Review – Shoe Dog

Shoe Dog: A Memoir by the Creator of Nike

by Phil Knight, published 2016

What can we learn from business books, especially business biographies?

I used to laugh about this with a friend a considerable amount– all these dopey books about businesses, business men and business secrets, written by ghost writers and know-nothing journalists (hack writers), developed for and marketed to mass audiences who want an entertaining dream and not an edifying edifice to stare at imponderably.

We would be amazed at how absent these books were of any meaningful details, in fact, precisely the meaningful details necessary to actually understand what was going on and “how’deedodat?” It was like some kind of conspiracy of incompetent stupidity, to write books about business without margins, without tax rates, without rates of return on capital, without the capital structure outlined and revisited periodically as an enterprise grew, without definitions of risk and explanations of strategy.

Instead, lists of names, dates, places. Stylized depictions of tragedy and success. Cliched, retrospective business wisdom, as if the hustler-entrepreneur thought in any terms other than pure, maddening survival or unbridled, sociopathic dominance of everyone around him. Overlooking special revenue or R&D relationships with governments that were critical to a firm’s mastery of its market or early survival, or ignoring impolitic questions of how the founder avoided getting swept up in the local social conflagration du jour and being drafted out of existence.

To this mish-mash of storytelling sins this book adds a new one, anachronistic language. Somehow, Nike/Blue Ribbon was a “startup” before startups in the 1960s (and even into the 1970s, when it had been around for almost a decade… just getting going, really!) and one of the guiding philosophies of Knight and his “Buttface” crew (more on this in a bit) was to “fail fast”, nearly five decades before the software development revolution convinced the business world that iterative testing and quick trial to failure was the right way for all businesses to grow and not just a specialized niche that could essentially emulate A/B variants of its product or service offering at no cost or risk with the simple push of a button. But yeah, the shoe makers were doing that back when Vietnam was a thing.

That is why I read “Shoe Dog” with skepticism and found myself lusting after a critical beatdown as I turned the pages. A 25 year-old Phil Knight travels to Japan and secures a distributorship for a top Japanese athletic shoe, quite by chance and without any explanation of how he surmounted the language barrier in post-war Japan, then proceeds to tour the globe for four months by himself as some kind of backpacker-type tourist while his order samples, presumably, sit and wait for him the whole time? This is the beginnings of what would become Nike. And it went just like that.

Yeah, right.

The book is full of these glaring contradictions. Knight wanted to avoid the standard, stultifying corporate life, so he built a massive corporation. He believed in playing it straight as he advised his Eagle Scout nominees, so he lied to his financiers and production partners to grow his business. He never had enough cash to keep the bank happy and grow the business organically, so he bought himself a nice home and took the team on bi-annual corporate retreats to luxurious places (the book suddenly introduces this information about 12 years into the company’s history, where it is also revealed that they endearingly refer to one another as “buttfaces”, somehow demonstrating their open and transparent corporate culture). His co-founder fools him into giving majority control of the enterprise at the time of founding, then gives him 2/3rds of his share when trying to retire without fuss or challenge.

What “Shoe Dog” taught me, then, is that I’ve been naive to think there is anything esoteric one can learn from business books like this. It is my mistake for coming to a mass market piece of media and expecting to hear an honest telling, or even an interesting one. These books are written to entertain, glorify the egos of those who they are written about or nominally by, and perhaps even to some extent to distract, delude or otherwise throw off of the scent the would-be competitors who read them.

Reading between the lines, Knight was an alcoholic. He was clearly unscrupulous and at times cruel in his dealings with others. He did not spend the time with his family that they wanted from him. He lied, consciously, to his business partners and financiers. And he sued and counter-sued to stay in business or gain advantage. He did some other stuff, too, but these are the kinds of things that seem to set people apart, alongside luck. Some people play by the rules, either legally or their own conscience or both, and some people find ways to stretch these factors or simply break them without regret. Those people go on to be billionaires. And they have an incentive to lie about what they did and how they did it because after all, lying is what got them there in the first place.

You will never know how a business was really built by reading a book about it. And you would probably never find out even if you were a friend of the founder. You may not even be clear on what happened if you were inside the company itself. It’s too complicated and there are too many human factors involved that lend themselves to obfuscating the truth, if it can even be remembered.

One thing I learned from “Shoe Dog” is it’s my own fault if I keep reading this stuff and find myself frustrated at being anything but entertained.

3/5

Review – The Bully Pulpit

The Bully Pulpit: Theodore Roosevelt, William Howard Taft and the Golden Age of Journalism

by Doris Kearns Goodwin, published 2013

I picked up this title for two reasons. The first reason was to try to explore the phenomenon of “fake news” and the mainstream media’s war on Donald Trump’s presidency (and vice versa), to better understand the modern concept of the official press as an important check on government/regime power. The second reason was because at (now) 2,024 reviews on Amazon with an average 4.5-stars, this book seemed to promise it’d be a great, and long at 700+ pages of narrative text, story and I was looking for a great story, something that, whatever I thought of the point being argued, at least proved to be interesting and artfully constructed.

On the second point, I find myself frustrated. The research that went into this book is clearly exhaustive– the author speaks almost as much through verbatim quotes from primary source documents of the period (journal entries, private correspondence, public speeches, newspaper articles and editorials, memoirs, etc.) as she does in her own voice. This lends itself to creepy quirks of the book, such as the preponderance of quotes in which Theodore Roosevelt is found explaining himself in confidence via correspondence with Massachusetts Senator Henry Cabot Lodge, a character who relationship with Roosevelt is never formally introduced or explained! It kind of makes Teddy seem like a tool of some higher, shadowy powers. Why was he constantly justifying himself to another politician when the author never bothered to tell us when and how they met?

But this doesn’t seem to make for a great story. The narrative is rather breathless and sycophantic in tone. Teddy, a progressive openly-hidden amongst Republican ranks, is one of the good guys, he never gives up and, progressivism being the inevitable enlightened state of the universe toward which historical events are constantly moving us all, he of course never meets any real resistance along the way and always wins in the end. And this is a good thing. We never see the author questioning him, catching him in contradictions (though there are many for the alert reader!) or asking how it is that this One, Good Man managed to succeed in a wholly corrupt system and reform it despite the various Interests who had so much at stake in stopping him.

For a critic of progressivism, there is no profundity to consider; for the advocate, no value in confirming what is already known. The story is boring.

As for the topic of “fake news” and watchdog journalism, that must’ve developed at some other time period. We learn again and again of how Roosevelt took various progressive journalists of the era into his confidence and made friends of them, and them of him, with many ebullient feelings being shared all around. We learn of his unique talent for cultivating relationships with these journalists who then heralded him and his policies for public consumption, and we also come to understand the important value this access represented to people who essentially are merchants of information those with access frequently come by. In some scenes, we see them conspiring so closely that it almost seems that the journalists are formulating policy, and the politician is writing the story.

In other words, we see a symbiotic relationship that serves power. Where’s the watchdog here?

One thing I wondered as I read this book was, “Was progressivism truly inevitable?” It’s hard to see how it could’ve been stopped, or what would’ve existed that was much different from it if it had been. Roosevelt’s insidious support for what every critic at the time could quite obviously see was socialism, from within the Republican party, which according to repeated insistence from the text had a stranglehold over the entire government, calls to mind the cliche, “With friends like these, who needs enemies?” It seems that there was a competitive advantage in politics in moving further and further to the left, no matter what party you came from, and the investigative journalists of the era (such as the evil Lincoln Steffens, who spent many years becoming “educated” in Europe about Marxism on his businessman father’s nickel) were only too happy to assist in readying the public for this ideological assault. When you read the accounts of the period of union workers intimidating “scab” worker families (women and kids), beating strike-breaking workers and even dynamiting non-union workers in public places, it kind of sounds like terrorism, something that seems like it would be a hard sell to good-hearted middle class Americans.

Yet, that is the side of history that won, and guys like Roosevelt and the investigative journalists helped make it happen.

It seems like it’s worth not forgetting that when listening to the media today tell us the important role it plays preventing democracy from dying in darkness while it does the bidding of the Deep State.

3/5

Review – The Snowball (#investing, #books, #business, #review)

The Snowball: Warren Buffett and the Business of Life

by Alice Schroeder, published 2008, 2009 (condensed and updated)

This is my second reading of The Snowball. I enjoyed it almost as much as the first, five years ago, and definitely took away different things from this reading than I did last time. At that time, I was just finishing my “personal MBA”  deep-dive into value investing and was interested in Schroeder’s Buffett bio mainly for the information and insight it would yield into Buffett’s approach and track record as an investor. I was surprised to come away from that reading realizing that the book was a moral parable in the form of a man’s life (an incredibly successful, well-known and near-worshipped man) and my second journey through the book was more focused on the question “How should I think about living my life?” than the question “How should I think about investing?”

I found the book most exciting to read and most interesting personally in the exploration of Buffett’s origins and the detailed narrative about the first twenty years of the partnerships that proceeded his investment in Berkshire Hathaway. As the story wore on and it became more about managing what he had and dealing with the consequences of choices wrought long ago, I found myself losing interest, particularly as the Salomon and Long-Term Capital Management sagas carried on for a mind-numbing fifty-plus pages in total.

Buffett’s childhood was far more unusual than I cared to notice in my first reading. He was obsessed with business, investing and the impact of statistics in life not just from a young age, but in ways that were extraordinary even for someone to be described as “doing X from a young age” would imply by itself. Obsessed is not a word I use lightly here. The young Buffett was probably an odd creature to be around, even for people who loved him or found him interesting or were of unusual talent and ability themselves. This seems confirmed in later years when so many people familiar with him describe feeling exhausted after spending just a few hours with him. It helped me to realize how unfair and pointless trying to compare yourself to a person like Buffett is.

When asked by Bill Gates, Sr., at a dinner what single word they’d use to describe the outcome of their life and their success, Buffett said, “Focus.” As Schroeder describes in many places in the book, and especially at length in the final chapter, “focus” means something completely different when Buffett says it versus anyone of lesser ability and different personality. When Buffett says “focus” he means “to the exclusion of all else, with relentless, all-consuming energy, without tiring or being distracted.” There is no balance working behind the scenes. He gave up a lot of “normal” things most other people would insist on or desire in distinction to that which they were focused on, not as a sacrifice but as an inevitability of his personality.

The most obvious and tragic is his relationship with his family and his relationship with himself. Most other people who are driven towards success in their field and the monetary rewards that typically come with it offer up the excuse of their family as their motivation, honestly or not. This wasn’t the case for Buffett, and achieving supremacy in his profession and in his personal net worth really didn’t do anything to enhance his relationship with his family or the way he cared for them. It is indicated on numerous occasions what kind of tradeoff he would’ve had to make to be more involved with his family, and he never did it. It’s an excellent reminder for someone who sees themselves as driven to achieve that these tradeoffs are real and accepting a “lower rate of return” in one’s efforts is a necessary (and happy?) price to pay to maintain a relationship with one’s family, which itself is valuable.

Buffett’s relationship with himself is also instructive in this regard. Many people wonder how money can’t solve most problems, and why people who are super wealthy continue to eat poorly, exercise infrequently and maintain the same limited psychological state and insecurities they possessed before they achieved glory. The answer again is simple– in the drive toward massive wealth, things get set aside and often it is the improvement of the self as a holistic unit that is set aside first in order to claim excess in one aspect.

Of course, we can’t expect Buffett to be perfect. Nobody is, and the point of mentioning this isn’t to point out the man’s flaws, but to explain them. You can’t have Buffett and have these issues resolved to everyone’s satisfaction. They come with the territory. If you want to be “focused” like Buffett, plan on neglecting your family and yourself, quite a bit. That’s only a judgment if you think those things are objectively more important than wealth or self-actualization in the area of generating wealth. That’s not really a judgment I want to make here and I think it misses the point.

Yet, Buffett’s flaws make for a fascinating lesson in a different way. Though Buffett was unusual, and exceptional, and completely driven toward a single-minded purpose from a young age, the path was far from certain that he would need to tread to get to wherever it was that he would end up going. It’s easy to sit here today reading a book published almost ten years ago, recounting events that unfolded over the past eighty, and see what was inevitable as inevitable. But Buffett made mistakes. Many of them, along the way. That’s what’s truly remarkable, that he made mistakes and still arrived where he did. It’s a good salve for a person carrying around the perfectionist fallacy. Give it a rest and get going, you can make some mistakes and still end up alright if Buffett is any example.

I love reading stories like this, stories of flawed people of unusual ability who managed to achieve something heroic even if their life wasn’t truly ideal. I love knowing it can be done. I love knowing what the pitfalls and the tradeoffs are, so I can be mindful of them myself. I love the way I can give myself permission to not achieve what they achieved (in kind or in magnitude) having the benefit of hindsight to see what it truly took that I can’t give, or won’t.

But most of all, I just love watching someone create something from nothing. That creative energy is uniquely human and what I admire most about our species and this little project called “civilization” that we’re all tinkering away on. The Snowball is not as great an investment manual as I originally thought it was (for that, I’d recommend Buffett’s BRK shareholder letters, along with or after reading Graham’s Security Analysis and The Intelligent Investor), but it is an epic moral profile and a captivating read overall because of it.

4/5

Review – Grinding It Out (#books, #review, #business)

Grinding It Out: The Making of McDonald’s

by Ray Kroc, with Robert Anderson, published 1992

Reading through the stories of great entrepreneurs, business people and politicians like Cornelius Vanderbilt or Warren Buffett, it is easy to find a sentiment much like this one from Ray Kroc:

Ethel [his wife] used to complain once in a while about about the amount of time I spent away from home working. Looking back on it now, I guess it was kind of unfair. But I was driven by ambition.

I find this sentiment remarkable for a few different reasons.

The first is how common it is. It seems to suggest that achieving “great things” in a particular field of enterprise is not possible without neglecting one’s family and other personal relationships in favor of the “productive” relationships and activities.

The second is how little awareness of this tradeoff many such people seem to possess, at least until they reach the end of their life and all their glory has already been gotten. Then, as they contemplate their state of affairs, either looking back on the empire they built or ruminating regretfully now that they are deposed (violently or voluntarily), they seem to re-evaluate how they spent their time and decide they came up short in considering family time less important than it should have been. They also seem to be either disconnected from the damage they do to their children and their psyches, or else try to evade such recognition– I think Ray Kroc mentioned his daughter all of two times in this 200 page telling, and while his daughter may not have been critical to the story of building McDonald’s, you’d think she would’ve provided enough value and motivation in Kroc’s life to merit more than a couple passing mentions!

The third is how excusable such high achievers seem to find their behavior to be in retrospect. “But…” is a permission word. It negates what comes before and offers cover. Yes, Ray Kroc was unfair, but… It suggests a different moral framework for studying life or a particular circumstance, one in which the rules don’t really apply and the ends justify the means.

The fourth is what a temptation these great projects must’ve provided to these people, to ignore their family, their health or any number of other values. If I was a successful paper cup salesman but stumbled upon the idea of McDonald’s myself, could I have resisted the temptation to build it and in the process knowingly give up my family, friends, physical well-being, etc.? It is perhaps easy to sit in judgment of another person’s efforts and decisions when the attraction of my own responsibilities is relatively less compelling. It’s easy to go home to my family at the end of the day as they typically offer me more interest and excitement. But would that be the case if millions of dollars and a global business organization hung in the balance? That I don’t know for sure, and perhaps you can’t know until you’re tempted with it.

But that leads to the fifth point, which is to consider whether a story like Kroc’s and McDonald’s could be told any other way. What if in the first 27 pages of the story of this business the quote above was not to be found, nor anywhere in the 173+ pages that followed? What if Kroc didn’t get divorced (twice), didn’t have a string of health issues along the way, came home and kissed his wife and daughter on the forehead five nights a week and spent most of each month at home and around town rather than around the country? What choices would’ve needed to be made differently to support that outcome, and how would the company look different either internally or competitively if that had been the case? How big would Berkshire Hathaway be if Buffett had raised his own children and loved his first wife more considerately instead of reading so many damn books and annual reports?

To ask may be to answer, but it’s frightening (hopeful?) to think otherwise.

Besides neglecting important obligations and personal considerations, what else do stories like these seem to tell us about those who achieve outsize success?

Incredible stamina seems to be part of it. They don’t just work hard, they work all the time. But again, it’s hard to know if this is part of the person, part of the responsibility and opportunity, or both. How would a person not work hard and often at something they didn’t love to the point they were mesmerized by it? Enthralled is a good way to describe the state of mind in relation to the idea of the thing being pursued here.

Also, simplicity. Maybe it’s the bad ghostwriting designed to break the story down for a lowbrow audience but the way these people talk about what it is they did, they rarely come across as great geniuses, though they’re often wits (Buffett is a notable exception here, and Vanderbilt was clearly “sharp”, a word for cunning back then, though it wasn’t clear he was necessarily “intelligent”, while it was clear he was no buffoon). The grand strategy and complexity is often seen in hindsight, knowing how the story ends and having years and years to tell it and thus accumulate various trappings which may or may not be integral to the success. In Kroc’s own words, it was all about Quality, Service, Cleanliness and Value and then spreading it across the land. Their financing was complicated, but it’s not clear it needed to be, especially if the company was less levered and less insistent on growing as fast as it did. Being focused seems obvious, yet important enough to mention it.

Where does that leave me? If there’s a way to build a legacy that doesn’t involve neglecting one’s family and health, perhaps by being more patient, moving more slowly or being less obsessed about the outcome, that is the kind of legacy I want to build. And I have to wonder what kind of personal insecurity or individual idiosyncrasy or whatever it is, that I seem not to have, that would not allow a person to make that choice given the alternative.

But if the only way to make things great is to trash some other part of your life and leave a smoking crater behind, a crater that’s especially painful in the vulnerability of old age, then I guess I better prepare myself mentally for more humble achievements. I’m just not interested in those kinds of tradeoffs and I don’t understand how such achievements could be satisfying without a family to enjoy them with and the sound mind and body necessary to experience it all.

3/5

Review – Iacocca: An Autobiography (#books, #review, #business)

Iacocca: An Autobiography

by Lido “Lee” Iacocca with William Novak, published 1986

What would the world of Big Business look like if it was owned and controlled by rational, intelligent capital allocators?

Before we try answering that question by reviewing a major episode in the business career of Lee Iacocca, let’s take a step back and talk a little bit about that man’s history before he arrived on the stage at that moment.

Iacocca was born to Italian immigrants in the early 1920’s. He lived through the Great Depression as a child and had the good fortune to develop a case of rheumatic fever in his adolescence. In that era, rheumatic fever could be and often was fatal, and frequently led to chronic health problems even after the infection was beat. He was lucky to get it because it resulted in him receiving a medical deferral during WW2. Instead of being blown up over some city in Germany like many of his peers, he worked hard on his studies in high school and college and had the benefit of such small class sizes during his industrial engineering classes at Lehigh University that he practically received a private tutorial for most of his four years.

After graduating from Lehigh, he got an offer to join the Ford Motor Company as one of 50 hand-picked students, but decided to pursue a masters at Princeton after receiving a fellowship. His luck continued when he got invited back to the company upon completing his studies despite the company forgetting it had promised to hold his spot two years earlier and then decided to hire him again anyway even though all the spots were filled.

Despite being hired on as an engineer, Iacocca quickly grew bored with his duties and petitioned for a role in field sales, which he was granted. His big break in the company came a few years later, not due to his engineering prowess but because of a slick local marketing campaign, “56 for ’56”, which was soon adopted nationally and to which the company attributed a big boost in sales. He was promoted incessantly, all the way up to president of the company in 1970, on the heels of a string of other successful promotions including the introduction of the Ford Mustang, Pinto, Escort and Fiesta, the Lincoln Continental Mark III and the revival of the Mercury brand and Cougar car.

If you’re reading this review anytime after 2017 when it was first published, you’re a bit puzzled at this point and don’t understand why you should be impressed with Iacocca. That’s because you have the benefit of hindsight and know how the story ends for these particular product lines and for the American auto industry in general. You also can’t appreciate how stupid sales and finance gimmicks like “56 for ’56” could not only meaningfully move the needle in a massive company’s sales, but could be placed like a laurel wreath on the head of one young man and allow him to propel himself up the ladder all the way to the company presidency. All I can say is it was a different time and America was a different place, and all the horrible stereotypes of the simplicity and innocence of the era seem, sadly, to have been true.

There’s one more bit of the story worth mentioning before we try answering our question. In being nationally-recognized initially, Iacocca was in practice being recognized by Henry Ford II himself, and it was Henry Ford II’s favoritism which allowed him to keep ascending the ranks. Later, like all good auto manufacturers seemingly must do when they find a talented executive with a string of successes accumulating (see the Hyundai/Krafcik saga most recently), Iacocca ended up on Ford’s shitlist and after carrying out a secretive investigation and waging a war of company politics against him for three years aimed at getting him to resign, he finally fired him in 1978.

Rather than being incredibly thankful for the amazing luck he’d had so far in his life and the astounding speed with which he had climbed the corporate ladder due to this initial favoritism, Iacocca developed major sour grapes. His heart filled with hate and disgust and he let Ford’s personal failings as a man become his own. He couldn’t give up and move on with his life and instead signed on to be president of Chrysler, Ford’s 2nd tier competitor, in what he thought would be a major “fuck you!” to Hank the Deuce. Now, here is where the story gets interesting and how we might attempt to answer the question first posed by demonstrating the disaster that is the present state of affairs.

In a chapter called “The Shah Leaves Town”, Iacocca the newly appointed president of Chrysler finds himself in a seeming perfect storm. Already in trouble because of a dysfunctional, hyper-decentralized operating structure, non-existent enterprise-level financial controls, last place product quality, poor sales volume, a debt-heavy balance sheet and out of control expense structure, Chrysler meets the same shocking set of macro events that every other major global auto manufacturer had to contend with at the time period, as well as the US economy in general– the Shah of Iran is deposed, the price of gasoline skyrockets and a terrible recession takes ahold of the US economy.

In response to these circumstances which are truly beyond Chrysler’s control, Iacocca concludes he is forced to:

  • slash major product R&D expenses, further exacerbating their low product quality
  • layoff thousands of plant employees and sales and administrative staff
  • sell off foreign divisions of the company that are deeply in the red
  • sell off the company’s valuable franchise real estate at fire sale prices (and later repurchase it at multiples of said prices)
  • sell off some of the company’s only profitable, “evergreen” divisions, such as its US military tank supplier, because “Chrysler was in the business of selling cars and trucks, not tanks” despite C&T losing millions annually and tanks being guaranteed a $50 million profit annually by the Department of Defense
  • ultimately, going hat in hand to the government begging for $1 billion in loan guarantees to avoid a Chapter 11 bankruptcy based on some whiny logic about “Free enterprise and survival of the fittest, except when my cock is on the chopping block” (paraphrasing)

The chapter is truly astounding in that it reads like a tell-all of a manager’s total incompetence in the face of adversity, doing all the wrong things for all the wrong reasons and still having the nerve to blame bad luck and the government as if the crisis was created in one day and not over a long period of time beforehand. Truly, considering the amazing string of good fortune that Iacocca had over his previous thirty year career with Ford and the jarring inability to think creatively when faced with a headwind, it begs a lot of questions about what of the success he and Ford experienced during his earlier tenure was due to their own genius versus random happenstance.

And it certainly begs a lot of questions about what the hell Chrysler’s board of directors was doing in the decades leading up to these freak events, while the company’s competitive position was eroding, its organization degrading and its risk growing to the point that a devastating calamity was all but inevitable.

That is what is so regretfully consistent about the way these episodes are depicted in books and in the press, whether we’re talking about the fate of one rundown company like Chrysler or the “sudden” onslaught of a national financial panic, like in 2008. To hear the people in charge tell the story, no one could’ve seen it coming and it was all someone else’s fault and due to a unique sequence of shocks that unfortunately all happened at once.

For people with no principles and no real understanding of complex events, such as major corporate failures requiring bailouts/government guarantees, or business cycle busts, these things are always surprising in magnitude and mystical in nature. But for people who read and think deeply about them and can trace the interplay of multiple phenomena over a long time series, another picture develops. Here, we can see that luck has little to do with what results beyond simply tipping over something that was already unbalanced. And actually, it is a series of poor decisions, often made in utter ignorance of what it is that is being decided for or against in each episode, that logically coalesce into a disaster masterpiece as fragility grows with the increasingly complexity of time.

If Iacocca was anything, he was a decent, hard-working salesman and marketer, a promoter, especially of himself. But he knew nothing of risk and how to manage it and gave little thought to managing a sound capital structure and the way all the operational pieces of the puzzle contributed to it, or didn’t– that’s probably why he was always referring to the accountants in the book as “bean counters.” This diminutive phrase for the people whose jobs are to provide an accurate state of the company’s financial health and system and thus allow rational capital allocation to take place in full light of the organization’s risks really tells you all you need to know about why things turned out as they did for Chrysler.

Although Iacocca can’t be blamed entirely for the mess he inherited at Chrysler, his response and strategy for fixing it certainly gives us a place to start in thinking about what not to do when master of a universe like this, and thus how a rational allocator of capital might do differently.

In the first place, a rational capital allocator would not rest on his laurels and allow good times, and especially boom times, to delude himself into thinking that all was well and no drastic improvements could be made in the business’s operations. In fact, this seems like the best time to consider making such decisions, because the company operates from a position of strength and thus will feel, and actually have, the maximum of alternative choices to make. A rational capital allocator would want to avoid at all costs finding themselves in a position where they are trying to decide which assets to dispose of, for example, while the clock is ticking on a debt bomb.

Second, a rational capital allocator would never fool themselves into thinking that the circumstances witnessed today were the consequence of recent events or decisions. Rather, he would look to the past, and further into the past the more complex and the larger in scale the operation in question is, for clues as to where the actual problem originates and therefore what the proper remedy might be.

Third, when faced with a crisis, a rational capital allocator would not rally around emotional identities such as “We’re a car and truck company at heart” but would instead contend with the logic of where profitability lies– if the only division making money is tanks, then it turns out you are in fact a “tank company”, in which case you better make haste in selling off and disposing of all non-tank related divisions, such as cars and trucks. The sub-section to the third point is that before it even got that bad, a rational capital allocator would’ve been asking questions like, “What does making tanks have to do with making cars and trucks, besides freak accidents of history?” and with no reasonable answer to be found, he would’ve worked to separate the capital and reporting structures of these activities long before the crisis struck.

Fourth, the rational capital allocator would realize that debt holders stand in direct opposition to equity holders and could easily set them aside given the right circumstances, and so he would be extremely hesitant to use debt in his capital structure, if at all. He’d also be a bit more eager to pile up cash rather than use it on silly, ego-driven things like acquiring an empire of assets in foreign markets just to be able to make the claim that he is operating a “globally diversified operation.”

Fifth, a rational capital allocator would try to qualify and quantify the major predictable threats to his model and not only manage his operations to them, but have anticipated his own response were such risks to actually manifest themselves. For example, if you run a major auto manufacturing enterprise, some big risks you might keep on the radar would be gas prices (affecting your demand), labor and steel prices (affecting your cost of production) and major geopolitical instability which might impact those primary risks (such as a major oil exporting country becoming politically unstable). Regime change is pretty frequent throughout history, and it’s not like there were no signs the Shah was unpopular in Iran prior to his departure. It should’ve been conceivable to major decision-makers like Iacocca that such events could take place and would have a negative impact on his operations.

3/5

Review – The Rational Optimist (#books, #optimism, #reason, #evolution, #economics, #development)

The Rational Optimist: How Prosperity Evolves

by Matt Ridley, published 2011

Why, for the last 300 years, has “everything” been getting better and better in terms of just about any human outcome you can come up with? Human beings are getting better at exchanging ideas and thus generating new and better ideas. In addition, the total stock of life improving ideas humanity can build from is compounding at an increasing rate. The benefits of free exchange extend beyond the economic realm and into the philosophic, and then back again.

The author charts a surprising course through humanity’s shared hunter-gatherer history. He argues that it was economic trade which allowed the division of labor to develop, and the division of labor which allowed for the transition from hunter-gatherer subsistence living to agricultural subsistence, and from there to a compounding of capital and an increasing division of labor and economic specialization that allowed for mankind to finally break free of the Malthusian trap in many parts of the globe (and more every year).

In addition, he says we are never going back. The genie is out of the bottle and rather than the division of labor being fragile, it is far more robust than any social structure yet experienced and gets stronger the more specialized it becomes.

Because of this, and because when surveying history up to this point in the broadest terms possible there is evidence of things getting better and better for more and more people, not the opposite, the author concludes that the rational thing is to be an optimist and expect this trend to continue.

There are several convenient leaps of logic built off flimsy premises that would startle and upset an opponent of markets and industrialized societies, but there is such a preponderance of hard logic and even harder evidence that there isn’t enough here to tip over the apple cart. But the value of this book is less in its rhetorical force for free markets and industrial development and more in its sweeping survey of a number of seemingly unrelated historical data and economic phenomena into a coherent picture of hopefulness about humanity’s future. I found myself joyfully surprised by the idea that in the chicken-egg quandry of agriculture and trade, the author contends that trade came first and produced all the surplus we moderns have enjoyed since then.

Going “back to the land” or seeking out de-urbanized, atomized communities seem to be doomed to bring their proponents a lower standard of living overall, idealizing a past reality that never actually existed or rejecting the very thing (the division of labor) which is necessary to enjoying a desirable standard of living with modern securities and comforts.

3/5

Review – Good Strategy/Bad Strategy (#review, #books, #strategy)

Good Strategy/Bad Strategy: The Difference and Why It Matters

by Richard Rumelt, published 2011, 2013

I recently came across GS/BS on an old blog I have been subscribed to for years. Being in the middle of some strategic planning within our own business, the find seemed timely so I moved the title to the top of my list and set aside “The Russian Revolution: A People’s Tragedy” for completion at a later date. I am glad I did, although having now concluded the read I find I have a conflicted view of the book.

One reason I find myself interested in this book is it is in fact, interesting. I find myself thinking a lot, and thinking differently, about various strategic topics covered in the book as well as my own related challenges, which suggests the book has given me a valuable new framework. On the other hand, I thought the author did not define his terms in such a way that leaves me feeling confident he has created a solution to the problems he has identified with most approaches to strategy– it’s almost like he came up with an even sexier sounding way to think about strategy problems without addressing the concrete limitations of the approaches he has critiqued.

In my review rubric, a 5/5 is a “classic” book that not only can be read again and again, but should and likely will be, each reading offering new insights or appreciation of the human condition examined within. A 4/5, on the other hand, is not a “near classic” but rather just a “very good book” that is worthy of recommendation to others. A 3/5 is a book with some value, but is otherwise unremarkable. And we won’t waste or time rehashing the miserable 2/5 and 1/5 ratings. I am puzzled because I think I am going to end up re-reading this book, and most likely in a very short period of time after I’ve tried to digest and apply some of what I think I’ve just learned to my own strategic activities. That suggests it is a potential 5/5. But I don’t feel like I will enjoy this book more with each re-reading, especially because some of the case studies contained within will have grown very stale (many I have encountered in other reading materials and few of those had any new insights to glean this time around). And because of my concerns with the definitions and overall structure of the book, I am not even sure it is a 4/5. I went back and forth with a friend in a private message system about whether I thought he should read it or not, finally settling on “yes”, and I have recommended it to others since then. It’s definitely not a 3/5.

Since my mind is not made up about what this book is saying, I don’t have a concise review of its major ideas to offer at the moment. I might reflect and write another post if and when I do, likely after the suggested re-reading. For now, I am just going to collect all the passages I highlighted and see if anything obvious bubbles up into my consciousness as a result:

  • Strategy is about “discovering the critical factors in a situation and designing a way of coordinating and focusing actions to deal with those factors.”
  • A strategy that fails to define a variety of plausible and feasible immediate actions is missing a critical component.
  • Doing strategy is figuring out how to advance the organization’s interests.
  • The kernel of a strategy contains three elements: a diagnosis, a guiding policy and coherent action.
  • The most basic idea of strategy is the application of strength to weakness.
  • A hallmark of true expertise and insight is making a complex subject understandable.
  • If you fail to identify and analyze the obstacles, you don’t have a strategy.
  • A strategy is like a lever that magnifies force.
  • Strategic objectives should address a specific process or accomplishment.
  • Business competition is not just a battle of strength and wills; it is also a competition over insights and competencies.
  • To obtain higher performance, leaders must identify the critical obstacles to forward progress and then develop a coherent approach to overcoming them.
  • The need for true strategy work is episodic, not necessarily annual.
  • A good strategy defines a critical challenge.
  • Strategies focus resources, energy and attention on some objectives rather than others.
  • All analysis starts with the consideration of what may happen, including unwelcome events. I would not care to fly in an airplane designed by people who focused only on an image of a flying airplane and never considered modes of failure.
  • A great deal of strategy work is trying to figure out what is going on.
  • Slowing growth is a problem for Wall Street but is a natural stage in the development of any noncancerous entity.
  • A diagnosis is generally denoted by metaphor, analogy or reference to a diagnosis or framework that has already been accepted.
  • A guiding policy creates advantage by anticipating the actions and reactions of others, by reducing the complexity and ambiguity in the situation, by exploiting the leverage inherent in concentrating effort on a pivotal or decisive aspect of the situation, and by creating policies and actions that are coherent, each building on the other rather than cancelling one another out.
  • The coordination of action provides the most basic source of leverage or advantage available in strategy.
  • Anticipation simply means considering the habits, preferences, and policies of others as well as various inertias and constraints on change.
  • A master strategist is a designer.
  • The truth is that many companies, especially large complex companies, don’t really have strategies. At the core, strategy is about focus, and most complex organizations don’t focus their resources. Instead, they pursue multiple goals at once, not concentrating enough resources to produce a breakthrough in any one of them.
  • A competitive advantage is interesting when one has insights into ways to increase its value.
  • The first step in breaking organizational culture inertia is simplification.
  • To change the group’s norms, the alpha member must be replaced by someone who expresses different norms and values.
  • Planning and planting a garden is always more interesting and stimulating than weeding it, but without constant weeding and maintenance the pattern that defines a garden — the imposition of a special order on nature — fades away and disappears.
  • In a changing world, a good strategy must have an entrepreneurial component. That is, it must embody some ideas or insights into new combinations of resources for dealing with new risks and opportunities.
  • Making a list is a basic tool for overcoming our own cognitive limitations. The list itself counters forgetfulness. The act of making a list forces us to reflect on the relative urgency and importance of issues. And making a list of “things to do now” rather than “things to worry about” forces us to resolve concerns into actions.
  • When we do come up with an idea, we tend to spend most of our energy justifying it rather than questioning it.
  • A new alternative should flow from a reconsideration of the facts of the situation, and it should also address the weaknesses of any already developed alternatives. The creation of new, higher-quality alternatives requires that one try hard to “destroy” any existing alternatives, exposing their fault lines and internal contradictions.

4/5

Review – The Vaccine Book (#vaccination, #health)

The Vaccine Book: Making the Right Decision for Your Child

by Dr. Robert W. Sears, published 2011

How many people who are “pro-vaccine” have read a book about vaccines?

How many people are aware of the frequency, severity and treatability of diseases which have vaccines available before deciding to take the vaccine? How many people understand the common, rare and potentially severe side effects, the physical components in the vaccines, the method by which the vaccine is manufactured and the availability of competing vaccine brands and production methods?

How many people understand the common vectors of each vaccine treatable disease and thus how to potentially avoid exposure to it entirely?

Who is likely to be better read on the subject of vaccines (even if you argued that they are ultimately misinformed)– your average vaccine taker, or your average vaccine skeptic?

Dr. Bob Sears is “pro-vaccine”– he believes vaccines have done more good than harm in the history of medicine and that they are an important part of individual and public health practices and he believes the standard vaccine schedules for infants and adults should be followed with few exceptions. So why is he having his medical license put under review because he supposedly gave a “non-evidence based” recommendation to a family to not vaccinate their child?

Because it’s hard to imagine a world in which a doctor would come under the scrutiny of authorities for giving a pro-intervention recommendation to a patient that was “non-evidence based”, perhaps we can assume that it is because Dr. Bob has challenged the medical establishment on the most fundamental level possible by writing a book which posits that patients should be informed about their choices and should ultimately provide knowledgeable consent before proceeding with a potentially dangerous treatment regimen such as infant vaccination. Sadly, if you ask most doctors to explain why they want to treat you the way that they do, what you get is not “evidence based” dialog about your choices, but sarcastic reminders about whose medical school plaque is on the wall.

It’s sometimes more like a priesthood than a profession, even though that doesn’t necessarily mean their advice is wrong or should be ignored.

So that is the controversy, but what does Dr. Sears actually say about vaccines?

The first twelve chapters of the book are dedicated to one disease each and its respective vaccine; the remaining chapters explore vaccine research, vaccine safety, vaccine ingredients, vaccine side effects and other topics.

The disease chapters outline the common course of each disease including symptoms, severity and treatment, followed by the common vaccine options available on the market including their preparation method and ingredients and common and rare side effects. There is a “pro” and “con” section exploring reasons to consider administering the vaccine and reasons why people/parents have not wanted to take the vaccine, and then Dr. Sears weighs in with his own take on how important the vaccine is. Each chapter helpfully summarizes the information with simple boxed call outs indicating whether the disease is common, severe and treatable (without a vaccine).

The common/severe/treatable approach is interesting. I found a lot of the diseases covered not-threatening because of the various combinations they “checked” in each category: a disease might be severe and treatable, and not common, or common, but not severe and treatable. The worst combination would be common, severe and untreatable– I don’t remember any disease with that profile. Just the opposite, in fact. According to Dr. Sears, with thanks mostly to widespread vaccination, most of the diseases mentioned are not common (to the point that they’re actually or practically eradicated in the US/West) so there is almost no chance of catching it, vaccinated or not. Several others are typically so minor in their symptoms, especially in infants (versus adults), that they might be mistaken for a common cold if caught. And those that are potentially severe seem to be treatable with antibiotics in most cases, especially if diagnosed early in the course of the illness.

That being said, some of these diseases have the potential to put the victim in the hospital if the disease is not checked early, or it happens to be especially challenging to an individual’s immune system. In such a situation, even with a full recovery and no lasting damage the experience itself is likely to be stressful, costly, traumatic for the child and heartbreaking for the parents to watch– it’s not a joke as far as risks go, and it needs to be considered seriously. And a few of the diseases, if caught and if particularly intense in the course of the disease, do risk permanent neurological or organ damage even if successfully treated. That’s a terrifying possibility!

Reading between the lines a little bit here, Dr. Sears seems pretty clear that whatever risks there are for an unvaccinated child in contracting and fighting any of these diseases, they are even smaller for a child who is breastfed and avoids day care or other germ-ridden public child environments. Assuming this is the course a parent is following with their infant (as we are), it seems a lot more like a judgement call between accepting the risks of rare disease complications the child is likely never to get, or accepting the risks of vaccine side effects (short and long-term) which are inevitable and seemingly random in their frequency and severity. There are several diseases/vaccines mentioned which simply pose no risk whatsoever (chickenpox), or for which the illness can not be contracted by the infant without an infected mother who transmits it during pregnancy or birth, or for which the illness and vaccine do not become relevant until adolescence or adulthood (such as HPV, a sexually-transmitted disease). Taking what’s left, and given our commitment to breastfeeding and homecare/homeschooling, it just doesn’t look like vaccines make a lot of sense for our family.

That was the part of the book I struggled with the most, when Dr. Sears recommended a vaccine not for the infant’s safety, but for public health reasons, such as to maintain low prevalence of a disease across a population, or to protect at-risk family members or caregivers who could catch the disease from the infant and have a more difficult time fighting it (for example, Dr. Sears talks about how a pregnant school teacher could catch a disease from unvaccinated students that could harm her unborn child). This is all good information to have and consider in the event of one of these complicating circumstances actually being relevant to a family’s situation, and certainly the “moral” issues are worth considering and debating, but it seems clear that if the question is simply put as “Does this vaccine represent a worthwhile risk/reward profile to the individual being vaccinated?” the answer we arrived at was often “No.” That’s a very different question from “Is it our job to take health risks with our child to protect other people/children from health risks?”

Interestingly, smallpox has been eradicated but the vaccine is no longer given to preserve herd immunity. Instead it is controlled by the US government as a national defense reserve. In identical situations where a disease, such as polio, has been practically eradicated, Dr. Sears still recommends getting the vaccine for public health reasons, but with smallpox there is no suggestion that the public needs to keep getting vaccinated to be protected from an eradicated illness. Why the different logic?

Another item I made special note of was the relationship between traveling, domestically and internationally, and vaccination of an infant. Dr. Sears is explicit in saying that flying around on airplanes is not an easy way to catch a vaccine-preventable disease, and that there is essentially no risk of this happening for travel within the US, and there is very little chance of this happening for travel outside the US. He does suggest that people who are essentially “living in the bush”, doing missionary work in remote locations or areas where these diseases are endemic in the population, are at special risk for some of these illnesses, but again this doesn’t apply to us because we aren’t going to be traveling to poverty-ridden areas or where access to clean water might be an issue. It was comforting to know that travel as part of our lifestyle doesn’t really need to be changed because of our decision not to follow the recommended infant vaccination schedule.

The other thing I wanted to mention is Dr. Sears’s opinion about the state of vaccine safety research. In short, he says a lot of the studies are wanting. Here are some especially troubling quotes:

Some vaccines aren’t studied alone. Instead, they are given along with several other vaccines, so there is no way to know what their actual side effects may be.

[…]

Most vaccine side effects are monitored for a short time via parent questionnaires.

[…]

Out of the twenty-three major studies done to date that show no link between vaccines and autism, eighteen have some conflict of interest involving vaccine manufacturers. Similarly, the addition of the hepatitis B vaccine to the infant schedule was driven largely by research done by doctors who worked for the vaccine manufacturers.

[…]

What about the statistical chance that your child might get a severe, life-threatening case of one of these diseases? To my knowledge, that information has never been determined accurately through precise scientific statistical analysis. [… Dr. Sears estimates these risks as follows:] A very rough total of 55,000 cases of severe diseases each year in children. We know that the current US population of kids twelve and under is about 60 million. Dividing 60 million by 55,000 cases means that each child has a 1 in 1090 chance of suffering a severe case of a vaccine-preventable illness over the first twelve years of life. Note that flu and rotavirus are responsible for most of these cases. If one were to run the numbers without those two diseases, the risk of suffering a severe case of one of the uncommon disease is only about 1 in 6000. Most severe pediatric cases occur during the first two years of life. An estimation of severe cases in children two years and younger would be about 34,000 cases divided by 10 million kids, or about 1 in 300.

[…]

What is very clear, however, is that vaccines have triggered autism in a very small number of children. A phrase I recently heard sums it up very well: Vaccines don’t cause autism… except when they do.

[…]

If we were to throw out all research that has some conflict of interest, we would actually be left with very little on either side of the [vaccine-autism] debate […] the right type of research has not been done yet.

In addition, here is what Dr. Sears would consider to be the minimum standard for a valid safety research study, which might be helpful for people trying to evaluate various studies in making up their mind about the risks posed by diseases and their vaccines:

  • Prospective: the study group is selected and then followed in real time. Virtually all current research has been retrospective, looking back into the past at data on groups of children who have since grown up (for which the outcome is already known).
  • Randomized: test subjects are selected at random and placed in either the study or the placebo group in a random manner to avoid bias.
  • Placebo-controlled: a study group exists that is not receiving the treatment in question (in this case, vaccines). This is the primary way to be able to draw conclusions with a high degree of accuracy.
  • Double-blind study: the researchers and the study subjects don’t know who is receiving the test treatment (vaccines). This prevents bias as the researchers observe and collect, and the test subjects report, data.
  • Large-scale research: this is needed for a study to be considered statistically significant and to prove the findings aren’t simply due to chance.

Interestingly, he explains why these studies haven’t been performed to date, and I am not surprised to report it is not an example of “market failure”! The government, as usual, plays a big role here.

A final note: There are several instances where Dr. Sears refers to a disease which has been practically eradicated, but which in recent memory has experienced a sudden outbreak in a localized community before being contained. Aside from a generic geographic description, such as “a neighborhood in Ohio” or something like that, there is no demographic data given about these outbreaks, if it is even collected and publicly known. Wouldn’t it be interesting to know that? If these periodic outbreaks are restricted to specific socio-economic populations, wouldn’t that change the implied incidence of risk for the population as a whole? I’d want to know that information, but the current state of medical research in our country considers this unscientific and irrelevant, so much so that it is politically incorrect to wonder about it. How can facts be offensive? It seems like there is an attempt to control political dialogue here, which I find disturbing.

This book has many virtues but its greatest one is that the information is both comprehensive and well organized, while still remaining succinct. It’s very easy to approach the question of vaccination, its risks and benefits, from a number of angles and find all of them anticipated by this book, and more.

4/5

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

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