Holy and Holey

I work on a sense of union, so I can view everybody's worldview as a part of mine. Even just a part to understand. That means practicing constantly letting go, because the parts I didn’t understand are who I used to be. 

The goal being to build up resilience by unpacking my identity. Unpacking the things that I hold on too tightly to. Constantly coming back to working on the skill to adapt, adjust, and accommodate. “When events change, I change my mind. What do you do?” said Paul Samuelson. 

You will have no choice. You will have to adapt. The world changes and there is nothing you can do about that. Sometimes the harder we hold on to things, the more likely we are to lose them. 

I am the worst version of myself when I am desperate. My sense of humour goes, and I become earnest and intense. Building a capacity to accommodate the views of others, and changing scenarios, is ironically an easier way to hold on to the things you really care about. A way to pick your battles. Building resilience is a way not to put at risk the things that really matter, for the things that ultimately don’t. 

Having a good sense of the few things that are important, which allow you flexibility with awareness of barriers, boundaries, and borders around your core. 

You can keep some things holy, as the base of your story. Allowing you a calm foundation. Keep the rest holey, to let the air in for breath. To feed the flames of creativity.

Income and Spending

Plan for things not going according to plan. Start with space. In monetary terms, that boils down to what your income is and what your spending is. In London Underground terms, mind the gap! There needs to be a gap between the two. 

A decent goal is building up to three to six months of what you normally spend in a month. Then you will be able to absord months that are not normal. You can expect unexpected expenses. 

You don’t know when, if, and how much they will be... but that doesn’t mean they need to be the boss of you. If something really big happens, it also buys you some time to adjust the plan. This creates the capacity for life-long learning rather than picking a path and sticking to it doggedly. 

Money is made through the supply and demand of skills and knowledge in containers. Supply and demand change. Once you have picked a path, something might happen that changes everything. You study IT and graduate as the Internet Bubble bursts. You study medicine in Holland, and so do all the smart kids, and then there are too many Dutch Doctors. The world is dynamic. 

You don’t get paid because of what you can do. You get paid because of what people need done, and how many options they have to get it done. 

Price is not value. Change price INTO value. Your value. By listening and responding to price, so that eventually you have the capital not to have to. A gap between your income and spending buys some time to do things at your pace.

Moving Underground

Reliable and Sustainable

There is often a disturbing amount of truth in oversimplifications. One is that the path to wealth is shopkeeper-professional-entrepreneur-bust and repeat in four generations. 

To start building wealth you need to first find breathing space between what you are earning and what you spend. You need to snap the hand-to-mouth connection. Gradually you build capacity to think about risk differently as you have more faith in your own grounding. When you have sufficient capital for a deep sense of knowledge that you are going to fundamentally be okay. 

Then you can build that base up to be an engine. An engine earns more on average than you spend on average. At that point, particularly if the engine is earning comfortably more than you spend, it starts growing. Compounding kicks in. Growth on growth. Even without you earning. Then it is no longer just about you, your earning capacity, and your consumption. Decisions extend beyond you and even your lifetime. Impact scales. Work is no longer about financing your needs. 

If you have sufficient capital, it can become a muse. Not all ideas are good business ideas. If you have the capital, they don’t need to be. Good ideas, that are not good business ideas, can be funded by good ideas that are good business ideas. Good businesses reliably and sustainably generate a growing stream of cash.

Hesiod and the Muse

Increasingly Released

We will always be thinking of something. Although often pitched as emptying the mind, meditation is practicing letting distractions pass through. Enhancing the capacity for conscious focus. That is the connection between money and yoga. 

If you have or build buffers for financial noise, and an engine to support your immediate physical needs and future development, you gain the ability to choose your point of focus. You can care about things that are bigger than you. 

What are you worrying about? Is it what you want to be grappling with? Can you involve yourself in solving problems that revolve around more than just you, your survival, and your status? 

With community wealth, we become truly invested in the bigger vehicle that solves those problems. We build universal capacity to deal with noise. With a longer-term commitment, it is no longer about mercenaries and sellswords who are rewarded and go on their way. We become a part of something larger. 

Focus can expand when you have confidence that the basics are secure. Focus can expand beyond money, as the money distractions pass through. 

Where money gradually takes more of the burden of working for money, and we are increasingly released to focus on issues that get suffocated by the rules of money-making.

Sani Pass

Time and Effort

If you are living hand-to-mouth, you have no option but to solve the immediate problems in the way you are most confident works. 

Building space, to take knocks (Short Term - Resilience) and give you confidence that sufficient time is available (Long Term – Endurance), allows you to look at problems differently. You can afford to try something different. 

This is the capacity that allows firms, countries, and people to invest in research and development. To allocate money to potential. Most people are looking for quick fixes and easy solutions. The higher your required rate of return, the shorter the time frame that is considered. 

One of the strongest competitive advantages you can have is willingness and capacity to commit to obvious, but hard, challenges. Where everyone knows the answer, but it is too much effort. 

Like getting fit and eating healthily. The further down the road the payoff for effort is, the more support you need till that pay off arrives. 

Most of us know how to run, and have done since we were kids. Few of us have run marathons because of the hours of training and effort required. A lot of people just don’t want to run marathons. Some want to. Theoretically. Maybe. Probably not. 

A common skill many Olympians share is the capacity to not have to earn money during the time they are training. Time and effort are significant barriers.

Time and Effort

to overcome barriers

Thrown Around

If you get the recognition and money you require from what you want to allocate your time and energy to, that is brilliant. 

The danger, and beauty, is that “this too will pass” applies to both good and bad. The world changes. Creative, and destructive, forces constantly renew and refresh the rules. Becoming attached to a fragile external source of recognition and money puts you a false step away from an imploding world. 

Yoga talks of starting the practice, and process, to still the waves. The seven Bhumikas are a map for a personal practice. Financial Yoga would be the same. 

The first step is a desire for knowledge. Then asking the right questions. Doing your due diligence on how the world works and how to still the waves. 

The third step is knowing what to do and doing it. Building a buffer that reduces the impact of the waves. Allowing you to start processing your choices consciously. 

The fourth step is where a sense of control sinks in. The waves haven’t disappeared, but you are in a position where you are no longer being thrown around.

Judo Haraigoshi

Start with Space

You can’t build capacity to absorb shocks and stress (to prevent losing sight of what matters), without finding space and time. 

Space is not “what is left”. Start with space. In financial terms, that means “paying yourself first”. 

First, put some money aside to build a buffer. Work towards having 3-6 months of spending as a cushion for the expected unexpected. To absorb months that cost extra. To absorb shocks that would have derailed you. Before you save to spend on a thingthing, put money aside to deal with anything life throws at you. 

 

The money is there, but not there. Protect the boundaries around your buffer. It is not there to spend, it is there to hold. Repair the buffer when noise shakes it. Pay yourself first. Then with whatever is left, decide consciously how to spend it. Don’t start with a list of things you have to spend on. Start with what you have, and choose how to spend that. Start where you are. 

Easier said than done... but we can’t focus on what matters, if we can’t focus.

Space is not what is left

It is where we begin

Couch Potato

You can view stock markets as sport or you can view them as work. You can “trade” anything with a pulse and a price. If someone else will give you money for it, it has a price. For something to be an investment, what is under the price matters. 

The truism about “time in the market, not timing the market” connects to the fact that fundamental investing is work, not sport. If you sit in cash for long periods of time to “avoid market risk”, then your money does no work. 

Cash is an important part of financial planning to create buffers for the unexpected. Emergency Funds of 3-6 months of your spending needs mean you don’t have to harass your investments when the unexpected pops up. Beyond that, the money is more couch potato than a Springbok World Cup-winning bomb squad. 

To “time the market” you need to pick both the highs and the lows, not just once... but every time you spin the dice. Investing on the other hand, grows because of the work the real businesses are doing, the real problems being solved, and the real customers being served.

No Work, No Pay

Consuming or Reinvesting

“No decision” can be “the decision”. Building wealth is capital allocation. Getting money a job. If  everything there is, is spent, there is nothing to put to work. If you are going to build capital, you first need to build buffers that control for the waves that knock you off course. To do that, instead of “nothing left” being the enforcer of discipline, you need to internalise self-discipline so extra is allowed to exist. Not extra in the sense of a Scrooge McDuck pool of hoarded coins. Extra in the sense of reinvestment. Extra in the sense of circle of life rain-cycles, where energy is neither consumed nor destroyed, but just changes shape and form. It is the story of the Ant and the Grasshopper and Aesop's Fables. The Ant works hard during the Summer and builds up a lot of reserves. And when it gets to Winter where there is nothing to eat, Ant has extra. Grasshopper plays during the Summer, when it is beautiful, and there is plenty, and there is enough to eat. But then when it gets to Winter doesn't have enough. If you are going to build capital and buffers... the money is there, but it is not there. Which is quite abstract. The money is working at a job. It is not there to be spent.

Consuming vs Reinvesting

Where You Are

Once you have the capacity to pause, you can form a picture of where you are. You can get an understanding of what is noise, and what is worth focusing on. What really matters to you, and what meaning do you want to create? You can still the waves of anxiety to the point that you feel some sort of sense of control. Space allows you to step back from your immediate needs and glimpse the bigger picture. From that point, you can get the deep knowledge. You can do the deep work. You first need to build the capacity to reflect on what is important to you. That is the path to liberty. That is the path to letting go of the anxiety that wraps you up and gnaws at you. That path starts with acceptance. With the question of where you are, and what do you notice?  

Surface Waves

Stilling the waves of money anxiety starts small. Like building relief from a storm when you have no shelter. The goal is simply to get dry and warm. If you can build a buffer of three to six months of what you normally spend, you start to create the capacity to make some path-altering decisions. You build a capacity to cope. You increase your control and focus. “You” increase it, but really it is the power of the buffer/capital. It is the same you. Just empowered. Similarly, yogis talk about Siddhis. Siddhis are seemingly supernatural, paranormal, or magical powers obtained through regular practice. In other words, mastery. But they are dangerous. Other people might elevate you and you might start believing that elevation. It is nice getting recognition. And that sets you up for the waves of anxiety to return. Real meritocracy is a call to see the value of people and their connection to each other through the waves. Building buffers and capital to power us without building barriers to divide us.

Stilling the Waves

 

Allowing Space

If you are time rich, rather than money rich, you need to learn to create boundaries. It's very similar to the rich-rich when people start asking for money. People start using your time more conspicuously, if they feel entitled to it because they are busy. When you create space and someone else doesn’t. It's a little bit like being punctual. The people who aren't punctual arrive late and make people who are punctual, wait for them. Which even though it is perhaps not intentional, is a way of saying their time is more important. Tim Urban writes about chronically, late, insane people (Clips). He calls it time optimism. They (and he includes himself) always try fit too much in. I am typically on time, and part of the reason for that is I stop doing whatever I'm doing early. People like me are time pessimists because we leave gaps for the next thing. I do a lot of waiting. We need to build a whole new way of looking at respect and how we recognise people, if we're going to change the way we make our decisions around money. Allowing for gaps. Allowing for the things we can’t see. 

"Why I am always late" Tim Urban

 

Building an Engine

If you want to still the waves of money anxiety, you need to start with some fact finding. Where are you? For me that has changed in a pretty fundamental way. Quite often big life changes are a catalyst for relooking at your situation. I moved back to South Africa in December. That means thinking in Rands rather than Pounds. I spent the early part of my career getting my money jobs around the world. Building what I call an Engine. You don’t have to be the sole breadwinner. Your money can work too. Especially if you squeeze some space in between your hand and mouth. To create space, you need to have an idea of what you are spending. So for me, now... I have to wait for the dust to settle. As I adjust, the numbers are way bigger (thanks inflation!) than 13 years ago, and some of the basic ways things are done differ from up north. After a few months of paying attention, you can get an idea of the things you can expect. Then you can start to add space for the surprises. Then you can start building (or repairing) your Engine.

Mechanical Repair

 

Half Squash

Every decision has trade-offs and constraints. It is nice to believe we can identify and avoid all the things we don’t like and hide them under an upturned Gem Squash. It is nice to believe we could all run the 100 metres in under 10 seconds if we really put our mind to it. We can’t. As Cicero said in the Gladiator, “Sometimes I do what I want to do. The rest of the time, I do what I have to.” Brutal honesty combined with some optimism and belief in small, achievable goals can gradually disempower constraints. Given time and application. Facing harsh realities can be done with kindness. We can build buffers to soften blows. To give us recovery time. To allow us to build flexibility and strength. We can chip away at reality, and change it. But every journey starts where you are. 

You can't hide the bits you don't like under the Gem Squash

 

Solved Problem

Investing is a solved problem. As Seth Klarman points out, “the real secret to investing is that there is no secret to investing”. The unsolved problem is that most people don’t do it. Most people still live hand-to-mouth. A lot of people are stuck in debt traps which is “reverse investing”. Like the underworld of Stranger Things, you work to pay for past consumption or misfortune. Three key factors in investing are (1) competence, (2) relationships, and (3) beliefs. I don’t believe in Gods of investing. I do look out for red competence flags. You have to do your due diligence. Like romantic relationships – we form connections with people. The grass isn’t always greener. Improving our investing habits starts where we are. Our beliefs are path dependent. There is an element of this in the “how” of investing. You have to choose a path that resonates for you so you can stick to it. The basics are pretty simple. Find a way to earn. Spend less than you earn. Get the difference a job. 

too many live hand-to-mouth

 

Fear of Success

Money is made by solving problems in containers for people with money. The key is being able to communicate with the decision-maker-with-money, in language they understand. Know who is paying. Know what they want. Know what success looks like to them.

Neville Scott has spent a career helping business leaders design solutions to problems that can be implemented. He starts his process by understanding “the School Playground”. Problems have deep histories with complex origins. Solutions to single problems have unintended consequences and layers. One problem we are all trying to solve is that we need to eat. We have to get paid. If we permanently solve the problem we get paid to solve, that can be a problem. Creative destruction is a powerful fear-inducing force, without sustainably looking after the problem solvers. 

Protagion - Active Career Management is holding a virtual conference where I will be part of a free panel discussion exploring how building buffers (for resilience) and engines (for endurance) of Capital can help ignite your creativity. Free from the fear of success. 

Taste Test

Investing is a lot like cooking. You can do it just as well yourself if you are passionate about it. I am far from a foodie, but my understanding is that why the French are known for their love of food is they let the ingredients do the heavy lifting. Simple and delicious from source. A challenge is we all need to eat, so there are plenty of people willing to help (and charge). How can you trust, and what should you choose, if you haven’t grown up at the knee of an olive oil and salt-stained apron? Once you have bought into the idea that Capital changes the game. Once you have realised that hand-to-mouth living is not sustainable. Once you have found work that pays more than you need to spend to survive. Those are the fundamental keys to build space to breathe, and an engine to finance ideas that aren’t constrained by the box needed to make money. You don’t have to cook yourself. There are people willing to help. What you will need to do, is learn to ask the right questions. To taste test. Develop the ability to tell if something is off. 

Learning to Taste 

(as a young Trev when I last worked for Old Mutual)

 

Building Support

A good idea is not enough. If you are deciding to invest in a company, you do not just look at their product pitch. As important are solvency and liquidity. Solvency recognises the fact that what you see is not the full picture. Add up the value of everything the company has (Assets), and subtract everything they owe (Liabilities), and what is left is closer to the truth of what is supporting the idea (Owner’s Equity). Support is the unsung hero that makes potential sing. In a crisis situation, price and value can disconnect dramatically. Which means if most of what you see is liabilities, the price of what the company has can evaporate. A fundamental principle of wealth creation is not to be a forced buyer or a forced seller. If you put yourself in a corner, you are no longer a decision maker, and your “good idea” will get you nowhere. Liquidity is the same principle, but clear and present danger. No one sees long term potential if current expenses cannot be paid. What is true for companies is true for people. To see each other’s potential, we need to build capital and buffers. To lift our eyes from hand-to-mouth living and crisis-to-crisis survival. To empower good ideas, you need to support decision making.

Mini Me

You can think of capital as your Mini-Me. In a world that defines us by our earning ability, building capital is a path to telling those voices to get knotted. If you spend money, you are firing it. If you put it to work, you are feeding your Mini-Me. Gradually that Mini-Me can grow. If you reinvest (rather than consume) a combination of what you produce, and what your Mini-Me produces, one day your Mini-Me may earn enough to be your bread winner. So you can focus on ideas that are good ideas, but not good business ideas. You can only build capital if you are not servicing past consumption (debts), and you are earning more than you are spending. There cannot be growth while you are bleeding. There cannot be growth without breathing space. But if you can hold space for, and look after your Mini-Me, with time and care it can grow to hold space for you.

Subtle Change

Stilling the waves of money anxiety starts with understanding your relationship with money. With the stories you tell yourself, and the daily practice you create around that. How you wake up. What you choose to do. How you choose to think. What new information you expose yourself to. What areas of embodiment you are exploring. The movement, you are creating. The flexibility, you are creating. The strength, you are creating. The control you have over how you move. Your autonomy. Your transitions.

Understand the situation that you are in, and the situation you want to be in. Understand the path, and the required skills and knowledge. That starts with paying attention to where you are, reflecting on it, and seeing what your choices are. In a way that you are fully present and able to grapple with that with a sparkle in your eye. To see a point in subtle change. To celebrate marginal progress that adds up. That powers small achievable steps every day.

Detail from "The School of Athens" Raphael

Euclid studying Change