Saturday, May 9, 2015

In God We Trust. All Others Pay Cash (Part II)

“The man who believes he can and the man who believes he can’t are both usually right.”
Attributed to Henry Ford

I had occasion to work the Houston Offshore Oil & Gas Conference as part of my job. I found Houston a culture shock after working in the Washington, DC area for more than a decade. In Washington, it was all about control and fairly dividing up the pie, a view based on the assumption that wealth was finite and that ordinary people could not be trusted with freedom. When I observed that Houston was the only town I ever visited where one could find a strip club, a Jesus saves, heals, and delivers temple, and a bug exterminator all on the same corner, I was informed that Houston didn’t have any zoning laws. People were more or less free to build whatever they wanted, wherever they wanted. I can’t imagine that this could be completely true, but the residents of Houston seemed to worry a lot more about trying to live their life than trying to control the way their neighbor might choose to live his life. It seemed that everyone from the newest illegal alien to the billionaire wildcatters landing their helicopters in the parking lot (really) didn’t view money as a finite commodity. They believed everybody could grab a piece of the action or if there didn’t seem to be enough cash around at any particular point in time; they could pump an entirely new pile of money out from under the sands that cover the bottom of the Gulf of Mexico.

I have continued to consider the question, “What do you believe about money?” Intention is the beginning of all things. Before I can begin to work towards a goal, I must be able to define that goal and I must believe that it is a goal that is worthwhile and possible for me to achieve. At this point the mind science teachers are correct. What you believe about money, your relationship with money, and what you believe about yourself are for most of us, the greatest impediment in achieving financial freedom. However that is not the end of the story. There is a whole lot of patience, perseverance, and plain old hard work necessary to get us from point A to point B.

Affirmations are not going to force the universe to manifest a Mercedes Benz in your driveway.

I graduated from college just in time for the recession of 1973. There weren’t many jobs available, but I remember running a thought experiment in my mind. I asked myself the question, “If you were tied up in a bag, with no money, and dumped into a strange town, how long would it take to get back on your feet?” My answer was no more than three weeks. After a couple of weeks, I found a job as a human robot packing rolls of cloth in burlap sacks. I also discovered the true value of a liberal arts degree, but that is another story. I was thoroughly convinced that no matter what life threw at me I could not only survive but I could thrive. I am not so sure I would be as confident in my 64 year old self as I was in my 22 year old self.

I was raised to believe in the “good job.” If I earned the correct degree, if I was a trustworthy hard working cog in a great bureaucratic machine, ultimately I would be given a “good job.” Then I could buy a big house in a nice neighborhood and drive cool cars. It never entered my parents’ mind or my mind that I could create my own personal enterprise out of nothing. I still haven’t crossed that bridge. I know I can help people do a better job of managing their money. I’ve done that; more than once. I know I can help people discover the questions that will help them find a better path that will lead them to their ultimate goals, but I can’t yet seem to believe (really really believe) that it is possible for me to make money helping others even though the world is filled with successful self help authors from every possible belief system.

I have learned to follow a hybrid of two classic investment paths. I hold a well diversified, age appropriate mix of index funds and individual conservative dividend paying stocks. Because I am a cautious soul, I tend to hold more than I should in cash and cash equivalents, a habit that severed me well in 2008-2009. I also believe that every portfolio should have something like 2% to 5% precious metal and maybe even a little in gold mining stocks. My largest position is in an exchanged traded fund (GLD) that holds my physical gold in a vault in London.

I am aware of some of my shortcomings. I find it hard to make a high risk, high reward gamble with even a small amount of money. I am overly skeptical of investing in foreign markets. The U.S. share of the world’s economy is shrinking. The rest of the world is growing. Last time I checked, my International positions were on the order of 15% or less of my liquid net worth. They should probably be twice that amount. I am slowly trying to take that next step.

I am still learning how to spend money. I am a natural tightwad. I am still learning how be a giver. I have come a long way over the last forty years. I hope I continue to improve. I want to be a blessing in this unhappy world. I also need to learn how to do a better job enjoying my blessings. I don’t need to keep cars until they are worn out. I can buy new clothes before they are so frayed that they can’t be given to a thrift store. I especially need to learn how to spend money wisely on the food I put in my stomach. Convenience food, fast food, and restaurants are not going to help me loose weight.

There is something else. I am always dissatisfied, not with the amount of money I possess or my lifestyle, but with the limits of my knowledge and wisdom. I know. I just know; that somewhere out there someone is doing a better job with his money because he knows things that I have not yet learned and applied in my life. Although I don’t want this person telling me what to do or doing it for me, I want everything he has to offer.

The Tragical History of Doctor Faustus is seen by some as a key myth in the development of Western Civilization. We have, as a culture, always been ready to trade our souls for knowledge, even under singularly unfavorable terms. We are always searching for keys to unlock mysteries concerning our own nature and to learn to effortlessly control our environment and our destinies. I simply can’t wait to read that next book or enter into a conversation with someone who knows more than I know.

As a Christian, I know there are dangers on that path.

“O, Faustus, lay that damned book aside,
And gaze not on it, lest it tempt thy soul,
And heap God's heavy wrath upon thy head!”
The Good Angel
(Marlowe's Doctor Faustus)

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