“The market can stay irrational longer than you can stay solvent” warned John Maynard Keynes. “When there is nothing particularly clever to do, the potential pitfall lies in insisting on being clever” adds Howard Marks. I am a big believer that the Emperor is wearing no clothes in many parts of the investment industry. The world is ambiguous, complex, and random. We seek out heroes who ooze confidence that is unwarranted. Many investors names are made or destroyed on a handful of decisions. Either these buy a decade or two (a career) because of something going well, or they have a failure carved into their souls. Extreme success may mean 60% of their decisions are right. A coin gets 50%. The margins are wafer thin. So regularly remembering that investing is more like dieting and exercising than a “how smart are you” contest is important. Everyone eats. Everyone moves. Make sure you are one of the people building towards something, rather than against someone.
Wednesday, June 19, 2019
Monday, June 17, 2019
Endurance, Resilience and Creativity lie at the heart of meaning creation. Resilience and Creativity stand up front. Every day we need to make it through the day, and do something worthwhile. Deal with the clear and present. Respond. Endurance requires a degree of detachment. It isn’t just about today. It is a realisation that true change compounds. Both negative and positive. Threats can sneak up on us. Epiphanies are sneaky too, as we connect seemingly unrelated ideas. Endurance extracts the trend from the noise. Endurance is calm, vigilant, and proactive. Endurance is conservative enough to protect the things we love, and adaptive enough to let go of the things that are holding us back in a world that is constantly changing.
Friday, June 14, 2019
There is a bitter irony in the tying of the means of production to labour, and the responsibility for looking after the worker to the employer. Hand-to-Mouth living binds the person’s survival to their labour. A Minimum Wage restricts the work that can be done to that which can explicitly be monetised sufficiently. If we worked towards a world where everyone had sufficient Capital to ensure survival, then everyone would have the most powerful negotiating skill there is. The ability to walk away. The ability to say the word, “No”. At that point, people will do the work they want to do. If you need a person to do the work, you will have to make the work attractive and remunerative enough to appeal to them. True freedom for workers would be if they were all Capitalists.
Thursday, June 13, 2019
Tying our vision for our life to an earnings-driven model is hand-to-mouth living. “What do you want to be?” we ask children, and that becomes the key question that determines their quality of life. Meritocracy suggests we are okay with people who add more value living better lives as a reward. That is very ego based. Individuals become self-judging productive assets. Building Capital separates the lives we want to live from the financing decision. It opens up a world of ideas that aren’t driven by some of the key questions of what makes money. Can you clearly articulate an ask? Can you clearly articulate an offer? Is there a big enough community with that ask? Can you build a container that allows you to charge for matching the ask and offer, and solving the problem? Not everything worth doing is a clearly defined scalable problem (Ask and Offer). Not every problem is only worth solving if you can get the credit (Containable). Building Capital creates space between your hand and mouth, and the opportunity to look up and dream.
Not everything can be contained
Wednesday, June 12, 2019
The idea that wealth comes from stumbling across some earth-shattering breakthrough is because of our obsession with outliers. Boring doesn’t make for good storytelling. But add time to the right kind of boring, and that is where real change happens. Change that silently compounds on strong foundations until the “over-night” success is identified years after the fact. Start from where you are. Find a way to earn. Build a Buffer between what you earn and what you spend. Build that Buffer into an Engine. Give that Engine space and time to breathe and grow. One day, it will be able to look after you.
Monday, June 10, 2019
We see the world differently. Max Planck said Science progresses one funeral at a time. "A new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die, and a new generation grows up that is familiar with it.” The hardest thing to do is to unsee and unlearn. Our knowledge builds up till we feel very comfortable with it, and it becomes automatic. It becomes embodied. We are just fudging our way through life doing our best. Different flavours of fudge harden. We are most conscious of today's flavour of fudge. That is why empowerment beats imposing your beliefs on others. We are all trying to do our best. Empowering people and communities means we get to test multiple solutions.
Sunday, June 09, 2019
“Survival of the Fittest” suggests a level of knowledge in advance. This is hindsight bias. Normally there is a base level of fitness, and then it is just those who have the specific survival skill required for the randomly selected sorting event. The world is complex, ambiguous, and random. We can work on our base fitness. We can be prepared for a variety of sorting events. If something happens that 95% wipes you out, you want to be in a position to rebuild from that 5%. “The Red Queen” principle in Biology is that evolution is more about running just to stay in the same place, “organisms must constantly adapt, evolve, and proliferate in order to survive while pitted against ever-evolving opposing organisms in a constantly changing environment.”
Friday, June 07, 2019
People come up with all sorts of elaborate strategies to beat the Roulette table. You can’t beat maths. On average whatever your strategy, in the long term, you lose 1/37th of whatever you put down each bet. 18 odds. 18 evens. 18 reds. 18 blacks. AND the pesky green zero. The Casino always wins. The only real winning strategy is to survive. Lose as little as possible while getting the “free” drinks. Wait for everyone else to lose first. The same is true on the other side. The Casino is only making a little each time. Enough time (Endurance) for it to add up. Enough of a buffer (Resilience) to handle the occasional big losses. Enough awareness to realise that chasing big, fast wins, can put you at risk of ruin. Enough understanding to look through the noise at what is really happening. Rule number one has to be staying in the game. Rule number two is that adding value beats gambling.