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Let's Get Started

Somewhere, amidst all the clutter and confusion, most of it fueled by our innate ability to procrastinate, lies something subtly important; a starting point.  

Of course the bigger question remains, why we don't start things. Especially the things that we know we should start and just can't seem to begin.  

We convince ourselves, I think that the reason that we can't change jobs, or set out on a new career or make a radical change to our diet or overall better health, is that change is hard. We've been told that change is hard almost all of our lives. True we are creatures of habit and habits are hard to break.  But why is that?  If you had little problem learning to smoke, why is "unlearning" to smoke so hard?   Can't you just reverse the process? 


Perhaps, the reason we can't fashion new ways of doing things, or start a new habit is that we're convinced that if we don't start, well then we can't fail.   

The notion of not getting it right is always a better outcome than the notion of "not getting it at all."  

4 Steps to Better Decision Making

Chip and Dan Heath, authors of "Decisive" have a great model for making better decisions.  What's most impressive about their view on the matter is the fact that if you sit back and think about it a bit, it's a universal tool. It works no matter what decision(s) you have to make be it at work or at home, in your career or about a project. Rejoice, the world gives out too few universal tools.  

So, what are the four steps; 


The authors use the acronym WRAP

  • Widen your options
  • Reality test your assumptions
  • Attain distance before deciding
  • Prepare to be wrong

Sounds easy, but we almost never do it.  

It's a discipline we can all benefit from learning, even if you have to force yourself at first.  

It's like going to the gym, easy to do, hard to stick with. Everybody can decide to go the gym and you're 100% guaranteed of success, because deciding to go to the gym is easy, actually going to the gym's the hard part. Someone once told me that in a minute you can quit smoking, it's continuously quitting smoking that's the hard part.  

And, contrary to what you might think, more choices are better than too few. There's research that shows that having multiple options, perhaps two or three are best, all in process at the same time allows for you to be less personally invested in the outcome. That will help to automatically widen your options and the multi-tasking part helps to keep the personal investment in any one outcome from getting so high that you can't give it up simply out of fear of personal upheaval if you walk away from what you "knew" to be true.  

Here's a tip; next time you have a decision to make ask yourself what you'd do if none of your current options existed? That just might set you on the right track to removing yourself from the harrows of narrow framing. After all, as Dan and Chip note; "focusing is great for analyzing problems, but terrible for spotting them." 

There are literally hundreds of examples I could site from the personal finance realm that span the decisions from, "I can't afford to retire today" to "which college should my child go to."  

Better decisions bring about better outcomes, starting making them by reading Dan and Chip's book but if you can't do that, start realizing that you can control the decision making process by changing how you make those seemingly "inevitable" choices.  

And if all else fails, get some help, narrow framing often resolves itself when someone on the outside is looking at the issues you can't see, it's that forest for the trees thing that's been talked about forever. And, it appears, with good reason.  


I'll have Vanilla please.....

Ahhh yes, the draw of all those flavors....almost too hard to pass up isn't it.

I'd archived a blog post from Abnormal Returns that came out right after the first of the year because it was prescient. It's actually a post I could have linked off of in early January in any year from 1979 when I started in the personal finance game till this year. Were I so inclined (and I might be) I could use it in January each year from here till the day the good Lord sees fit to take me from this planet, that's how good it is. 


"Choosing Simplicity In The New Year" is a gem. It lays out for investors some pretty simple and straight forward metrics to follow that will in fact, hold the vast majority of us in good stead.  In it's unabashed simplicity It reminds me of the Progresso Soup commercial where the first order of the day is, "eat the soup!"

I'm particularly moved today to write on this particular topic because I've been working lately with a Client who commented to me over the Christmas break that he didn't find our "strategy" to be changing very much over time. At point of fact there were about seven "satellite" asset classes that moved in and out of his portfolio over the last few years, all at a profit and all almost perfectly timed. We were lucky. Throughout that period we did hold pretty tight to our core allocation of stock and bond ETF's. 

We've also rebalanced his portfolio as anyone should and we rebalance more or less at our regular intervals, twice each year lest we, as Vanguard noted in their research, offset the value of rebalancing in transaction costs.

Choosing simplicity though for many is akin to picking Vanilla at Baskin Robbins. It's hard when you're tempted by so many other things. But here's the thing, Vanilla works!!

As quoted in the Abnormal Returns blog post;

"The risks of trying to avoid the risks (of the 60/40 portfolio) are greater than the risks themselves," Mr. Kinniry said. 

You see, the elegance in Vanilla lies not only in the essence of it's simplicity but in the time honored ability of it's more oft than not perpetual satisfaction. We've long argued for the notion that investing should be two things, [a] based on funding goals and [b] fun. Ok, well it should at least not be stressful. Look, I'm going to bet you a dish of vanilla that if you can't achieve a goal with a basket of equity and bond ETF's your problem's not your investments it's the goal your aiming for! Take another Abnormal Returns quote from their blog, this one by Jame Picerno at the Capital Spectator; 

"The lesson for most folks is that broad diversification across asset classes and periodic rebalancing of those assets, will capture average to above average returns on a fairly reliable basis through time. The flip side of this lesson is that trying too hard in money management boosts the odds of ending up with high-priced mediocrity, or worse."

The immutable point is likely nestled in the final paragraph of the Abnormal Returns blog post. It notes a truism that's as reliable as Vanilla is good. That at some point in any year, any month, any week, any lifetime there will come a point when simple looks stupid. Either the stock market will soar and any bond holdings, or emerging market equity will look like an anchor or there'll be a correction in the market and owning any stocks will seem like passing on the Cherry Garcia in favor of Vanilla Bean was just a woefully bad choice, all things being equal. To add to that there will come a point when "doing nothing" is actually the most "doing" you could be "doing." (I still to this day struggle with why actively deciding to stay the course doesn't count as a decision. Imagine if you woke up every day and dutifully announced to your partner that "I've decided to stay with you...." Is this more of a commitment because you utter it than it is because you feel safe enough to not have to?)

So let's keep it simple.

  1. Set reasonable goals 
  2. Calculate what you have to have, save and earn to reach it
  3. Understand your willingness/ability to accept risk
  4. Build a block of money to meet that goal at that risk
  5. Vanilla

And let us know how we can help.

Good Will Punting...

It’s official, being a Senator or Congressmen must in fact be the greatest job on the face of the planet.

I say that because it’s becoming increasingly obvious, that these individuals are willing to do almost anything to either preserve the seat that they currently hold or get elected to one.  

We’ve fallen into a dangerous political time. Over the course of years, administrations from both parties have time and time again, espoused  the advantages of “being welcomed into the “community of Nations.” My guess would be, that being welcomed as such gives you the opportunity to expand your influence, to create a greater global good for all societies including your own. It is in part, recognition of the fact that “you’ve arrived” as a country and a people. 

Evidently, the United States as a global leader, thinks that expanding her global reach and influence includes disrupting the economy of just about the entire planet. And, not because we need to, but because we can.

There exists today, political leaders in Washington who actually believe it would be a good idea for us to go through a debt ceiling debate and push it to the point where we close the government. The sense that I get in the tone of that rhetoric is that going through that ceiling would be good to “teach somebody a lesson.” Little do they know, but the lesson that they’ll actually be teaching, isn’t a lesson based on improving the understanding of one political party or another. It is rather, one they’ll teach to the  broadest slice of the American public and much of the world’s populous. And what exactly is it that they’ll be teaching? 

Unbeknownst to them, what they’ll be teaching us all (and hopefully themselves), is that playing this game over and over again, going through draconian measures, saving your best effort for the worst hour, is both a policy and a ploy replete with failure.

You know you’re at a desperate point when the question “what’s in the best interest of America?” Is best answered by, “doesn’t matter.”

If you're so inclined, no matter what your political persuasion, write or call your elected representatives and asked him for one simple favor, "please, not again."

The All Too Tentative First Step

We know what it is that needs to be done. And, we know what needs to be done far more often than we give ourselves credit for. 

We stumble over roll-outs,  and we leave meetings having not said what we knew needed to be said.  Cautiously, we avoid topics, skate across conversations and drive-by decisions that should have been made. Our projects linger, our deadlines come and go and the opportunities we once had, we may have no more. 

What are we waiting for?  We're waiting for the rescue. We frequently wait for reinforcements, or “the right time” or someone else to open the door to the next step. 

My sense is that if we own the issue we own the answer. 

Read more about taking the first step no matter what options “waiting” might offer. 

Clarity Counts

Of all the things that advisors can do for clients, among the most beneficial is clarity. 

How clear are you about what you want? How certain are you that you're on track to get it?

How clear are you about what you want? How certain are you that you're on track to get it?

When we work with others in collaboration and dialogue, we win when we've arrived at clarity. 

As this blog from Leadershipfreak suggests, clarity must come before decisions. And so it is in the planning profession. Without clarity, client's have a hard time finding a space for effective decisions. 

In your life, in the time with your family and friends, as we counsel those around us and as we engage in that persistent conversation with our own self; seek clarity. 

Here's to a great Holiday Season and I hope that you find this blog something to ponder as the New Year approaches. 

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