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.

Then you Build

Wealth building is not wealth extraction. It is not a negative competition. Yes, you are engaged with people in a way where you push each other, and challenge each other, but there is no need for schadenfreude and benefitting only if others do badly. 

We can gradually let go of that and have the genuine intention to solve rather than perpetuate problems while drawing rent from them. There is the temptation to have easy containers where the only competitive advantages are fake. 

Real mastery and resilience can cope with, and thrive under, openness and transparency. A really good business idea can be judged through the filter of how it would work in a world with full transparency, zero transaction costs, and perfect replicability. 

If someone knows what you are doing, they could do it too. Real competitive advantage comes from embodied knowledge. You can tell someone what you do and how you do it... and they still won’t be able to, or won’t want to, because it isn’t what makes them tick. You have a relationship with them, and that is something they will keep coming back for. 

The way you see the world can change, and adjust. We can go deep into different areas. Make different choices. 

My goal has always been to develop a resilient world view. One where there is nothing that everything relies on. Where changing one thing doesn’t bring everything else down. Where you hold each part lovingly, but you are not so attached to it that it defines the whole reality. 

Then you build. Choose. Go.

Building doesn't have to leave a hole

I Am Not

Detachment isn’t finding a cave and not participating in society. It is partly about the conversation you have with yourself in your head. I have a friend who said to me, “You talk about yoga and are a yoga teacher, but I have seen you more wound up and angry than anyone else I know.” My inner conversation is often full of righteous indignation. 

The struggle over wanting to care, but both not having the capacity to care about everything, and not having the skill, knowledge, ability, network, influence, or resources to do anything about a lot of what I think should be different. 

Like many others, and definitely many other South Africans, I intentionally carry personal, historical, and global problems with me. If someone is stressed at the table next to me, I will soak that up. Like if you are sitting next to people breaking up in a public place. For most of us, the last few years of news and politics have been really difficult to process. 

Do you stay involved? Do you detach by turning off your connection to the internet? Do you detach by not having conversations with other people? Do you detach by creating an alternative reality bubble? 

I am okay with getting angry. Living with the full range of emotions we were given. Anger can be useful if applied in the right settings with the appropriate delivery. It’s a part of caring. The opposite of love isn’t hate, it’s apathy. When someone has absolutely no interest in you whatsoever, that can cut straight to the soul. Hate normally comes from a place where there is emotion and connection. 

Part of financial resilience is emotional resilience. We aren’t Spock-like detached rational human beings. We are connected to the world in an emotional way, which we need to acknowledge and learn from.

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

Working Out

It is tempting to judge decisions based on what did happen. If you accept that the world isn’t on a set path that just has to reveal itself, then what could have happened is just as important. 

A bad decision that worked out, is still a bad decision. Especially if that decision-making process gets used repeatedly. Act with what Warren Buffett, Benjamin Graham, Seth Klarman, and other decision-makers call a margin of safety. An acknowledgment that being wrong is a part of engaging with the world meaningfully. 

Don’t just assume what you think is going to happen will happen. What if something else happens? Get out of the mindset of thinking you are rewarded for prediction rather than tangible value creation. A track record of building rather than of being right or wrong. 

Uncertainty is a part of decision-making. Of course you want to plan, but in a way that realises you have limits and constraints. 

A margin of safety is like a buffer when you are streaming a show with slow download speeds. Enough of a buffer means it can be slow, but it doesn’t stop you from watching, because you started with patience. 

A margin of safety means your plans don’t get disrupted by whether you are right or wrong, because they allow for change. Where wrong is something you embrace as a part of the learning process, rather than something that ends your creativity.

Pattern Addicts

When sitting at a roulette table where the option is red or black, and spinning... a series of reds in a row may make the chancer think, “it has got to be black next”. 

But no. This is called the Gambler’s Fallacy, “more frequent in the past means less frequent in the future (or vice versa)”. 

The roulette table has no memory. It is a pure-play live-in-the-moment fanatic. The chance is the same every time. 

This is not something that is natural to us pattern addicts who thrive on story telling. Even trained statisticians are not intuitive statisticians. You bend your heart and mind to accept the rules of chance. Override what seems to be true, to accept randomness. 

Our lives are short, and they may be too short to gather sufficient evidence. When we have enough evidence, it may no longer be relevant, because the driving forces have changed. Significant data mud wrestles with relevant data. 

You can harness randomness to help you make decisions, if you can admit that going right or left doesn’t fundamentally matter. What matters is going. Sometimes waiting for further evidence is just waiting. 

The trick is to overcome the debilitating fear of randomness.

Survival of the Flexible

Many of us like to think that there is our own version of something controlling everything, and that allows us to find comfort. I moved away from being religious, but I still had the idea that there was a bias to good. That gave me comfort partly because of the possibility that you can control stuff. 

Gradually, I started to get more comfort than that, from the idea of randomness. The simple driver that stuff happens because stuff happens. 

There are different types of randomness. Part of the complexity depends on the constraints. When you roll a dice, there are only 6 possible outcomes. For a coin, it is two. The Rubik’s cube is incredibly complex, with 43 quintillion (18 zeros) combinations. That is a finite... but mindbogglingly large number. By adding a layer of pattern recognition, you can still learn to create a sense of control. 

Another level of randomness is simply a pulse. The mere existence of life and change. It does not have to have intent other than a will to survive. To cope with change. That does not require insight into the future. If you have sufficient biodiversity, you can cope with most changes in an evolutionary sense. 

You just don’t know which of the survivors will be the strongest in hindsight. That depends on what happens. Even if you see the result, and played again, a different scenario would unfold. That is complexity that responds to flexibility rather than control. Reacting and adjusting. Survival of the flexible. 

Create excess control and single solutions create the unintended consequences of mono-culture. Where we do not know that what we are doing is horribly wrong, until it is too late.

Hiding your Needle

I used to enjoy having a well-stocked bookshelf of what I had read, as well as what I wanted to read. When I had friends over, I could give them a book. I would have a few copies of the ones I really liked. 

The bookshelf, photo collection, CDs, and DVDs were a visual story of what I was curious about. A conversation starter. 

When I streamlined, I gave most of those away. I also gave a way a lot of paintings. I had an art studio in Wimbledon for four years, and it was time to find homes for the paintings that hadn’t yet been adopted. I usually gave paintings to friends for special occasions. I love seeing my work on people’s walls. 

I still had some stuff to store that was sentimental. A good friend’s father had a business making children’s playground surfaces. That included having a warehouse for storing the materials. It is dangerous paying “rent” for stuff, but I was lucky. He let me have a corner to put things like my easel, and I guitar I had bought with the intention of learning. 

A former colleague looked after an electric keyboard I had the intention of learning. He had the intention too. 

Like Arya wrapping and burying her sword. A girl may have no name, and we may not want to identify with things, but turns out to be hard to let go completely. Going through the exercise of trying to let go is revealing.

And Again

Not eating or sleeping properly can catch up on you. Short-term resilience can hide the long-term damage you are doing to your endurance. 

You need to deal with the patterns of ups and downs and recognise natural rhythms respectfully. Your body is a vehicle that allows you to think clearly. You won’t be able to still the waves of your thoughts if your body is crying out. 

Niggles, knots in your muscles, and points of tension are what stop you from doing what you should be doing. That is when scarcity of attention kicks in. You get big, muscular, sportsmen coming into yoga classes, who (forget touching their toes) can hardly brush their teeth because of the size of their distorted biceps. 

You need awareness of how everything is connected, and to regularly move in a way that reminds your body of its options and tools. It’s a long-term game. Real wealth, and real meaning, gets created through commitment and consistency. 

A long timeframe shifts your reality. Single decisions get taken in context of their broad framing. Instead of all your energy being sucked into one choice with life-or-death outcomes. Where getting it wrong is debilitatingly frightening. Endurance is the bedrock for the confidence to be creative. 

It has to be okay to be wrong, because being wrong is the only way to learn. Endurance is your ability to be wrong... and still be able to try again. And again. And again.

Bedrock

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

Mini-You and Real-You

Fundamental investing is treating your money as a mini version of an earning you. Applying the same “what are you going to do when you grow up” that excessively defines our life planning. Fundamental investing is getting your money a job. 

The same concepts of Financial Yoga for an individual real person apply to the legal person that is a business... and to your money that invests in businesses. Endurance, resilience, and creativity give shape and form to ideas. 

The Balance Sheet of a company provides endurance. The rock on which they do whatever they do. A strong Balance Sheet allows a company to survive. It buys time. To invest in research and development. To properly maintain what they have. 

The Cash Flow Statement indicates resilience. It breaks down how cash is used for operating, investing, and financing activities. Can the company find the liquid cash it needs, as and when it needs it? Is there the money available to do what needs doing? 

The Income Statement is a picture of the bottom-line creativity. Is what the company is doing costing more than what it is producing? Is spending under control? Is the business sustainable? 

Studying the Financial Statements of a business is similar to the financial planning of an individual. Money is more suited to the hard solvency, liquidity, and profitability ratios that weigh, measure, compare, and judge containers for wealth creation. 

The more time and space it is given to grow, the more money as a mini-you can free real-you from those constraints.

19th Century German Ledger

Autonomy and Consent

Once you have a deep understanding of yourself and where you are, you can build capacity. To handle the random, ambiguous, and complicated change you are a part of. You will be able to cope. “I am okay now. I will be okay later. I will thrive.” 

Plans are neither static, nor able to remove difficulties. Plans are a tool to create a process to deal with problems as they arise and evolve. Challenge means you are alive. In movement culture (calisthenics) they focus on developing strength, flexibility, and control (see GMB.io). This is the same idea I talk about with financial yoga and stilling the waves of money anxiety. 

Strength is endurance. The building of your muscles through regular controlled stress. Through workouts, varied between Sustained Medium-Intensity and High-Intensity Interval Training (HIIT). 

Flexibility is resilience. Your ability to adapt and adjust to accommodate different situations. Through calm and relaxed lengthening of your muscles. 

Control is creativity. It is the ability to see, evaluate, decide, act, and get the intended consequences you were looking for despite all the things that are not in your control. 

Moving well gives you an underlying sense of autonomy and consent.

Moving Well

Little Finger

It is important to practice the ability to detach. Not all the time. We also have to relax into and accept the way we are, but then build capacity for periods of reflection. Where you can look back and see, “This is a game. I am an avatar. What did I do?”. It can be quite useful, for example, in work situations where you might have a boss that has treated you really badly. I can remember watching Game of Thrones during one of my periods of work that was really frustrating. I remember walking on my commute with one of those ear-worms of something that is bothering me. One of those ones where it just seems like there is no way out. But if you are able to step back and see yourself as a character in the story, you can see that it is not you. It is a situation that the character in the story is in. This provides a sliver of separation. That can offer a tiny gap of calm. Perhaps even some humour. This bit of the story will pass. Pages turn. Chapters end. Characters evolve. 

See What Happens

In the study of machine learning, they started to see that you can simplify quite complex decisions down to a string of ones and zeros. The computer is not sentient. It has just learnt through multiple repetitions of trial and error, with adjustments. Feedback loops added to complicated processes. It does not understand its own behaviour. Given the ones and zeroes, you can’t extract the knowledge they contain. You can only apply it and see what happens. We are sentient, but even we do not understand ourselves completely. And we have to accept that we can not understand ourselves fully. A lot of our behaviour carries deep knowledge that we can try to interrogate but we might not be able to come to the bottom of. We can constantly be on the path of understanding ourselves through self-awareness, self-search, and self-reflection. That includes recognition of limits, and creating an environment that can cope with lack of understanding and regularly being wrong. That can cope with lack of control.  

Binary Counter

Extended Challenges

When a country isn’t wealthy enough (e.g. South Africa), or even if a country is wealthy enough (e.g. the United Kingdom), to have a solid safety net, we start pushing responsibility to owners and managers saying, “they need to look after the employees and create jobs.” In some ways, I think that is fair. Firms can use team language when convenient and treat people (employees and clients) as disposable tools at other times. The danger with that is the condescending idea that there is a class of people responsible for looking after people, and an underclass of dependents doing their bidding for a hand-to-mouth living. Both decision-making and responsibility can be shared in a way consistent with autonomy and consent. If we build proper resilience and endurance. If we aren’t solely reliant on salaries or welfare. What happens when companies go bust? What happens when countries can’t tax more or borrow more? As we have seen during the Covid crisis, a large number of the institutions we rely on are not designed for extended periods of challenge. To be creative, you need the capacity to survive the winter. Wealth creation is at its heart, risk management. 

Ice Age Earth

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. 

Financial Calm

Financial calm does not require you to be loaded. It comes from a level of confidence that you can cope in three dimensions. 

1) With decisions that take you left or right. 

2) With the unexpected bumps of ups and downs. 

3) With the endurance to keep on keeping on. 

Financial calm can come with belief in your plan. Not a crystal ball that sees the future. Instead planned capacity for futures. When you know you are living within your means, then deep soaking calm builds your strength, flexibility, and control. In a way that radiates through how you move. 

Stress releasing from your muscles and joints. Living within your means allows you to expand the length and smoothness of your inhalation and exhalation. Identifying and building the skills and knowledge needed for a source of income. Overcoming the barriers and securing your container. 

Calm is not the size of the ins and outs. 

Calm is the space between the ins and outs.

Up-Down, Left-Right, Forward-Back

Build Capital and Free Labour

For my Batchelor’s Party, my Best Man knew the normal ways of embarrassing me would not work. Instead, he dressed me up as White Jesus with a MAGA hat. Politically and economically, I am of the “The Future and its Enemies” (Virginia Postrel) and “The Righteous Mind” (Jonathan Haidt) school of thought. We are all best placed to make our own decisions and agreements. My main objection to the politics of the last few years is the gunk in our ears. The picking of teams. The lack of acknowledgment that decisions are complicated, and we cannot see into each other’s worlds clearly enough to make decisions for others. We can just do the hard work of breaking down barriers and building agreement. With the available resources and technology, we are in a better position than we have ever been to empower people rather than looking towards putting people in power. We are in a better position than ever to build endurance and resilience, and release each other’s creativity. To build capital and free labour. I am tired of being tired. Let’s build.

Not My Decision

The Battlefield

 “Tatra sthitau yatno bhyasah” Yoga Sutras

Abhyasa is the continuous effort towards firmly establishing the restraint of thought waves.

Stilling the waves of money anxiety requires developing a sustainable practice over a long period of time. It isn’t about “get rich quick” schemes and easy solutions. One of the main texts in Yoga is the Bhagavad Gita, which tells the story of Arjuna on the Battlefield. The chaos is going nowhere. The practice you develop is to find that point of calm within the struggle. To cope. It isn’t just moments of silence found in practicing meditation, outside of life. The aim is to develop new scripts, habits, actions and reflections that combine to deal with whatever life throws. To have the endurance and resilience to draw from and see through the chaos. Each day. For the long term. With commitment and focus.

Arjuna

Engine and Vehicle

Don’t put good ideas on a pedestal. A good idea is just an intended destination. To get there, you need an Engine (Capital) and a Vehicle (Container). Fundamental Investing recognises that just because something is a good idea doesn’t mean it will be a good investment. A strong company needs a strong Balance Sheet and control of their Cash Flows. Meaning they need to be both solvent and liquid. To survive the long term, their assets need to be worth more than their liabilities. To survive the short term, their liquid assets (easily available) need to be more than their immediate obligations (payable now). A company with assets that are theoretically valuable may be forced to sell them for far less than they are worth if they have short term obligations that are impatient. The same is true for individuals as is true for good businesses. What you do, isn’t the only thing that matters. Your Engine matters. Your Vehicle matters. Step back. It isn’t just activity that counts. Work on the foundations and the environment in which you create meaning. Create space. Create time. Then create.

Good Ideas need Engines and Vehicles