True Value: Understanding What Matters in Business and in Life

We were walking down a small cobblestone street in Aix en Provence. It was a perfect June day – sunny and still warm in the late afternoon. The old, unpainted buildings had an amber glow.

Some of these buildings, we had learned from poking our heads inside, contained modest-sized apartments. Others enclosed elegant residences that only the wealthy could afford. From the outside, though, you couldn’t tell one from the other.

“That’s a good thing,” K said. “From the outside nobody can tell how much money you have.”

“It’s the opposite back home in Florida,” I said. “Wealthy people want everyone to know how much money they have. So they keep building bigger and bigger McMansions.”

“It’s just a question of values,” K said.

We stopped at a cafe about a block from our hotel. It was nearly filled with people having drinks and smoking, enjoying the end of their workday. A young girl stood under an oak tree playing Bach on a violin.

We ordered coffee. I wrote in my journal. K was reading a magazine.

“It says here you can survive without food for three weeks,” she said. “And three days without water. But only three minutes without oxygen.”

“Japanese pearl divers can stay under water a lot longer than that,” I said. “I think the world record is something like 19 minutes and 21 seconds.”

She shook her head, smiling. “You know what I mean. It’s a question of values. So much of our time is spent pursuing things that have questionable or temporary importance. But food… water… oxygen — what could be more important to human beings?”

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Getting A Perspective

Strategy for Taking a Sensible Approach to a Disturbing Situation:

You get upset about something. It is all-consuming. But you know, deep down, it’s not that important. Perhaps this will help. While you are counting to ten, ask yourself these two questions:

  1. On a scale of 1 to 10, how much is this bothering me?
  2. On a scale of 1 to 10, how important will this seem to me in five years?

Example: My issue with a certain client who is not listening to my advice.

  • How much does it bother me now? 8
  • How much will it bother me in 5 years? 0

Asking these two questions reminds me that this is a temporary problem, one I can easily fix by allowing the client to improve or by dismissing him. With that in mind, I can relax.

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The B Tour: Barcelona

 

As I mentioned yesterday, I’m spending a month in Europe with K, in Barcelona, Brussels, and Berlin. We call it the B tour, although it offers more to see than the A tour (Amsterdam, Antwerp).

We arrived in Barcelona this morning. I’ve been here only once and briefly. But that whet my appetite for more. If you’ve never been to Barcelona, put it on your “see-before-you-die” list. It is one of the best cities in the world to visit.*

Barcelona has all the amenities you would expect from a world-class urban center (amazing art, architecture, theater, parks, and shopping). Plus, like Hong Kong, Los Angeles, and Vancouver, it sits between mountains and sea, giving tourists lots of ways to enjoy nature as well as culture.

The Dali Museum. Photo: Simon Sellars

On top of my “must-see” list are two museums: the Picasso Museum in the Bari Gotic district and the Dali Museum in Figueres, which is a short train ride from the city. Picasso and Dali were two of the most skillful and imaginative painters of the 20th century. If you don’t share that opinion, you haven’t seen enough of their work. A trip to these museums will fix that. Pay particular attention to their early works. Even as young teenagers, both were demonstrably gifted artists.

I’m also excited to revisit the breathtaking structures of Antonio Gaudi, including the Cathedral of the Holy Family. Like a medieval church, it is still being constructed after more than 50 years. Gaudi is the patron saint of Spanish modernism. Like Dali and Picasso, he was immensely creative. Gaudi’s buildings are amazing to look at. They are astonishing and ironic – all at the same time. Gaudi believed in beauty and had the skill to create large, polymorphous structures that hold up – literally and aesthetically – over time.

Gaudi Self Portrait

In addition to its cultural and natural amenities, Barcelona offers visitors a warm and welcoming atmosphere. The Catalonians, Barcelona’s rootstock of people, speak their own language (related to Spanish). They have their own traditions as well. Like the Romans, they are genial and enjoy life. But like the Basques, they have a rebellious spirit that is hard not to admire.

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Three Ways to Get Rich

Recently,  I watched Michael Moore’s documentary “Capitalism: A Love Story”. As always with his films, I found it to be entertaining propaganda.

One of his primary arguments is that the rich have duped “the rest of us” (Moore brilliantly aligns himself with the workingman) into believing in capitalism by spreading the myth that anyone in America can become rich.

It’s a wonderful irony. Here is a guy, the son of an autoworker from Flint, Michigan, who gets rich in America through hard work and initiative… and then makes a movie based on the premise that you can’t do that.

The truth, as Moore sees it, is that the only power the poor have over their financial future is to vote in social democracy — where the “system” works to put more money in the pockets of the working and middle classes.  (Though, as history has proven, that doesn’t usually happen.)

The reason socialists have a problem with capitalism is that it cannot make everyone wealthy. And that’s true. I like the idea of making the world a richer place. But I know from experience that it can be done only one person at a time.

And this brings us to the question Moore raises in his film: Is it possible for an ordinary person — without special contacts or resources — to become wealthy in America today?

I’ve been studying that question since I started writing about wealth building 10 years ago. And it’s clear to me that ordinary, unconnected, wage-earning Americans do it all the time.

I’ve mentored at least a dozen people who started out at the bottom and are now multimillionaires. So Moore’s premise, I’m saying, is bullshit. You can get wealthy in America. And there are three ways to do it:

  1. You can get wealthy by scrimping and saving.
  2. You can get wealthy by hoping and praying.
  3. You can get wealthy by earning and investing.

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The Stock Game

Photo: Helen D. Van Eaton

Good quotations about the Stock Game:

  • “There’s nothing wrong with cash. It gives you time to think.” (Robert Prechter Jr.)

  • “Stockbrokers know the price of everything but the value of nothing.” (Phillip Fisher)

  • “You can cut somebody’s hair many times, but you can only scalp him once.” (Anonymous)

  • In the business of money management, you are good if you are right six out of ten times.” (Peter Lynch)

  • “Nobody spends someone else’s money as carefully as he spends his own.” (Milton Friedman)

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K.I.S.S.

I had the feeling that Steve didn’t believe me. But I had no idea he would go behind my back to try to prove me wrong.

It was the spring of 1999. Steve had recently been hired by my client to write an investment newsletter. He had the qualifications: an MBA and Ph.D. from good schools, experience both in the front and back rooms of brokerages. But he didn’t want to sell stocks. He wanted to write about them.

When I saw his first effort I was impressed. The analysis was sound. The research was deep. There was only one problem. His writing was terrible.

It wasn’t sloppy or illogical or even ungrammatical. But it was incomprehensible. It read like a treatise. It was the kind of writing that you might get away with in academia but could never pull off in the real world.

I called him into my office and told him about my secret antidote for writing like his: the Flesch-Kincaid Readability Test. The FK is a computerized tool that looks at the length of your sentences, how many syllables there are in each word, and other data. It then rates the entire piece in terms of reading ease. A rating of 5.0 or below is very easy to read. A rating of 10.0 or above is very difficult to read. A score between 5.0 and 10.0 is what you’ll find in most newspapers and magazines.

I explained to Steve that my goal is to keep my writing – no matter how complicated the ideas I’m trying to express – at 7.5 or below.

Then we analyzed Steve’s writing. It had an FK of 12.0. Almost off the chart.

“You won’t get a big audience with such a high FK score,” I said. “You have to work on simplifying your writing. Get your FK down to 7.5. You’ll be a better writer, have more readers, and make more money.”

He thanked me for the advice. But, as I said, I could tell he didn’t believe me. What I didn’t find out until years later was that he spent almost two months trying to disprove what I’d told him.

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No Place is Better Than Home

No place is better than home. “East or west, home is best” — upon completing a round-the-world trip, Andrew Carnegie illustrated the universality of that sentiment with two stories:

• After hearing that he came from a country where rivers froze, tapioca workers in the woods near Singapore felt pity on him and invited him to come live with them.

• A Laplander, having made a fortune and traveled to all the great cities of the world, came back to his native town, Tromso, and built a two-story house — which by local standards was a mansion.

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