Mood Management 2019

2019-11-02 14.02.09

One of Taleb’s best insights:

It’s better to make the system robust to reality, rather than seeking to change the way people are.

He applies the advice to financial greed but you can extend the idea across domains. For example, I consume less sport because…

It’s better to make your mood robust to reality, rather than rail against cheating. 

Outrage is a distraction from the work I need to do. So is fear, and I found myself feeling fearful in a meeting last week.


I spent most of my working life in a job where there is a financial incentive to mislead me. Recently, I was sitting in a meeting and the CEO lit up my spidey sense:

  1. He showed over-reaction to small stimuli
  2. He told me he was honest
  3. He showed a lack of impulse control

I pay attention to the trifecta because it usually means there is a secret around me.

It could be innocuous => I can be insufferable when hyped and nervous. Anyhow, the lesson here is not about the CEO. I looked inside:

  • Repulsion => the feeling that I might get ripped off is unpleasant.
  • Hubris => I caught myself thinking, “if only this guy was more like me. He could be so much more…”
  • Catastrophizing => my mind jumped to the worst case scenario => he’s a crook and I’m going to lose my investment!

Fortunately, I didn’t act on any of these feelings. Merely watched them come & go.

I reminded myself that I can only be deceived when I want something.

  1. What do I want to have happen?
  2. Why am I in this meeting?

I was in the meeting to avoid making a mistake in my life.

Someone else’s life is beside the point.


2019-11-02 14.23.47

But what was I seeking? What was causing the uneasiness?

This summer, I felt a push to start writing again. I had been reading books and listening to author interviews. There was something, essential, missing from their dialogue.

The humility to see that the optimal plan is rarely optimal.

I studied world-class experts, sharing world-class advice. Advice they could not implement in their own lives.

I wanted to shout, “If you are right but you can’t get it done then you are not right!”

Then I came across this Goggins post on Instagram

When you don’t know yourself nor do you care to know yourself, you end up spending the majority of your time trying to please other people. People who like you when it’s convenient for them, when you are doing something for them, when you are making them feel better about themselves, etc.

The entire post is gold. Wildly excessive fatigue strips everything away and leaves you with the truth, your truth. DG is lucky he’s writing it down. We are lucky he’s sharing.

You see, what I was feeling was a conflict between knowing the author’s advice works and seeing him not being able to implement. It was what drove the question in last week’s blog… Who gets the benefit of your best advice? Frankly, who cares. And more importantly, who am I to care?

Repulsion, hubris, catastrophizing => replaced with gratitude, for access to world-best advice, and an opportunity to improve myself.

Sport, finance, relationships… absent desire, we can never be deceived.

What I Talk About When I Talk About Building Wealth

SuperGirl

When people ask me about asset allocation, I guide them towards family wealth.


Over your life, you will see things blow up.

  • Jobs will be lost
  • Divorces will happen
  • Guarantees will be called
  • Companies will fail
  • Investments will go to zero

Certain habits make us more prone to blowing up:

Debt – fixed obligations can ruin you in bad times.

Lack of emotional control – this runs deeper than, say, anger management.

People who make a habit of rationalizing a lack of control in one domain (elite sport, closing a sale, acting in a client’s best interest) rarely have the capacity to control themselves across domains. If you might get caught, then you’re fragile.

Substance Abuse – it’s more than the cost of sorting yourself out – it is the lost opportunity of a life well lived and the impact on the rest of your family, especially your kids.

Spending vs Cash Flow – personal spending, burn rate and fixed costs => the more spending you have relative to cash flow, the more fragile your finances.

The above is a long way of asking, “What aspects of your life might blow up?

Which is a polite way of saying, “I’m not sure asset allocation is the most pressing issue in your life.

If you work in an ethically-challenged field, have a lot of borrowings, have a high burn rate or are surrounded by peers with issues…

…then tweaking portfolio construction is a lower priority item than immediately removing what might ruin your life.

I’ve done it. You can do it. It’s better on the other side.


How large is your current portfolio when compared to your lifetime portfolio? – AKA you might have more wealth available in your career than your portfolio.

Investing is different at 25, 40 and 55 years old.

The nature of “different” depends on your personal circumstances.

#1 => Consider your Core Capital. The single best thing I did out of college was save four years of personal living expenses, $100,000 in the mid-1990s. It sat in a bank account, while I worked my ass off at my career.

Having that money enabled me to choose better and choosing better became a habit.


Very, very, very (!) few people can be professional investors – AKA can I get rich by beating the market?

Take an honest look at the people that you know in finance. How many of them “got rich” from their own money? Remember these are the experts.

In finance, most people get rich due to the rules of their game and collecting pools of other people’s money (your money, by the way).

With your portfolio, keep it safe, simple and low-cost. A target-date fund makes a nice core holding.

Having my Core Capital enabled me to take more risks in my career path, and life experience => not with my Core Capital.


Once-in-a-lifetime opportunities happen once a decade – AKA great deals happen when credit markets are shut

Here are the assets I own and why I own them:

  1. Index funds => long-term, diversified, not linked to my home real estate market
  2. US Treasuries/Core Capital => 5 to 10 years family expenses
  3. Boulder real estate => A relative value play against California, a cost-effective way to raise a family and a fantastic outdoor life. Think very carefully before locking yourself into any location. As a young man, my lack of ties enabled me to jump at great opportunities.
  4. Cash => my early retirement was funded by three deals I did coming out of the last credit crisis. Once you have your Core Capital (say, five years living expenses) then building up a pool for “great opportunities” is a consideration.

Starting out? Read this PDF.

Be wary of home bias => you can see it in my portfolio => even more risky is having your balance sheet, retirement and job reliant on the success of your employer.


Switching Costs – AKA think carefully before you sell good assets

I have assets in my portfolio that I would not buy at today’s prices. Financial theory tells me I should sell these assets.

  • I have zero confidence in my ability to predict the future.
  • If I sell assets then I pay taxes and commissions.
  • After selling, I have to figure out where to put the capital.
  • I doubt any “new” plan will be better than my current plan, which is simple and low-cost.

Release yourself from constant optimization => good enough is good enough.

Put your efforts into being a better version of yourself.

 

Impossible Conversations

trooper

Around the house, I’m fond of saying, “Good people can make bad decisions.” I say this because I’m aware of my past misdeeds and my continued capacity for misjudgment.

However, out in the real world, telling someone that you believe they made a bad decision can have unpredictable outcomes => especially with people who have not come to terms with their own role in a situation.

If you feel cornered, and have been asked for your opinion, then here is a useful fallback…

I will never know the facts. What I do know is I believe in forgiveness and want the best for you and your family.

You’ll preserve the relationship and can move on.

Forgiveness doesn’t mean you have to associate, do business or live with someone.

Forgiveness means you free yourself from the burden of carrying around the past.


By the way, I’m reading a book called Impossible Conversations.

My #1 “unhelpful” conversation habit is parallel talk – both out loud and in my mind. I have a bunch of other habits that hold me back but I can’t tackle too much at once!

The book is worth your time.

 

A Better Set of Problems

2019-09-14 07.05.49My favorite place in the United States is Blue Sky Basin.

From Blue Sky, you can look west and see The Mount of the Holy Cross – it’s a humbling view, which reminds me of beauty and personal insignificance.

Mountains are good that way!

2019-09-13 14.44.34When I tell folks about my mini-adventures, they might say “I wish…”

  • I wish my spouse…
  • I wish my kid…
  • I wish my boss…

Pay attention to your spoken wishes, and do.

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Am I willing to do whatever it takes to turn my wish in to reality?

Using my son’s hiking, I have insisted, “I will never…”

  • drive long distances
  • walk slowly
  • carry everything
  • give up “my day”

Going deeper, unlocking the benefits of marriage required me to modify what I thought were my best qualities.

Well, do you want it enough to change?

2019-09-14 07.45.21.jpgSecond, pay attention to the reality that you’re going to feel the same!

Memory is different than experience…

…and my experience often feels like a problem.

My experiences are largely forgotten, replaced with new problems I dream up. Fortunately, I am free not to take myself too seriously.

This insight, requires paying attention and not taking my thoughts too seriously in the moment.

I started by noticing my #1 habit that was clearly making things worse => acting on anger in low-stakes situations.

What is your #1 habit that’s holding you back?

2019-09-14 07.52.57.jpgWith a bit of luck, I have a few hundred Blue Sky laps remaining.

Each time I look over to Holy Cross, I’ll be reminded of a job well done.

Fill the world with reminders of your best self.

Building Resiliency

2019-08-11 07.56.00

I like to balance the Navy Seals in my feed with the Flag Officer in my life. Here’s what Admiral Jonser has to say:

Gordo, always remember that our words have far more power, and reach, than we can possibly imagine.

When my son was little he developed a habit of total breakdown. He could not handle the slightest disruption and we were at a loss about how to help the guy.

If anyone needed to “harden up” it was him. However, I couldn’t bring the hammer down (on the nicest guy I’d ever met).

We talked about this challenge with each other, with his pediatrician and with his teachers.

What we ended up doing was cultivating a different kind of normal for him.

My normal:

  • Read, exercise and learn every day
  • Be kind, especially to those without recourse

I focused on the above, invited him along, and gave up trying to fix him.

2019-08-13 08.08.03-1How do you help a sensitive kid learn to deal with strong emotions?

Lower The Stakes – paradoxically, expectations may be making life more difficult, particularly when you focus on external performance relative to peers and siblings.

Personal Mastery – Where can you give your kid (or yourself) a big win? Our kids try a lot of different things – climbing, swimming, hiking, skiing, martial arts, water polo, reading, math, art.

From the time he could stand up, my son had a passion for walking uphill. So I went with that, even when it meant I had to carry him back to the car! Turns out he also has a knack for skiing. So he’s 8 and he’s figured out that he can hike and ski like a man. That’s a big win in a boy’s world. Personal mastery helps, a lot.

Respect Sensitivities – at the start of the summer, I put his sister on BLAST. He was standing beside her. She shrugged me off, I merely “got her attention.” Unfortunately, my son was caught in the blast and ended up on the ground shaking from overload. I didn’t need Admiral J’s advice to see my approach had been completely ineffective.

Positive (Self) Regard – my desired outcome for my kids is simple. Basically, I’d like them to be polite, healthy and repeat mistakes less often. This leaves my mind free to acknowledge they are already better versions of myself. I share my shortcomings with them – current and when I was their age.


We stuck with the above, as best we could, and he figured out how to cope. My main role remains loving him and not making things worse!

Change happens slowly. This was a multi-year project and I didn’t notice he was a different guy until last weekend. He took a huge digger descending the highest mountain in Colorado, brushed it off and kept on rolling.

I said to myself, “this is something new,” and started to rewind the recent past. I realized my filter was out of date. Homie had been crushing life all summer and I didn’t notice.

Perhaps there was nothing to fix.

 

 

Being Wrong

IMG_4015Some of what I know to be true is false.

Being (somewhat) wrong is a natural state of being.

It rarely harms me.

But when it does…

Boom!

What to do?

Pay careful attention where error has the greatest impact on my life.

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Blindspots – what are the areas where I am unlikely to be right?

In a marriage, a business partnership, an investment, a sport… the greater our personal, emotional investment… the bigger the fall when a new reality slams against our old beliefs.

Often a feeling of righteous anger comes forth, and along with it, a desire to lash out.

When these feelings arise I remember:

  1. I fooled myself. Make a note! It is going to happen again!
  2. Acknowledge, we all want to be fooled. I am not alone, nor am I the first to experience this situation. Nothing personal, bro.
  3. Further energy invested into a (clearly) losing situation is better spent creating the life I want, within my new reality.

It is easy to get hooked into a cycle of mutual retribution – it might even feel good, for a while…

…but you might not be aware of the harm you are creating.

Sleep, skin, hair, mood swings, cravings… all useful signals when we are off-the-path.

Tough to point this out directly to someone! The people who have been effective with me have said something along the lines of…

“I wonder if there might be a better way to handle this…”

“You’re right, of course, but you might feel different later…”

Attention

What’s the penalty for being wrong?

  • Marriage partner
  • My last haircut
  • Sports with a high degree of concussion risk
  • Sunscreen
  • Business partnership
  • The shirt I wear
  • Personal guaranties
  • The color of my socks
  • Borrowing money
  • What I am having for dinner
  • The ability of my children to teach themselves
  • My choice of car
  • My temper

Be willing to talk about what matters, with the people who matter to you.

Letting Go

I was asked for advice on “successfully letting go, when you know it’s time to let go.”

The context was athletic identity but this applies to everything.

There are three components of how I deal with my attachments.

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Understand that mortality is going to force me to let go of everything.

In the context of physical power, we are forced to deal with this in middle age. You’d have to be a very out-of-shape twenty-something not to notice a shift as you move from 40 to 60.

Every transition in our lives can be used as preparation for the Big One that awaits us all.

Another example, from the preschool years. Parents dealing with grief from the disappearance of their babies. Our kids growing up is an opportunity for continual letting go. I miss our babies (but it’s ok).

My greatest attachment is to my kids. Some day we are going to have to say goodbye to each other. Preparing for that day is part of what remains for me.

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Acknowledge that the strength of my attachments is due to chemical signatures deep within me. I can feel them.

The transcendental experiences I had, while racing, live within me. When I speak of racing, my skin electrifies and my muscles warm.

Same deal with thinking deeply about my leaving my kids – though not as pleasurable! I feel them below my heart, just in front of my spine.

If you look deeply into these experiences, these attachments, they can be a source of tremendous energy. There is a lot of power here.

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Counter my grasping by meeting my obligations to those closest to me.

Put simply, my antidote to my mind is to be a good guy.

With a deep feeling of goodness, it’s easier to let negative thoughts pass through me and not get caught up in the opinions of others.

I deeply know that my current life is aligned with my core values.

If you’re (secretly) wigging out then it’s information that you’re out of alignment. Start acting better and your mind will follow.

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To see the power of these techniques, consider the times of your life when you’ve done the opposite.