Preemptive Wealth Management

It’s kind of funny that most curricula are focused on kids and young adults learning things before they need to know them.

They learn about and memorize facts and ideas that are completely unnecessary to solving actual problems they face. The idea is so that they’ll be prepared and know things in case they ever become important or useful to know in the future. It’s odd for several reasons, not least of which is that this kind of learning has almost no retention, but especially because most of the students won’t end up ever facing most of the problems even if they did retain the knowledge. (I have used Pythagorean theorem once in my entire life, and even then I didn’t remember its name or the specific formula, but had a vague idea that there was a way to find out one length of a triangle if I had the other two. Google did the rest.)

It should be taken as a given then that I am not pushing for “just in case” learning, or any kind of compulsory education period.

But if one were to agree with the standard approach of learning a bunch of things that might possibly be useful to some sliver of the class at some point in the future, you would think there might be a good bit of material on wealth management. After all, there are 12 million millionaires in the US – more than 3% of the population – which is probably higher than the percent of students who will ever need to know how to label a mitochondria. If you believe in preparatory learning, preparing to manage wealth would seem at least as logical as preparing to be a medical doctor. (There are roughly 900,000 doctors in the US, or less than 0.3% of the population).

We tend to think about wealth as only a benefit, not a problem to be dealt with. “Oh yeah, sure would be nice if my biggest challenge was learning how to manage a million bucks!” Maybe. But probably not as nice as we imagine.

What’s the opportunity cost of paying off a mortgage vs putting the money to work in the market? How liquid do you need to be? Where to keep cash since banks are only insured or $250,000 in deposits? How to deal with requests and demands from friends and family? How much to hedge against exogenous economic shocks? How to do so? How to not get taken advantage of by financial planners, lawyers, accountants, and managers of family offices and trusts? What’s the best way to handle inheritances so you give your kids a leg up but don’t cripple them and rob their ability to gain strength by solving their own problems?

Most people have trouble with financial management at the paycheck to paycheck level. More money doesn’t magically solve that. The problems just get bigger and the stakes higher.

While the idea of compulsory public schools teaching wealth management is not desirable, there might be something to the idea of individuals who desire to achieve wealth learning how to manage it a few steps ahead of time. If nothing else, the mindset alone is a form of subconscious confidence building. Investing in wealth management is a kind of bet on yourself that you will put it to use.

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The Source of Decisions vs. the Sequence of Decisions

There’s a lot of debate about who should make decisions.

Should government decide what substances you’re allowed to ingest, or you?

Should owners decide how many vacation days to offer employees, or should employees or other agencies force it on owners?

Should product designers decide what goes into a product, or should they ask customers what they want?

These debates mostly miss the point. In their quest to answer what should occur, they fail to understand what actually does occur, whether they like it or not.

In reality, only individuals can ever decide. Only individuals act. Individuals decide to listen to other individuals or ignore them. You can’t change this. To say, “Let the experts/government/market decide” is just a less clear way of saying, “Let individuals decide”. The thing that changes are the consequences and incentives for those individuals. What is really being debated is what happens after an individual decides.

The real thing on the table isn’t who decides, but how decisions are responded to through time. It’s not the source, but the sequence of decisions.

After an individual chooses to offer an item for sale, what should happen next? Should another individual with a warrant and a gun come and tell them to stop? Should other individuals be free to buy or badmouth or ignore it?

The sequence of decisions is crucial. Individuals will make good decisions and bad decisions. But most of the time you can’t tell whether it’s good or bad based on the decision in isolation. You’ve got to see the sequence that follows.

In business, it’s not possible to defer decisions entirely to consumers. You can’t wait for people to decide what you should do because the information is never complete. You have to decide what to make, how to price it, where to sell it, etc. This doesn’t mean you dictate to consumers. Quite the opposite. After you decide, you see how they decide. You see the response or non-response, take in feedback, then decide the next step. It is a sequence of decisions through time that determine what’s good or bad, working or not. It’s not about who chooses once for all, but how choices unfold through time.

You can’t escape individual choice and responsibility. Neither can you expect a single choice to be decisive. The best results come from an ongoing sequence of individuals choices that inform, incentivize, and build off each other. It’s not about who leads in the dance. It’s about how the initiation-response process unfolds.

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Why Don’t We Spend More Time Preparing for Death?

If I told you a hurricane was certain to strike your neighborhood in five days, what would you do in those five days?

You probably wouldn’t spend that time thinking about what to do if you got in a car accident. You wouldn’t spend them planning for career contingencies. You wouldn’t spend it thinking about your dream vacation, or buying domain names for a project you may do someday, or planning your kids long-term education.

All those things are fine activities, but they involve preparing for something that might happen. Meanwhile the hurricane is guaranteed to happen. It would be weird to spend all your energy on many things that could happen and ignore the one thing that absolutely will happen.

We will all die.

Death is the only fact of life that is utterly and inescapably universal.

We know it’s coming. It will happen. It’s the only guarantee in all of life.

Yet it seems like the thing we spend the least time and energy preparing for. We do more planning for totally unlikely events like winning the lotto, or global apocalypse, or contracting a rare disease, or becoming famous than we do for the sure thing that is death.

Death denial is widespread. Not just stuff like preparing a will or getting life insurance or creating succession plans. Many people (though not as many as would seem prudent) do these. They kind of check them off the list then try to never think about it again. Like maybe if we don’t confront it, it won’t happen? But it will.

It would seem normal to spend more time contemplating and preparing for death than anything else. It has a 100% probability of happening. How many things in life can you know with such certainty? It’s a huge leg up and ought to make prepping for it easier. Why not pre-death counseling, to emotionally prepare for it? Why not study all theories related to the process of dying, biologically and spiritually, and theories on what might happen next? Why not plan for death like we plan for less sure things?

I’m not sure why we don’t. I’ve been thinking more about death. And, like almost everything, it seems way more scary when avoided then when confronted. I used to think people or religious traditions that talked a lot about death had some unhealthy obsession. Now I wonder if it’s those who don’t that have the bigger problem.

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Playing Chess with the Market

I just talked to an entrepreneur friend of mine and he had a great phrase for what building a company is like.

Playing chess with the market.

I love this because building a business isn’t so much about right and wrong, luck or skill. The outcome is determined by a series of moves made in response to another player whose mind you can never read. There are causal chains, but they’re all theoretical. They assume certain actions by the other player that may or may not happen. In fact, it’s like a never ending series of chess matches against a rotating cast of random opponents, where moves that worked the first five times stop working the next, and patterns you learned change.

This framing reveals how hard it is and makes the challenge exciting. It also depersonalizes it a bit. Of course you won’t get every move right or win every game. But you try to learn each time. Treating it like a game is a huge cognitive relief.

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The Benefits of My Evangelical Upbringing

I grew up in a pretty conservative Midwestern protestant situation. I was homeschooled and church was a big part of our social life. There are plenty of things to mock and joke about in this milieu (and I do!) but there are some under-appreciated benefits.

There are benefits to not getting into sex, drugs, and partying as a young person, but that’s not what I’ve appreciated most. As time has passed, I’ve seen other benefits I didn’t think about at the time. I took them for granted and assumed they were omnipresent.

Those benefits are philosophical. Epistemological, not aesthetic.

While not ubiquitous in Christian upbringings, the particular niche of Evangelical Protestantism I came up in was very focused on intensive Bible study, theology, and examining questions of meaning, free will, good and evil. There was an expectation that you should be able to logically prove every belief, examine arguments against it, and wrestle until you had coherent, non-contradictory ideas. Discussing claims made in sermons and questioning their accuracy, alignment with scripture, or logical consistency was normal.

There was utmost respect for reason and analytic philosophy. Difficult scriptures were studied in depth, arguments on all sides examined, original Greek and Hebrew checked, historical context learned, and commentaries consulted.

I always enjoyed this. I liked studying the Bible and various theologians. I loved their debates and disagreements. I was fascinated by questions of fate vs. free will.

There was a sense in which we Christians always felt the need to, “Be ready always to give an answer for the hope that you have”. You didn’t just believe stuff, it was incumbent on you to really examine it and understand it, and be able to explain it even to antagonists. I remember diving into apologetics and preparing to be attacked from all sides by classmates and professors when I took college philosophy classes.

I was disappointed.

Everyone in the class was an atheist (this was the very early 2000’s, before the resurgence of spiritual interest common today), but reflexively so. It was a default setting. No one had any arguments. None of them seemed to have examined anything. And it didn’t seem to trouble them. I was looking for some fights! I wanted to challenge and be challenged. It was as if everyone – even those wanting to major in philosophy – didn’t much care to examine the most fundamental questions of being and existence and morality and meaning. They would laugh at or dismiss ideas sometimes, but freeze up if asked to explain.

This was a real shock to me.

I had one TA who asked any theists to raise their hand. I was the only one. Some people snickered. He said, “Don’t laugh. All the best analytic philosopher were theists. Aquinas would run circles around most of you. Do you know why? Have you engaged this stuff?” He was an atheist moving towards agnosticism, but he had mad respect for anyone who did good philosophy (I later discovered he became a Bhuddist and quit academia. He was my favorite philosophy professor, so I’m not surprised). There was one other philosophy prof who was a Christian, and everyone was afraid to debate him. I think he dreamed in airtight symbolic logic.

I didn’t realize at the time that the intellectual tradition I’d inherited in all those Bible studies and debates and books was straight from Aristotle. The more I studied the history of philosophy, the more I realized I wasn’t the one who was wacky or out of step. Questions of God and religion had been taken the most seriously by the most serious thinkers. The whole Protestant project was, in a way, a big philosophical “eff you” to those who said don’t think for yourself, just act out the rituals. It was a celebration of reason. (This is not to say Orthodoxy and Catholicism do not retain a lot of sound philosophy, or that Protestantism always does. All religion tends to have interesting ideas at its core, and devolve into a less rigorous social movement subject to capture as it grows).

I often wonder how people go about their lives acting on important core ideas and assumptions without seeming to have any interest in or feel any necessity to examine, define, and make logical sense of those ideas and assumptions. Being wrong is one thing. Being uninterested in examining tacit truth claims is another.

I’m not looking down on people who are uninterested in or not conversant in inquiry into these things. I just don’t understand it. And because I value getting to the why of things, I am very grateful that I grew up in an arena that prized the most foundational questions, and expected one to be intellectually and morally accountable for their own beliefs – and comfortable being a bit of an outsider.

I must’ve seemed so weird. An early teen spending hours underlining, cross-referencing, diagramming, checking translations in my Hebrew-Greek keyword Bible, writing arguments and counter-arguments. Fortunately in my social circles, it wasn’t weird at all.

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Crazy People Work on the Most Interesting Stuff

Think of the most exciting possible inventions and discoveries you can imagine.

Deep space travel. Telepathy. Wireless electricity. Anti-gravity. Cold fusion. Terraforming. etc.

If you poke around YouTube or podcasts or badly designed websites, you’ll find people working on them. Devoting years to research and experimentation. You’ll notice their passion and conviction. But you’ll also notice something else: most of them are kinda crazy. Whether or not they are discovering anything true, you suspect they would be the last people on earth capable of bringing their idea to market or even credibly explaining it outside their niche circles.

But if you poke around places full of high achieving people with sharp minds, big vision, and lots of ability, you won’t hear them say stuff like, “I’m working on faster than light travel. I think the current model of physics is all wrong, and I suspect it’s possible so I want to prove it.”

Most of the best, most respected minds seem to be employed on the more mundane stuff. Sure, they’re doing cool valuable stuff (except when they go into politics), but how often does it question the most fundemental assumptions?

We know so very little about reality. We don’t even know what we don’t know, or whether what we know is actually true. And the most fundamental stuff – the nature and origin of the universe, our planet, our species, the basic rules of the physical strata, consciousness, death and beyond – is the stuff most of us spend the least time on.

Except the crazy people. They live there.

Part of the crazy label comes because they are working on this stuff. To examine widely accepted beliefs is often considered crazy. Part of the label is because most of the time these people are crazy. So it feeds itself. People who don’t know how to be normal are more likely to go into crazy stuff because they have less to lose. The more they do, the more the belief that “only crazy people study that” is re-enforced and better minds are repelled.

I’m not trying to place blame or cast judgement. I’m trying to understand this phenomenon. It’s the same thing that causes most conversations with neighbors and acquaintances to be so boring. Most of us – myself included – are not willing to dive into crazy stuff most of the time. If your reputation is shot, say, because you’re crazy, it’s easier.

Conformity is a powerful force. I try to do a little something every day to combat it. A world of crazy questions is much more interesting than a world of probably wrong answers no one wants to talk about.

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