Kuiering v Pricing

Stillness can come not through the absence of thought, but through a point of focused engagement. 

I am at my happiest when I am absorbed in a deep and meaningful conversation with someone. My favourite word is Kuier. It doesn’t have a direct translation, but I interpret it as a warm spending of time. There is catch-up. There is content. There may be wine. 

Yet the point of focus is really an appreciation of the other human being rather than being defined by another goal. An attempt to see each other. Like the wonderful greeting... Sawubona... I see you. 

I get into a state of flow by diving into learning things. When I feel a sense of meaning soaking in as I chip away at complexity. Flashes of insight before I get swallowed once again by confusion and doubt. Wondering in the grass rather than lost. Stumbling. Grappling. Connecting. 

Everyone finds flow in a different place. Which is why relationships are one of the essential basics to come back to. To invest in. To make yourself available to people. Partly so that when you need them there is pre-loaded reciprocity. We can tell if someone is interested in us simply because they want something now. 

Part of Kuiering is a lack of urgency. Part of pricing is manufactured discontent and immediacy. Kuiering is comfortable where it is. Pricing creates a feeling of wanting to be somewhere else. Kuiering releases expectation. It notices. Pricing creates expectation. It contrasts. Kuiering needs a person. Pricing needs a problem. 

I am lucky to have a wide circle of friends. I find each of them is able to see me in a slightly different way. I understand, and see, and kuier with, myself better through those relationships.

No better place to be

Empowering the Uncontainable

Meritocracy and conspicuous consumption are dirty dancing partners. Value is personal, and price is a blunt tool for exchange. Price is a way to “put a number on anything”, even if it shouldn’t be boxed in that way. 

Demonstrating your wealth via things you can see can be an attempt to put a price on yourself. To show what you are worth. If you buy the idea that people with more merit, have higher prices, and so in a hand-to-mouth world... consume more. Another way of thinking of money and price is a tool to build the capacity to cope with life. Not about ranking or comparison, but rather about endurance and resilience. 

If you snap the need to (always) listen to price, you can internalise the way you look at value. You are not extracting yourself from life, in all its glory, and with all its challenges. You are building capacity which requires support. You can’t do it alone. 

Wealth is built in containers. We need to recognise our communities, and see how the containers we build exist within bigger containers. Trust in the bigger container is part of Adam Smith’s argument in favour of win-win capitalism versus win-lose mercantilism (battleship diplomacy with nations competing). He was able to show that freedom of movement in capital, goods, services, and people is win-win. 

You need to give things shape and form to make money, but those containers can morph and empower the uncontainable.

Changing Shape and Form

Financing Value

An essential part of the practice of being good with money is being good with your emotions. 

Making money involves being good with other people, through social, emotional, and cultural intelligence. Despite this, these forms of soft skills are often not the things that explicitly and conspicuously make money. 

STEM (Science, Technology, Engineering, and Mathematics) skills are typically easier to monetise because of the direct application to things you count and contain. Acknowledging that good ideas aren’t always good business ideas, isn’t an invitation to ignore social, emotional, and cultural skills. Quite the opposite, it is an invitation to invest in them heavily. 

A yogi is not someone who is completely unruffled. A yogi participates in and is part of the world. Detachment is not exclusion. Unlike in the past where the incredibly wealthy would flaunt gold and palaces, well managed wealth can connect and empower. 

A wealthy person can live a grounded life, with a background engine reinvested in problem solving. Putting capital to work, and labouring on things that are good ideas but hard to monetise. Unpaid work is often priceless, with value that needs to be funded by the priced. 

Detachment becomes that how you make money is how you finance value creation, not how you demonstrate your worth.

Growing in Muddy Waters

Funded Abundance

We all need to eat. To eat, we need money. To get money, we need to be paid. One of the fundamental parts of getting paid is the container. The shape and form that holds what it is you offer. 

Without constraints, an offer is a gift. That is because we don’t get paid based on the stable, known, countable, intrinsic value of what we do. We get paid based on supply and demand. We get paid based on scarcity. If something is incredibly valuable AND plentiful, it will have a low price – water, oxygen, love. 

It is possible to free yourself from the constraints of what makes money. If something/someone else makes money for you. You can be born rich. You can marry into money. You can surround yourself with rich generous friends. You can be born in the right country. You can have significant natural skills that set you apart. 

Otherwise, you just need to listen deeply to the signals given by price. What are people paying for? In what containers? How do you develop the skills and knowledge in those containers? It sounds cold, and in some ways it is. 

You start where you are, and you work to release yourself from constraints that don’t work for you. Chipping away with small, achievable goals that add up. Gradually building capacity for abundance funded by scarcity.

Shape and Form

Nothing Else Matters

It isn’t only the idea that matters. It isn’t only your merit that matters. Liquidity (enough to cover immediate needs) and Solvency (you have more than you owe) are cornerstones that carry anything with potential value through the chaos. 

Liquidity recognises that the short-term can swamp and swallow true value. If you think of true value as what would happen if everything went according to plan, and everyone saw the world as you do. 

Solvency is what lets you carry on carrying on, for a chunky period of time. 

If you aren’t being creative in the long-run... Liquidity and Solvency won’t save you. What they do do, is prevent you from being forced to make decisions. 

If “No” is not an option you have, the forces of supply and demand will eat you alive. Desperation is blood in the water to sharks. If you have to buy, at any price, the price will go up. If you have to sell, at any price, the price will go down. 

Value is almost meaningless in a pressure cooker. If one thing is so important, that nothing else matters... you won’t be able to see, hear, or feel anything else.

Shark's Eye

Foggy Window

The relationship between price and value is a signal. It is a powerful signal that allows us to communicate with each other. Personal value cannot be expressed in a number. We express it anyway... through decisions and price. 

Our values change. Our bodies change. Our bodies regenerate every 7-10 years with new cells replacing old ones. We learn based on what we experience. Our value set changes based on the evolving relationships and the connections we have to the world. Our interactions evolve with the environment around us. 

The way we communicate is complex. We grapple with issues. We reflect on our past. Heroes rise. Heroes fall. New perspectives raise uncomfortable questions and interpretations of our stories. The relationship between price and personal value becomes a tool in value creation. 

The problem is we set up that communication in a hand-to-mouth way. We, as living evolving stories and bodies, become productive assets tied to blunt price tools. Our egos, sense of respect, and self-worth get tied to “what we will be when we grow up”. Society used to create blunt roles, castes, and classes, providing repugnant clarity. When you were confused about a situation, authority would instruct you. 

Now it is more complicated. We are unpacking, and figuring things out. 

Another blunt tool for self-definition is money. We never earn enough. We want more. Valuable actions that don’t make money, get lost in our ability to communicate if we live very different lives... with money the foggy window between world views.

Unclear Price

Linked Moments

Fundamental investing and a focus on value creation are concerned with long-term compounding. How moments are linked to each other. Sustainable actions with intentional consequences. 

Price exists here and now. It moves in rapid response to supply and demand. A higher price attracts more people and resources to meet that demand. A higher price makes people who want that problem solved consider alternatives. Our decisions are all relative. 

We have a limited basket to fill, and very different decisions to make. Price averages out our immediate decision making. We do not all pay what something is worth to us. We pay the same. Some get a good deal. Some think it is fair. Some will feel they need to explore options, or uncomfortable but still pay. Others will walk away. 

That process communicates information about where resources “need” to go. A surface level information flow that does not have knowledge of all the behind-the-scenes complexity. Adam Smith’s invisible hand pulling on our tacit knowledge. The stuff we understand, or don’t understand, about our own worlds. That gets expressed through how we engage and what decisions we make. Revealed preference.

How are things connected?

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)

Building Value

We understand things better if we are directly involved. We all have to live somewhere, and so houses are the default big asset we think of people deciding to buy/own. We know our home. A roof over your head is a very easy problem to communicate. 

If someone offers to buy your house, and suggests a price that is less than what you think it is worth... it is easy to say no. Especially if you didn’t even want to sell. A reluctant yes may squeak out if you have no option but to sell, and no one else but that cheeky person to sell to. 

With investments, when the price falls, there is panic! All a price is, is a quote. The last agreed number for which a share changed hands. The lack of real-time knowledge of price (noise) for houses brings some calm. 

The best tool for long-term investing is the ability to choose what to pay attention to. To place your attention consciously in alignment with little actions that add up. 

Fundamental investing is when you get your money a job. Your money becomes a mini version of you (with more flexibility) that can earn on your behalf. “The actions that add up” is the real work the money is doing. 

Why is it making money? What problem is being solved? What is the ask? What is the offer? What is the container? Or the hardest problem of the lot in making money... “How do you get paid?”. Fundamental questions about building value.

Brick Making

Real Value

Find value in the abundant that is neither contained nor containable. Find value in things that are difficult to monetise. When you want to be paid, provide solutions that are easy to monetise. 

To put a price on something, you need shape and form. To see value, you need to look beyond superficial structure. To see what others don't. To price, you need to simplify into a clear ask and offer. To see value, you need to relax into complexity that may exist beyond words and pictures. 

To make money, you need to listen to the signals of the market, be adjustable, and move with the problems as they arise and are solved. As the situation changes, the useful containers change. Real value is more consistent and dependable than the temporary containers we use. 

We create space for real value by getting spending under control. Carefully choosing the containers we are prepared to pay for. Building internal spending discipline is fundamental to being able to handle the waves of money anxiety. That anxiety comes from placing our value in external containers that are not of our choosing or creation.

Artist: Alex Rennie

Enough to go Around

If you tie your identity and incentives to your job and pay, the stress and shocks of money will drive your anxiety. Hunter-Gatherers may have also lived hand-to-mouth, but that is a false analogy because they were living off the land (a form of capital which produced opportunity). They had the option of moving in tough times. We live in containers which restrict our movement (countries, job qualifications) and do not all have the option of a menu of skills which provide almost certain payback if mastered (hunting and gathering). 

Modern hand-to-mouth living means spending all you earn, without the option of earning more if that is not enough. When there is more than enough, simply consuming it. Adjusting spending up if income rises. The trick is to slowly separate from that. To see value in things that are abundant, and put your money to work solving scarcity. “Democratic Goods” are things where there is sufficient supply that everyone who wants it, can have it... at a reasonable price. 

Price surges when there is not enough to go around. Price surges when we borrow to buy at a price we can’t afford... because there is not enough to go around. If you can find and see value in things where there is sustainably enough to go around, you can detach from the relentless stresses and violent shocks of scarcity. 

Gathering Honey

See the Value

One of the ways to gain control of your spending is to select where you place value. To find value in the plentiful rather than in the scarce. Spending is often a team sport, and changing your habits can be incredibly difficult. 

Like trying to become more vegetarian in a South African meat-eating culture. It is painless to change habits if the tweak feels better. If it is simple to make vegetarian food, and you enjoy how it tastes, it will be a smoother transition to eating less meat. If you feel like you are punishing yourself and being a martyr because everyone else is eating what you want, and you don’t like what is on your plate, it is going to be incredibly difficult. We get a quota of self-discipline, and if you use it all up in one area, it can explode in another. “Everything in moderation, including moderation”. 

Build changes to behaviour realistically, gradually, and sustainably. Planning is not about epiphanies. Break-through-weekends are followed by Monday alarm clocks and deep soaked patterns. To make real change, see the value in things that you did not before. Tweak your drivers and incentives. Deep, slow, conscious re-programming. The self-imposed limits stop feeling like chains because you experience the world differently. 

“Save more later” is an approach where the goal is not to adjust your spending up if your income goes up, or you get an unexpected boost. Where you snap the sense that life is better if you spend more, and spoil yourself because “you are worth it”. Reward yourself with the abundant. Put your money to work.

Changing Habits

Being Forced

You can put a price on anything. That is not the same as, you should put a price on anything. A price is just a number used to communicate an exchange. One person gets the money. One person gets the thing/service. A fundamental rule of wealth creation is “Don’t be a Forced Buyer. Don’t be a Forced Seller.” But saying something is a rule doesn’t make it a reality. Like saying something is a human right doesn’t magic the resources/ behaviours/ agreements for that right into something more tangible than words. In order not to be a forced buyer or seller, you need your yes and no to carry weight. The weight of the knowledge that you will be fine whatever the outcome. The power of the ability to choose from multiple options. The minute you are in a corner, then others will have the ability to put a price on anything you have. You can’t build wealth in a corner. 

Never a Forced Buyer be.

Never a Forced Seller be.

Not This, Not That

Choosing your path consciously requires regular self-reflection. In Yoga, there is a practice called Neti Neti which means “Not this, Not that”. It is an analytical meditation on what you are not. It allows you to create some space between what you are, and the tools you use. In the world of money, we use price as a tool. Price is not value. You need to determine what your values are, and what you value. You can use price as a communication tool, but it does not have permanence. Similarly, salary is not worth. Salary is simply the price of someone’s labour. Supply and demand determine that price. Not some intrinsic respect-commanding, life-defining, ranking of merit. Quite often when people are making good money, they think it means they are valuable. It is dangerous to base your self-worth on pay, because supply and demand get disrupted. The barriers to entry that command that price can fall. The market changes. We create through destruction. You can do something incredibly valuable, but if lots of people can do that too... the price will be low. Price is not value. Salary is not worth. You are not your job. 

Price is a Tool

Cut the Fat

Price is not value. Daniel Kahneman points out that while we might be intuitive grammarians, with our ears bristling when someone butchers our mother tongue, even those with years of training in statistics are not “intuitive statisticians”. Some truths require slow deliberate thinking rather than rules of thumb. Truths like there are no gods of investing. Investors who will agree “price is not value” will fall foul of this too when talking about “their value”. Everyone likes to believe they are the one that adds the value. That can’t be replaced. That other people can be cut out of the value chain, because other people are the fat. A high price is not an indication of value. It is more likely (1) scarcity, or (2) barriers to entry. An obstacle to creative destruction is that we all need to eat. We all need to get paid. We all need a source of wealth. The only way anyone will be prepared to be made redundant is if we believe we are included in the future that exists on the other side. Money is made by solving problems for decision makers. One of our problems, is that (without capital) we need problems. 

Are you the fat?

 

One Slice

A share is a slice of ownership in a real underlying business. If someone sells a house, it is quite often also their home. If someone offered an excessively cheeky price, the (still) owner would tell them (the wishful buyer) to get knotted. Unless they had no choice but to sell. You don’t sell slices of your home. You either sell the whole thing (and buy another one), or not at all. With shares, little bits of ownership swap hands, but unless the company is raising more money, it can often crack on with doing whatever it does (largely unaffected). A share price is not the price of the whole company changing hands. It is the last slice to swap hands. It is a quote as a guide for the next person who wants to buy or sell. That is part of why price is not value. If suddenly a whole lot of people are buying, the price will go up. If suddenly they sell, the price will fall. The only way you would see how much the whole company would sell for, and turn into cash… is if the whole business went on sale. And there was a buyer. And cash changed hands. Price is a rough stab value. Real value is what gets done. Sustainably, and into the future. 

The Whole "Cake"

Price is not Value

Do not get too obsessed with the specific skills and knowledge which you think will provide the reward you are looking for. Price is not value. What determines how much you get paid for something is supply and demand. Price and value can disconnect for long periods and to extreme levels. The key is to disconnect your value creation from having to care excessively about price. To do that, you need to pay attention to capital and containers. Capital creates space. Containers get you paid. Space snaps the hand to mouth connection that forces you to dip into markets to care about supply and demand. A salary is just the price of your labour. The price of your skills and knowledge. Those are affected by how many other people can do what you do, and whether those paying you need/want you specifically to do the work. You do need to listen to the market to see what skills and knowledge are being rewarded now. You do need to build the capacity to adjust as supply and demand changes. The more you are able to convert your earning ability into capital, the less you will need to care about what other people think things are worth. Particularly, what they think you are worth. 

Pay for Work

Money “should” cost something. Interest is the salary of money. A low interest rate environment is a way of artificially providing cheap labourers (cash to invest). It is the same as you get cheap labour in countries where there isn’t enough work (e.g., South Africa now), and have to force people to go to work with hut taxes when there is too much work and not enough labourers (e.g., South Africa during the Bhambatha rebellion of 1906, or Sierra Leone in the Hut Tax War of 1898). The flip side of cheap labour is that those getting paid struggle to survive (actual workers or Gran living off her pension). Cash is low pay work, so the labourer can decide when and where to work or sleep. A bond is lending your labourers for a higher fixed salary. Like getting your money a job. Equity/Stocks are slices of ownership in a real underlying business. Businesses are where the work gets done… with cash, borrowing, salaried workers and the resources from owners. No salary is paid for equity (dividends are the closest they come). If long term value is added, the capital will grow. If long term value is destroyed, the capital will shrink. There is lots of noise, smoke, and mirrors… but in the end, it’s what you do that matters.

"Bauer beim umgraben" Van Gogh

Do Good Work

There is nothing more Free Market than failure. Bail-outs etc. are “third way” interventions where Government steps in. Particularly bad if they only step in when there is failure, and do not share in the up-side. A danger of basing your investment philosophy on a dance around what something is worth, rather than what it does, is that price and value can disconnect massively. It is particularly dangerous if you “bet” more than 100%, or are naked (have a position in something you do not own). You can trade anything with a pulse, the underlying thing does not matter as much as the person (legal or real) you are buying/selling from/to. You can leverage up a horrible asset to make great profits (until things go wrong). Investment is different. A basic principle of fundamental investing is that what you do matters. It is not gambling. It is capital allocation and problem solving. Shifting resources to where they are doing good work, and continuing to do good work over long periods of time. No one can force you to sell if the business is strong enough to carry on doing its work.

Alternative Worlds

“Price is not Value” is perhaps the most important lesson to learn in navigating wealth creation, financial planning, and building a career. I constantly find myself wanting to believe price is more than it is. Feeling like the way I see the world is reality. All price is, is a communication tool between different realities. We see the world based on what we have seen. We see the world from within our self and community created containers. That is where value sits. Price is where different value systems briefly and fuzzily meet. Price is a crude tool to artificially, and temporarily, simplify qualitative ideas of what something is worth down to a number. As individuals, we can then rank and compare all the other things that come into our decision making. Then make choices based on bringing things into and out of our world, based on price.