Monday, April 24, 2017

The TED Talk Test

The other day in a private conversation, I was annoyed to realize that I was enjoying retirement so much that, to be honest, I was unwilling to make the big investment of time and energy necessary to move this blog from a part time ministry to a full time commercial product. I am certainly more knowledgeable than when I started the Silver Eagle Experiment and my writing skills have improved over the last nine years. I don’t expect any change in those trends, but when will I ready to try and jump to another level? Leaping into the unknown is always pretty scary unless a hungry bear is getting close to your leg. I felt that way when I left the saw chain factory for engineering school.

I jumped and never looked back.

While considering this conundrum, I came up with an interesting thought experiment. Let’s say you are given the opportunity to present a TED Talk. If you spend much time on the Internet, you have probably listened to at least one of these lectures. TED started as a conference presenting 18 minute lectures by people with amazing, inspired new ideas in the fields of Technology, Entertainment, and Design to an audience of movers and shakers. The presenters were not only given an opportunity to share their life’s work, but also a chance to begin to build a network of well positioned patrons and allies who could provide fuel for their passions.

Here is the deal.

You will be given the opportunity to present an eighteen minute lecture on any subject you consider important to an audience of 200 or 300 men and women of your choosing. They could be venture capitalists with hundreds of millions of dollars looking to invest in new products or services. They could be the managers and owners of publishing houses or broadcasting companies looking for new books to publish, movie scripts to produce, or ideas for TV shows. They could be powerful politicians and the donors who fund their campaigns. Your choice, but you only get one shot at the big time.

There is another bonus if you are successful. The best TED talks get millions of hits on YouTube and other services. You will not only have instant name recognition, but your dream will be granted Internet legitimacy.

Eighteen minutes is somewhere between 2,500 and 3,000 words depending on how fast you talk. I don’t even know what I would say that would differentiate what I am trying to do from a hundred others, some household names who have sold books and courses in the hundreds of thousands and others, who are anonymous bloggers just like me. Let’s say that at some point I have the words. Then I would have to practice in private until I had the speech just about memorized. After that I would have to experiment with live audiences to perfect timing and delivery. If I had spent years learning the art of public speaking, it wouldn’t take as long, but it would still represent a major effort for anyone.

David didn’t hit Goliath with the first stone he ever placed in a sling. From having been a small boy who owned a sling, I expect that David’s major source of entertainment out in the sheep field was learning how to throw stones with that weapon. Unlike me, I expect he was also learning how to sing psalms and play the psaltery to avoid going mad with boredom. I could hurl a rock an enormous distance with my sling, but where it would land was anybody’s guess. A champion slinger could hit a target the size of Goliath’s head, at least most of the time. I saw this demonstrated on cable TV. I believe God put the rock between Goliath’s eyes, but I also believe that David’s skill is what landed that rock on the Giant’s head.

What would it take me or you to care about something so passionately that we would make the kind of effort it takes to jump whatever you are dreaming about to the next level? What kind of things would we do that others might find a bit crazy, because we cared so much we couldn’t help ourselves from trying just a little harder?

I heard a successful televangelist talk about the first days of his ministry. Once he rented a room and no one came to hear him speak. He went ahead and delivered his sermon to the empty room, in the belief that God had told him to do it and if no one else was listening, at least God heard it. I might question this man’s theology, but who can gainsay his determination?

Will I be ready to deliver my TED Talk when the opportunity presents itself? If I haven’t delivered it to a lot of empty rooms and at least 20 or so small audiences, I would expect the answer would be, “No.”

Sunday, April 23, 2017

Add Some Passion to Your Dream

Something rather unusual happened the other day. For the first time since I retired, I had the opportunity to throw some “new money” into the market.

Since I retired a little over four years ago, during most months we have lived on our renewable income and the mortgage payment we receive from the owner financed sale of our house in Maryland. In our case, renewable would be my wife’s early Social Security and my FERS pension. This has been enough to cover everything but extraordinary expenses such as repairs to the old house before the sale, the cost of moving to the new house, certain large tax bills, and that first-class vacation to Hawaii. On those occasions we dipped into our savings. After all, that is why we saved for retirement.

As an aside, let me add that when and how to take Social Security is a rather complicated question that requires an individual analysis before rolling the dice. First of all, you will have to guess how long you will live. If you take early Social Security at age 62 and die before roughly age 78, you win. If you wait until full retirement age, in my case 66, and die before 78, you lose. If you can wait until age 70, you can collect your maximum benefit. If you have longevity in your family, you might want to wait.

Or not!

The rules change all the time. In our case, we were able to flip my wife’s individual benefit to a higher spousal benefit at the time I started my Social Security at full retirement age. I had planned this maneuver with the understanding the rules might change before I reached 66. Then there is the question of necessity. If you are 62 and are unemployed, you might want to go ahead and take Social Security even if you believe you will live to 90.

After receiving my first three Social Security payments, I realized that my checkbook balance was higher than expected, as we were still living on renewable income and that monthly mortgage check. For the first time in more than four years, I had some new money. It reminded me of the years spent in the stretch run to retirement. I wanted to retire at the earliest possible date. Baring a winning lottery ticket, that would be the day after my 62nd birthday, the first day I could retire without a pension penalty. I remember how exciting it was to watch my version of a 401(k) growing with every paycheck. I was even more passionate about my self directed, after tax investments. When the balance went up in the checkbook, I would move some of that money up to our money market fund. I would tell myself stories about money that only moved in one direction—up, first from checkbook to savings, then from savings to investments in the stock market. This was almost always true except when we needed to buy a new car. Then money would move down from savings into the checkbook and off to the car dealer.

I was emotionally involved in my dream. I wanted to achieve my goal of early retirement so badly I could taste it. Think about times in your life when you were able to fuel a fantasy with your emotions. I expect this happened somewhere along the way to your wedding. It also happened to me when I was in engineering school. After nine years, I so wanted to get off the factory floor, that my academic efforts were fueled with passion.

Revisiting the memory of that feeling for even just a moment, as I purchased a small amount of a somewhat speculative stock, reminded me of how important passion can be in helping us to achieve our goals, but how to turn it on when we need it?

It seems like others are better able to hit our happy buttons for their benefit than we are able to tap into our emotional reserves for our own benefit. Last week I received a “private invitation” to experience a test drive in the new Alfa Romeo Giulia or Giulia Quadrifoglio, just the kind of car I would like to own some day. My wife had fun teasing me about this advertisement as she knows that although I am a logical researcher who reads Consumer Reports, a little passion will help in separating me from our money when visiting a car dealer.

If advertisers, marketers, politicians, and preachers know how to ignite a fire under our inertia, why can’t we learn to do it to ourselves? Tony Robbins correctly differentiates between the musts and shoulds in our lives. If it must get done, it will get done. Sometimes a should will get done, but often we find an excuse to avoid doing what we really know, in our hearts, SHOULD be done. The musts tend to be fueled with passion.

You Gotta Want It!

Saturday, April 22, 2017

Is It Working for You?

"In times of change learners inherit the earth; while the learned find themselves beautifully equipped to deal with a world that no longer exists."
Eric Hoffer

During their working years, the Baby Boom watched the covenant between workers and corporations that worked pretty well from 1945 until 1970 unravel. Besides oil shocks and the miseries of stagflation, we also experienced the deindustrialization of the United States that eliminated approximately 20 million good paying, relatively stable jobs with benefits for Americans of average ability. On the plus side we had a good run between the end of the recession in 1985 and the dotcom crash of 2000. The Internet and cell phone revolutions generated a lot of new wealth, unfortunately not as many new jobs, and we came to believe that the value of a house could only go up. We experienced a lot of change over the last 45 years. Much of it wasn’t good.

Unless our country changes direction, the future doesn’t look too hot for the Millennial Generation. Globalization, personal and public debt, and new jobs that require above average ability in technical areas that are in demand, entrepreneurial skills, or sales aren’t going to help someone with a high school diploma and no particular talent.

You’ve read the news. Too many Americans, including an unfathomable number in the top quintile are living paycheck to paycheck. Surveys indicate that 46% of households couldn’t cover a $400 emergency without borrowing the money. If it isn’t working for you, you had better become open to the idea of becoming a learner.

Get another degree, get a better job, worked for me, but I don’t expect that will work in the future, unless we are talking a M.D. Starting around 1973, our country started producing more college graduates than new jobs requiring a college diploma. Even in my case, my last degree really didn’t kick me to a higher pay grade than what I would have achieved without it. However, about the time I turned 50, I set out on a different kind of learning quest to discover the secrets of investment, so that I could retire comfortably some time before my death.

Given the rate of change in our economy, I don’t expect that I will be able to quit learning until I am dead or declared incompetent.

Your relationship with money isn’t exactly like your relationship with other humans, but the emotional indicators are remarkably similar.

If you are experiencing:

Fear
Anger
Hate
Blaming others
Guilt
Shame

Chances are you need to change direction.

If you are experiencing:

Peace
Joy
Love
Equanimity
Forgiveness
Generosity

Keep on doing what you are doing, but don’t miss the opportunity to explore new paths.

The basic facts of money, like the rules of chess are quite simple. However, learning to apply them with skill is the work of a lifetime. Studies indicate that chess is a game that is controlled, 100%, by the skills of the players involved. At the other end of the spectrum is the lottery, no skill, 100% “luck.” Good luck and bad luck tend to balance out over the course of a lifetime, just as the best teams in football tend to play in the Super Bowl, even though football (like investing) is maybe something like 20% luck.

Don’t be a victim. You can do this. The first steps are easy enough to learn. Go to the library. Dave Ramsey and Suze Orman are the big names, but the shelves are filled with introductory personal finance courses offered by authors from every social, religious, and cultural perspective imaginable. If you are a bit of a counter culture artistic kind of person, try “Your Money or Your Life by Joe Dominguez,” a classic. Be sure and get a recent edition, the investment advice found in the original has been seriously overtaken by events.

Money is just a tool, not an end in itself. The purpose of earning and saving more money is to make a better life for yourself, your family, your community, and your world. Your feelings, as well as your bank balance will let you know where you need to focus your efforts in learning how to improve your performance in this very important dimension of a balanced life.

Friday, April 7, 2017

Stories are Only Words--Unless You Believe Them

The “nuts and bolts” of personal finance are really pretty simple, requiring nothing more than third grade math and a copy of the golden rule. Don’t spend more than you earn. Put a little something in savings every time money crosses your palm. Try to cultivate a generous heart. If you want to earn more money, look for opportunities to be a greater blessing to your neighbor. Why then do so many people suffer from financial distress? I can sit down with someone and work through a monthly budget, but I can’t get them to believe that living on a budget or starting an emergency fund is a reasonable possibility. I have come to the conclusion that the stories we believe are ultimately what limit our chance to reach financial freedom, whatever that means to you.

Recently while listening to a lecture on finding financial freedom the teacher suggested, “Imagine looking into a mirror while saying, My greatest fear concerning money is…” The class dutifully repeated the first part of the assignment and then broke into self conscious nervous laughter. With a little more prompting, the braver members of the class shared their greatest fears. For me this was a spooky experience. As I said, “My greatest fear concerning money is,” I spontaneously visualized my parents standing behind me with their arms crossed and expressions of disapproval on their faces. My mother is dead. My father is suffering from Alzheimer’s. Sadly, I don’t think he even knows he has a son. Why is that story bubbling around in my subconscious mind, even though I am comfortably retired and write a Christian personal finance blog?

If the stories you tell yourself about money aren’t true and useful, you need to make an effort to find a better story. If the stories are both true and useful, hang on to them until you find something better. There is always a better story.

Consider an unemployed coal miner living somewhere in rural West Virginia: If he makes the statement, “The mine is closed. I will never find another job that will pay enough to support my family,” might prove to be a true statement if he remains in his home town, but is it a useful story? It gets worse. As we tell ourselves these stories over and over again, eventually we begin to identify with our stories. In this instance, this man might come to say, “I am an unemployed coal miner.” Identifying with our own story can become deadly. If I am a Type II Diabetes patient, a cure would destroy my self identity. Did you notice I said my father is suffering from Alzheimer’s? The disease is not my father. Your problem is not you.

Liberation is a possibility, but it will require a different story.

Richard Branson, founder of the Virgin Group wanted to be an entrepreneur from a very early age. He sees possibilities where I would see only problems. Once after his flight from Puerto Rico was canceled, Branson chartered a small airplane and sold tickets to his fellow passengers to cover the cost. I would have cursed my bad luck and tried to get seat on the next available plane. For Branson, this was the inspiration for Virgin America, a small but growing niche airline. Branson told himself a story about how easy it is to make money so many times that he came to believe it. His net worth is something like $4.5 billion, not too bad for a kid selling records at a discount price. This got him into legal hot water, because the price on some of those records was protected by marketing agreements that limited discount sales. Well, his headmaster correctly predicted that Branson, a poor student with learning disabilities, would either end up in prison or become a millionaire.

I have a friend who invests in rental properties. When he looks at a dilapidated little house requiring $20,000 in repairs and remodeling to make it habitable, he sees nothing but opportunity. He tells himself a story. The people who rent this house from me will not only pay the mortgage, but they will give me the house for free after they finish paying off the mortgage. I tell myself stories about broken toilets in the middle of the night and tenants who will throw parties for their biker boyfriends.

Same property.
Same cost and opportunity.
Different stories.

Go ahead. I challenge you to look into the mirror and say, “My greatest fear concerning money is…” Write down the answer. Then continue to write down the stories you tell yourself about money. Without judging or blaming yourself, examine the truth and utility of your stories. Are they based in scarcity, fear, anger, resentment, envy or greed? Chances are they will produce fruit that you won’t want to eat. If they are based in possibility, abundance, generosity, good-will, and happiness found in the success of others, your stories are likely to carry you a long way towards financial freedom.

Stories are only words and words can be changed.

Tuesday, April 4, 2017

If Only You Believe in Miracles

Sometimes miracles aren’t a big deal, unless it happens to be your miracle.

Last week, while I was out walking on the Swamp Rabbit Trail, I saw a plastic card sitting on the pavement. It turned out to be a live debit card issued by one of the major banks. After finishing my daily exercises, I drove over to the closest branch office of that bank. It was out of my way, but what is an extra 10 or 15 minutes? I gave the card to the branch manger who assured me he would immediately call the owner of the card and give her the good news. If she knew she had lost that card, I would expect she was praying for a miracle. If not, I imagine a brief prayer of thanksgiving passed through her mind when she received the branch manager’s phone call. I didn’t do anything remarkable. It didn’t even cost me $1.00 in gasoline, but for someone I will likely never meet, it was a miracle.

As part of my morning ritual, I watch a lecture or sermon on Youtube while drinking a cup of coffee. While listening to the King of Las Vegas, Steve Wynn opine on the secrets of running one of the three greatest hotels in the world, it occurred to me that much of what Steve was promoting could be used by churches. His managers collect stories about employees who went the extra mile to make a guest’s experience—extraordinary. The story appears almost immediately on the Hotel Employee Internet. Within a few hours, a large photograph of the hero of the hour appears on the wall in the employee area. As a result, employees are actively looking for an opportunity to get their name up on that board by providing the highest quality service in the world.

Joel Osteen believes in miracles. He not only tells his congregation to expect miracles in their lives, he encourages them to look for opportunities to, “Be a miracle for someone else.” When he hears about a member of Lakewood who has done something—extraordinary, whether it was something large, like starting a ministry for children with autism that has gone nationwide, or something small like driving an old lady to church every week for several years, they get an atta-boy from the pulpit. Sometimes Joel names names and puts the camera on miracle worker. Sometimes they remain anonymous, but he gives enough details that the person receiving the complement and their friends know who Joel is talking about.

What if I started every day with a prayer, not only asking God for my needs, but asking him for an opportunity to be a miracle in another person’s life? Having had the opportunity to be a miracle here and there over the course of my life, I have learned that it is a blessing to be a blessing. It also seems that there is, at least some correlation between being a blessing and receiving a blessing.

Saturday, March 18, 2017

How About That Person in the Mirror?

Lately, it seems the air is filled with self righteous finger pointing. It seems that all these attacks, if successful, would benefit the finger pointer and his followers at the expense of someone else. I am tired. How about we try something different? Let’s look at that person in the mirror and ask ourselves, “What can I do today to make myself a better person and the world a better place?” It doesn’t have to be all that much, but do something. Make a start.

How about my body? If I think the cost of medical care is excessive, what can I do to lower the burden on our health care system? Can I find a way to eat a healthier diet? Can I undertake and exercise program? Maybe I could drink one less beer this evening?

How about my heart? Looking deeply and honestly into my motivations can be less than pretty. How much gratitude is down in there? How about forgiveness? Can I find a way to make an enemy my friend? Are my goals in line with my understanding of God and my faith? Do I have a generous heart? It doesn’t have to be all that much; you could leave a 20% tip for that waitress schlepping your food on what is obviously a bad hair day.

Do you need to improve your finances? I had to ask that one. After all, this is a personal finance blog. I would also add that improving your relationship with money can put you in a position to do more good in this material world. Maybe you could find a way to work a little harder, a little longer, or a little smarter. All of these options are likely to put a little more money in your pocket. Can you find a way to spend a little less on things that cost you money, like cable TV and a little more on things that pay you money, like stock in a cable TV company?

If we could all spend a little more time finding ways to produce a better crop in our own garden and a little less time chest thumping and trumpeting our moral and intellectual superiority this world might be a happier place.

I don’t know about you, but I still have some work to do with that guy in the mirror.

Matthew 7: 1-5

“Do not judge, or you too will be judged. For in the same way you judge others, you will be judged, and with the measure you use, it will be measured to you.
“Why do you look at the speck of sawdust in your brother’s eye and pay no attention to the plank in your own eye? How can you say to your brother, ‘Let me take the speck out of your eye,’ when all the time there is a plank in your own eye? You hypocrite, first take the plank out of your own eye, and then you will see clearly to remove the speck from your brother’s eye.

Sunday, March 12, 2017

If Your Mind Is Empty

“If your mind is empty, it is always ready for anything, it is open to everything. In the beginner's mind there are many possibilities, but in the expert's mind there are few. ” Shunryu Suzuki

Beginner's Mind refers to having an attitude of openness, eagerness, and lack of preconceptions when studying a subject, even when studying at an advanced level, just as a beginner in that subject would. (Wikipedia) It is an openness to learning new things.

Over the last fifteen years, since I made the decision to learn something about the art of investing, I have developed my personal investment paradigm, a mixture of Modern Portfolio Theory, Value Investing with a tip of the hat to the criticisms of Taleb and Mandelbrot. For new readers, Modern Portfolio Theory recommends owning the entire world market through the purchase of low cost index funds, since it is very unlikely that you or anyone else is likely to beat the market over the long haul. Value Investing suggests that the investor buy underpriced bargains, particularly if the pay a healthy sustainable dividend and then hold onto those stocks—FOREVER. Taleb and Mandelbrot have proven conclusively that the world is a much more dangerous place than is described in Modern Portfolio Theory. However, neither of those authors has suggested a useful alternative method for the average investor. Taleb was a highly successful options trader. Unfortunately, that game is a little too rich for my blood.

P.S. Don’t forget about that “age appropriate” mix of bonds, CDs, cash, equities, precious metal, and real estate that is part of your investment contract with yourself.

While I am not flying around the world in a private jet, my personal investment paradigm has helped me achieve one of my goals, a comfortable early retirement. Now, I have discovered that as I have gained a certain measure of expertise, I have lost an equal amount of Beginner’s Mind. Even though I am constantly reading different books on personal finance and investment strategies, I feel as though I have actually read the same book one hundred times or I find when I am reading a book, I am judging it on the basis of my established prejudices.

This is important because my paradigm does not have a clue about what to do in the current environment beyond maintaining my contract with myself concerning the contents of my “age appropriate” diversified portfolio. Bonds and CDs don’t pay spit and stocks are overpriced due to the actions of the World’s central banks. A whole lot of money has been created out of thin air. The entire developed world is carrying a dangerously large debt burden. Interest rates have been held artificially low to stave off deflation. After collapsing in the 2006-2008 slow motion train wreck, real estate has recovered to the point that it no longer constitutes an option for the cautious, uninformed investor, like me.

It is time for me to take a deep breath, open my mind, and consider the possibility of learning a new art. This will involve trusting in the old Chinese adage that when the student is ready, the master will appear, as well as more work than I might find desirable in a comfortable retirement.

As I learn, if I learn, I will share what I have learned with you, my readers.