Alexandersmap

    Tag: Warren Buffett

    • Productive Change

      “Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.” ― Warren Buffett

      Some of us are inclined towards change, and force ourselves to stick with things longer than we might otherwise to see them through. Sometimes (as with a great marriage) the journey is worth the ebb and flow of a life together. Other times, as with a job or a house or an acquaintance, you find that the return on investment isn’t working out. Change can be the most productive energy we can spend in such moments.

      It’s possible to stay in a house too long. Neighborhoods change as the neighbors do. The stairs and furniture we’ve easily navigated our whole lives can become impossible obstacles when we grow old and frail. My own neighborhood is full of the same people that were here when I built this house years ago, and I’m seeing it all play out as it did for my in-laws, where they all grew too old to navigate the familiar but did it for too long anyway.

      I recently left a job I’d been in for years when flat year-over-year growth turned into a down year. There was no exit interview, which indicates they feel they have it all figured out. So their chronic leaks will probably continue. My own energy can be put into a better vessel. It turns out my timing was good with a receptive market ready for my skillset. It was never the company brand I was bringing to the market, but my own.

      A sound vessel with a good crew can weather almost any storm. It remains sound through maintenance and awareness of the forces bringing change. The same can be said for the crew. Together they can travel through time and place, picking up tales of adventure along the way. But time conquers all, and eventually the vessel or the crew need to change. Houses can be homes for generations of owners. Companies can grow with a new crew. And people can find a better way though this world on a different vessel.

      Change for its own sake is frivolous and wasteful. Change must be strategic and ultimately productive. But the same can be said for sticking with something instead of changing. It does us no good to forever bail a ship that is clearly sinking. Our habits, systems and routines, alliances with others, organizations we join, companies we represent in the market, the places we live and the vehicles that carry us to them—are all vessels that are either carrying us somewhere or sinking into the abyss. The question we ought to be asking ourselves is, is our energy being put into the right place or is it time for a change?

    • Getting There

      “What got you here won’t get you there.” – Marshall Goldsmith

      Indeed.  But knowing where there is is an essential part of making the shift in the what.  December is a great time to think about then and there stuff, but really every morning you should reflect a bit on where you’ve been and where you’re going.  What went well, what went badly, what can change, what must change…  and how do we begin right now, today?

      Personally, I function better with Bullet Journal type lists.  Check things off, move things forward that you didn’t do, etc.  Lists of tasks are easy.  Lists of life goals are a little harder.  The Warren Buffett/Mike Flint 25/5 exercise is harder still, but time marches on and if you don’t reflect on where you’re going you’re going to end up somewhere else with the things you wanted to do undone.  I did this 25/5 exercise a year ago, and I’m going to do it again this week.  Essentially, you write down 25 things you want to accomplish – start a business, write a book, run a marathon…. whatever.  You then circle the 5 most important goals and avoid the other 20 at all costs until you’ve accomplished the circled 5.  It forces you to focus on what your real priorities are, and what the real distractions are to getting there.  It’s challenging because we all want to be good at everything, but in being generalists we fail to achieve our biggest goals.  Hell yes or no.  Essentialism…  The 7 Habits of Highly Effective People story of putting the big rocks in the jar before filling the rest with pebbles, then sand and then water…  Whatever you want to call it it’s the act of saying no to many things to enable you to achieve the few big things.  And the few big things are the “there“.

       

       

    • Choosing the Great Over the New

      New is overvalued relative to great.  … for example, when choosing which movie to watch or what book to read, are you drawn to proven classics or the newest big thing?  In my opinion, it is smarter to choose the great over the new.” – Ray Dalio

      I’m reading a Henry David Thoreau book called Walking.  It’s a quick read – not very long at all – but full of wisdom nuggets as I posted yesterday.  I’ve recently re-read Walden, and read some Hemingway’s The Sun Also Rises last fall.  It’s no secret that I’ve been reading a lot of stoicism over the last couple of years, and re-read Marcus Aurelius’s Meditations again last year.  And I have a pile of classics teed up for future reading.  So this Tweet I read from Ray Dalio today was especially meaningful for me as I try to mix in classics and opt out of things just because they’re popular at the moment.  They’re classics for a reason, and you can glean a lot of out of them if you dive in.

      Choosing the great over the new goes for things beyond books and movies of course.  You get what you pay for in life, and that applies to time as much as it does money.  I dropped a Derek Sivers quote a couple of blogs ago; “Hell Yes or No” that concisely articulates great over new in career opportunities, relationships, what you spend your weekend doing and which food, books and media you consume.  So it was with great interest that I read another Twitter thread from George Mack early this morning:

      The most VALUABLE piece of investing advice I ever received came from Warren Buffett.  

      Buffett gave a talk at University of Georgia.

       He told the students to look around at their friends and answer the following question:

      “If you could get 10% of their earnings for the rest of their lives, what friends would you INVEST in?”

      Once you have the 2-3 friends that you’d invest in, explore the WHY you’d invest in them.

      What values do these individuals hold?

      What habits do they engage in?

      Here’s teh values of friends that made me want to invest:

      1. High Agency/Resourcefulness
      2. Consistency
      3. Give more than they take
      4. Learning machines
      5. Live on the edge of their comfort zones of creating a new project
      6. Pay attention to small details

      After doing this, Buffett sugggest you look around at your friends again.

      “If you could SHORT 10% of their earnings for the rest of their lives, what friends would you choose?”

      Again, once you have these friends in mind – ask the WHY you’d short them.

      What values do they have that you’ll think will harm them?

      What negative habits do they engage in?

      Here [are the] the values of friends that I’d SHORT:

      1. Narcismism
      2. Inconsistency
      3. Arrogance
      4. Dishonesty
      5. External locus of control
      6. Map knowledge/know it alls

      Once you [have] these lists, you have finally answered one of life’s wooliest questions:

      “What are my values?”

      You have the guiding principles you can look to embody.

      You can extrapolate this further than just financial ROI.

      You can look at your friends balance sheets for happiness, relationships, fitness, etc.

      Who would you invest 10% in?  Why?

      Who would you short 10%?  Why?

      You can download the values you need for these areas too.

      This exercise is so powerful because our identity isn’t involved.

      “It’s easier to recognize other people’s mistakes than our own.” – Daniel Kahneman

      Emotion & Ego distort our reality.

      It’s so easy to see when a friend should break up with their partner, quit their job or shut down their company.

      Yes despite having more information on the subject than you, they still can’t see it.

      Why?

      Emotion & Ego (Identity)

      The Buffett exercise is so powerful because it gives you the ability to view your human operating system in the same way everyone else will:

      1. Objectivity
      2. Don’t care about you
      3. Want to know what value you can provide

      Self aware ness has the Dunning-Kluger effect built into its software.

      The most self aware people I know are convinced they lack self awareness.

      The least self aware people I know are convinced they are self aware.

      Buffett’s investment advice passes Peter Thiel’s test.

      You know your friends better than ANYONE.

      This means that you have a SECRET that the rest of the world doesn’t have about their values and habits,

      This information gained is truly unique to everyone who applies it.

      SUMMARY:

      1. Treat your objective analysis of other people as the best form of self knowledge
      2. Understand what values you’d invest in and what you would short in every area of life.
      3. The tactile knowledge of your friends is a secret as unique as your finger print.

      I copied this down here as much to retain it for myself as to blog about it.  Coming back around to the Dalio quote, choosing the great over the new, I’m applying this in my work as well as my reading and other pursuits.  I’ve weaned myself off of low value business relationships, and avoid toxic business relationships whenever possible.  I’ve fired customers who are such A-holes that they aren’t worth the commission check that comes with dealing with them.  And I’ve developed other business relationships that are absolutely worth the long term investment even though the return isn’t there quite yet.

      So the quoted material is longer than the original content from me this time around, but I thought I’d stick with the great instead of adding the new.  Hopefully some of my new will prove great in the long run.