A Few Things I've Learned Halfway Through 2016

With the first six months of 2016 almost over, here are a few things I’ve learned and been thinking about so far this year:

A wealth of information creates a poverty of attention.

More information does not necessarily lead to better decisions. Take a break from Twitter, Facebook, newspapers, CNBC, texting, etc. Arthur Conan Doyle noted the following:

I consider that a man's brain originally is like a little empty attic, and you have to stock it with such furniture as you choose. A fool takes in all the lumber of every sort that he comes across, so that the knowledge which might be useful to him gets crowded out, or at best is jumbled up with a lot of other things, so that he has a difficulty in laying his hands upon it. Now the skillful workman is very careful indeed as to what he takes into his brain-attic. He will have nothing but the tools which may help him in doing his work, but of these he has a large assortment, and all in the most perfect order. It is a mistake to think that that little room has elastic walls and can distend to any extent. Depend upon it there comes a time when for every addition of knowledge you forget something that you knew before. It is of the highest importance, therefore, not to have useless facts elbowing out the useful ones.

Meditation is not about controlling or eliminating thoughts; it is about learning to be at ease with them. 

Training the mind takes practice and patience. This video provides a great summary. 

It is a common misconception that success creates happiness. However, it is actually the reverse: happiness creates success. 

Make it a priority to read this article. 

Our environment and the people we surround ourselves with have a larger influence on us than we think.

Via The Start-up of You by Reid Hoffman:

Relationships matter because the people you spend time with shape who you are and who you become. Behavior and beliefs are contagious: you easily “catch” the emotional state of your friends, imitate their actions, and absorb their values as your own. If your friends are the types of people who get stuff done, chances are you’ll be that way, too. The fastest way to change yourself is to hang out with people who are already the way you want to be.

The first half of 2016 has gone by quickly to say the least. The four points above are some of the bigger lessons learned. As always, reflection is one of the keys to lifelong learning, and one would be mistaken not to take a moment to look back as we enter the second half of the year.

What I Learned Meditating for 100 Straight Days

I recently set a streak of 100 straight days of meditation using the Headspace app. After completing the ten-day trial, I decided to purchase the one-year subscription. The paid version of Headspace consists of four broad categories of guided meditation with a few subcategories for each. There are also “single sessions” which are more episodic. After 100 days, I have completed three Foundation levels, as well as the Self-esteem, Change, Balance, and Acceptance subcategories, ranging from 10 to 30 days each.  I have also done 11 single sessions, intermixed within my daily sessions. Here are a few things I have learned:

Be patient.
The biggest challenge with meditation is that it is such an abstract concept. There is no tangible byproduct that one can point to and say, “here is my result.” Expecting to master meditation in a month or even 100 days is like expecting to be fluent in a new language in that amount of time; it is simply unrealistic. As with anything else, meditation takes a lot of deliberate practice to become proficient. 

It is not about controlling or eliminating thoughts. 
One of the goals of meditation is to learn to be at ease with your thoughts. It is not about getting rid of bad thoughts or feelings, or avoiding certain emotions entirely. Rather, it is about achieving a sense of calm. One of the analogies Headspace uses is that of a stormy sky. While at times there might be dark storm clouds looming over everything else, the blue sky is still there above those clouds. If you have ever been in a window seat on a plane, you know what it is like once the plane breaks above that cloud level. Similarly, while we may occasionally feel overwhelmed, emotional, and stressed, it is important to recognize our inner sense of calm is still present as well. 

There is an important difference between “I am stressed” and “I am feeling stressed.”
We are not our emotions or feelings. In one of the subcategories I completed on Self-esteem, the app discussed a noting technique where we simply look to recognize how we are doing. Again, it is not about changing these feelings or emotions, but identify them for what they are. Instead, the objective is to gently note, “ah, I’m feeling stressed/anxious/angry/etc.”

More effort does not equal a greater result.
Some days are especially challenging if the mind is going 100 miles per hour. The key is to focus on the breath and recognize that trying to pin down the mind will not be constructive. Certain days go really well and others are frustrating. The main goal at this point is to develop a daily habit of meditation, understanding it is a work in progress.

As Andy Puddicombe, founder of Headspace, says, “training the mind is about changing our relationship with the passing thoughts and feelings. Learning to view them with a little more perspective. And when we do this, we naturally find a place of calm.” I would strongly recommend trying the first ten days of the Headspace app for guided meditation.

How Financial Planners Really Make a Difference

It is not uncommon among laymen to assume that as a “finance guy” I invest people’s money, religiously monitor market performance, and react to movement on almost an hourly basis. Friends and family will occasionally shoot me a text when the market has had a really good day, and especially when the market has had a really bad day. This focus on the stock quote is what most of us have been trained to fixate on and incorrectly assume is the cornerstone of Financial Planning.

With few exceptions, I couldn’t care less how the market performed yesterday; to be honest, I don’t even know. That is not what I want to be focusing on, and that is certainly not what I want my clients to be focusing on.

The investment world is becoming ever more commoditized. Easy access to academic research and commentary, along with the rise of low-cost index funds is creating a much more uniform investment universe. Equal opportunity is everywhere; anyone can sit at their computer in their boxers and be a low cost investor. Most of the value and flair advisors can add on the investment side is gone, and 25 years down the road, before I’m even 50, there may be nothing left.

Clients work together with their Financial Planner to make strategic decisions that minimize their tax liability, invest their money in a fashion that is appropriate to their goals and risk tolerance, and help them manage all aspects of their financial lives. This means helping others achieve their life goals through proper management of financial resources. The “goal” is not necessarily to make as much money as humanly possible by maximizing returns, but rather to take an appropriate, pragmatic amount of risk that will generate consistent returns over a long period of time. What ties the whole thing together is the ability of the Planner to manage financial behavior, which often involves helping clients take a long-term view on investing and their financial lives.

For some, a “long period of time” is the endless stretch between breakfast and lunch. When it comes to investing, I’m talking a much longer stretch, as in a substantial percentage of your lifetime. This of course requires an enormous amount of discipline and patience, which is not the popular attitude when people on Twitter and at the barbershop are yelling things at you about SalesForce stock. People are trained to think reactively and quickly: the stock went down, how can I solve this problem...how can I minimize my pain?

This is human nature, and we have been trained to favor reaction over inaction. Why is this the case? On the savannah action was preferable to inaction. If there was a rustle in the bush there was two possibilities: 1) It was a tiger or 2) It was the wind. If you reacted, you may have been running from the wind 90% of the time, but at least the 10% of the time it was a tiger you could get away. If you did nothing, you may have avoided looking foolish the 90% of the time it was the wind but the 10% of the time it was a tiger you were eaten. Point being, action was preferable, and over time those with the quickest reaction survived as one only had to out-react the slowest. However, what worked on the savannah does not work in the markets. On the contrary, when turmoil is present doing nothing is often the best advice.

When a tree is planted, you aren’t checking every day to see if the tree has grown. If you did you would become frustrated, diagnose the tree as a dud, and chop it down. The same behavior is seen in the world of investing. A better approach is to plant the tree, make sure it has all the necessary nutrients to grow and then forget about it…And of course prune it quarterly through the process of rebalancing.

The focus that investing has received since the genesis of the stock market has created a constant uphill battle for true Financial Planners. When most think of finance, their brains instantly go to the sexy image of stock picks and owning a yacht. Furthermore, the media fuels this image by constantly shoving market data and speculation down our throats. Individuals ask questions about returns and “hot stock picks” rather than asking for their estate plan to be reviewed, or ask how many months of cash reserves they should have as an emergency fund.

Anyone who is willing to give you investment advice prior to reviewing your total financial picture is suspect in my opinion. A lot of considerations take precedent to sinking large sums of money into a brokerage account. Do you have an emergency fund? Are you properly insured? Does your budget need to be addressed? How are all of your other investments allocated? These are just a few of the many topics that should be addressed before investment decisions are made.

I define myself as a planner, not an investor. What to invest in, and the markets current performance, often have little to do with helping people make smart decisions about money.