Young and Enthusiastic

Exercise is not something that is “in addition” to what we do. It is fundamental. Yoga talks about releasing yourself from your identity. So why does it then focus so much time and energy on the physical body? It does this because the body is the vehicle for our thoughts. It is the vehicle for the obstructions that we have. 

Much of physical yoga is really about learning to sit comfortably. To sit comfortably, you need to do exercises because your lower back or shoulders may be tight. Working on your hips and spine flexibility can help you get to the point of stillness. If you are constantly distracted by muscular niggles, or not being able to breathe properly, it is very hard for your anxieties to fall away because you have fires that keep needing to be fought. 

Building exercise into your daily practice is not the last thing on the priority list for “when you have finished the work that needs doing”. Work normally has the refill option on default. You never finish for the day. You need to look after your physical body and mental well-being to be able to do that work. That can hide and seek you if you haven’t done it for a long time. 

Even if you used to be active, you can blink and ten years can go past since you last raised your arms over your head. When I was a young (enthusiastic if not very talented) rugby player, we used to do those exercises where you spin your arms around. You don’t do that in the office. Suddenly you realise that sitting is the modern day smoking. You can lose yourself at a desk without noticing the cumulative effect of inactivity.

Survival Models

From 2014 to 2021, the main source of my income was no longer a salary. I stripped back my spending dramatically, and was attempting to live off my Engine. Aiming to spend less on average, than my Capital made. Straight out of the Financial Independence, Retire Early” F.I.R.E. playbook. 

It meant giving up certain things (e.g. I had a room at Wimbledon Art Studios for four years) and reducing others (e.g. cheaper rent, less take-out, cheaper holidays). When stripping back your spending, you learn more from those with less. It is eye-opening to see what people, without options, get by on. 

Still, I exceeded on the spending side and my Capital was far noisier than a salary. Imagine pay day coming, and your boss asking for a deposit! 

In theory, I could have run my Engine down to zero. In reality, my “internal Engine” wouldn’t go to zero. I wouldn’t be starting from scratch. The thought experiment of if every *thing* was taken from you, what would you have? Relationships, skills, knowledge, social capital, and the opportunities presented by being part of the community you are a part of. You can also build the capacity to start again with more ease, if you need to. Even if the situation is very different. 

Like rewriting an essay you lose when your computer crashes. Second time, you may be more effective. The first course I repeated at university, was ironically called “Survival Models” (previously called Mortality). The second time I did it, I had the big picture, and suddenly things made sense. Helping people one page behind, is also a great way to take your next step. 

When I decided to go back to work, it was partly because I no longer had confidence that my Engine was sustainable. I could repair and rebuild it better with the stability of a salary as support. I could also repeat something I had done before (working!), and help people one page behind.

Surviving

Happy 28th Birthday South Africa

I was supported through university by Old Mutual. It was part of why I chose the career I did. Pragmatically sitting on a bench in London during two gap years between school and university, I took the decision that life would be harder if I didn't do something that made money. There are certain choices that are easier to get support for. I found a course and a company that would put me on a path to financial security. It wasn't romantic. I worked for 1.5 years for each year I was supported... then aged 28, got itchy feet. Old Mutual were supportive. I looked at jobs internally, but also got support and positive recommendations to look externally. I then headed overseas again, and back to the UK (via Bermuda). I did feel loyalty to the company... but in reality, that meant to the people. Those who had backed me. But that didn't mean my choices couldn't look beyond the container. As it turned out, I came back to work at Old Mutual 12 years later when I returned to South Africa. How you treat the people who leave says a lot about who you are. The containers we use to build each other up are there to build rather than constrain. Today those who stay, go, or arrive, celebrate the fall of the Apartheid that separated us... and pretended that it was our containers that defined us.

Warm Bermuda Welcome - 2008

Happy Birthday South Africa - 27 - 26 - 25 - 24 - 23 - 22 - 21

Full Time

I stopped working in the Corporate World in August 2014 (Spoiler alert – I returned in February 2021). The first thing I wanted to do was to travel. 

I had a close family friend’s wedding coming up on the opposite side of the rock (Australia), and I now had time available to accept the invitation. 

In the UK, standard leave entitlement is 28 days, with it being frowned upon to take more than two weeks in a single chunk. Australia is a long way to go for that kind of break, both from the expense and the jet-lag perspective. Leave becomes preciously allocated. 

Work becomes the default. What you do every morning. The way we structure work is typically “full time”. Work will be found. It is not a case of whether there is work to do. You never get to the bottom of the work container. Work is a deeply engrained habit. So much so that it is hard to do work when there is no structure. You can say to someone, “Yeah, sure, we must do coffee” but you don’t arrange a time, and so it doesn’t happen. 

So rules that remind us to do things are helpful, but the “full time” rule seems a little excessive. It can mean that you don’t end up doing a lot of the things that are important to you because work takes priority. “Sorry I don’t have time, I have to work” becomes a one-stop-shop wall that cannot be legitimately questioned.

Taking Time Down Under

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

Grow or Shrink

The value of a business can be zero. Price can join it there. Now or later. Analysts will attempt to calculate their view of the intrinsic value of a business, and then compare it to the price. Value is dynamic, relative, and personal, and so no estimate of intrinsic value is the “correct” price. 

It is possible to get caught in valuation no man’s land. Seduced by a model of what you think reality should be. Seduced by the impenetrable complexity of your perspective, and how smart that makes you feel. 

Instead, calculating intrinsic value is like doing due diligence on a company you plan to work for. It’s not just about the quality of the job offer. It then matters what work gets done. 

Investors with a quality mindset, will seek out businesses at a reasonable price, but what they are really looking for is what is being done. We tend to undervalue the future, and so it is profitable finding companies that sustainably do something of value and reinvest, creating wealth through a process. 

A good idea is not enough. Those investors will very much consider the strength of the balance sheet of these companies, and the container (barriers to entry) in which value is created. Understanding the barriers that allow winners to keep on winning. 

You don’t have to know what is going to happen in the future. If you don’t pay an excessive price, then the focus shifts to the quality of work being done, and the habit of reinvestment. It is not about outperforming others, or even looking at what they are doing. Not gambling. Not chance. 

If a business creates and reinvests, with a resilient container, it will grow. If it consumes capital, it will shrink.

No Man's Land

Flander's Field, Belgium (1919)

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

Good Green Vibes

Two of my referees for my return to Old Mutual were the same two referees when I left the company and ventured overseas 12 years ago. As part of my first day reading, I was going through the Annual Report to Shareholders which referred to the 175-year-old company motto of “a certain friend in uncertain times”. The line between colleague, client, and friend can become very fuzzy given how much time we spend dedicated to work. I like that fuzziness. I like the fluidity which recognises that we are not just cogs in the machine. I think the warmth with which I have been welcomed back reflects well on the company, in a world where we have to acknowledge that wealth is created in containers. That can sometimes lead to excess competition, secrecy, and dehumanisation. Old Mutual is both a 175-year-old institution and a large publicly listed company. It isn’t a human and doesn’t own the humans in it. I don’t want to deify or anthropomorphize it, but I do look forward to seeing the people in it again and working with them, and the various stakeholders affected by buildings with green roofs.

Touched with Green

What You Do Next

Imagine if we could wave a wand and there was a level playing field for everyone to work. Not that everyone would do the same, or be rewarded the same. But that you were rewarded based on what you did. Fundamentally. The thing that mattered most was not what you had done in the past, but what you did next. That is mostly how we treat money on the stock market. If you look at the long-term history of a share price, there is noise, but there is also a reasonable explanation for why the capital has grown. Yes, it compounds. Its own type of privilege. But in public markets, anyone can buy and sell the shares. The money itself is welcomed without question. Privilege is “cashed in” through a sale. Sometimes that privilege is overvalued, and sometimes that privilege is undervalued, but over the long term the thing that determines whether the capital grows, or shrinks, is what work the money does.

"Three Figures" Van Gogh

Off to Work

A foundational principle of Capitalism is that money can work. To turn ideas into reality, you need capital and containers. One form of container is Public Equity. An idea is turned into a legal person called a company. That company can make agreements. Which means “it” can make and sell stuff. If it is public equity, it means slices of ownership are sold on a stock market. This means you can put your money to work in any publicly listed company (if you find the price acceptable). Money carries less baggage than people. It does not have to deal with sexism, homophobia, racism, or xenophobia. For the most part, if the container (country) you were born in lets you move your money around the world, you can put it to work anywhere (without a job interview and someone projecting their insecurities onto you in a selection process). Capital is much more yogic than people. Yoga is the idea that everything is connected. It is people that we force into prefabricated ideas about what they can and cannot do. It is people’s worth we struggle to see. With money, what you do is much more important than any prejudices.

"On the way to the field" Van Gogh

On the Menu

I am chatting to a few companies in my job hunt. Like dating, if you do that while employed, it feels dirty. The company I work for has one employee. Me. And currently no clients, other than people reading my free writing. My 2,800 blog posts over 6 years earned me $23.59 (and you need to reach $60 to get paid). So, it is okay. The context shift of coming back to South Africa after 12 years, means it provides an opportunity to get to understand what is going on here on the ground. My head and heart never left, because of Social Media and working for/with companies with South African links while away. My feet did, and it does feel different. Like buying cupboard items when shopping, rather than hand-to-mouth eating. The gaping hole in my “build capital” mantra is that I am not an entrepreneur. I did not make jobs. I took on-the-menu jobs, and reinvested the gap between my pay and my needs. I studied a degree knowing the salary and demand for the jobs that required that. Old Mutual paid for my studies. The most prominent emotion I have is gratitude. You cannot build capital without a job, and South Africa does not have enough jobs. But I am confident it will have one for me. Not all good ideas are good business ideas. Not all people willing to work can find work.

Savoy Hotel Menu

Cairo 1900

The Great Wave

There will be many lessons learnt when we reflect on 2020, and unfortunately probably most of 2021 too. When the dust settles. One of those will be the danger of predicting things we pretend to understand, but have not experienced. Another will be the peril of basing society on hand-to-mouth existence, because of (amongst other things) a belief in “work ethic”. Asking children as they grow up what they will be, and meaning how will they earn a living. Existence based on a willingness to work, requires the existence of work. The ability to create real value requires reinvestment and a long-time frame. It requires breaking the cycle of feast and famine. It requires being able to pause. Sometimes for longer than we like. It requires a safe place to retreat to. We have to snap our earning addiction by creating capital. Capital is not hoarding. Capital works. Capital can create space for when we realise how much of what we thought we knew is not true. Capital allows you to be wrong without it being the end. If you have the ability to work from home. Be grateful you have work. Be grateful you have a home. Then let us build back better.

The Great Wave off Kanagawa

Fighting over Scraps

The Corporate world is a game, best played as a game. I wasn’t good at it because I wasn’t willing to accept the veil of meritocracy. I took it too seriously and literally. I was too deep soaked in Righteous Indignation. It is more a club with increasing levels of loyalty when you prove yourself. Layer 1 is for cogs. Paid a salary and with a notice period. Your salary is the price it would cost to replace your skills and knowledge. Layer 2 is longer term incentives. Tying you in so breaking loyalty will cost you. Layer 3 is participation in profits (and losses). The club aims to reward you enough to stay, but not enough that you can afford to leave. Layer 4 is ownership. That private club isn’t open to everyone. Wealth creation gets institutionalised, so the first three layers are sufficient to create the value while closing the door to layer 4. Layer 4 is for immortality beyond individual contribution. Enough underconfident overachievers will do the work in the first three layers to make sure layer 4 is exclusive. Harsh reality? Layer 4 is available to those who start from scratch. The first three layers are attractive enough that people will fight over the scraps. Institutions change unwillingly. Pick your layer 4 and build new institutions.

Self Promotion

I hate interview processes and CV/Resume building. Partly because people who are good at interviews aren’t necessarily good at the job. Partly because hiring and firing is often just an opportunity to project prejudices and politics by dividing people into categories of good enough and not good enough. The interviewers and firers seldom hold themselves to the same standards as the person they are judging. The final decision seldom relies on anything other than gut feeling and hindsight justification. But such is life. Sometimes we just have to do things because that is how they are done. Writing a CV always felt nauseatingly self-promotional to me. A way I got around this was asking a few people I had worked closely, and well, with to write 100ish words (roughly the length of this post). Two or three authentic testimonials from people you have genuinely worked well with that demonstrate the skills and knowledge that are being looked for. My impression is that relationships and chance connections are the real catalyst for opportunity. Be part of the conversation and genuinely interested in other people. Do good work. Then change the way things are done.

Life is a Galton Board

Not Corn

Rich lists don’t show the resources people have hoarded. The figure isn’t the same as a weight. It isn’t a pile of bags of corn that could be divided up by the kilogram. You can figure out your own Net Worth. Net Worth is the value of the assets a person owns, minus the money they owe. Owning an asset doesn’t mean you “have” the asset. Asset Managers themselves don’t even have the Assets. They use Custodian Banks who keep a record, but the Assets are companies doing work. The Share Prices are a combination of the Tangible (stuff you can touch) Assets (Factories, Equipment, etc. that could be sold) included in a quote of what the market would pay for ownership of future profits. Like someone giving you money now, up front, for the salary you are going to earn going forward (not that unlike a Mortgage Loan). Worthless if the work isn’t done. The beauty of Public Equity is that it penalises hoarding and rewards Capital that solves real problems for real people.

Wiggle Room

You are not your job. Your income doesn’t determine your quality of life. Your success is not signaled by how much you consume. We are not cogs to fill specific and managed roles defined by a path we set out on as kids. You can love languages as an adult when you hated Afrikaans as a kid. You can discover a passion for Music late in life. Coding. Investing. Running. Whatever. You can unlearn. You can relearn. You can reflect on who you are, and who you want to be. Free Will exists. It’s just hard. Detaching from your circumstances starts with wiggle room. If you live hand-to-mouth then there is no breathing space for change. We have the most control over our mouths. Our consumption. If you can let go of signaling to others your place in society, you can gain control over your choices. Slowly. Over time. With work. Emergencies often make our choices for us. Build an Emergency Fund. Space between your hand and mouth. 3-6 months of spending requirements. Then look up. Look properly. And make a choice.

Space to Wiggle

Look Up

Too many of our financial decisions are made based on a multiple, or percentage, of income from labour. Labour Income is a fragile, isolated, building material. The most obvious dangers are death and disability. The more sneaky ones are furlough (a new word for many in 2020) and redundancy. Double Income households hide the fact that unpaid work still needs doing. They also increase the amount lenders are willing to loan, without actually building houses. So the price goes up. Even sneakier is “longevity risk”, the danger of outliving your money once you can’t earn more because of old age. Add to that Financial Emergencies that get funded with debt, so that income ends up paying off past expenses rather than gradually creating wealth. We hide our addiction to hand-to-mouth living behind the shield of “Work Ethic”. The idea that if you don’t contribute, you shouldn’t earn. Fear as an incentive. More robust roots would see people as the best placed local authorities to solve problems. It would empower decision making of communities. It would invest in foundations and buffers independent of personal income generation. Solving the hand-to-mouth problem allows us to breathe, look up, and create. Sustainably.

Rotten Building Material

Doing the Work

Personally, I don’t like the idea of investment as an abstract thing. Simplifying “Asset Classes” and treating them with characteristics that are assumed to be essential. Instead of asking what a Company needs money for, or what a Government is going to do with the money, Corporate and Government Bonds simply become a habit. Blind lending. People try guess “Risk On” and “Risk Off” to swap between being Business Owners and Holding Cash as a risk management tool. I have never met someone who has a long-term record of return outperformance through that sort of timing. I know lots of people who have suffered by panic selling, then buying after prices rise, then selling again when they fall. If you think of investments as real jobs, you see the silliness. Imagine quitting your job and then waiting till things settle till you return. Or imagine turning up each day and doing the work. It’s the work that gets done that determines the long-term return. Real assets doing real things.

Women Digging Potatoes

Van Gogh, 1885

Swallowed Whole

Not all good ideas are good business ideas. Care Work is the most obvious example. You can force a business model on 1-1 relational care, but there is no real possibility to scale. The only way to make it “worth the time” of the person providing support is to push the price up. Charging by the hour is done mostly because it is easy. Care Work starts to hurt if you push the price up. If you know your hourly-rate, and you know you aren’t being paid because you are doing something else, it can hurt. Like a self-employed person taking time off. Like a consultant going for a coffee with a friend. Like a lawyer or tradesperson doing small talk when you know the clock is ticking at your expense. Long handed pennys. Short handed pounds. The cornerstone of making money is constraint. Being able to put things in a box. To control supply and demand. But, and this is important, you have to be able to put money making in a box too. If you aren’t able to accept limits and constraints, and be comfortable with the concept of enough – money will swallow you whole.

Saturn devouring his son

Francisco Goya

Something Useful

Once the penny has dropped that money can earn a living if you don’t kill it, the question of what job to get it remains. Quality Financial Advice costs at least as much as a good therapist, because they are very similar. The advisor’s key job is to understand you, your goals, your skills, and your quirks. Generic advice is cheaper or free, but then you take full responsibility. Get your money a job. Don’t chase your tail. Stick to the plan. Two big risks are Churn (the grass is always greener) and Complexity (tax and legal structures to “optimise”). My preference is to keep it simple. There are no Gods of investing. Just pick someone who is doing something you understand. There are fact sheets, commentaries, and websites. The 4Ps of Due Diligence on Funds are People, Process, Performance, and Price. You are looking for consistency, reliability, stability, and trustworthiness. Stay curious and dig a little when something concerns you. Mostly, the advantage of building an Engine is that the key ingredient is time. Crack on with what it is that really floats your boat, and let your money build value. The most important thing is the simplest. Is your money doing something useful?

Keep it Simple