From My Work-in-Progress Basket

Can You – Should You – Value Knowledge in Dollars and Cents?

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Friday, September 28, 2018

Delray Beach, FL – I try to limit my wealth-building and business advice to what I know to be true from experience. That’s because I am skeptical of advice derived solely from thinking.

When I first began to read business books, long after I’d retired the first time, I was surprised to find that many of the bestsellers were authored by academics who had no actual experience. Their arguments were sometimes convincing. But most often they were not. They contradicted the lessons I’d learned.

As for books and speeches and essays about investing, some of them, like Warren Buffett’s advice, made great sense. And those were based on experience. The others, based on theory, were sometimes persuasive. But when I put the advice to work I was almost always disappointed.

All that is to say that I want to discuss a theoretical issue today. If you have my bias towards experience-based knowledge, this may seem like bullshit to you. But I think it’s actually very important. So here it is…

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Notes From My Journal

Get Better by Todd Davis

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Friday, September 28, 2018

 

Delray Beach, FL–I purchased the book because I liked the title – Get Better: 15 Proven Practices to Build Effective Relationships at Work.

It seemed like it was going to be the sort of book that contains observations and advice that are sensible but not remarkable. Like it was going to be a book made by taking a listicle and expanding each bullet into a chapter.

And that’s what it turned out to be. Not a bad book. But one that could be scanned (rather than read word-for-word) without fear of losing much.

Below, you can see seven of its ideas along with my reactions…

Idea #1: To be a good relationship builder you must start by identifying the various roles you play, both within your business and in your personal life.

Me: Half right. Building a good life requires that sort of thinking. Building a business affects your personal life (and vice versa), but there’s no rule that you have to pay attention to it.

Idea #2: Learn to differentiate between non-important urgencies and those that matter greatly in the long run.

Me: Yes. This is extremely important in terms of personal productivity and achieving goals. I’m not sure why the author included it, since it’s only marginally related to relationship building. But, yes, very important.

Idea #3: Focus on collaboration, not competition, by thinking how everyone can benefit.

Me. Yes. Competition has its place in business, but cooperation is much stronger and much longer lasting.

Idea #4: Become a good listener.

Me: I hate this advice. But I think it’s true. So long as by being “a good listener” you mean listening so that you understand what is being said (and not being said) with the goal of advancing the business relationship, not taking care of the other’s psychological needs.

Idea #5: Work hard to make your employees feel that you trust them.

Me: Yes… unless you don’t. If you don’t trust them, get rid of them.

Idea #6: Promote a safe and respectful work environment.

Me: This is a good thing to do if by “safe” you mean that people feel safe to work hard and contribute to the business. If you take “safe and respectful” to mean they don’t have to worry about getting their feelings hurt, you are focusing on the wrong thing. Every hour you spend dealing with gender pronouns, for example, is an hour better devoted to creating profits.

Idea #7: Learn not to react too quickly. Learn to mull things over before you respond.

Me: Right. I wish I could have learned to do that. I managed to grow my businesses without this skill, but it is something that would have helped me. I’m working on it and probably will continue to work on it till I fall over.

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From My Work-in-Progress Basket

That Was Then, This Is Now (but It’s Still About Then)

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Wednesday, September 26, 2018

Delray Beach, FL – South Side High School’s Class of 1968 had its 50th-year reunion last weekend. About 75 of the 300 students in our class attended.

I wasn’t going to go. Then I decided to do it, but feared it would be an emotional disaster.

South Side High had a very stratified social order. At the top were the Chosen – affluent kids that arrived at school well dressed and confident. They came from good families, lived in beautiful homes, and dominated the school’s academic and social functions.

Below them were the Disposables – kids that came to school rudely dressed, emotionally unpredictable, and financially embarrassed. They (we) came from good to not-so-good families, lived in modest homes, and starred in sports but played secondary roles in every other school activity.

Finally, there were the Invisibles, representing perhaps 50 of the 300. Mostly minorities, they dressed better than the Disposables, lived in the projects, and, like the Disposables, had little interaction with school activities. (Except for sports.)

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Notes From My Journal

The Economy Is Looking Good: Don’t Get Giddy… or Scared

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Delray Beach, FL– There are lots of reasons why many people today are excited about the investment markets.

For the first time in 10 years, for example, the GDP growth rate is higher than the unemployment rate.

We are seeing the strongest expansion of manufacturing activity since May 2004, according to the WSJ.

Wages are rising. Not much in real terms, but more than we’ve seen since the last recession.

And according to several sources, consumer confidence has rarely been higher.

For some investors, Len Zachs (of Zachs Investment Research) argues in a recent report to his clients, this sort of economic environment creates a perilous paradox.

Some will see data like this as a signal to go all in – i.e., to put all of their spare change into the investment markets. Many, feeling emboldened by the “good” news, will take more risk, getting into speculative investments like low-cap stocks, mining stocks, hedge funds, start-ups, etc. And a smaller number will see it as scary. Fearing that we may be at the top of an investment cycle, they will sell their stocks and other holdings and retreat to cash.

None of these reactions is smart, says Zachs. “Investors should not see the current strength in the economy as a rationale for doubling down on risky ventures, and they should not see the market at all-time highs as a rationale for staying on the sidelines.”

“Instead of focusing on big returns in short periods of time, or trying to time your entries and exits into the market,” he says, “focus on the long-term and on key economic indicators that can help you stay level-headed.”

This has been my approach since I began to write about wealth building 20 years ago. After losing good money a few times by following my gut, I began to question the wisdom of trying to beat the market. I was pretty sure I couldn’t do it. Could anyone?

The answer was yes, but only for a given period of time. And since you can’t know when an analyst that’s been hot for years will suddenly go cold, I decided to step out of the “market timing” game.

The foundation of my current stock strategy is very safe and very long term. (And yet it’s done remarkably well over the short term as well.) I call it Legacy Investing.

 

 

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Notes From My Journal

The Lessons of History

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Monday, September 24, 2018

Delray Beach, FL– On the recommendation of Tim Ferriss, I’m reading Will and Ariel Durant’s The Lessons of History. Published in 1962, it contains the occasional paragraph that seems chronologically quaint. But the sentences are lovely. The tone is pitch perfect. And it is dense with wise thoughts and observations.

A few tidbits:

* We are all born unfree and unequal: subject to our physical and psychological heredity, and to the customs and traditions of our group; diversely endowed in health and strength, in mental capacity and qualities of character.

* Inequality is not only natural and inborn, it grows with the complexity of civilization.

* Society is founded not on the ideals but on the nature of man.

* Puritanism and paganism – the repression and the expression of the senses and desire – alternate in mutual reaction in history.

* The concentration of wealth is natural and inevitable, and is periodically alleviated by violent or peaceable partial redistribution.

* Economic history is the slow heartbeat of the social organism, a vast systole and diastole of concentrating wealth and compulsive recirculation.

* Monarchy seems to be the most natural kind of government, since it applies to the group the authority of the father in a family or of the chieftain in a warrior band. If we were to judge forms of government from their prevalence and duration in history we should have to give the palm to monarchy; democracies, by contrast, have been hectic interludes.

* If progress is truly real despite our whining, it is not because we are born healthier, better, or wiser than infants were in the past, but because we are born to a richer heritage, born on a higher level of that pedestal which the accumulation of knowledge and art raises as the ground and support of our being.

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From My Work-in-Progress Basket

Every Problem Should Have a Simple Solution

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Monday, September 24, 2018

Delray Beach, FL – On August 15, I published an essay titled “Growers and Tenders” in which I suggested that there are two kinds of employees. I wrote:

This is an exaggeration, but I like to say that, in business, personalities can be divided into two camps: those that value growth and those that value order.

Those that value growth (the growers) want to make everything bigger. Those that value order (the tenders) want to make everything better. And you need both to enjoy unstoppable success. But the ratio depends on where in the business lifecycle your company is.

This idea is, of course, a simplification. But there’s nothing wrong with that. In business (as in almost any context), simple ideas are almost always better than complicated ones because:

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Notes From My Journal

This Actually Happened

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Saturday, September 22, 2018

Delray Beach, FL– We were talking about sexual harassment. Sally and Leslie and I. Sally said, “At my age, I could use a bit of it now and then. Leslie laughed, agreeing. “I’m way short on that kind of attention,” I admitted.

“Bernie used to harass me,” Leslie said seriously. “He used to come up behind me and rub my shoulders as I worked.” Bernie was her boss. And my partner.

“He did that to me too,” I said. “I took it as a fatherly thing. He did it to lots of people, including his kids.”

“It felt creepy,” Leslie said.

So there you have it. I have no doubt that it felt creepy to Leslie. I’m sure she was subject to various levels of sexual harassment during the years she worked for us. This was 30 years ago.

But I don’t believe Bernie was sexually harassing her. I believe he was doing to her what he was doing to me. I believe he saw it as an avuncular gesture, one of warmth.

I could be wrong. He could have had different motives depending on whose shoulders he was rubbing. I just don’t believe that.

Many would say that what he meant doesn’t matter. It’s how she felt that counts. And it does count. But that doesn’t mean it’s true.

These days, I wouldn’t think of rubbing a woman’s shoulders – any woman’s except K’s. But I’d have no compunctions about doing the same thing to a man. And what if he felt it was creepy?

Leslie never said anything to Bernie. And that was probably at least in part because he was her boss and, as her boss, had a certain “power” over her. But that power didn’t extend to prohibiting her speech. Though it made it more difficult. More risky.

Bernie is gone now so I can’t ask him about it. Neither can Leslie. We will never know. Leslie will carry that creepy memory with her. And I will live with my doubt.

 

 

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Worth Reading

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What I’m Reading… James Altucher is a very impressive guy. But two things impress me most: his ability to absorb not just knowledge but wisdom – fast. And his relentless drive to improve his life.

A Letter I Would Send to My Teenage Self

By James Altucher

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A Word to the Wise

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Today’s Word: roseate (adjective) Roseate (ROH-zee-it) is rose-colored, resembling a rose. It can also mean overly optimistic. As used by Oliver Wendell Holmes: “Speak not too well of one who scarce will know himself transfigured in its roseate glow.”

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