Through and Towards

Eternity is a concept that is hard to wrap our heads around. We think in contrast and action, and stories. Stories of change and growth. It’s the only way we can think. It can be hard to focus on life... the pulse, the signal within the noise, the process, the questions, the connection. 

There are ideas we can’t grasp and fully conquer, and questions that we will not find the answer to in any book or any particular conversation. There is a lot of uncertainty. 

As you get older, you realise that there are no real adults in the room. Even 70, 80, or 90-year-olds are just big children that experience the world in a particular way. No one's experience is the same as yours and we are all just doing our best. 

Holding Space is the idea of non-interventional listening. You aren’t listening TO construct a response. Their story doesn’t trigger recognition of their story in your story, and anecdotes from you. You allow them to tell their story without claiming it. You don’t respond to someone’s story about their cancer with a story about a family member of yours with cancer. 

Stilling your own waves, and stilling the waves of money anxiety, doesn’t always mean solving problems directly for someone. There are also challenges around empowerment and allowing people to solve their own problems. If people are best placed to make their own decisions, you want them to make those decisions. 

There will always be waves. Stilling the waves is how you experience those waves. Financial Stillness holds space for you to make connected decisions through the waves. To build through things that pass, towards what truly matters to you.

Near and Now

There is a tale of Alexander the Great coming across a yogi as he was venturing and conquering east. The yogi was sitting on a rock. Who has lived the good life? Look at all the things Alexander has done! Bertrand Russell’s book “In Praise of Idleness” opens up our weird relationship with the conspicuous. Our preference for fake work over space and reflection. 

We are not well trained to kuier. To spend and savour time with each other. When kuiering with someone, you turn off the measurement. Perhaps you are laughing with someone to the point it is contagious. Where the laughter goes beyond the joke, and you have a moment where you look at the person and think, “I am so glad you exist”. 

A connection that has nothing to do with weighing and measuring. You just see the other person, and get a sense that they are a part of who you are. Not the part of you that passes. The part you really connect with. 

The glorious nature of being human, is that when you are that connected, you can always feel that person's presence. Even if they physically die, they are a part of your story. You can close your eyes, and they are still there. Bending space and time. A close family friend described this beautifully in a recent virtual memorial after the unexpected passing of his wife due to Covid. The sense of her being near and now.

Map of Alexander's Empire and Route

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

Expectation Management

We all have to eat. To eat, we need money. To get money, we need jobs. There are not enough jobs. Once there were not enough people for the work that needed doing, and Governments had to impose hut taxes to force people into the economy. If you tax in cash, you need to be paid in cash to pay your tax. 

If we live hand-to-mouth, then we cannot survive without a source of income. Part of wealth is the capacity to have disruptions, bumps, and gaps in money flowing in. An ability to survive the winter. An ability to plant in the spring. If you treat people as in-the-now productive assets, then their quality of life is chained to the marriage of the supply of work and demand for that work. This filters through to how people build relationships and communities. 

The sad truth is that when you are young, it is about love and purpose. As you get older, it can be about the work that the person does and how they pack the dishwasher. Relationships come loaded with expectations. One of the key drivers of wellbeing is expectation management. The comparison between what you think should be, and what is. It is hard to manage expectations if we are at the limits of our spending.

Ability to Rest

Escape Plan

Building wealth requires a plan. Before that, if you are trapped, you need an escape plan. If you are in a situation where you don’t have the ability to earn, or are stuck where you don’t own enough of what you earn. If what comes in is used to pay interest on previous consumption. 

Building only starts when there is forward momentum. Good debt is where money is borrowed, and given a productive job. The money is not borrowed and consumed, but earns a salary. The money gets paid. There is still risk. The borrower takes on the risk of not being able to pay the salary, because what is produced does not cover the costs. If you commit to salaries, you have to pay even when there is not money. Or close shop. The wage bill comes each month, and you have to meet it. Like if you have borrowed and consumed, and still have to pay interest. It becomes the cost of waking up. 

Building only happens with space. With construction rather than destruction. With a source of income. With control of expenses. If you then want to separate yourself from the anxiety of hand-to-mouth living, the escape plan can morph into a growth plan.

Resource Depletion and Consumption

Early Growth

Building capacity for endurance and resilience requires space. One of the reasons it is hard to start saving and investing is because you first need to be able to handle the basic noise. You cannot build if there is nothing extra to build from.

The concept of extra can even trigger people as insulting. One of the biggest pushbacks I get as a campaigner for savings and investment is that for the vast majority of people, this seems ridiculous. When I start saying you need self-restraint, and to spend less than your income. The trade-offs people must make are often hard. “Nothing kills an activist like a mortgage and school fees”.

Life starts living people, rather than people living life. Responsibilities make people much more conservative because they have obligations. There is less capacity for flexibility because people have made commitments that are important to them.

Advice is usually autobiographical, because it is heavily dependent on the story of the person giving it and where they came from. These questions do not have easy answers, but how we create space is a beautiful question. 

Early Growth is Fragile

Space to Value Time

Tim Urban (waitbutwhy.com) talks of time optimism. It is a euphemism/kind way of referring to being late. Busyness is a form of laziness. If you are time pessimistic, you leave space. You don’t start new tasks if you don’t have the time to give them the necessary container (focused attention). You allow space, to be on time. On time *for* people. As a matter of respect. If you are constantly making people wait for you, you are not going to get many chances. But that does mean, as the time pessimist, you are regularly going to be the one waiting. Because you have created space. That space is partly an acknowledgment that other people’s time is as important as yours. We all get 24 hours a day, rich and poor, powerful and powerless. Busyness is often used as a conspicuous signal of importance. We can’t know what people are doing that matters, but being late implies that thing is more important than the person you keep waiting. When you're doing a presentation, “sorry, I put this presentation together at the last moment” is not good enough. It means in a room full of 10-100 people, that you think that your time is worth more than all their time combined. Because it is the one true point of equality, we should not waste other people's time. 

"Why I am always late", by Tim Urban

Two Marshmallows

I don’t like being the bad guy. I don’t think most people like that, but I don’t subscribe to the “it doesn’t matter what other people think” philosophy. You can only make purely independent decisions if you are a hermit. If relationships matter to you, then connections and consequences matter. Yet there is a balance. Your interests matter too. One behaviour that creates capital is delayed gratification. If you are living purely in the now, then every decision is about the now. You are not building space. You are not building time. You are not building capacity. Because everything is about now. There is a story (controversial in its scientific rigour) about putting Marshmallows in front of children. If they can wait for the researcher to return, they get two. The test was meant to evaluate the ability to take charge of your emotions. A powerful life skill. The controversy is over whether this an innate or learnable skill. Imposing delayed gratification on others isn’t fun, and building capital is a team sport. We make many of our financial decisions together. Our joint decisions are the key to whether we consume what is created or whether we act as custodians and reinvest. Building space, time, and capacity.

 

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

Framing your Decisions

I believe we all experience the world as a controlled hallucination. We take in information based on what we already know. Gradually building trust based on an elaborate story we build up to explain the responses we experience to the decisions we make. You can’t live without a story. Your story acts as the framework for what you want to do, and how you want to make decisions. You need to internalise and embody the disciplines you want to use to frame your decisions. The way a lot of people discipline themselves with money decisions is running out of money. When there is no money there, you can’t spend it. Which means most of us live hand-to-mouth. You cannot build space for autonomy and consent within your decision making that way. You will get stuck in a monthly cycle, or a weekly cycle, or whenever the money comes in. You get income dependence, where you get a job, and get paid, and that determines your standard of living. And there is no space. No extra. If you want something, you save specifically for it, buy it, and go back to zero. Never actually freeing yourself from the constraint of having nothing in the bank. That becomes your framework. 

"The Frame" Frida Kahlo

 

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

 

Ongoing Source

Building wealth takes time. 15 years is an aggressively short period to build an Engine (Capital that can earn enough to cover your expenses). Unlike saving with a picture of what you are going to spend your money on, building an Engine aims to build an ongoing source. You can’t build wealth without a source. You can’t build wealth if you consume everything that comes from the source. You DEFINITELY can’t build wealth if you consume more than what comes from the source (and live off increasing debt). Most people live hand-to-mouth. A few manage to build capital to finance their retirement. This will never change if we consume everything we produce. Time and space is needed. Establishing sources of wealth. Then creating space between our hands and mouths. Then giving proper time to let capital work. Till we can live off the fruit rather than shrinking the number of trees.

An Ongoing Source of Energy

An Ongoing Source of Energy

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

 

In Between

Actions have consequences. Both intended and unintended. The desire to count and maximise has the unintended consequence of undervaluing the future. If you make your decisions by simplifying complexity down to two simple numbers (Return and Risk), the result is a just-watching-your-feet time horizon. The underlying assumption is you will have the opportunity to make a different decision for the next time frame that does consider the future when its turn comes. Aiming for returns of 15-20% would mean anything beyond a 5 to 10-year time horizon almost does not enter your consideration. The most powerful investment forces are space and time. Space between production and consumption. Time between contribution and extraction. Rather than short sprints, thinking with a long timeframe in mind allows you to focus on sustainability and consistency. A long timeframe forces you to think of things that cannot be simplified into numbers.

Observable Universe Logarithmic Map

Wary of Force

A lot of people work best under pressure. When they have to. When they are in a corner. I am the opposite. I don’t like myself in a corner under time pressure when I become very task orientated. When the goal is victory at all costs. There are two cornerstone biblical stories I don’t identify with at all. The first is the binding and sacrifice of Isaac by Abraham because “God wills it”. The ultimate loss of perspective and parking of a moral compass. When obedience trumps consequences. Pure play child abuse. The second is the story of Job. Where God and Satan have a bet of whether Satan can turn Job against God by making his life awful. The ultimate abuse of the gift of unconditional love. I avoid corners. I would rather internalise the discipline required and chip away every day than be forced into situations without time and space. The day before an exam, I want to be off to the movies to clear my head. If a client suddenly changes their requirements the evening before a meeting, I would rather be fresh than pull an all-nighter. Presence requires time and space. Be wary of forced actions and decisions.

"The Sacrifice of Isaac" Caravaggio

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

Building Capacity

A business is a legal person. It is a container which has legal rights and is subject to obligations. A share is a slice of ownership of this container. In deciding whether to buy or sell a share, you don’t just look at the product. You don’t just look at what the business does and “is”. Beyond the product they are selling and its profitability, you have to look at the solvency and liquidity of the container. At its strength and flexibility. Solvency is a measure of endurance. Unlike people with reasonably stable salaries, a business can have much more volatile profits. Years it makes no money or loses money. It needs to survive. It needs Capital in excess of the money it has borrowed, to get through difficult periods. It needs self-reliance. Self-sufficiency. To make adjustments. Research & Development. New leaders. New management. New hires. New products. Mergers and Acquisitions. Restructuring. Liquidity is a measure of short-term resilience. Even if you have Capital, you need cash to meet clear and present dangers. To make sure immediate needs don’t drown long-term purpose. When investing in yourself, don’t just focus on what you do. Build endurance and resilience to have the capacity to keep doing, whatever comes in your way.

1914 Volume Measurements

Stillness and Shadows

I am trying to get better at honestly recognising the advantages and disadvantages of every position rather than arguing for my preference. One of my favourite books is “The Earthsea Quartet” by Ursula Le Guin. The story revolves around the hero (unknowingly) wrestling with his shadow. Magic lies in discovering true names, and seeing the essence allows change. Like the concept of Wu Wei (action through inaction). Everything changes through acceptance of the starting point. I am a fundamental investor. Meaning I think the best way to make money is by solving real problems. This means I have a preference for being “Fully Invested” rather than trying to be clever and buy in and out because other people are wrong, “Time in the market, not timing the market”. The lesson of 2020 is you need to build in the ability to not do anything. You need to have endurance to afford to get out of bed, even if the world loses its health and mind. “Fully Invested” requires space. Action requires inaction. Garr Reynolds of PresentationZen.com talks of “Hari Hachi Bu”, the concept of eating till you are 80% full. Don’t fight stillness. Don’t fight shadows. Activity isn’t creativity.

Know Yourself

Start with Space

We live in a hand-to-mouth, pass-the-parcel, kick-the-can, pay-as-you-go economy. That has underlying assumptions and puts you at the mercy of feast and famine cycles. Creative destruction is both powerful and useful. For survivors. To survive, you need to build in a “margin of safety”. Meaning you have to leave space. To build space. The only thing you can plan for is that things won’t go according to plan. Hand-to-mouth means spending everything you earn. Pass-the-parcel means if your customers don’t get paid, you don’t get paid. Kick-the-can means spending now because you assume future growth will be able to pay for current spending. Pay-as-you-go means one generation pays for the next. Think of Pensions as the predecessor idea to Basic Income. The big question then was also how do you pay for it? The answer then? Working people pay directly to retirees. Retirees die, working people retire, and children start working. Merry-go-round. Until people live longer and people have fewer children. The way to build, is first to build space. Then build engines.

Space and Time

Be super careful what you count. Not everything can be reduced to numbers. It is essential to be able to jump to an alternative reality free from the constraints of space and time. A reality that is still. Where you can breathe. Financial Mathematics is built around reducing decisions to Risk and Return. Around concepts like Time Value of Money and Opportunity Cost. “Net Present Value” is meant to be a framework for decision making. You set up the inflows and outflows into the future and discount them back at a required rate of return. Then you choose. The fundamental flaw in all of this is that neither Risk nor Return can be reduced to numbers. We see what we want to see, and models will show us whatever we most want to see. The world is complex, ambiguous, and random. By the time the numbers are out, it will be too late. Even then, there is so much noise our choices still boil down to judgment calls. Numbers give the illusion of control. Confidence gives the illusion of understanding. No one can, or does, know. What we can do, is build the ability to cope. We can value every moment without discounting it, and connect what comes before to what comes next. Not making anything so important that we lose everything. Making space and time.