Plot Twist

Be wary of averages and extremes. When making decisions about a path to go on, it is important to “think in distributions” and to think about what is not there. The range of outcomes, and what happens if it does not work out. The past (especially long histories) is incredibly helpful. Including similar histories, with slightly different contexts. Same, but different. There but for the grace of. The starting point for wealth creation is an income. A source. Researching how others have done it is key, but make sure you do not just look at the ones who have done well. Especially if you are the product. If someone is teaching you to make money like they did, but in reality they are making money by teaching you… that is just a Ponzi Scheme. Layers of teachers teaching teachers to teach teachers till all the teachers are taught. Talk to people doing what you want to do about the challenges. Lots of people. Not just the ones you are paying. Talk to the bitter and twisted. Do not take their word as the truth, but be aware. How can it go wrong? How can it go right? Build the capacity to cope with plot twists.

Home for Bees

Two concepts I am progressively incorporating into my investment philosophy are Rewilding and Biodiversity. My Father-in-Law is a Natural Beekeeper and I like the idea of Natural Stockkeeping. Recognising that it is the bee that does the work. Where the goal is to do as little as possible, but not less. You have a roll, but it is more custodial. As we are grappling with a world that consumes too much already, yet is still struggling with mass poverty and hand-to-mouth living, we have to come up with new stories. In “Stubborn Attachments”, Tyler Cowen talks about twisting the maths of finance to not excessively discount (ignore) the future, and to focus on Maximum Sustainable Growth. David Attenborough reminds us of the seemingly obvious observation that something is only sustainable if you can do it forever. One measure of growth that is dangerous is activity. Doing more is not always doing better. Controlling more is not always doing better. Sometimes we can do better, without doing, and releasing the potential outcomes.

Staying Connected

The only thing we can be certain of, is that things won’t go according to plan. We can plan for, not going according to plan. Time matters, if in each moment we are doing something that matters to us. If today matters. If we are connecting the moments. Backwards and Forwards. There is a temptation to weight time differently. To release the past. To discount the future. To focus on now alone. That is not my approach. I love my story. Revisiting my story. It provides context to the habits, loops, scripts, drivers, responses and incentives that create the way I see the world. With attentive feedback and reflection, that rewire the way I will see the world. The way I will interact with others. I value my future. The future of the others who will follow. The connection I will have to their story. What we can plan for, is our ability to endure. Our ability to cope. To adapt, adjust, and accommodate the uncertainty. Plans don’t have to be about control. Plans can start with acceptance and investment in capacity. They can start with a deep breath. Then move forward while staying connected.

The Future Matters

We see based on what we have seen, and what we want to see. Businesses don’t give a pre-set return or guarantee the Capital will survive. Over the long term, return is based on adding demonstrable and recognised value. What you do matters. Over the short term, price is based on what investors have seen, what they worry about, and what they want to see. Over the very long term, the US Stock Market (e.g. S&P500) has generated nominal returns of roughly 7% (with several dramatic falls). Stock pickers normally would want more. How much more? The more aggressive the model, the less the distant future appears to matter. If you want stocks that will return 20%, you’ll see stocks that will return 20%. Financial Modelling raises more questions than answers. Still worth doing, but with a pinch of salt. At 20%, the maths means anything 5-10 years out becomes a significantly smaller, almost negligible, part of the decision-making process. That is dangerous. It’s no surprise prices are all over the place when our eyes are only on the next 5 years. This too will pass. Ensuring a Future matters.

Stock Market Crashes

e.g. Tulip Mania