“…Let us not waste our time in idle discourse! Let us do something, while we have the chance….”  Vladimir, Waiting for Godot by Samuel Beckett

The characters in Waiting for Godot sit under a leafless tree waiting for Godot to show up and it is like groundhog’s day.  Time drags out and actions repeat in an endless loop.  The men insist they will not wait for Godot, and yet they continue to do so, even though they know it is useless.  It is maddening and futile.

It reminds me of something I often hear from would-be investors:

“When I have enough money to invest, you will be the first person I speak with.”

The odd thing is, I am frequently approached when I am minding my own business.  I can be reluctant to share what I do for a living because I have seen the anxiety and embarrassment it sometimes conjures up in others.

I rarely have follow-up conversations with these types that are hopeful.  I might run into them again at a gathering, and I will never bring up finances – but they will. They will tell me they haven’t forgotten about me and when they have money they will be sure and call.  They are right about one thing: they haven’t forgotten about me; they have forgotten about themselves.

They are waiting for “good dough” to invest; to which I say good luck.

Their lack of commitment to securing their finances is usually a lot less about actual resources available than it is about their priorities.  No matter what someone’s goals are –personal, professional, spiritual, financial – there comes a point when a first step is taken; a desired outcome is set and a series of action steps are taken.

I saw a headline on Charles Schwab’s 2018 Modern Wealth Index study: “Most Americans have no financial plan, and many think their wealth doesn’t deserve one.”

Sadly, it is true and with devastating results.

According to the survey, which looked at daily money behaviors, people who tend to plan are more likely to have an emergency fund and life insurance. 75% of planners pay their bills on time and still manage to save money every month versus 33% for non-planners.  They are less likely to carry a credit card balance and they are more apt to feel financially secure.

When it comes to their investing behavior, the gap between these two groups grows even wider:

• 82% of planners consider their risk tolerance when investing versus 55% for non-planners;
• 78% of planners are aware of fees and investment costs versus 44% for non-planners; and
• 54% of planners regularly rebalance their portfolios versus 17% for non-planners.

Having a financial plan creates priorities and causes focus, which leads to action and improvement.   That is why it is not surprising to me that planners are more aware of the very things they can manage – the risk, fees and asset allocation.

Without focus, procrastination kicks in.  The next holiday season when I’m around the punch bowl I will hear the same nine million excuses about why nothing has changed since last year.

I’m not judging, mind you; but I know one thing.  I can’t help, either.  I’m the kind of person that if I’m told a problem, I will do my best to offer a few actionable steps to take.  When I just hear the worry with no commitment to taking action – suddenly the other person’s discomfort and anxiety become mine.  That may make me sound selfish, but I‘d rather help than worry.

Something as simple as putting aside $50 a week will amount to $1,000 after five months.  It’s a start.

Companies like TD Ameritrade and Vanguard will open accounts with no investment minimums and low trading costs.

Robo-advisors, like Liftoff, are another great option.  Based on an investor’s time horizon, goals and risk tolerance; an appropriate, low-cost, diversified portfolio is constructed and is rebalanced back to the original portfolio allocation.

Fear of not being able to achieve their financial goals may cause some people to waste the most precious ingredient to compounding interest: Time.

Time out of the market pays nothing, and the endless, senseless waiting begins; which, for some, never ends.  Maddening and futile; and so it goes…

 

 

Sources:  
Charles Schwab’s 2018 Modern Wealth Index Study. 
Lombardi, Esther. “Quotes and Themes from Waiting for Godot.” ThoughtCo, Feb. 19, 2018, thoughtco.com/waiting-for-godot-quotes-741824.

Our sons have been playing in a summer basketball league and have entered the playoff season.  The first opponent they faced was a team they had beaten easily during the regular season.

“They don’t know how to play!  We’re going to kill them!” my son said.

“You played them at the beginning of the season, things could have come together by now,” I cautioned.  “Never underestimate your opponent in a game, or in life.”

Cue the eye roll – because you know that’s exactly how he responded.

As my son pointed out, I don’t know much about basketball. But there’s this little matter of having lived more than half a century and having seen a thing or two – especially upsets.

Going around thinking you’re the bomb can cause an explosion, all right.  Reality shows like Top Chef and Project Runaway delight in showing contestants openly bragging that this week’s challenge is their area of expertise and how they will smoke the competition. The episode usually ends with the contestant eating crow and heading back home or barely squeaking by – kind of like winning a basketball game by a measly five points, which is what happened.

With the EBI West Conference still fresh in my mind, I thought back to one of the speakers, Michael Lombardi, an America football executive.  He spoke about lessons for life and business.  Basically, he spoke about what makes great, great.

Mr. Lombardi worked as an assistant coach to one of the most successful football franchises, the New England Patriots, under the impressive (if not grumpy) Bill Belichick.  What separates the Patriots from other teams is the fact that they have appeared in more Super Bowls than any other team and eight of those 10 appearances were under the guiding hand of Belichick.

Lombardi credits a culture of humility as an important factor in the team’s historic successes.  Every season starts as if the previous season’s wins didn’t exist.  This explains why the locker room is bare.  Past triumphs matter not and they certainly won’t get the Team another championship.

Giving into an ego stroke would derail them – and that won’t help them establish themselves as the team with the most Super Bowl wins (that distinction belongs to the Pittsburgh Steelers, who have won six championships to the Patriot’s, five).

I have seen this happen with investors who have had a good run of things; though unlike a football franchise, often times luck – not skill, talent or discipline – was behind the success.  Pride blinds the eye to the truth and can poison future success.  Add into the equation exceptionally high, earned income and the hunger to make a better future can start to wane.

Life is good, it will always be good.  Aren’t I great?

To be successful in life – and investing – requires that you prepare yourself to perform in all environments – favorable and hostile; each has its own challenges.

Keeping a cool head requires a plan to keep the ego in check when things are going well and to not give in when you’re getting knocked around.

Here is what this might look like:

• When times are good, save more. You can afford to and, when the market turns volatile you will feel better for having put more away when you could.  It also forces you to live off of less; being lean never hurt anyone.
• Rebalance, rebalance, rebalance. Your advisor should help you determine the appropriate mix of investments given your time frame and your risk tolerance, but as the markets move your portfolio can get out of balance.  For example, if an allocation of 70% stocks and 30% bonds makes sense for you, and stocks go down in value, your allocation might shift to 60% stocks and 40% bonds.  Rebalancing forces you to sell the bonds (high) to buy the stocks (low) to return to the 70%/30% mix.  These adjustments needn’t take place frequently, but keep an eye out for major shifts in allocations.
• Understand what you have and why. There is a temptation to load up on an asset class that has performed well.  A good portfolio has a mix of investments – both the top performers and the bottom performers.  You need to own them all in order to participate in the market shifts that topple last year’s “winners.”  If you know the role all these investments have in your portfolio, you will not over-weight one investment type because it is the latest rage.
• Don’t pat yourself on the back too hard. Be happy for the successes you get, but understand that how you are prepared to handle the difficult times will dictate your long-term financial health more than your short-term wins. Let’s face it; it’s hard to go forward if you are grinning at yourself in the rearview mirror.  At best, you won’t move forward very fast – at worst, you’ll end up in the trunk of the person in front of you.
• Share your painful lessons, especially if it will spare someone a similar fate or can help someone heal from their wounds. That’s just being a decent human being.

Long-term success is achieved when we push just as hard at the beginning of the journey as we do at the end.  Humility fuels that drive and allows us to start over again and again.

If we have the courage to be brutally honest with ourselves, it also can help us identify the blind spots that would threaten our well-being – just ask Bill Belichick.

I had the pleasure of attending the EBI West last week.  For those of you unfamiliar with it, it is a conference for financial advisors and the theme is evidenced-based investing.  There were many distinguished speakers from the financial industry with interesting perspectives, but the content the “outsiders” to the industry brought was refreshing and enlightening; especially one who spoke about ancient Greek philosophy.  I am being quite serious.  He was riveting.

Ryan Holiday, a best-selling author and founder of Brass Check, spoke about Stoicism.  This ancient Greek philosophy is every bit as relevant today as when it guided philosophers, such as Seneca and Epictetus, as well as statesmen and emperors, such as Cato and Marcus Aurelius.  Some of our most notable American presidents, George Washington, Thomas Jefferson and Theodore Roosevelt, were inspired by this philosophy.

For those of you who think philosophy means sitting around and pondering life’s great questions, Stoicism is about behavior.

According to Holiday, “The philosophy asserts that virtue (such as wisdom) is happiness and judgment be based on behavior, rather than words. That we don’t control and cannot rely on external events, only ourselves and our responses.”

This way of thinking challenges us to make our obstacles our advantages and to realize that it is a waste to try and control that which we can’t; invest your time in what you do have power over.  Put your energy into living a good life, which means being virtuous – patient, honest, and sincere, for example.

It sounds so simple and yet there are many distractions we deal with in a modern life.  An endless news cycle entices us to gyrate to every hiccup, the non-stop barrage of social media dings and pings can dilute our focus – just to name a few.

For investors, the market noise can push our hands into acting when we should exercise restraint.  It’s a heck of a lot easier to do so when you put the work in up-front – into a financial plan – which enables you to control all those variables you can, instead of worrying about market returns (which is like worrying about the weather forecast in the future).

Barring extenuating circumstances, you can control how much you work and what you earn.  You can control how much you spend and how much you save.  You can decide when to retire –or whether you will seek out part-time employment in retirement.

Some of the devices you need to employ might not be easy – they may come at great sacrifice.  Only you can determine if the price is too steep.  It’s more productive to weigh the pros and cons of your options, rather than to worry about market volatility or to hope on the unlikely possibility of a winning lottery ticket.

When you do take control of what you can – expect a peace to settle over you.  Even if you have to work your tail off doing so, even if you make great sacrifices – it is empowering to focus your energy on actions that move the needle in the direction you want to head.

When Tony and I decided that I would stay home full-time with our infant sons, we were somewhat prepared; we had saved aggressively in the years leading up to their arrival.  It also gave us the incentive to start our own advisory firm.

In order to do so, we both had to take courses for the Series 65 license.   Tony was working full-time and made the time for this.   Our sons were poor sleepers and I often was in a fog of sleep deprivation – yet I managed (with lots of coffee) to stay awake reading what I had to so I could take the test.

That was certainly not the end of it.  Tony continued to teach full-time, which meant client meetings took place in the evenings or on the weekends.  His coveted school breaks were consumed by catching up and cramming in more meetings.  He set about working towards a Certified Financial Planner^TM designation, which was another worthwhile, yet time-consuming, endeavor.

Honestly, I had come to dread Christmas and summer breaks because there was always a false hope that it would be a vacation.  For years, it never was.

Controlling what we could made the difficult work easier because at least we knew what we were killing ourselves for – which is better than killing yourself for someone else’s benefit (which, trust me,  I could have easily added a decade to my lifespan had I been smarter in my youth).

Our actions were not merely driven by economics.  Here is where the virtue part comes in: What we had seen happen to others, at the hands of ill-intended financial salespeople, made our work important.  Our work could empower others and help them move towards financial security and the peace that comes from that.

Joining our efforts with Ritholtz Wealth Management was a way to help reach more people than we would have been able to as a two-person firm.  We were able to set up a program to rescue teachers from expensive options in their 403(b) plans.

Thanks to Mr. Holiday, I am inspired to learn more about Stoicism and how to apply it to all facets of my life.  That certainly is within my control and it’s up to me if I choose to act or merely ponder.

The same is true for you.  A good place to start is his website.

My senior year of college wasn’t filled with the dread that some of my classmates seemed to carry.  All the “countdown” parties went on without me; I didn’t feel the need to squeeze the last bit of juice out of my carefree days as a student.  I was itching to get on with it; the next big event in my life was hovering on the horizon and was taking forever to arrive.  I was impatient for my real life to begin.

Had I not been so doe-eyed, I might have clung to every moment of what was slipping through my hands.  I might have even curled up in the safe arms of another university to pursue a master’s or law degree.  But I was arrogant, ignorant and without a plan.  What could possibly go wrong?

It was the spring of 1987 when I graduated.  As my initiation into the business world, I went to various personnel agencies with the same results.  My fanny was promptly plunked before an electric typewriter and I was asked to type as fast and as accurately as I could in a minute.  No pressure.

I tried to tell them that there was some mistake because I had a degree; if my typing speed was a determining factor for employment, I was in deep trouble.  I looked to my left and I looked to my right – no guys were on the typewriters.  I guess this was a sign of the times.

I finally landed a job where my boss didn’t care how quickly I typed.  The only problem was within five months of starting this job and renting an apartment, the market crashed.  Many people lost their jobs as financial firms seemed to tumble like dominoes.

Being entry level, I was cheap labor and I managed to never be without work; yet, I also felt trapped into staying where I clearly didn’t want to belong.  But rent, bills and student loans were my responsibility, and I was raised to always meet my responsibilities (even if I felt like a trapped mink, ready to gnaw off a body part just to get free).

What did I have to complain about anyway?  I was 22, living on my own, paying my own way and I was employed.  This was no time for a pity party, but there was time during my hellish commute to lower Manhattan to fantasize about winning the lottery and buying my freedom from this mundane life I was living.

Fantasy gave way to reality; no, I didn’t win the lottery, but I began playing regularly.  It seemed one of the few things I could control and it sparked a bit of joy in me.  Had I just put some of that money away and invested it, maybe the more fulfilling moments of my life would have arrived sooner.  I’ll never know and I’ll never get back that time.

But, I did see a correlation between my lottery playing relative to my overall satisfaction with life; it was an inverse relationship, like a see-saw.  The lower I felt, the more I would play.  When I felt like I was moving in an upward direction, I didn’t even think about playing; I was excited enough by my life.  I had created my very own Misery Index and didn’t even know it.

At the heart of it, I was looking for something that money really couldn’t provide all by itself.  Yes, it might have helped speed things along, but it might have derailed me.  Misery can be a motivator to make changes; comfort can lead to complacency.

Over the last few days, I read three interesting blog posts from my colleagues.  Nick Maggiulli wrote about the life-altering effects of money and why it cannot be measured or predicted by data.  Barry Ritholtz wrote about the privilege of taking a thoughtful approach to being productive.   Josh Brown wrote about the importance of why we work. All three struck a chord with me.

Nick examines a lottery winner who had already been wealthy; in spite of his savvy and good intentions he implodes and loses everything.   This is an interesting twist, as it is typically the rags-to-riches-to rags stories we hear about.

How is it that someone with financial success, skill and knowledge could blow this?  Nick analyzes data to draw conclusions and there just isn’t data to predict the human response to the adrenaline rush a windfall can create.

My own personal hunch is that the hunger that led this wealthy man to look for a big win had absolutely nothing to do with money at all.  Money is a beautiful, quantifiable distraction when life is unsatisfying.  At the end of the day, looking at a big net worth number might take the sting out of the suck of life – but after a while that salve won’t ease what is really causing all that chafing.  If life is going off the rails money can speed up the process by miles, and it makes for a wickedly colorful crash and burn.

Barry addresses that by not operating on the gerbil wheel of chasing sales, we are able to slow down and be more deliberate and focused in our efforts as a firm.  This leads to a productivity that can be measured in fulfillment, and not merely output for output’s sake.  We are how we invest our time.  When that is in lock-step what we truly value, life becomes richer – and no, I’m not talking about the green stuff (and yes, it is a privilege).

Josh writes about another one of our colleagues, Alex Palumbo, who didn’t dilly-dally in getting on a career course that has meaning to him.  Like many of us, he started out in this industry in a soul-crushing way.  Unlike me (and Josh and many others) he got the hell out as soon as he could.  He wanted to work at something that had meaning to him and as a result, his career is off to an impressive start.

As Josh points out, “Alex needs a Why, not just a What or a How Much in order to find himself in the working world.”

I would argue we all need this in life – not just in work.  Without meaning, it is tempting to fill up on other excitements, such as lottery playing/gambling, boozing, drugging, and cheating, etc.

Having more money isn’t going to ease a dissatisfied life.

That Misery Index can soar off the charts for many reasons; take the time to discover what your reasons are before you buy that scratch-off.

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