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Month: January 2017

Why I Am Not Doing My Annual Review/Planning Session This Year

Why I Am Not Doing My Annual Review/Planning Session This Year

Although I have never been a resolution-maker (phony!), I have long-been an annual planner, and since 2014 my efforts have taken an explicitly formal yet evolving shape. Depending on my other priorities and distractions, I typically begin reflecting on my year-past in late December and finish up writing out some thoughts and expectations for the year-coming by mid-January; I then set a calendar reminder to circle back mid-year in June to see how I am doing and recalibrate if necessary. In this way, I have generally made steady progress on a number of annual and life goals over the last three years.

The heart of the process involves the following steps:

  1. Flick through my calendar for the year-past and review major activities logged therein
  2. Sit in quiet and dig into memories of significant experiences and other events not captured on the calendar
  3. Write out an essay-form reflection on these accomplishments and the thoughts and emotions they evoke
  4. Lay out a new set of goals or achievements to be accomplished in the coming year as a list
  5. Write a brief summary of the anticipated path to achieving these goals via specific behaviors, processes and routines in the coming year

To this I added last year the “mind-mapping” practice suggested by a friend, wherein one gets out a blank sheet of paper, writes some words for major categories of life activities (I used Relationships, Career, Wealth, Mind/Body (Health) and Travel/Lifestyle) which are encircled and then additional related words are “bubbled” out from each category in a randomized chain of thought. It creates a neat visual representation of your ideas, especially if you use size to emphasize weight of concern, or can find ways to draw linkages between related ideas on disparate categories. It’s also a lot quicker to scan for meaning than an essay. I found combining this practice with my essay writing practice gave me a more complete picture of my yearly accomplishments.

I found listing out what I had done to be therapeutic. One thing I struggle with is giving myself credit for what I accomplish. I always want more and want to do more, and so it’s easy for me to convince myself I haven’t done enough, even when I have done everything on an arbitrary list! Writing it all down creates a volume of evidence that is hard to ignore: all the trips, all the interactions with friends and family, all the meals planned, the workouts at the gym, the money saved and invested, the skills developed, etc. It’s harder to look at that list and conclude “I didn’t get anything done last year!”

Another interesting aspect of this practice is I have a record I can look back on and see:

  • how long did it take me to accomplish a particular goal?
  • did I remain persistent if I didn’t get it done when I first wanted to?
  • did I decide to give up on a goal and if so, why? (did I realize it wasn’t important?)
  • what themes exist that are consistent across time with regards to goals I have set?
  • how am I “different” or “the same” in what I am trying to accomplish from year to year?

There are some things I have failed to achieve for several years now but which I still desire. There are other things I thought I wanted but decided weren’t important or worth prioritizing at some point along and consciously let them go in order to simplify my life. And there are some things I have been so stupendously efficient with that I’ve made progress each year on another “tier” of related achievements such that I am much farther along in the space of a few years than I would’ve thought when setting out on my first related activity some years ago.

Another reflection and motivation process I considered doing this year was suggested by another friend. Basically, I was to write myself a letter, dated January 1, 2018, which outlined all the different goals I had achieved throughout 2017 with explanations of the processes or routines I used to achieve them. For example, I accomplished X by spending Y minutes every week on Z. The idea is that one can not only consciously envision these tasks as already completed (so you get the sense they can be done) but you have also given yourself the how-to manual you can use to achieve them. It’s like having a crystal ball you didn’t realize you programmed. I really liked this idea and was prepared to implement it.

Somewhere along the line between early December, when I first started outlining my annual review process, and today, nearly at the end of the first month of 2017, I seem to have completely lost my motivation to get any of this done and so I have essentially given up on it!

I have a lot of friends who excel at personal organization, motivation and self-development. Most of these friends now have children of their own, and their reports have been consistent: children will dramatically change your personal productivity. I have to admit I discounted these reports quite a bit. I thought I was even better organized, even more productive, so it wouldn’t affect me, or at least as much or in the ways it affected them.

Simply put, I was wrong. Being extra sleep-deprived has sapped my drive. It’s required me to take more down-time where I do nothing too intense so I can mentally, emotionally and physically recover. Being on-call for my Little Lion has made it harder to focus on activities which require dedicated focus to make progress. In fact, it’s often impossible to even imagine starting such activities lest I get immediately interrupted and feel frustrated in the process. And now and for the foreseeable future, pitching in on tasks the Wolf could normally handle by herself means I divert a significant fraction of “me” time each week toward things other than me. So I am not superman, and my experience here has been quite similar to my friends just as they predicted or said to expect.

But having my Little Lion has also been incredibly motivating in the sense that it’s given me a new, concrete purpose to pursue various activities, from the minute daily upkeep stuff to the big life-planning stuff. And it’s definitely made me more resilient and less prone to complaining or feeling bad for myself; where I couldn’t always see it before, it is now abundantly obvious to me that “no one is coming to the rescue”, and if I don’t do what I have to do, it doesn’t get done and he, the Wolf and myself all suffer for it.

So I don’t think that is what is going on here, though it makes for a convenient and wildly coincidental excuse!

I am still thinking about this so I can’t say anything for sure, but I will take a stab at what I think is going on. I think what’s going on is that I have built a process here that is almost an end unto itself in terms of the energy and investment required to make use of it. It takes too long. It requires too much thought. It encompasses too much potential behavior and activity in the future. It seems to leave little room for spontaneity. It takes away from too much of the “living of life” I’d like to be doing right this very moment. It is, in a word, overwhelming.

This will seem like a tangent but here goes: recently the same friend who was proposing the letter-writing exercise (which is, ironically, probably a dramatic step towards simplifying this process if I did JUST that, rather than adding it to my existing process…) was talking about how he heard Tim Ferriss on one of his podcasts make some remark about how he has kept a nutrition and workout log for himself every single day of his life since he was 16 (or something, I don’t remember… it was a long amount of time). Essentially, Ferriss could pick any day since he was 16 (or whenever!) and tell you exactly what he ate and what workout he did and what weight he managed to lift, if you asked. My friend thought this was an incredible example of discipline, organization and data-gathering.

And truly, it is. But what of it? How is this valuable? What on Earth could Ferriss do with this data besides impress someone like my friend, or scratch some strange “autistic” itch of his with regards to data-fying his own life? How much healthier, more fit, etc., is he than the average health nut or fitness buff because of this practice?

There is a difference between exhaustive and exhausting. I would say this is exhausting. I would say my annual review process has become exhausting. So I can look back at how my goals have changed since 2014. Why besides personal vanity do I think this is valuable? “Oh look at who I was and what I am now!” Some self-help gurus say you should stop comparing yourself to others and only compare yourself to yourself. “Transcend yourself.” If you want to compete, compete against your personal best.

No matter how many times you transcend yourself, you’re still you. You’re still here. Whichever version of yourself you are this very moment, that’s the one you’ve got to work with. You got a leg up on You-Of-A-Year-Ago. Congratulations. One should HOPE one has a leg-up on someone who is a full year behind! What have you done for yourself lately?

I’ve been fighting this battle for a few years now, mostly with myself, and on a number of fronts, this battle of telling myself I should be doing certain things to accomplish certain goals. I tell myself I want to be a “highly productive person”, and I look around and imagine that all HPP have goals, do annual planning routines, etc. Worked fairly well for me up to this point doing it the way I had done it, and I can see people who seem to accomplish even more than I, and I can imagine they’re even more intense about it. So I tell myself to do a little bit more, push a little harder, be a little more consistent. But each effort in that direction seems to be pushing up against my Diminishing Marginal Return boundary, because I am becoming less and less a HPP and more and more a Person-Striving-To-Be-A-HPP in the process.

I’ve been doing this with writing for the last ten years, blogging in particular. I used to write/blog A LOT when I was younger. I felt like I had a lot to say. I really enjoyed hearing myself think. I’d go back and re-read my own material and get a chuckle. Oh, it was good! Then, something happened. I realized a lot of what I was saying had been said before. I realized I wasn’t a professional writer so I was mostly writing for my own amusement. I realized, I had a lot of other stuff I wanted to do besides write my thoughts down somewhere! Writing and blogging slowly became not something I did because I felt motivated and passionate about my writing subject, but a habit I stuck to because I convinced myself it was some integral part of my identity.

My annual planning has taken a similar turn. It is mostly something I am keeping up with to convince myself I am that HPP I think I want to be and can become if only I do things like this. It is not so easy to sit down and do it. It isn’t coming naturally to me. Yes, I am tired right now, but no, I still get a lot of other stuff done despite that, because I want to do those things.

Instead of doing my annual planning process this year, I have decided to write about why I am not doing it. I felt like I needed to give myself permission to let it go, and this is how I chose to do that.

Your Rich Ancestry (#family, #heritage, #wealth, #inheritance)

Your Rich Ancestry (#family, #heritage, #wealth, #inheritance)

To my Little Lion,

We’ve been reading up on the RIE (Resources for Infant Educarers) philosophy of Magda Gerber in more depth since you were born. We were already familiar with the basic principles from observing practicing friends, reading the introductory literature and hosting a RIE-class at our home before you were born. But now we’re eagerly doubling down to make sure we really understand it. The information is digested quite differently when a child like you isn’t a theoretical possibility but a living, breathing actuality. We want to try to get it right.

One of the things Magda Gerber stresses is that the most important thing we as your parents have to teach you is who we are as people. Everything we do and say in front of you you will be paying attention to and learning from. You’ll be internalizing ideas about what is normal, what is desirable, what is ideal or typical for parents, for adults, for people who are more powerful than you in various ways, etc. You’ll also be looking at us as examples of how to relate to oneself, and to others– is it with compassion, empathy, respect and benevolence? Or is it a pattern of vindictiveness, aggressive assertiveness, leverage and manipulation?

We feel relieved that this is really all we need to teach you, although it’s an epic task by itself! It makes sense to us also that this is really all we CAN teach you. If it was a parent’s job to teach their child everything they needed to know, every parent would be bound to fail from the get go. No parents are omniscient because no people are, and parents vary in their ability to communicate and educate about key ideas. But teaching who we are is something any parent can do and will do, as it happens normally in the course of living one’s life. We’re going to be mindful of this reality as we learn more about you, and you learn more about us.

One thing may give you pause, though– we will know almost everything about you, because we will have known you since the moment you were born. But we have lived for several decades before you arrived, and even if we do not mean or want to keep secrets, we can not possibly recount every detail of our lives as they existed prior to your arrival. We will try to share with you what we think is important and worth knowing, but you should understand that there is some bias inherent in this selection and try as we might, we may not always be objective in the telling of the facts. As always, it will be up to you to ask questions and make up your own mind. We hope we can be faithful partners in that process.

Now, there are other things that we can teach you and that we want to teach you, especially things we feel especially well-suited to provide guidance and our individual experience about. Your mother, the Wolf, is a talented home cook despite a lack of professional training, and she is eager to share her skill and passion with you if you’re interested. Your father is a bibliophile and has many books and stories to share with you, and years of methodology on how to extract the most juice from the pulp. These are just a few examples, there are many others.

Aside from teaching you about ourselves and modeling what it is we can model for you, you have a wealth of other family members and family friends who can enrich your life with other skills and wisdom as well.

Your Auntie Lionesses are students of film and photography, business and marketing, athleticism and foreign languages. One has picked up the guitar, which your father has never managed to learn but which he just might if you wanted to give it a go together. They can model great compassion and kindness for you.

Your Grandpa Lion is a mechanical person. He didn’t manage to impart many of these skills to your father, but he can probably be convinced to make good on that missed opportunity by teaching you how to use simple tools and DIY around the house, how to work on cars and motorcycles and other things with engines and transmissions. He’s also an outstanding businessman and leader. He knows how to rally excellent people to a cause he believes in and drive the effort forward to a successful conclusion, a timeless social skill you will benefit from immensely if you can learn it from him. Your Grandma Lion is extremely artistic and creative, with a strong eye for design. She can teach you about how to create a warm, decorated home environment, how to develop style in your clothing. Your Grandma Wolf can teach you about what it is like to grow up in another country, and the experience of leaving home behind to start over in some place unfamiliar. She can model what it means to work hard, which means getting on with life and its challenges and doing it with a smile. She can help you grow up to be bilingual so you’ll have an immediate advantage in your future travels, business opportunities and relationships.

Your mother and father have so may close personal friends with endless things you can learn about from them. One is a pioneer with his family, literally hacking a living out of a remote jungle location far from us. Another is learned in the ways of artisanal butchery and can teach you all about the cultivation and processing of nutritious animal proteins. We have friends who have had corporate careers, and those who are entrepreneurs. We know people who are incredible professional investors and people who are thrifty amateurs. We know people who know all about how to have a good time and others who know about being serious and keeping one’s head down. If you desire a balanced life, you’ll want to consider all these examples and choose what makes the most sense to you.

You have great grandparents and practically innumerable aunts, uncles and cousins on both sides of your family. Your life is so abundant and rich in so many ways, the biggest challenge you will have will most likely be taking advantage of it all– you won’t have enough time or interest, so you’ll need to learn to be selective.

When people think of education, they primarily think of books and schools. There will be some of that in your learning process, no doubt, but where you can learn the most is by interacting with other capable people. Just like us, they can model who they are and what they know and love and in so doing offer you a wealth of ideas on how to get the most out of your life.

All of this you get just for showing up in life!

Review – Common Stocks And Uncommon Profits (#investing, #stocks, #growth, #business)

Review – Common Stocks And Uncommon Profits (#investing, #stocks, #growth, #business)

Common Stocks and Uncommon Profits: And other writings by Philip A. Fisher (buy on Amazon.com)

by Philip A. Fisher, published 1996, 2003

Stock market investors who have studied Warren Buffett in detail know that he has cited two “philosophers” of investment theory more than anyone else in being influential in the formation of his own investment approach: Benjamin Graham and Phil Fisher. Graham represents the cautious, conservative, balance sheet-driven Buffett, while Fisher represents the future-oriented, growth-focused, income statement-driven Buffett. If you ask Buffett, while Graham got him started and taught him key lessons in risk management (Margin of Safety and the Mr. Market metaphor), Fisher was the thinker who proved to have the biggest impact in both time and total dollars accumulated. Buffett today, whether by choice or by default due to his massive scale, is primarily a Phil Fisher-style investor.

And yet, in my own investment study and practice, I have dwelled deeply on Graham and did little if anything with Fisher. I tried to read Fisher’s book years ago when I was first starting out and threw my hands up in disgust. It seemed too qualitative, too abstract and frankly for a person of my disposition, too hopeful about the future and the endless parade of growth we’ve witnessed in the markets for several decades since the early 1980s. Surely there would be a time where the Fisher folks would hang their heads in shame and the Grahamites would rise again in the fires of oblivion! After all, “Many shall be restored that are now fallen and many shall fall that are now in honor.”

As my professional career wore on, however, I found there was less and less I could do with Graham and more and more of what Fisher had said that made sense. And if you’re in business, you can’t help but be growth oriented– buying cheap balance sheets isn’t really the way the world works for the private investor. So, I decided it was time to take another look at Fisher’s book and see what I could derive from it as an “older and wiser” fellow. What follows is a review of Part I of the book; I plan to read and review Part II, which is a collection of essays entitled “The Conservative Investor Sleeps Well At Night”, separately.

Keep Your Eye On The Future

One thing I noticed right away is the consistent theme of future-orientation throughout Fisher’s book. Whereas balance sheets and the Graham approach look at what has happened and what is, Fisher is always emphasizing a technique that involves conceptualizing the state of the future. For example, in the Preface he states that one of the most significant influences on his own investment results and those of other successful investors he was aware of was,

the need for patience if big profits are to be made from investment.

“Patience” is a reference to time preference, and time preference implies an ability to envision future states and how they differ from the present and therein see the arbitrage available between the two states. The other key he mentions is being a contrarian in the market place, which sounds a lot to me like the lesson of Mr. Market.

Fisher also says that market timing is not a necessary ingredient for long-term investment success,

These opportunities did not require purchasing on a particular day at the bottom of a great panic. The shares of these companies were available year after year at prices that were to make this kind of profit possible.

While he cites the structural inflationary dynamic of the modern US economy and seems to suggest the federal government’s commitment to responding to business cycle depressions with fiscal stimulus puts some kind of ultimate floor under US public company earnings (unlike in Ben Graham’s time where large companies actually faced the threat of extinction if they were caught overextended in the wrong part of the cycle, Fisher suggests the federal government stands ready to create conditions through which they can extend their debt liabilities and soldier on), he says that the name of the game over the long-term is to find companies with remarkable upside potential which are, regardless of size, managed by a determined group of people who have a unique ability to envision this potential and create and execute a plan for realizing it. In other words, the problem of investing is recognizing strong, determined management teams for what they are, that is, choosing superior business organizations in industries with long runways.

Getting the Goods: The Scuttlebutt Approach

People who know about Fisher typically identify him with the “scuttlebutt approach”. Fisher says scuttlebutt can be generated from:

  • competitors
  • vendors
  • customers
  • research scientists in universities, governments and competitive companies
  • trade association executives
  • former employees (with caveats)

Before one can do the scuttlebutt, however, one has to know where to look. Fisher says that “doing these things [scuttlebutt] takes a great deal of time, as well as skill and alertness […] I strongly doubt that [some easy, quick way] exists.” So, you don’t want to waste your time by going to all the trouble for the wrong idea. He says that 4/5 of his best ideas and 5/6 of the total gains generated over time that he could identify originated as ideas he gleaned from other talented investors first, which he subsequently investigated himself and found they fit the bill. Now, this is not the same thing as saying 4/5 ideas he got from others were worth investing in– the proportion of “good” ideas of the “total” he heard about is probably quite low, but the point again is not quantitative, but qualitative. He’s talking about where to fish for ideas, not how successful this source was.

When I thought about this section, I realized the modern day equivalent was investment bloggers. There are many out there, and while some are utter shit (why does this guy keep kidding himself?) some are quite amazing as thinkers, business analysts and generators of potential ideas. I have too many personal examples of my own here to make mention of them all. But I really liked this idea, cultivating a list of outstanding investment bloggers and using that as your primary jumping off point for finding great companies. The only problem for me in this regard is most of my blogroll are “value guys” that are digging in the trash bins (as my old boss sarcastically put it), whereas to find a Fisher-style company I would need to find a different kind of blogger interested in different kind of companies. But that’s a great to-do item for me to work on in this regard and should prove to be highly educational to boot!

So, assuming you’ve got a top notch idea, what’s next? Fisher is pretty clear here: do not conduct an exhaustive study of the company in question just yet. (In other words, don’t do this just yet, though I loved SoH’s follow-up where he explained what kind of things would get him to do that.) What he does do is worth quoting at length:

glance over the balance sheet to determine the general nature of the capitalization and financial position […] I will read with care those parts covering breakdown of total sales by product lines, competition, degree of officer or other major ownership of common stock […] all earning statement figures throwing light on depreciation, profit margins, extent of research activity, and abnormal or non-recurring costs in prior years’ operations

Then, if you like what you see, conduct your scuttlebutt, because,

only by having what “scuttlebutt” can give you before you approach management, can you know what you should attempt to learn when you visit a company […] never visit the management of a company [you are] considering for investment until [you have] first gathered together at least 50 per cent of all knowledge [you] would need to make the investment

This is the part that really gives a lot of investors pause about Phil Fisher’s approach, including me. Can you really do scuttlebutt, as he envisions it, in the modern era? Can the average investor get the ear of management? Does any of this stuff still apply?

First, some skepticism. Buffett’s biographer Alice Schroeder has said in interviews that much of what made Buffett successful early on in his career is now illegal and would amount to insider trading. The famous conversation with the GEICO chief is one of many that come to mind. This was classic scuttlebutt, and it worked amazingly well for Buffett. And even if it wasn’t illegal, most individual investors are so insignificant to a company’s capital base that they can’t expect nor will they ever receive the ear of management (unless they specialize in microcap companies, but even then management may be disinterested in them, even with significant stakes in their company!) And, assuming they DO somehow get management’s ear, they aren’t liable to learn much of value or interest specifically because most managements today are not only intellectually and politically sophisticated, but legally sophisticated and they are well aware that if they say anything more general than “We feel positive about our company” they’re liable to exposure under Reg FD. This seems like a dead end.

But let me try to tease the idea out a little more optimistically. Managements do provide guidance and color commentary on quarterly earnings calls, and if you are already dealing with a trustworthy, capable management (according to the 15 points outlined below), then there is opportunity to read between the lines here, even while acknowledging that there are many other people doing the same with this info. And people who do get managements’ ear are professional analysts employed by major banks. Again, lots of people read these reports, but there is some info here and it adds color and sometimes offers some “between the lines” information some might miss. And while the information you can get from any one company may be limited, by performing this analysis on several related companies you might be able to fill in some gaps here and there to the point that you can get a pretty fair picture of how the target company stacks up in various ways.

I hesitate a little, but I think the approach can be simulated to a fair degree even today. It’s still hard work. It can’t be done completely, or perhaps as Fisher imagined it. But I think it can be done. And it still comes down to the fact that, even with all this info that is out there, few will actually get this up close and personal with it. So, call it an elbow-grease edge.

After all,

Is it either logical or reasonable that anyone could do this with an effort no harder than reading a few simply worded brokers’ free circulars in the comfort of an armchair one evening a week? […] great effort combined with ability and enriched by both judgment and vision [are the keys to unlocking these great investing opportunities] they cannot be found without hard work and they cannot be found every day.

The Fisher 15

Fisher also is known for his famous 15 item investment checklist, a checklist which at heart searches for the competitive advantage of the business in question as rooted in the capability of its management team to recognize markets, develop products and plans for exploiting them, execute a sales assault and finally keep everything bundled together along the way while being honest business partners to the minority investors in the company. Here was Fisher’s 15 point checklist for identifying companies that were highly likely to experience massive growth over decades:

  1. Does the company have sufficient market scale to grow sales for years?
  2. Is management determined to expand the market by developing new products and services to continue increasing sales?
  3. How effective is the firm’s R&D spending relative to its size?
  4. Is the sales organization above-average?
  5. Does the company have a strong profit margin?
  6. What is being done to maintain or improve margins? (special emphasis on probable future margins)
  7. What is the company’s relationship with employees?
  8. What is the company’s relationship with its executives?
  9. Is the management team experienced and talented?
  10. How strong is the company’s cost and accounting controls? (assume they’re okay unless you find evidence they are not)
  11. Are there industry specific indications that point to a competitive advantage?
  12. Is the company focused on short or long-term profits?
  13. Can the company grow with its own capital or will it have to continually increase leverage or dilute shareholders to do it?
  14. Does the management share info even when business is going poorly?
  15. Is the integrity of the management beyond reproach? (never seriously consider an investment where this is in question)

What I found interesting about these questions is they’re not just good as an investment checklist, but as an operational checklist for a corporate manager. If you can run down this list and find things to work on, you probably have defined your best business opportunities right there.

In the chapter “What to Buy: Applying This to Your Own Needs”, Fisher attempts to philosophically explore the value of the growth company approach. First, he tries to dispel the myth that this approach is only going to serve

an introverted, bookish individual with an accounting-type mind. This scholastic-like investment expert would sit all day in undisturbed isolation poring over vast quantities of balance sheets, corporate earning statements and trade statistics.

Now, this is ironic because this is actually exactly how Buffett is described, and describes himself. But Fisher insists it is not true because the person who is good at spotting growth stocks is not quantitatively-minded but qualitatively-minded; the quantitative person often walks into value traps which look good statistically but have a glaring flaw in the model, whereas it is the qualitative person who has enough creative thinking power to see the brilliant future for the company in question that will exist but does not quite yet, a future which they are able to see by assembling the known qualitative facts into a decisive narrative of unimpeded growth.

Once a person can spot growth opportunities, they quantitatively have to believe in the strategy because

the reason why growth stocks do so much better is that they seem to show gains in value in the hundreds of percent each decade. In contrast, it is an unusual bargain that is as much as 50 per cent undervalued. The cumulative effect of this simple arithmetic should be obvious.

And indeed, it is. While great growth stocks might be a rarer find, they return a lot more and over a longer period of time. To show equivalent returns, one would have to turnover many multiples of incredibly cheap bargain stocks. So this is the philosophical dilemma– fewer quality companies, fewer decisions, and less room for error in your decisions with greater return potential over time, or many bargains, many decisions, many opportunities to make mistakes but also less chance that any one is critical, with the concomitant result that your upside is limited so you must keep churning your portfolio to generate great long-term results.

Rather than being bookish and mathematically inclined (today we have spreadsheets for that stuff anyway), Fisher says that

the successful investor is usually an individual who is inherently interested in business problems. This results in his discussing such matters in a way that will arouse the interest of those from whom he is seeking data.

And this still jives with Buffett– it’s hard to imagine him boring his conversation partner.

Timing Is Everything?

So you’ve got a scoop on a hot stock, you run it through your checklist and you conduct thorough scuttlebutt-driven due diligence on it. When do you buy it, and why?

to produce close to the maximum profit […] some consideration must be given to timing

Oh no! “Timing”. So Fisher turns out to be a macro-driven market timer then, huh? “Blood in the streets”-panic kind of thing, right?

Wrong.

the economics which deal with forecasting business trends may be considered to be about as far along as was the science of chemistry during the days of alchemy in the Middle Ages.

So what kind of timing are we talking about then? To Fisher, the kind of timing that counts is individualistic, idiosyncratic and tied to what is being qualitatively derived from one’s scuttlebutt. Timing one’s purchases is not about market crashes in general, but in corporate missteps in particular. Fisher says:

the company into which the investor should be buying is the company which is doing things under the guidance of exceptionally able management. A few of these things are bound to fail. Others will from time to time produce unexpected troubles before they succeed. The investor should be thoroughly sure in his own mind that these troubles are temporary rather than permanent. Then if these troubles have produced a significant decline in the price of the affected stock and give promise of being solved in a matter of months rather than years, he will probably be on pretty safe ground in considering that this is a time when the stock may be bought.

He continues,

[the common denominator in several outstanding purchasing opportunities was that ] a worthwhile improvement in earnings is coming in the right sort of company, but that this particular increase in earnings has not yet produced an upward move in the price of that company’s shares

I think this example with Bank of America (which I could never replicate because I can’t see myself buying black boxes like this financial monstrosity) at Base Hit Investing is a really good practical example of the kind of individual company pessimism Phil Fisher would say you should try to bank on. (Duh duh chhhhh.)

He talks about macro-driven risk and says it should largely be ignored, with the caveat of the investor already having a substantial part of his total investment invested in years prior to some kind of obvious mania. He emphasizes,

He is making his bet upon something which he knows to be the case [a coming increase in earnings power for a specific company] rather than upon something about which he is largely guessing [the trend of the general economy]

and adds that if he makes a bad bet in terms of macro-dynamics, if he is right about the earnings picture it should give support to the stock price even in that environment.

He concludes,

the business cycle is but one of at least five powerful forces [along with] the trend of interest rates, the over-all government attitude toward investment and private enterprise [quoting this in January, 2017, one must wonder about the impact of Trump in terms of domestic regulation and taxation, and external trade affairs], the long-range trend to more and more inflation and — possibly most powerful of all — new inventions and techniques as they affect old industries.

Set all the crystal ball stuff aside– take meaningful action when you have meaningful information about specific companies.

Managing Risk

Fisher also gives some ideas about how to structure a portfolio of growth stocks to permit adequate diversification in light of the risk of making a mistake in one’s choices (“making at least an occasional investment mistake is inevitable even for the most skilled investor”). His example recommendation is:

  • 5 A-type, established, large, conservative growth companies (20% each) -or-
  • 10 B-type, medium, younger and more aggressive growth companies (10% each) -or-
  • 20 C-type, small, young and extremely aggressive/unproven growth companies (5% each)

But it is not enough to simply have a certain number of different kinds of stocks, which would be a purely quantitative approach along the lines of Ben Graham’s famous dictums about diversification. Instead, Fisher’s approach is again highly qualitative, that is, context dependent– choices you make about balancing your portfolio with one type of stock require complimentary additions of other kinds of stocks that he deems to offset the inherent risks of each. We can see how Buffett was inspired in the construction of his early Buffett Partnership portfolio weightings here.

For example, he suggests that one A-type at 20% might be balanced off with 2 B-type at 10% each, or 6 C-type at 5% each balanced off against 1 A-type and 1 B-type. He extends the qualitative diversification to industry types and product line overlaps– you haven’t achieved diversification with 5 A-types that are all in the chemical industry, nor would you achieve diversification by having some A, B and C-types who happen to have competing product lines in some market or industry. For the purposes of constructing a portfolio, part of your exposure should be considered unitary in that regard. Other important factors include things like the breadth and depth of a company’s management, exposure to cyclical industries, etc. One might also find that one significant A-type holding has such broadly diversified product lines on its own that it represents substantially greater diversification than the 20% portfolio weighting it might represent on paper. (With regards to indexation as a strategy, this is why many critics say buying the S&P 500 is enough without buying “international stock indexes” as well, because a large portion of S&P 500 earnings is derived from international operations.)

While he promotes a modicum of diversification, “concentration” is clearly the watchword Fisher leans toward:

the disadvantage of having eggs in so many baskets [is] that a lot of the eggs do not end up in really attractive baskets, and it is impossible to keep watching all the baskets after the eggs get put into them […] own not the most, but the best […] a little bit of a great many can never be more than a poor substitute for a few of the outstanding.

Tortured egg basket metaphors aside (why on earth do people care what their egg baskets look like?!), Fisher is saying that the first mistake one can make is to spread your bets so thin that they don’t matter and you can’t efficiently manage them even if they did.

Aside from portfolio construction, another source of risk is the commission of errors of judgment.

when a mistake has been made in the original purchase and it becomes increasingly clear that the factual background of the particular company is, by a significant margin, less favorable than originally believed

one should sell their holdings, lick their wounds and move on. This needs to be done as soon as the error is recognized, no matter what the price may be:

More money has probably been lost by investors holding a stock they really did not want until they could “at least come out even” than from any other single reason. If to these actual losses are added the profits that might have been made through the proper reinvestment of these funds if such reinvestment had been made when the mistake was first realized, the cost of self-indulgence becomes truly tremendous.

Further,

Sales should always be made of the stock of a company which, because of changes resulting from the passage of time, no longer qualifies in regard to the fifteen points… to about the same degree it qualified at the time of purchase […] keep at all times in close contact with the affairs of companies whose shares are held.

One vogue amongst certain investors is to be continually churning the portfolio from old positions to the latest and greatest idea, with the assumption being that time has largely run its course on the earlier idea and the upside-basis of the new idea is so much larger that liquidity should be generated to get into the new one. Fisher advises only using new capital to pursue new ideas rather than giving in to this vanity because,

once a stock has been properly selected and has borne the test of time, it is only occasionally that there is any reason for selling it at all

The concept of “investment” implies committing one’s resources for long periods of time. You can’t emulate this kind of trading activity in the private market, which is a very strong indication that you should try to avoid this behavior in public markets. A particularly costly form of this error is introducing macro-market timing into one’s portfolio management, ie, this stock has had a big run up along with the rest of the market, things are getting heady, I will sell and get back in at a lower cost. I’ve done this myself, most recently with Nintendo ($NTDOY) and even earlier with Dreamworks ($DWA). Fisher says it’s a mistake:

postponing an attractive purchase because of fear of what the general market might do will, over the years, prove very costly […] if the growth rate is so good that in another ten years the company might well have quadrupled, is it really of such great concern whether at the moment the stock might or might not be 35 per cent overpriced? That which really matters is not to disturb a position that is going to be worth a great deal more later.

It plays to a logical fallacy that a company that has run up has “expended” its price momentum, while a company that has not had a run-up has something “due” to it. On the contrary, Fisher points out that many times the material facts about a company’s future earnings prospects change significantly over time from the original purchase, often to the good, such that even with a big run-up, even more is in the offing because the future is even brighter than before– remember, always keep an eye on the future, not the present or the past!

And similarly, if one has an extremely cheap cost basis in a company, one has an enormous margin of safety that should give further heed to trying to jump in and out of the stock when it is deemed to be overvalued.

He adds that, like wines, well-selected portfolio holdings get better with age because,

an alert investor who has held a good stock for some time usually gets to know its less desirable as well as more desirable characteristics

and through this process comes to develop even more confidence in his holdings.

If you’ve read some of my thinking about the philosophy of building multi-generational wealth through a family business, you’ll see once again the direct parallel to private market investing in Fisher’s conclusion:

If the job has been correctly done when a common stock is purchased, the time to sell it is– almost never.

Conclusion

Distilling Part I down to its essence, I concluded that the most important skill for generating long-term gains from one’s investing is still about having a disciplined and consistent investment program followed without interruption and in the face of constantly nagging self-doubt (“In the stock market a good nervous system is even more important than a good head.”) The particular program that Fisher recommends be followed is to:

  1. Create a network of intelligent investors (bloggers) from which to source ideas
  2. Develop a strong scuttlebutt skill/network to develop superior investment background
  3. Check with management to confirm remaining questions generated from the 15 step list
  4. With the conviction to buy, persevere in holding over a long period of time

If you can’t do this, you probably shouldn’t bother with the Fisher approach. Whether it can be done at all is an entirely separate matter.

4/5

Of Enemies Abroad, And At Home (#politics, #America, @realDonaldTrump, #loyalty)

Of Enemies Abroad, And At Home (#politics, #America, @realDonaldTrump, #loyalty)

We are now being told that the election of Donald Trump represents a virulent strain of tyrannical fascism in American politics, which was before lying under the surface but is now unapologetically out in the open. Certain agitators and political commentators are claiming that they don’t feel safe in a world where Trump is president, implying that there may be physical threats against their life, property or lifestyle under his regime. The conclusion is that Trump is to blame for a politics of potentially open, physical violence across partisan lines.

But if this is what Trump represents, Trump is the necessary response to an earlier dynamic, not the initiator of it. You see, the Left has been successful in its quest to control politically-acceptable speech. The world of man can be controlled by arms, or by words and ideas. If certain words and ideas can not be uttered, then the people who believe in them have no choice but to take up arms in their support. What choice but violence does a person have to convince another of his views, if his views are considered unutterable in society?

We are also told that Trump is committing what amounts to treason in warring with political factions in his own country while buddying up to autocrats in other countries, such as Russia. If the right way, and the only way, to conduct a political strategy is to play by your opponent’s rules, then this criticism may have merit. But politics is war by other means, a game of domination and annihilation. If you are a globalist after global control, you might call a truce here and there with domestic factions to enhance your projection of power outside your borders.

But what if you are a “nationalist” or “patriot”, like Mr. Trump?

If your primary political concern is dominance within your own borders, it is clear who your enemies and your friends are. Your enemies are any domestic political factions which question, criticize or otherwise restrain your full use of power inside your borders. And your friends are any parties, inside or outside your borders, that can either help you defeat your domestic opponents in some way, or who can agree to some kind of truce that lets you focus on defeating your opponents at home.

Make no mistake about it– Mr. Trump is in a war for his political (and potentially even vital) life, such is the nature of politics which has no rules but that which each opponent might individually observe. And looking at the world as he claims to, it seems not only not treasonous, but completely rational, to find friends where they can be found in order to quell the domestic disturbance represented by the Democrats and the American Left. And we can sense the truth of this proposition in observing that while critics of Mr. Trump argue that he should make peace with his domestic opponents to fight external enemies, these critics are not suggesting these opponents make peace with Mr. Trump, nor are these opponents themselves voluntarily laying down arms against Mr. Trump for the time being to take them up against the Great Alien Menace. Actions speak louder than words here.

And what about the spat with the domestic spy agencies? Ignoring the fact that they were un-American and not to be trusted under the Bush regime, and were clearly un-American and autistically-focused on studying the communication patterns of those people they nominally serve under the Obama regime (and when did these people face election and change under any of the last three administrations?), they are supposed to be answerable to the Congress, which supervises them, and the President, who leads the nation they serve.

To raise the claim that Mr. Trump is playing a “dangerous game” in challenging their methods, claim and authority, is to belie the very corruption his opposition to these organizations so far engenders– this may be a hard metaphor for many to understand these days, but it would be as if the appointed chief executive of the owner of a company was playing a dangerous game in challenging the actions and attitudes of the company’s hired employees. This argument has the theoretical cause-effect relationship of American civics exactly reversed.

In case anyone needs reminding these days, why is it exactly that the American intelligence “community” (note: for their to be a community, there by definition must be some who are inside it and some who are outside, that is, citizens of the domain and barbarians at the gates…) is to be considered trustworthy?

Have they demonstrated gross competence at their appointed tasks? Anyone who has not forgotten the failures of September 11th, 2001, must puzzle at the question.

Have they any kind of record of their activities and thinking that is examinable by the public? No, only the Congress and the President have access to that information (if the intelligence agencies are honest in presenting it in the first place!) and there is a clear principal-agent problem in electoral politics presented by these defined secrets.

And what kind of people are they who join these secret cabals, whose jobs seem to consist of lying for a living, trafficking in arms and illicit substances and occasionally murdering people deemed to be strategic problems for themselves or the government they represent?

Well, just that– liars, murderers, professional criminals and reckless thrill-seekers.

A better question than “Why should they be trusted?” is “Why should they be tolerated in a society that claims to have an open government?” Speaking of tyranny and autocratic rule, is there any model more noble in form than the modern spook cartels?

Technological Change And Social Inertia

Technological Change And Social Inertia

Isn’t it interesting how people develop a sense of entitlement over things that, until only a few years ago, did not exist?

And isn’t even more curious that people will become defensive about protecting outmoded jobs they hate?

I read an article about NYC taxi and limo drivers seeking to ban the implementation of autonomous vehicles in NYC to protect their jobs. But how many taxi and limo drivers even like their jobs, or love them? Do these people wake up every morning, breathe deeply and say to themselves, “I am so grateful to get to drive people around again today!”

Technology marches on, and soon it will provide new things and new jobs for people to feel entitled about.

Review – The Subtle Art of Not Giving A Fuck (#books, #review, #self-help, #philosophy, @IAmMarkManson)

Review – The Subtle Art of Not Giving A Fuck (#books, #review, #self-help, #philosophy, @IAmMarkManson)

The Subtle Art of Not Giving a Fuck: A Counterintuitive Approach to Living a Good Life

by Mark Manson, published 2016

How much deep wisdom can you expect from a recently published book written by a youthful individual who writes a blog about his opinions for a living? Not much, if you’re reasonable, and in that sense this book managed to be both exactly what I expected it would be and enjoyable nonetheless.

My basic gripe with this book is that it doesn’t manage to fully develop or even adhere to its titular theme, the idea of “giving a fuck.” It’s a cheeky way of stating something more profound, and while Manson manages to explore the profundity I don’t think he does it thematically which creates a disconnect between the marketing of the book and its ideas, and the actual philosophy itself. I think this book would’ve been more interesting if it was not called “The Subtle Art of Not Giving a Fuck”, which is a not very subtle way to appeal to a potential audience at the cost of the integrity of the book itself, which is otherwise sound.

But I am “not going to give a fuck” about that, because it’s irrelevant in light of what value I did take away from the book, which is notable. There are many pithy concepts in Manson’s work, I will list some of those that I found myself dwelling upon and try to share why they were meaningful to me.

Everything worthwhile in life is won through surmounting the associated negative experience […] The avoidance of suffering is a form of suffering. The denial of failure is a failure. Hiding what is shameful is itself a form of shame.

The concept here is not that struggling towards achievements gives achievements their meaning, but rather that it is unavoidable to struggle towards achievements in life. Furthermore, attempting to avoid the struggle is irrational because the avoidance of struggle is a struggle. Instead of one struggle (toward an achievement) you now face two– the avoidance of struggle as struggle, and the struggle towards achievement itself. Or, even worse, you face one struggle with no reward, the avoidance of struggle as struggle.

Embrace the struggle as necessary and vital.

No matter where you go, there’s a five-hundred-pound load of shit waiting for you. And that’s perfectly fine. The point isn’t to get away from the shit. The point is to find the shit you enjoy dealing with.

“The solution to one problem is merely the creation of the next one.” […] hope for a life full of good problems […] Happiness comes from solving problems. Happiness is […] a form of action; it’s an activity. […] Happiness is a constant work-in-progress, because solving problems is a constant work-in-progress […] True happiness occurs only when you find the problems you enjoy having and enjoy solving.

Two years ago, I had the opportunity to head a small retail sales organization in need of a turn around. It was hard work, the hardest work I’ve done to date. And I was successful in my work, but most of the time it didn’t feel that way to me because of my inexperience.

The thought I remember having most often was, “Am I doing something wrong?” My problems seemed to multiply without end. Every time I fixed something, something else broke. Every time I thought I had configured the organization, our processes, anything, into some kind of stable equilibrium, it would start tilting in another direction all over again. I became very discouraged because I associated this inability to find stability as some symptom of my incompetence or inadequacy as the man in charge.

I brought this up with more senior people in the organization during several sit downs and the reply I got each time was, “That’s business– there are always more problems to solve.” I didn’t appreciate it at the time, but it’s also life, life is a series of challenges and obstacles to overcome. There is no equilibrium, no final resting state besides death. Everything in prelude is constant turmoil and flux. You can accept that and get on with it, or you can invest a lot of time and energy in being bitter and resentful about it (speaking from experience here!) and you will succeed wildly in this failure of imagination if you want to do that.

It took about a year of struggling with that sense of self-doubt before I came to terms with the inescapable nature of recurring problems. At that point, I came to appreciate the concept philosophically– there were always going to be problems to solve, no matter whether you screwed things up or batted it out of the park. And once I had that piece, I realized the next piece was to find problems you like to solve. If you’re going to deal with problems, you might as well have fun with them.

This connects to my theory of investment, as well. I believe the ideal for investment is control, ownership, being in a position to add value by being a change agent. And so from that standpoint I believe the most fundamental investment value, besides price, yield, future prospects, etc., is that you select investment problems you enjoy solving. You be an owner where you can add value with your solutions to the problems the company faces, and where you enjoy providing those solutions.

Real, serious, lifelong fulfillment and meaning have to be earned through the choosing and managing of our struggles.

Who you are is defined by what you’re willing to struggle for. People who enjoy the struggles of a gym are the ones who run triathlons and have chiseled abs and can benchpress a small house. People who enjoy long workweeks and the politics of the corporate ladder are the ones who fly to the top of it. People who enjoy the stresses and uncertainties of the starving artist lifestyle are ultimately the ones who live it and make it.

This ties together the ideas of avoiding entitlement by embracing the necessity of struggle, and selecting struggles you enjoy. It provides explanatory value for the outcomes we witness in other people, particularly people who excel in certain fields. It helps us appreciate where their success comes from– their embrace of particular struggles. It helps us to understand that it is unreasonable to expect to enjoy those same rewards without the same affinity for those struggles.

We don’t always control what happens to us. But we always control how we interpret what happens to us, as well as how we respond.

“With great responsibility comes great power.”

A lot of people hesitate to take responsibility for their problems because they believe that to be responsible for your problems is also to be at fault for your problems.

Fault is past tense. Responsibility is present tense.

Many years ago I became interested in the thinking of the psychologist and philosopher, Nathaniel Branden. One of the books I read which had a big impact in my life was his not-so-subtly titled How To Raise Your Self-Esteem. It is a humongous work inside a small package, a title I can easily recommend to anyone, and there is one sentence in the book that hit me like a person you’ve always respected and admired admitting they can’t stand you: “No one is coming to the rescue.”

I made a lot of excuses for myself back then. I don’t know if it was a sense of self-pity or a sense of cosmic divinity (how could I of all people be meant to suffer or be anything but perfect?!), but I was good at sitting around waiting for everyone else to get clued in on how great I was. I spent A LOT of time trying to figure other people out and rationalize why, despite my brilliance and benevolence, they didn’t like me, weren’t attracted to me, didn’t enjoy my company, etc. What I didn’t do much of was think about what I could do differently to get different results in my life. My attitude was, “This is just the way I am, if the world doesn’t appreciate it, then fuck ’em!”

When I read that no one was coming to my rescue, I first thought, who would come to my rescue if someone was coming to my rescue? It wasn’t god, as I didn’t believe in it. It wasn’t my parents– my parents love me, and they didn’t seem to have taken the opportunity to rescue me from my struggles so far, so it seemed safe to assume they weren’t just waiting for the right occasion. It wasn’t my friends, they were struggling with some of the same things I was. And it wasn’t some random stranger, they don’t know me and couldn’t care about my struggles. By process of elimination, it dawned on me that the only person who could come to my rescue, was me, and even I wasn’t getting off my ass to do the deed. So, Branden was right, no one was coming to my rescue.

That’s when I stopped the unsatisfying game of assigning fault, and took up the mantle of responsibility for my own life. It’s been an imperfect practice, and it always will be, but it’s made all the difference in my life since then.

Life is about not knowing and then doing something anyway.

“If you’re stuck on a problem, don’t sit there and think about it; just start working on it. Even if you don’t know what you’re doing, the simple act of working on it will eventually cause the right ideas to show up in your head.”

Action isn’t just the effect of motivation; it’s also the cause of it.

This is a great reminder for me because I am a cerebral person. The thing I struggle with the most is overthinking my problems. This was again something I had to learn on the job while heading the retail operation. I would face a problem and try to find the “perfect” solution for it, which inevitably meant thinking and thinking and thinking again. I received another bit of wisdom in one of those senior manager sitdowns: “You’re never going to have the time or the ability to implement the perfect solution. Consider a couple options and then pick the one you’re most comfortable with and accept that you might make another mess that you can clean up later.”

Again, the lesson applies to life in general. You can think your problems to death, literally (see Buridan’s ass). You’ll get more places by simply doing, and dealing with the consequences. Consequences are unavoidable and there are always more problems to solve whether you get the current one right or wrong. There is also a parallel to investing practice here– facing a sound investment with a 10% return potential, should you hold out and wait for one that could return 20%? No. Invest whenever you can find a safe return and worry about whether you’ll have free resources for the 20% return when you come to it. If you do otherwise, you may give up even the 10% return chasing a phantom 20%.

Commitment gives you freedom because you’re no longer distracted by the unimportant and frivolous.

I’ve been kicking this one around a lot with friends recently. During the financial crisis, I was enamored with the idea of living with no flag, traveling around the world as a lifestyle, being a “citizen of the world.” It’s a sexy, exciting dream, but it makes no sense. Part of what makes being a “citizen” of any place enjoyable is the commitment you make to that place which allows you to have deeper connections and experiences than a mere tourist. It can be captured in the metaphor of the traveler who wants to know where the locals eat. You can’t eat like a local when you’re always on the move. You can live the life of a citizen when you’re an uprooted, uncommitted nomad.

This also dovetails with the simplicity mindset of Marie Kondo’s “Life-Changing Magic”. When you live life simply and rid yourself of ill-used possessions, you commit yourself to fuller utilization of the possessions that remain. You commit to a particular use pattern and give up the elusive dream of having and using it all, which is impossible. The things you discard are marginalia, they are not important, frivolous things in your life.

With your limited “fucks to give” in life, you must draw a close bead on the things you’re aiming to achieve.

Death is the only thing we can know with certainty […] it must be the compass by which we orient all of our other values and decisions.

And then there’s that. It’s great that the book tries to wrestle with the issue, because we have an anti-death culture, this diseased belief that “death can’t happen here.”

Yesterday I was re-reading the preface of Phil Fisher’s Common Stocks and Uncommon Profits. The preface is written by Phil’s son Ken, who is also part of the investment industry. At the time Ken was writing, his father was suffering from dementia and slowly dying. Ken reflected on the former vitality of his father which had now diminished, and lamented the fact that he tried to continue the game of investment even in his old age, which Ken argued was a young man’s game.

One example he provided was a time when his then eighty-year-old father told a group of people of some stocks he was picking which he looked to own “for the next thirty years.” The people he was speaking to thought this was cute, but Ken thought it was depressing and nonsensical. It was extremely unlikely his father would be around another thirty years and so his behavior and values were mismatched for what was appropriate to his stage of life. In effect, he was squandering what little time he had left, because he would not be honest about the inevitability of his impending death.

Ken suggested he would’ve been better off visiting with family, traveling or just taking it easy. And I agree. There’s a wisdom here in understanding death and keeping it, in some sense, in the forefront of one’s mind. We should be making the best plans we can with the time we think we have left, but we should never kid ourselves about how much time that is likely to be and what kind of plans are appropriate for the occasion.

3/5

Notes About The First Ten Days Of Your Life (#infancy, #life)

Notes About The First Ten Days Of Your Life (#infancy, #life)

To my Little Lion,

I wanted to share some observations about the condition of your world at the time of and shortly after your birth, just ten days ago. It may interest you to look back on this some day, and it will be of benefit to me and your mother to remind ourselves of our good fortune, and yours.

You were born during the Winter Solstice last year (it’s New Year’s Day today, so I can already say “last year”, as if you’ve been around so long… we’re already shocked when we realize you have not been around even a month) and what’s more, you were born during a rain storm, the rarest of rare weather conditions where we currently live. Your mother and I are not superstitious people and we don’t believe there is any cosmic agency behind the concurrence of these events, I just find them remarkable because of their natural beauty, much like the nearly perfect weather conditions this morning when I finally took our dog for a walk– cool, breezy, clear, sunny, good visibility all the way off the coast to the island, fresh smelling air after another night’s rainfall.

You were born at home, as planned. The Wolf and I planned for months for that moment, as you were slowly growing inside of her belly, because we thought it gave the most advantages to you and to us. All of our friends who have had children describe the happiest part of the birth of their children as the moment they were released from the hospital and able to come home. We figured, why not just start at home and skip a few steps? We valued the privacy of it, as well. Your mother could labor anywhere she felt comfortable doing so, in an environment she knew well, with only your father and the three birth attendants (the midwife, the midwife-in-training and the doula to comfort your mother) nearby. We looked at your birth as a natural, healthy process and we were concerned that bringing you into the world in a hospital would encourage everyone around you to try to notice what might be wrong with you and your health, rather than what is right. It’s not that we’re anti-hospitals, and we appreciate that we live nearby one in case we needed extra help in bringing you into the world, we just try to live our lives simply and it seemed like we could do without. Your mother took great care to eat well, exercise, think happy thoughts, read a lot about you and how you were growing and how you’d be when you arrived, and so it seemed with such low risks to keep it that way by having you at home.

What did not go as planned was the specific day you decided to arrive! We were expecting you a few weeks from the day you were born. The Wolf and I were methodically going through our preparation checklists each day and week as your expected due date got closer. The day you were born, I was supposed to run to the market and start stocking up on supplies to feed your mother and the birth team. I didn’t get there in time! Your mother started laboring early in the morning and had pushed you out (without any drugs or medical intervention) by the afternoon! We didn’t even get the birth tub here in time for your water birth, she had you right on the bed you sleep in with us at night. The midwife was very kind and let me “catch” you as you came out. It was an exhilarating experience to grab your wet, slippery, bony, hot little body for the first time and lift you up and place you on your mother’s chest. We didn’t know what you’d be — a little boy or a little girl, though your mother says she secretly suspected you were a boy, and every passerby on our daily walks thought for sure you were a boy from the way your mother was carrying you, which is more superstition — but we were excited that you were what you were, if that makes any sense!

The birth team was so great with your mother. The doula arrived first and comforted your mother. Even though you couldn’t LEGALLY be delivered in our own bath tub (well, your bath tub, in your room), which I will tell you more about such silliness when you’re older, your mother labored in there with the doula while we waited for the midwife and her assistant to arrive. Everyone encouraged your mother and gave her the confidence and support she needed to bring you out, even though your father didn’t have any food or drink for anyone!

Your Grandma and Grandpa Lion came over to visit that first night and brought your mother and I some much needed food. They were so excited to see you! Your Grandma Wolf came a few days later, she lives a few thousand miles away and had to quickly change her plane tickets to be able to see you. She’s with us now and will be for the next few weeks. She is a big help for your mother and father, helping with sweeping, cleaning up dishes (your father is rediscovering his penchant for cooking these past few weeks), caring for your dog, doing laundry and even spending time with you which is really her greatest reward. She does all the hard work without complaint, with a smile on her face, getting to spend time with you for even a moment seems to make it all worthwhile to her. Even when you poop and pee on her, the chair, the floor and your dog during your “air time”. (Oh, and your Grandma Wolf is super obsessed with you staying warm, she is always chiding me about it.)

Your Auntie Lionesses came by and pitched in, too. They helped change bed sheets, sweep floors and they gave your mother and father an awesome early Christmas gift– six nights of meals that we packaged and put in the freezer to make more time available for me and your mother to spend with you. You’ve had a few visitors already, mostly your mother’s friends and some of Grandma and Grandpa Lion’s friends. They’ve bought food, gifts and good wishes. We didn’t have a name for you at first. Well, we did, but we hadn’t settled on it. So the first five days of your life created an obsessive mystery for many of the people who care about you. We “revealed” your name on Christmas Day while visiting at Grandma and Grandpa Lion’s house and everyone was overjoyed. Your Grandpa Wolf doesn’t get to meet you, but he gets to enjoy being part of your namesake, which we hope you will be able to appreciate some day.

As I said before, it is hard for your mother and I to believe you’ve only been with us for ten days now. All you know of the world is our bedroom, our living room, our kitchen, the view of the sky on the way to the local bakery and back, the ceiling of your mother’s car, and a few rooms of Grandma and Grandpa Lion’s house. The only people you know about are the few people who have come to see you so far, and most of them looked like funny blurs to you that you couldn’t focus on. You might imagine there are three animals in the whole world, your dog and your grandma and grandpa’s two dogs. We try to keep remembering that everything is new to you right now and everything will be new to you for years to come– you will need patience and your own space to learn and explore the vast diversity of the world and to make sense of it all.

We spend time holding you, but we also give you time on your back — on the bed, on the couch, not yet on the floor but eventually — to look around and move your body on your own. Your movements are jittery and random, but they have great meaning and importance to you. You are working on developing yourself, even when you’re moving around in your sleep, trying to become the person you will be. We don’t ever want to forget that, or try to hurry it, or expect anything of you but that. We resist as much as we can the temptation to “pattern-fit” your behavior right now, especially when people ask silly but well-intentioned questions like “How is he sleeping?”, “How is he eating?” etc. The answer is always, just as you are supposed to, whatever that is each day and night, it’s always changing because you’re always changing, getting a little older and a little bit further along your own plan each moment.

There’s so much more I could say, but this is what I want to focus on for now. Raising you is indeed a challenge, but it’s a challenge we chose and it’s a challenge we love (even aside from all the help we’ve gotten so far). We look forward to each day with you!