Well, that was a quick 2.5 years . . .

After a 2.5 year hiatus - and I'm not really sure if that was intentional or not - I decided it was time to post an update.  Wow, a lot has happened with a few trips around the sun!  Looking through past posts, I have mixed feelings.  I can honestly say I'm proud of how much I've stayed the course, even without writing this blog to help keep me in line.  However, I also remember why I think I stopped writing for a while.  I think I wanted more out of my writing and I gave up trying to get there.  That lack of fulfillment came maybe as I ran low on interesting material that I was passionate about writing or maybe as I felt my time was better spent on productive activities such as reading or researching ideas, rather than writing about dreams.  Anyhow, I guess I got the bug again . . .

Using Availability to Our Advantage

Marco Rubio has recently been taking a lot of heat for his robot-like performance at the most recent Republican national debate.  In case you somehow missed it, he repeated a stump line verbatim four times, completely out of context, in answering the moderator's questions.  Governor Chris Christie lambasted him on national television, calling Rubio out for being the robotic politician that Washington manufactures.  My initial thought, besides the feeling of embarrassment for him, was:  How can he not know what he is doing?  Why can't he stop himself from regurgitating the same canned line? 

I think it comes down to the availability heuristic.  From Wikipedia:

The availability heuristic is a mental shortcut that relies on immediate examples that come to a given person's mind when evaluating a specific topic, concept, method or decision.

Basically, your brain takes a shortcut and tells your mouth to spew the first thing that comes to mind; that is, the idea that is currently most available in your brain.  While this heuristic typically serves your brain beneficially in most every day cases - who would enjoy conversing with someone who had to put 10 minutes of thought into each carefully chosen sentence? - it has a tendency to choke under pressure. 

Put yourself in Rubio's shoes - or even Rick Perry, who infamously forgot the third government agency he would drop in order to cut federal spending at a debate during his 2012 presidential campaign.  Or, think of when your boss walks in unexpectedly and peppers you with questions on progress or schedule or budget - items that maybe you hadn't thought about yet today as your mind was focused on resolving a more technical issue currently at hand.  You freeze and spout out the first thing that somewhat coherently makes sense, even if it isn't 100% accurate.  You may even repeat yourself a couple of times, using your line as filler material in hopes that a more lucid thought will quickly materialize.

Daniel Kahneman and Amos Tversky discuss this phenomena at depth and provide examples of the biases created from availability in their classic 1974 paper, "Judgment Under Uncertainty:  Heuristics and Biases" (pdf. version of original article here).  One such analogy illustrates how the risks of an expedition may be significantly overvalued if those risks are vivid and come to mind easily.  How many people do you know who are afraid to swim in the ocean because of the possibility of a shark attack - which, based on historical evidence, is highly unlikely to occur?  For whatever reason - be it Hollywood movies or the gruesome picture we imagine in our heads - the image is vivid and easily recallable, forcing us to put much more weight on the likelihood that it will occur than it actually deserves.

And it's not just in what we say and how we react to social situations.  It is also in our private actions and decisions.  Take your finances, for example.  Say you began to invest in 2006 or so and, since then, you casually follow the overall stock market.  You take a diversified, conservative investing approach - maybe a few blue chips, but mostly Vanguard funds, as your financial advisor recommends.  2008 comes along and wipes out 40% or more of your holdings.  You panic, sell out, and lick your wounds.  The market continues to drop and even though you know the market has historically produced positive returns since its inception, you stay on the sidelines, missing out on the eventual massive recovery.  Why?  Because the only thought, the available thought, in your mind is the vivid memory of your losses.  You don't care what the experts say, you're not screwing around with stocks ever again. 

The availability heuristic messes with our rational thought.  Economists like to believe that humans are rational thinkers, but rational thinking is not innate.  Everyone knew the 2008 market was going to correct - and correct it did!  Those on the sidelines missed out on enormous gains.  The rational move would have been to dig deep and invest more.  A killing would've been had.  But our mind isn't innately wired to think like that - but we can train it to. 

Charlie Munger in his revised "Psychology of Human Misjudgment", gives this gem of advice:

The great algorithm to remember in dealing with this tendency is simple: An idea or a feat is not worth more merely because it is easily available to you.

If we force ourselves to undervalue the first idea that pops into our minds, we can enable ourselves to make more rational decisions.  The overwhelming affect of the 2008 crash left vivid memories in investors' brains and overshadowed the last 100 years of positive performance.  Similar reactions took place in those who lived through the 1930's Great Depression.  Story after story can be found of gun shy businessmen, bankers, and investors.  Families put their money under their mattresses or in safes where it could never again be lost in the financial markets.  We need to get beyond that train of thought and force rationality into our minds.

An even more interesting strategy is to force yourself to think rationally when you have time to do so.  Read the thoughts of good decision makers.  Read Warren Buffett's letters to his shareholders to get a sense of how he reaches rational business decisions.  They are intriguing and can be applied to personal finance as well as large scale investment decisions.  Read Benjamin Graham to understand how to rationally value a business or Kahneman to understand the biases your mind subconsciously utilizes.  Rubio and Perry could learn a thing or two from these guys, like don't count on canned answers, for one.  Had they been comfortable within their respective platforms and spent their mental energy on thoroughly fleshing out their political positions, they wouldn't need to bank on recalling over-used speeches that have limited upside but large downside risk.

Your brain can be wired to make rational decisions - not by being an intuitively rational thinking machine - but by trickery; use your brain's instinctive mental shortcuts to your advantage.  The more rationality you constantly feed your brain (via books, education, etc.), the more subconscious, rational decisions will be automatically made. 

Streamline Your Mind

From successful businessmen to politicians and entrepreneurs to investors, a penchant for reading seems to be a common trait existent in many of the world's top leaders.  From President Obama to former NFL quarterback Fran Tarkenton, many start their days scouring the local and national newspapers and favorite blogs. 

"The Week" published a wonderful article in 2013 describing Warren Buffett's and Charlie Munger's reading habits.  Here's an excerpt:

Warren Buffett says, "I just sit in my office and read all day." 

What does that mean? He estimates that he spends 80 percent of his working day reading and thinking. 

"You could hardly find a partnership in which two people settle on reading more hours of the day than in ours," Charlie Munger commented. 

When asked how to get smarter, Buffett once held up stacks of paper and said he "read 500 pages like this every day. That's how knowledge builds up, like compound interest."

The article goes on to describe how possible Buffett successor, Todd Combs, has heeded his bosses advice and reads up to a thousand pages on some days! 

Of Wrestling and Life

I am extremely biased, but I strongly believe wrestling is one of the toughest, most challenging, character building, and valuable activities that a person can participate in.  Few other sports pit one competitor against another in an environment that requires as much mental preparation as full-body strength, endurance, and coordination.  MMA may be one of the few exceptions.

I was fortunate enough to have had a semi-successful high school wrestling career - placing 8th my junior year and 3rd my senior year at the Indiana State Wrestling Tournament - before walking on to a Big Ten wrestling team.  On the nurture side, outside of family influence, the sport probably did more to shape my life, my values, and my belief system than maybe any other external factor to this point.  Wrestling involves many intricacies that can be applied to numerous - maybe most - obstacles encountered throughout a lifetime.  With that, I have compiled a list of lessons wrestling can teach that apply to life in general:

We Are Wimpy!

We, as a society, are wimpy.  We become more and more sensitive to every news article or Twitter post that rubs us even slightly the wrong way. We turn to social media as an outlet and believe it exists only as a means for us to vent our perspective.  If we don't like something, well, instead of doing something productive to change it, we voice our frustration in a Facebook rant.  Seven likes later - there, you feel better.  You DID do something about it.  You just changed the world, didn't you?

I'm not blaming social media for the current state of our culture; it had to be expected as the world grew more connected.  We all have a right to be heard - I'm not denying that - it's just that now we can easily access an audience for our tirades instead of chewing the ear of our significant other or neighbor or co-workers over the water cooler.  In fact, I don't even mind the obsession our society has with "being heard" and "making a point".  I think it even offers an advantage to the "doers" over the "talkers". 

Why do the "talkers" do what they do (or, don't do what they could do?)?  It starts young.  Parents these days (man, I'm sounding old!) do everything in their power to ensure that their kids are comfortable, regardless of how much they are being set up to fail.  Megan McArdle opens her book, "The Upside of Down" with a discussion on how schools are set up to let children fail later in their lives.  Parents side with their kids over teachers, grade averages are increasing - not due to smarter students, but out of convenience, multiple valedictorians are named in the same school - sometimes in the 30's and 40's - because "no one wants to make a distinction between the kids".  In general, everyone gets a trophy for participating.

"Waiting for the Universe to Respond to What You've Been Manifesting"

Over the weekend, I stumbled upon this picture on Instagram:

 

 

It was so ridiculous and pointless - just like most brain-drain social media posts, I suppose - but it was also one of those images that became stuck in my head.  How often do you feel like this?  I mean, REALLY feel like this?  I've felt this way more lately than I can ever remember - and it's tough.  Anxiety has got to be one of the most difficult emotions to suppress.  If you're like me - and I'm assuming if you're reading this then we likely share number of similar characteristics - it is not in your nature to sit back and watch the world go by.  You need to be doing something; you need to be planting some seed or nurturing one that you've previously sown.  Sitting and watching is next to impossible. 

Entity and Incremental Learning

From Business Insider

I've been on a bit of a psychological kick lately digging into books like "Bounce" and "Thinking Fast and Slow" - which is quickly becoming one of my favorites and, by far, one of the most informative I've ever come across.  "Bounce" mentions some of the work of Carol Dweck, who was the author of "Mindset", which contains some mind blowing information on how our minds work and how we can condition them to focus on success.

While her book was a great read, I had forgotten - or, more likely, didn't yet understand - how enlightening her concepts really were.  That was until a couple of months ago.  Not only did her writing continue to pop up in a number of books I had been reading, but my son was born.  After seeing how fast little babies pick up new habits and how quickly they learn, I began to think about the best way to raise him from a psychological standpoint to empower him to live the best life he possibly can.  I remembered Dweck and gave myself a refresher of her teachings, which took on an entirely different meaning than the first time I plowed through "Mindset". 

One of the tenets of "Mindset" was the distinction between entity and incremental learning.  Entity learning was the belief that brainpower and intelligence were innate and could not be improved.  It gave the individual a sense of entitlement.  On the opposite end of the spectrum was incremental learning:  the belief that "the novice can become the master" (quoted from "The Art of Learning").  Empowering! 

Deliberate Practice in Pursuit of Goals

For years now, I've been enthused and passionate about investigating the role of talent in shaping the person we become in our lives.  Books like "Talent is Overrated" by Geoff Colvin, "Outliers" by Malcolm Gladwell, and "Mindset" by Carol Dweck had huge impacts on shaping my perspective about innate abilities and showing evidence that we all truly have much more control over our lives than we initially assume.  I have recently read "Bounce" by Matthew Syed, who was an Olympic table tennis player for Great Britain.  He had won numerous European table tennis championships as well as Commonwealth Championships - but readily admits to choking in the 2000 Sydney Olympics.  At that point, he began to investigate the intricacies of success, why some experts choke, and the role of genetics in shaping our talent.  The book was phenomenal (I hope to do a write up on it soon).  Syed knows a thing or two about success in athletics at the highest levels, which gives the book some validity over the others, who were written by psychologists and journalists.  "Bounc" is like "Talent is Overrated", "Outliers", and "Mindset" on steroids (in fact, Syed even talks about steroid use in sports!).

Anyway, it was another eye opener into what we are truly capable of accomplishing with, as Colvin defines it, "deliberate practice".  Deliberate practice can be thought of as hours of focused practice - not going to the driving range to hit golf balls, but going to the driving range, focusing on the grip for hundreds of swings, then focusing on the backswing for hundreds of swings, etc.  Ideally, you'd be able to film yourself or receive immediate feedback so you can make minor adjustments.  Watch this talk from Colvin.  While this task is much different than perfecting a golf swing, the message remains unchanged:

Suggestion, Anchoring, and the Adjustment Heuristic

I've recently been reading (listening on audio!) through Daniel Kahneman's "Thinking Fast and Slow" and one idea struck me that I haven't been able to get out of my head:  Anchoring and the Adjustment Heuristic.  Here is the Wikipedia definition:

Anchoring or focalism is a cognitive bias that describes the common human tendency to rely too heavily on the first piece of information offered (the "anchor") when making decisions.

Kahneman and Amos Tverskey Kahneman goes over numerous examples of this bias; one involved asking study participants if Gandhi was 144 years old when he died.  While this question is obviously absurd, as 144 years is longer than anyone can live, it sets an "anchor" from which the participants "adjust" from.  Participants adjust down from 144 to reach their answer. 

In another example, real estate agents were given sufficient information to assess the value of a house.  Within this information was the list price.  Some agents were provided information with a very high list price while others were given a very low list price.  The ones given the high list price produced a significantly higher value of the home than did those who were given the low list price. 

Beer Economics: To Brew or not to Brew . . .

We all have our "thing".  The "thing" . . . you know, the one that you, savor extraordinaire, just won't budge on.  It goes against every principle you try to uphold on a daily basis.  It's material, it's expensive, it's unnecessary, but it's sooooooo good!  Maybe it's coffee?  No, you would never frequent Starbucks each morning for a $5 Pumpkin Spice Latte with your name spelled incorrectly down the side - that would be asinine.  But there are still ways to get your fix, to feed that craving, and conquer that one weakness for a reasonable price.  Maybe when you're at the grocery store staring at that wall of Folgers and Maxwell House, maybe you can't help yourself but reach for a bag of Peet's for only $1 more per bag, or 15 cents more per pot.

Mine?  Mine is craft beer.  My dad had been brewing beer long before it was hip.  I sidestepped the Icehouse college phase.  I never "moved up" to the expensive Coors Light.  Nope, my first "bad" beer was Sam Adam's.  At that point, I was doomed.  It's a one way track.  A guy can move from Iowa to California and he'll understand what he had been missing, but you can't expect a Californian to relocate from San Diego to Des Moines and survive.  It's a step backwards, in his eyes.  After my dad's craft beer, there was no turning back. 

But craft beer exploded.  Now, a six pack of Lagunitas Little Sumpin' Extra ale will set you back $9.99, if you're lucky, and that's before taxes.  You want to buy Ballast Point Sculpin in Chicago?  How about $13 minimum?!

Utility - In Another Sense

Utility, in an economic sense, is defined in Investopedia as:

"Utility is an abstract concept rather than a concrete, observable quantity. The units to which we assign an "amount" of utility, therefore, are arbitrary, representing a relative value. Total utility is the aggregate sum of satisfaction or benefit that an individual gains from consuming a given amount of goods or services in an economy."

I became familiar with the term "utility" in this regard from Jordan Ellenberg's "How Not To Be Wrong" and it intrigued me.  Business Insider and Smithsonian give nice summaries of its use in the book here and here respectively.  The gist of it is that everything comes with a cost and you need to ask yourself what cost are you willing to pay for a level of comfort.  It is an "inconvenience factor" and Ellenberg measures it in utils.

You Win! Now What???

"If you don't continually revise your goals, the only place you've got to go is down." - Laird Hamilton, World Renowned Surfer

I've written extensively about the process of goal setting and listed some literature that expounds on those ideas (e.g. "Think and Grow Rich", "The Art of Learning", and "Mindset" - take a look at the "Good Reading" page for additional suggestions).  However, what happens when a goal is within site or attained?  What do we do next?  How often do you see professionals who seem to mentally "check out". 

The first one that comes to mind (as football season is drawing near!) is (former) NFL quarterback Jake Locker. 

Financial Freedom - July 2015

I recently (better late than never!) came across a couple of blogs that I really enjoyed on personal finance:  Root of Good and Mr. Money Mustache.  Both blogs focus on early retirement and different techniques to become financially independent - my goal numero uno.  Mr. Money Mustache has a way of conveying to readers the proper mindset one needs to go down this path and the differences between those who achieve this goal and those who do not.  My favorite part of Root of Good is the financial update and transparency he provides into his family's financials with monthly updates. 

After being inspired by these two blogs of men who have successfully obtained financial freedom, it occurred to me that, while it is extremely beneficial to read about the reflections of those who have succeeded, it may be even more beneficial to document the journey as it unfolds.

Personal Goals - Ultimate, Tangible, and Intangible

My Goals:

SUCCESS = FREEDOM

1)  No regrets
2)  Maximize time with family and ensure happiness
3)  Financial Freedom by 1/1/2020
4)  Relocate family and purchase home in Chicago area.  Accomplished 3/31/2015
5)  Purchase/Open Business
6)  Travel as much as possible

*Doing all of this with integrity in a way that would make God proud and with the end result of leaving this world a better place than when I entered it.

As you can see, some of these are more tangible than others.  No regrets?  Maximize time with family?  It is difficult to quantify whether or not these are accomplished.  I'll tell you that I KNOW when I'm NOT spending enough time with family, but how do you really know if you have maximized it? 

Overcoming Weakness

How can you expect to improve in your area of expertise, your chosen field, or as a person in general by focusing solely on your strengths?  Everyone has a weakness; what differentiates those who succeed from those who do not is how those weaknesses are dealt with. 

In "The Art of Learning", Josh Waitzkin discusses the necessity to identify your weaknesses and work on improving them until they no longer hold you back.  In case you are not aware, Josh is the subject of the book and movie "Searching for Bobby Fischer". 

The Power of Silence

-"Brevity is the soul of wit.  If you've got something to say, say it and stop talking.  If you don't have anything to say, you're doing yourself and others a favor by keeping quiet.  If you can't make a contribution, don't slow down the people who can."  -Craig Newmark, Craigslist Founder, "Getting There"

Listen more, talk less.  Try it.  As with any exercise in discipline, it is difficult at first, becomes easier with practice, and, once accomplished, is EXTREMELY empowering and fulfilling.  So many people feel they have to make a statement about all topics that come up in casual conversation.  Why? 

What it boils down to is protection of ego. 

The Problem with Self-Help

It seems everywhere you turn these days, someone is trying to help you help yourself - with either rah-rah infomercials or "You Can Do It" blogs. Here are a few problems I see with these:

How much time and money are you spending on these products?

Think about what you could accomplish in the time you expended constantly reading self-help blogs and ebooks online? Think about what you could do with the money you spent on purchasing products from these gurus. You could save it up and buy some weights, if your goal is go become more fit.

8 Minor Adjustments to Maximize Productivity Towards Your Ultimate Goal

I don't think an entire blog needs to be dedicated to changing your daily life.  I think you can get the point across in a single post or two.  Once you have a handle on it, you should be able to assess your own life and optimize your actions - no further blog reading or research necessary on how to maximize the time in your day.  So . . .

Each morning offers the opportunity to start fresh . . . a new beginning, a clean slate.  Many people wake up and immediately begin to stress and dread about what they have to do that day.  That mentality sets the stage for an unorganized, unproductive day.  Others use the morning to plan out tasks they intend to accomplish that day to help them reach their ultimate goal.  That small difference can have an extraordinary compounding effect and create a drastic advantage for that person over others.  For a quick analysis of how little changes can make a big difference, check out a previous post comparing Al and Joe and the differences in their routines.

Making slight adjustments each day can create the foundation for a healthier, more productive life, set you up to ultimately achieve your goal, and pay dividends in your future.  Below are 8 suggestions for maximizing your time each day:

1. Workout in the morning

Planning to workout in the morning can mean an improved chance that you actually do workout that day. 

Like Billy Beane Playing Small-Stakes Poker

Small-Stakes Texas Hold 'Em is based on a series of bets that are capped after three rounds of betting.  For example, the first round of betting, after the cards are dealt in a $3-$6 game, requires a $3 bet, nothing more, nothing less.  After subsequent cards are turned (the 'flop', the 'turn', and the 'river'), betting is capped at $6 per round. 

These betting rules play a significant role in strategy and have a tremendous psychological effect on

A Day in the Life of Ambitious Al . . .

. . . and his friend, Regular Joe.

Ambitious Al and Regular Joe are friends and coworkers at Wilde, Guess & Co. an investment bank in Chicago.  Both are well-educated, intelligent individuals.  In fact, Joe ranked higher in his graduating class than Al.  Joe talks about becoming a VP and hitting it big time, but talk is what he does best.  Al, more reserved, is goal oriented and, after moving as high as he can at WG&C, plans to open his own hedge fund.  Let's take a look at how each spends his day, while tracking the hours each productively works towards their own individual goals:

5:00 a.m. - 6:00 a.m.: 
Al: Wakes up, stretches, and heads to the gym. (1 productive hour - healthy body is the foundation of a healthy mind!; 1 hour cumulative)
Joe:  Sleeping. (0 productive hours; 0 hours cumulative)

6:00 a.m. - 7:00 a.m.
Al:  Heads back from the gym, cools down,