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

Stupidity Tax

Conspicuous Consumption is a stupidity tax. As is hoarding. The image of Scrooge McDuck is not one of someone who is good with money. 

People who are good with money are constantly putting it back to work. Lazy assets get eaten away by inflation and fees. Lazy spending is firing money. Even though someone with capital is building reserves, those reserves are working. 

If you are a fundamental investor, that work is something tangible you can understand and explain. That capital is connected to other people and providing something we collectively want or need. It provides breathing capacity for the owner by working for others. 

We do need the layer of what is now called responsible investing, impact investing, or the inclusion of ESG (Environment, Social, Governance) issues in decision making. The importance of including qualitative issues in decisions that are normally driven by numbers. Recognising circles of competence with people who understand money, but may be less conscious of unintended consequences of broader societal impacts. Making sure that good business ideas are also good ideas that are consistent with our ethics and values. 

It is not just the conspicuous that matters when it comes to endurance. It is also behaviours, patterns, and things as basic as sleep. Understanding the processes and science behind sleep. Where the direct connection to “productivity” isn’t obvious. Understanding how unconscious learning gets processed and connections get made. Where what we are aware of and unaware of gets connected and pushed into our subconscious if we are sleeping, eating, relaxing, breathing, exercising, and looking after our mental health properly.

Ant Bridge Crossing

If you do manage to break free from the hand-to-mouth cycle, you will have to internalise spending discipline in a way that is far from ordinary... and very misunderstood. 

One of the tricks of the ability to hold shares of real businesses, is that wealth has to work. Instead of resources being hoarded, they get reinvested. In factories, in services, and various other forms of problem-solving. 

A twist on the story of the Ant and the Grasshopper. The Ant still works all summer to build up a supply of food for when she can’t work. During the winter, the food isn’t stored... it is still working somewhere else. The hard bit is that it is still not there to spend... beyond meeting the planned needs of the Ant not being able to earn and still having to eat. Every dollar that is consumed beyond that is a dollar fired. 

When there is nothing there, you don’t need discipline not to spend it. If you live paycheck to paycheck... there is never “extra”. The Grasshopper may look at the paper pile (the actual pile has been reinvested), and say... but you have plenty! 

Building breathing space in a world where most people don’t have it raises lots of existential questions. It is incredibly hard to build capital, partly because there are always profound needs and emergencies. 

You have to genuinely believe that the capital is ALSO working on solving problems. Balancing immediate needs with a structural long-term path to deeper breathing. If we always consume everything we make, we will never reach collective freedom.

Still Working

Slow and Sustained

It is not a coincidence that it is easier to make money if you are born in America. Compounding isn’t just something that happens on your investments. As a community becomes better at solving problems, the depth of service providers, and support networks expands. 

The ability to make money in America has compounded. Bryan Caplan calls the case for opening borders “Trillion-Dollar Bills on the Sidewalk”. The world would make more money if more people moved to America. 

Money is made in containers. You need to build an environment that maintains and builds capacity. It comes from simple things soaking deep. 

Like the gradual shift to long-term savings in Australia brought about by “Supers” (pension funds), where over the last 40 years they have collectively moved to being the 4th largest holders of pension savings (About AUD$3.4 trillion in assets) from saving a little more each year. 

To breathe properly while running, you need to build your capacity for abdominal breathing. As you inhale deeply, your tummy comes up rather than going in (shallow breath). You use your diaphragm to create more space. Distance runners will practice bringing their focus back to slow, gradual, inhalations and exhalations rather than panting. Breathing correctly. Running correctly. 

These seem basic, but the basics are what allow the flash. Building muscle memory for the relationship between income and expenses is like gaining control of your breath. 

Slow, sustained, strength building. Best done as a team.

Building Capacity

Building the capacity for long-term thinking, is a form of exercise. Running a marathon is not a one-day event. It starts on the first training run. 

Developing a movement culture to gradually increase your strength. Putting yourself under controlled stress to learn about yourself. To build your skills and knowledge in a way that you believe you are capable in difficult situations. Reflecting on how you react. Seeing what kind of support you need. 

The body has a use it or lose it efficiency that comes standard. Once confident in similar situations, auto-pilot gets turned on, but where you don’t use something regularly it disappears. 

Which means you need to build up capacity to stay involved and stay conscious. Part of endurance is reserves. The ability to pull on extra when you need to go deep. Very physical requirements that come from eating properly, cooking properly, and recognising what your body needs beyond what it craves. 

A very sad legacy of Apartheid was promising sports stars coming through where despite “picked from nowhere” support, the gap of early childhood nutrition meant their body didn’t have the structural back-up for sustained performance without injury. Grounding matters. Consistency matters. Back-up and reserves, matter. 

When running a marathon, you need to take on nutrition and water regularly even before you need it. Otherwise, if you only respond when you do need it... it is already too late.

What Makes Money

Income and money operate at a very explicit level. Pay for what you see. Fully acknowledging what makes money and what doesn’t, and not using force to get your way, allows you to go deeper and wider. 

You can shift to embodied learning. To things we can’t explain. To the tacit knowledge that is held by people on the very front lines with zero distance from decision making. Knowledge built through immediate and repeated feedback cycles and real wrestling with real problems. Understanding that is impossible to pass up the chain. 

Research and development can take a lot of time and become a part of you. Where the payback is hidden. 

Competitive advantages I like are ones you can do in the open. In “The Art of Learning”, Josh Waitzkin talks about his jiu-jitsu teacher publishing his training videos. This surprised people, because he was freely giving away his secrets. His answer lay in his confidence that if you were concentrating on what he was doing, he would be a step ahead, because he had gone deeper. 

If you have to safely guard a secret, it’s not really a competitive advantage. It is a fragile wall. 

With an enduring advantage, you can tell people what to do, but the time, commitment, and effort will scare them off. Particularly if that mastery doesn't make money. They will head towards the six easy steps to financial freedom in six months. Not the life of hard graft that will set up the next generation.

Time - Commitment - Effort

Paying for the Priceless

In times of plenty, when there are lots of good business ideas, there is often money available for good ideas that don’t generate their own money. There are muses for creativity. Golden ages. 

Something may be incredibly valuable and hard to quantify, but still have costs that are very real, very grounding, and very countable. There is magic that happens between the inputs (what something costs) and the outputs (that we value). Directly marrying inputs and outputs in a money dance is stifling. 

Some creative, exciting companies, will have at their core a very boring business that generates cash. That provides the money for the angels, moonshots, and unicorns. The money for research and development. Management could easily sell those businesses separately, but don’t... because they need the cash! 

Newspapers made money because they sold advertising. The ads paid for the investigative journalism. Adverts that make the advertisers money mean they are happy to spend $1 if they are confident that will make them $2. 

Is the journalism worth that same $1? Harder question. What do you find interesting? What do you want to read? Are we better off if we have intelligent people asking difficult questions? Search and social media muted Newspapers' cash engine. 

Theoretically, you can put a price on anything, but that requires a buyer and a seller to agree on that price. It is easier to price things you can count, compare, and control. 

Then pay the costs for the priceless.

Achievements in Golden Ages

Beyond Etch-a-Sketch

Time is the foundation of property rights. If you know that whatever you are going to do is going to get etch-a-sketched, then you rightly will think with a temporary mindset. Live in the now. You can’t trust there will be a tomorrow. 

If you know you have got a plot of family land for the next thousand years, and no one is ever going to take it from you... the connection to that land will run deep. If you feel a connection to your future family, you will be willing to build something where each generation successively acts as custodians. 

That is why really deep, old money, is family wealth. Where you have family constitutions, and succession planning, and even set up family offices that employ lawyers, accountants, investment professionals and others to help with the complexity of support structures. You are training the grandchildren to take the reins of the family one day. There is a connection across time. 

That is very different from someone who plans to consume their money during their life time... no inheritance, no worries! 

Real wealth is built over incredibly long timeframes. Not even necessarily at high rates of return. Slow, stable, reliably positive return that just keeps quietly coming. 

You may worry if the return is too high, because that raises the possibility of an explosion in the other direction.

Connected Time

I stepped away from working in the corporate world in 2014. The initial plan was to scale back my expenses and live conservatively off my invested capital. To focus my time and energy on things that were abundant and low-priced (like reading, writing, and spending time with people). 

I became a universal basic income activist. Understanding the concept of “giving money directly”, and cutting out the expense involved in giving advice and imposing your world view. As Rutger Bregman says, “Poverty is not a lack of character, it is a lack of cash” (See “Utopia for Realists”). 

What we all need is a solid foundation to work from with a lack of fear. Like attachment theory with child psychology. Healthy kids are happy to explore, because they know they have somewhere safe to go back to when they get hurt. 

Each time something goes wrong, their confidence increases, because they know they will be fine. They know they will be looked after. With something as basic as a cuddle. Fundamental security seeps into their bones, changing their perception of risk and the way they make decisions. Whatever happens, I will go on. 

That immediately increases the length of time your decisions involve. Sparking the most powerful investment tool... connected time.

Rupert with Time

Bewildering Respect

Starting rich is a safety net. Not all safety nets are viewed the same. 

A lot of Government safety nets come at the cost of respect. They are the opposite of a job interview. To get help, you must prove you need help. With a job, you know there are limited vacancies, so you are proud they chose you. To get help, you prove you cannot self-sustain. That is a belittling acknowledgment to make. 

When we look at other people’s problems, our advice is autobiographical. We look at their problem with our whole picture. With our capital, our knowledge, our skills, our experience, our way of seeing... but I am not you. You are not me. 

Watching a participation play where the actors take suggestions can leave the audience frustratedly correcting and recorrecting as no decision plays out as if they were acting. I even ended up as one of the characters, “let me have a turn”. Even then, you are just one of the participants and many decisions are team efforts. The decision you would make in that situation would not be the same, because you would not be you in that situation. 

I find seeing real poverty humbling because it strips away how much credit I give myself for my own personal merit. It strips away vast chunks of the justification for why I am as fortunate as I am. It leads to a re-evaluation of thorny ideas like white privilege, civilizing missions, and unintended consequences. 

It leads to bewildering respect for people in their worlds.

Where You Are

I lived in the UK for 12 years. When I arrived, I admit I was skeptical about the idea of poverty there. The UK is a rich country. There is a tendency for us to only care about the poverty we can see. 

South Africa is notable as the worst country in the world for inequality, and yet it is only as unequal as the world-as-a-whole (using Gini Coefficient as the measure). What is considered poverty in the UK is very different from South Africa. 

By the same token, my eyes would be opened by going to South Sudan. A friend of mine’s job was removing bombs there! 

I gained some appreciation of UK poverty when I was in the US, walking (probably unwisely) around areas of Chicago, and it definitely felt like poverty. It felt like Apartheid. 

Poverty is scarcity. When a single thing starts taking on your full attention. When you have to focus not on choice, in the context of all your decisions. The immediate becomes so important nothing else is relevant. Even a financially wealthy person can have time poverty, because they no longer have choice in their moments. 

It was an eye-opener to see tough, difficult to solve, poverty in rich countries. 

I went to a play in London where the actors paused and took suggestions from the audience, and re-acted. A theatrical version of the film, “I, Daniel Blake”. Where the wheels (illogically for those watching) fall off. “If only they had done [this]”. The punchline being that it is almost meaningless to suggest alternate paths to someone not in your situation. 

We don’t see the same. We can’t see the whole situation, and make decisions FROM where they are.

poverty

Moving with Grace

It’s not all about you. Part of letting go of anxiety is not feeling like you are being judged in each and every moment. Where your waves of worry are about real problems, rather than perceptions of you. 

When you decide to start paying attention beyond the boundary of yourself, and connect to more, it is a bit of an existential crisis with no clear answer. At least worrying about yourself has very skin and bone constraints! 

Philosophers like William MacAskill and Peter Singer look at effective altruism in a world where we have to think about constraints. Resources aren’t abundant. Opportunities aren’t abundant. Scarcity is real, and scarcity puts up prices and creates walls. Abundance is free and open. 

What is a reasonable amount to consume? How should we think about other people who don’t have enough? Capital provides a foundation and starting point that changes the game. If you stop living hand-to-mouth, and you build up capacity to think long term. 

Moving from day-to-day, to week-to-week, to month-to-month, to year-to-year, to the point where your short-term decisions are connected and constructive. Where you can absorb difficult times, learn from them, and respond in an empowered way. 

Where you move through life with an additional level of grace not available to those who are being flung around by the elements.

moving through and with the elements

Are or Do

Paul Bloom says people are essentialists. Like Plato, believing that all things have an “essence” that define them. We “are” something. “I am angry” rather than “I am doing anger”. “They are a racist” rather than “they are doing racism”. 

We like the baseball that was hit by Babe Ruth, or the jersey that was worn by Kolisi, Smit, or Pienaar. The value (price?) of the jersey goes up if it wasn’t washed! Like there is a permanent spirit in the object. 

I had a coke can collection growing up that I inherited from my older brother, then expanded. I learnt that if you want a valuable can collection, you had to maintain the integrity of the can, unopened, and in its original state. Wasn’t going to happen... so my collection was just for me. 

We start believing that we can be weighed and measured by our essence. That some people are fundamentally better, with more merit, than others. The toxic view that you can gather data points on people till you can discard them because they are not brilliant outliers. The idea that once you have enough information on a person, you can pass judgement on them and decide if they are good enough. 

My view of privilege is that it is part of endurance. It is building up your ability to endure and strengthen your capacity to absorb challenges. Part of that has nothing to do with you and your essence. 

In stilling your money waves, you have to be aware of the impact you have on others, the benefit you receive from others, and the obligations that you have. Part of stilling waves is realising the waves don’t only affect you.

Waves Matter

While the idea of meritocracy might focus on the best skills and knowledge, it misses other components of money-making. Specifically, capital and containers. 

Capacity for risk is a form of strength. The way you view risk can depend on how much capital you have behind you, and the risks YOU can take. It is not, and never will be, the same for everybody. 

We don’t start from scratch every day. We don’t want to start from scratch every day. On the surface, you might have “alignment of interests” where the surface noise is “shared” by everybody. It is not the same if you have deep support networks. 

That is why a lot of entrepreneurs are just rich kids with safety nets. It is not that they are more willing to take risks. It is that the consequences are not the same. History matters. 

Yoga might be about stilling waves, but it acknowledges the waves matter. Waves are karma. We all have a history to work through during our life. The sum of past karma. The results of current decisions and actions. Our ability to act, relies on acting mattering. An impact on the next generation. On those around us. Positive and negative. 

That is why it is so important to be aware of intended and unintended consequences. If you genuinely want to have the ability to see underlying merit, you have to be aware of context.

acknowledge the waves

Self-Sacrifice and Self-Reliance

The irony of growing up in Apartheid where a privileged minority received various advantages, is that that is not part of the deep soaked self-identity. 

Reach further back and the scars are of tough-love and self-reliance. “No one owes you anything” and “Life is hard. Make a plan”. That perspective is a positive-optimistic-negative view of the world. A Ja-Nee view that got baked into the stories of Racheltjie De Beer and Wolraad Woltemade. 

My great-great-(forget how many)-grandfather was Jacobus De Beer, who was a signatory at the peace of Vereeniging (the treaty that ended the second Anglo-Boer War). I had ancestors on both sides. The story of Racheltjie is of her saving the life of her brother by sacrificing her own. She removed her clothes to cover him in a snowstorm. 

There are repeated stories of self-sacrifice, but also self-reliance. A willingness to give to others, but not rely on or expect from others. A cultural sense of loneliness. A sense of fleeing others. 

I don’t have a full handle on how I ended up here. My Maiden name is Black. A surname given to expelled sheep thieves in the Scottish borderlands. All sorts of dodgy people, explorers, refugees, and randoms found their way away and down south. Unpacking stories is complicated.

Bloemfontein Concentration Camp

Unpacking

A cornerstone of my personal story is having grown up in South Africa during Apartheid. I was born in 1980. Nelson Mandela was released in 1989. 

One of those events where everyone remembers where they were. Like seeing the Twin Towers coming down, or hearing about the death of Princess Diana. I can remember being at close family friends, sitting on a big, puffy, pink cushion. That was where I watched on television as Nelson Mandela left Victor Verster (now Drakenstein) prison with his fist raised. 

The 80s were a tumultuous time in South Africa. A collective existential crisis. Who were “we”? In 1985, P.W. Botha delivered the “Rubicon Speech” as the world’s objection to white minority rule reached crescendo. He attempted to say there was no turning back. Nelson Mandela would not be released. He was wrong. 

We constantly have to renegotiate the way we interact with each other. Our agreements. Who we see ourselves as. What we include in our identity. What we exclude. Who we support. Who we hold down. Who we are. 

Some of these stories are inherited. We have to do the hard work of unpacking the consequences of past decisions. Unpacking shared stories. So we can raise our fists and walk forward.

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

Small Sustainable Adjustments

“Stubborn Attachments” by Tyler Cowen talks about some of the problems of financial decision-making across time. How do we balance actions and long-term consequences in guiding our choices? 

Discounting cashflows is one way to take into account the “Time Value” of money. A Dollar today is worth more than a Dollar in 5 years' time. Making decisions based on discounted cash flows ends up almost ignoring 15–20-year time frames. The underlying assumption is you can reinvest at the end of the period. 

I take the essence of his argument as a focus on Maximum Sustainable Return. Sustainability is key. You need endurance to make sure you are in it for the long run. To extend what you are doing to the next generation, and the generation after that. To adapt your thinking from 5-year plans to 1,000-year plans. Consequences beyond "you". Where BIG interventions fizzle, but small sustainable actions have big long-term effects. 

Epiphanies, vanity projects, and conspicuous victories are much less impactful than small sustainable adjustments. “Most people overestimate what they can achieve in a year and underestimate what they can achieve in ten years.” (Amara’s Law). 

Time is the most powerful investment force.

Le Temps