we spent 20 hours riding in the mountains.

However, at the start, only one of us could truly see the view! He’s raving about the beauty of the scenery, posting up on Instagram and smiling from ear-to-ear.

At first the little voice in my head is going, “of course it’s beautiful… you frickin’ live in LA!”

However after a dozen hours, I realize that I’ve been infected by his relentless positivity.

A deep happiness combined with a genuine desire to understand my point of view. Highly addictive!

Big Air

Think big, you have nothing to lose

You’ll never find out if you don’t try. Being an inspirational figure, my buddy implores… “you MUST try.”

Keep trying until you fail – that’s the only way to learn that failure isn’t fatal.

The picture above shows that he practices what he preaches. One year into riding his mountain bike, he can crush me on all technical terrain.

I was schooled, and impressed.

Rest StopTurning the tables, he asked me a question, What’s made a difference?

When I listen to people talk about their lives, I’m impressed by the quality of their (largely unconscious) thoughts.

We share moments of deep insight. However, and most certainly in my own case, insight is brief and fleeting!

The dark periods of my life spur a desire for change. In my early 30s, I realized that I had nothing to lose, wrote down my insights and started to make small change a habit.

It takes a while but, like compound interest, 14 years of (mostly) good decisions add up.


Thanks for the visit, buddy. I hope we meet again but, even if we don’t, I’m grateful for our time together.

My Financial Domain and Legacy

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

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

This is a great question.

Be sure to run your answer by your therapist.


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

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

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

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

Another great question!

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

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

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

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

Value your time, more than your money.

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

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

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

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

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

Laugh out loud.

One Kind Word

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


What’s your mission?

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

Here are some of my whys for living

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

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

“Is this my domain?”

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

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

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


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

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


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

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

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

One kind word can break the chain.

Don’t Know, Don’t Care

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

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

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

Don’t Know, Don’t Care

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

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

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

There is no end of worries available to you.

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

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

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

Step into the mind of young woman:

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

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

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

Life is none of my business.

What Do We Need To Retire?

My post showing how a 1.2% fee differential can cost you 131% of your pension contributions inspired Paul Meloan to write an article about The Clear Value of Financial Planning. The article lays out Paul’s case for his work in the field.

To help you understand the cost/benefit relationship, have your advisers write out the dollar amounts that you’re paying in fees, expenses and taxes. Be sure they include all the soft costs that are buried in your mutual funds.

In Paul’s article, he lays out questions for a family to consider. I thought I’d answer these questions, as viewed from a life outside the box.

#1 – How large of a pool of assets do my significant other and I require in order to live in the manner which we desire for the rest of our lives?

The most important thing for you to remember is to declare victory immediately. You have more than you need and are in a position to think about the future. Many, many people are less fortunate than you. Spending time with the less fortunate will temper your needs and get you to financial freedom more quickly.

The financial services industry is built backwards from your true needs. If you listen carefully then you can hear the industry say, “you can be happy tomorrow if you have more.”

Be happy now, with less.

I recommend that you flip question #1. When I look at my family’s net worth, I express it in terms of “years of current expenditure.”

For example, if your net worth is $500,000 (Assets Minus Liabilities) and your current expenditure is $125,000 per annum then you have FOUR years of current expenditure (500,000 / 125,000).

Why is this is a useful way to consider your position? It’s useful because it changes the conversation from

  • What do I need to be happy tomorrow?; towards
  • How can I spend wisely today?

The years-to-burn exercise reminds me that the fastest way to improve my financial position is to reduce my current expenditure, not take more risk.

In terms of years-to-burn, my peak wealth was 13 years ago. I was living out of a Subaru and sleeping on a friend’s floor in LA. My life was extremely simple – eat, sleep, train. It was one of the happiest periods of my life and my net worth was 1/6th of right now.

It’s worth repeating… I increased my net worth by 600% and feel less wealthy.

Historically, most my spending has been wasted.

  • luxury air travel
  • high-end hotels
  • excessive childcare
  • personal assistants
  • office space
  • non-performing assets
  • personal luxury expenditure (clothes, cars, boats, vacations)

I ditched most of these because I discovered that they were bandaids healing myself from a lack of satisfaction with daily living. My spending was driven by our culture rather than my needs.

Choose your hometown and your buddies carefully! I assure you that the exact same family will have needs that vary by geography. Consider:

  • Manhattan vs Boulder
  • Aspen vs Truckee
  • Palo Alto vs Greenville
  • Santa Barbara vs Hood River

I came close to moving to Palo Alto to spend more time with my pals (love you guys and gals). It would have changed my life – not better, not worse – but absolutely different.

The more time that you spend helping people that have less than you, the smaller your retirement fund will “need” to be. There are examples of this all around us.

Finally, the benefit of wealth is not to leave work. The benefit is to feel secure enough to choose meaningful work, regardless of compensation. Hang out with people that are rich in personal satisfaction (artists, priests, teachers, ministers, caregivers, coaches, guides) – you’ll know them when you speak with them.

#2 – What should be the composition of that pool of assets, and how should they relate to each other in terms of risk and expected returns?

You can beat all of your pals by using Bogle’s Little Book of Common Sense Investing.

As a bonus, the strategy is simple to understand and easy to execute.

If you can’t figure the book out then call Vanguard and they will help you in exchange for a fixed price fee when you need help.

If you keep screwing up then get yourself a financial coach and pay a fixed fee to hold you to your plan.

We all do better when someone is watching – that’s why I have a blog.