Happy 31st Birthday South Africa

I was 31 in 2011. It was a watershed year for me in terms of assessing what was important. I dived into a “Project Mojo” to get myself back on track. I was living in London and started renting a lock and go studio at Wimbledon Art Studios. When I chose what to study, it had been a very pragmatic acceptance of the idea that, “Not all good ideas are good business ideas”. I loved art and maths, but it was more likely that I could monetize maths/business than art. I kept up at least one painting a year, but that was all I got round to. I had always prioritized later, but decided I need to bring some of that prioritizing into fruition. 

Every Saturday and Sunday, I would head to my studio for a couple of hours. I specifically chose to spend the year focusing on abstract expressionism. Trying to turn my mind off and focus on automatic, glutral painting, that came from somewhere else in me. Color and texture. Layers and energy. What makes you an artist? Renting a studio? Selling a painting? Believing you are one? Making a living from painting. I have always loved art. My mother was an art teacher, and I did take it as a Matric subject. Turning creativity, directly and conspicuously, into a career is something I considered… but always felt like a path with lots of resistance. These two or three hours, twice a weekend, had none of that baggage. It wasn’t for anyone else.

Wimbledon Art Studios has two open studios each year. Most of the artists clean up their studio and turn it into a gallery. There is a huge range and plenty of deals on offer. It was also very humbling for me, as you sit for hours with people poking their head in and making snap judgements of whether it is worth coming in. I did sell a few… but certainly nowhere in the range of convincing myself that this is a better career option than Asset Management. Art remained something “for me”. Not something that I would bend and twist into the mould required for paying the bills.

We all need to pay the bills. Even South Africa has to figure out a way towards economic prosperity if it wants to have these indulgent “finding yourself” years I was able to afford. Sometimes you do what you want to do. Sometimes you do what you have to.

Framework for Release

Financial Yoga is a framework for release from seeing yourself as a productive asset. An asset is not simply something you have. 

It is true that you can buy and sell things that are not productive. They can be referred to as an asset, even though they do not do anything. They may even go up in price if more people want the thing, and more is not made. 

Cash can be a wasting asset. Something that reduces in value because of inflation and costs (e.g. in a money market fund, or because of bank charges). 

What makes an asset something that can release the necessity for you to earn money, is when the asset itself earns money. If that money is reinvested, then the asset can grow, and earn more. By working rather than wasting. 

Property can be a productive asset, if you get rent from it, but you are not making anything. So if you live in the property, you should not consider it an asset. You are consuming what it produces. The same for cars if you are driving them for you. For most people who own them, their house and car is not there biggest asset. They are. Their capacity to earn is. 

Productive assets are not valued for what they are, they are valued for what they produce. That is why you do not want to be a productive asset. Not all good ideas are good business ideas. Not everything we should do, should make money. 

Count yourself lucky if the thing you are passionate about, and competent at, is also something that makes money. To finance the difficult-to-monetize good ideas, you need to solve the funding problem and generate energy from good business ideas.

Release

To the Backline

My growth spurt was delayed. After being a fearless forward in my introduction to rugby, I was introduced to high school. I had not grown, and my mother was not happy on the sidelines (not) seeing a tiny boy being swallowed up in the middle of a scrum with a habit of collapsing. I was not fast at all, nor particularly skillful with the ball, and didn’t have any strategic insight and overview of field positioning. The choice to move to the backline also seemed to sap my courage when monsters had run-ups. A friend of mine, Shaun, used to delight in running towards me and screaming because I would just throw the ball away. Fearlessness kicked in at various stages when my voice deepened, and centimeters stretched. I once again became more willing to throw myself into situations where I could potentially get hurt.  

 

Understanding Incentives

The world is getting progressively (but bumpily) less racist, sexist, homophobic, and classist. We are breaking down barriers, but we still have hierarchy. The concept of people being better and lifting groups of people. The directionality of that is interesting because living a simple life can be a choice. There is a story of Alexander the Great out empire building and he comes across a sage sitting on a rock. The one doing external work. The other doing internal work. The Gini Coefficient measures inequality. A Gini of Zero (0) in a two-person world would mean Alexander and the Yogi had the same. One (1) would mean Alexander had it all. If we shared everything, there would be no incentive to get more because it would immediately be watered down (particularly if it was among the 7.8 billion people on the planet). We want to have a sense of reward for what we do. Conspicuous reward. Well done, here’s a gold star. Here’s some money. That’s how we do incentivization. You do something. You get measured against other people. You do something more. Understanding what we do, starts with understanding what incentivizes us.

Gini Coefficients by Country

Much to Well

My path to financial security involved very little out the box thinking. The cold hard reality of London visits while I was working as a Gap Student (teacher’s assistant) made me think 100% pragmatically. I wasn’t starting from nothing. I had already had a great education that gave me options. Networks and education are a form of capital. I studied full time for 4 years, and part time for 4 more. My formal earning period was the decade from 2004 to 2014. I had few enough external obligations to build an Engine. Capital that could earn income. I could decide I had enough. That is the out the box thinking. “How much is enough?” usually comes before "more". To attempt stepping away from filtering my productive hours through the rules of money, constraint had to be self-imposed. I still work. Mostly unpaid. I still tend the Engine, and if I spend consistently more than it makes, it will go bang. A different kind of stress. If the unexpected pops its head, I have to do repairs. In a world addicted to growth, this is a question we are all going to have to answer collectively. When does measuring growth shift from how much we consume? From how much to how well? And obviously, I am able to ask these questions from a very privileged position. The box that matters is shared.

Growth Rings

If you want to learn about learning, it depends which angle you are coming from. If you want the low hanging fruit, Tim Ferriss is your man. Author of “The 4-Hour Workweek”, he is all about hacking life to its bare essentials through self-experimentation. Finding entry points. Planting seeds. Variety and quantity unafraid of mistakes. Often the barriers to good enough to get 80% of the juice are quite superficial. If you want mastery, learning is about unlearning. Then Josh Waitzkin’s “The Art of Learning” is my bible. Stripping back. Finding out what is unnecessary. Simplifying. He calls it “making smaller circles”. Embodying knowledge requires autumns and winters. Periods of difficulty that show us what really matters. That allow the essential qualities to add another ring to mark another period survived. An essential part of endurance is the experience of having endured.

Beyond the Numbers

Money making, once you release the question “what do I want to be?”, boils down to Capital allocation. Where will resources be most effectively put to work? What job will I get my money? Except money doesn’t face the existential questions we do. Where we are judged for our merit as a person by the choices we make, and the things we can do. Where respect and love are conditional. Money just does what it is told. Money makers still have a philosophy. They still face some existential questions about how to allocate Capital. Evidence mounts over time as to whether it has been well allocated, but there is a lot of noise. The holy grail is sustainable growth. Compounding over a long period of time. That requires looking beyond the numbers. At what could of happened, but didn’t. At things that have never happened before, but would be a big deal if they did. At what does happen at the core, but gets missed because we focus on the frills and glitter. Done well, Capital allocation leading to sustainable growth can free people from filtering the question “what do I want to be” through filters like “how can I make money out of this?”.

Filtering for Money

Sustainable Growth

I am a fundamental equity investor. I think money is better at working than people, and people shouldn’t have to be productive assets. This requires building Capital. A space between hand and mouth so that something is left to put to work. It also requires an underlying optimism and faith in the future. If you are negative, now is all that matters. You could be hit by a bus. I plan to not be hit by a bus. This means I get my money jobs at companies I think can deliver Sustainable Growth. I believe most of us have a short-term bias. A long-term plan means “the next five years”. My ideal long-term plan is the next 1000 years. That makes you look at the underlying system, institutions, and deep roots. That makes you plant Oaks you won’t see grow to full size. That gives unborn people the same vote as those who are currently making the consumption v investment choice. Being a fundamental investor means what the money does matters. Matters deeply. It isn’t gambling. It isn’t playing. It isn’t a Win-Lose competition. It is building on what came before, responding to current challenges, and contributing to what comes next.

Not scared of Busses

Three Pot Slow Cooker

I have three pots in which I invest my Engine. I manage about 2/3rds myself. I then have one pot (in a Global Equity Fund) which I milk (when it goes above a certain amount) which has about 2/3rds of what is left. The last pot (in a different Global Equity Fund) I don’t touch, and is meant for later life. I have taken out more than I ever put in. Meaning I have already withdrawn more than I contributed. The pots are between 6 and 11 years old. How is this possible? The money is working. It is growing. If you see Capital as a living thing, consumption is a form of killing. We need to consume to survive, but it is all about living in balance. If you eat some of the fruit, you can live sustainably. If you cut down all the trees, you are also killing all the future trees that would have grown. And the fruit that would have produced. If I act as a good custodian, there is no reason why my withdrawals shouldn’t be infinitely more than my contributions. The song isn’t about me. If I live hand to mouth, then what you see is all there is. And if the opportunities run out because my mouth is too big, the music will come to an end. Sustainable Growth is the underlying beat. Conscious Custodianship the musician.

Three Pot Slow Cooker

Custodian v Consumer

Saving is still hand-to-mouth consumption. It is just more French than American in that you use smaller plates, and take longer to eat. You put money aside “for a kitchen”, or “for a car”, or “for a holiday”. In the meantime, the money does a bit of Netflix and chill. Waiting till it is needed. Investing is different. The heart of investing is reinvesting. Profit is only an entry point. There needs to be a cycle. The next client. The next project. It is that pulse that drives growth. Investing turns you from a consumer into a custodian. You tend your cake, rather than eating it. Investing turns the TV off and gets your money a job. Then it looks for the next job that needs doing. And the next. Investing is active. That is why saving can only keep you at the same level. Investing compounds. The growth grows. That is where the magic happens. 

Smaller Plate

Let's See

I have always been skeptical of Epiphanies. Less so when they are events in our past we reflect on. When we realise that years ago, a breakthrough experience changed the path of our lives. I do believe in the Butterfly Effect. That everything we do matters, and nudges the world onto a different path. We just have very little idea of the unintended consequences of our actions. The pumping heart of valuable change is sustainability. Not whether you can do something today, but whether you can do something every day. Whether you can still do it tomorrow. Whether you can still do it in ten years. Change compounds through repetition. Through practice. Through deep soaking. Till the change becomes a part of who we are. The correct response to most Ephiphanies is, "Let's See".

Ephiphany

Savour v Seek

Before the year 1800, the world was very different. There were less than 1 Billion of us. Although scattered around the world speaking different languages, our day to day lives were not that dissimilar. Different rituals, beliefs and ways of seeing, but we were mostly poor, illiterate farmers. One way to describe what has happened since then is massive, unsustainable, growth. In a world of farmers, idleness is a significant vice. You need every hand available to assist in the fight for survival. That deep-rooted driver to be 'doing something productive' - meant less conscious sitting, conscious breathing, conscious discussion. There was work to be done. We spent the last 200 years growing out of scarcity. Much of the work we need to do over the next 200 years will be growing into abundance. Learning to savour rather than seek.