The Kindzia Blog

Out The Window - September 30, 2008

With the turmoil in the political and economic arenas over the past few days, it's an interesting view of the reactions from all the different stakeholders.

One area of interest to me is the behavior of man and the influence of social perspectives upon any particular individual.  More specifically, I work with and surround myself with people that share a common desire; to be a long term investor interested in securing a bright financial future. 

We all say that we are long term investors (until we aren't).  Now is a good example of that in the markets.  There are many who are selling, just because others are selling.  Their decisions are based on emotion and social influence.  Their long term plan, their long term strategy, their inherent beliefs...are...well...right out the window.  Fear once again rules the world.

To quote the most successful investor of all time, Warren Buffett, who when asked the "secret to his success" replied with a wry smile, "It's easy, I am fearful when others are greedy and greedy when others are fearful."

Buffett is quite the contrarian.  One of the few that is capable of tuning out noise, emotion, panic, and social influence and makes decisions on analytics, fundamentals, logic and an eye for profit opportunity.  He's a master.

But while we all might not have the nerves of steel, or the brainpower or the desire to purge through financial reports everyday of our lives, there is an alternative.  The alternative is to apply the time tested and proven methods of investing success.  For a quick recap of things that you've heard a thousand times before, here they are;

1. Use asset allocation.  Invest in a variety asset classes.  Examples would include stocks, bonds, real estate, natural resources, etc.
2. Always diversify.  Have you ever heard the saying, "Don't put all of your eggs in one basket?"  Of course you have.  When creating a portfolio, use diversification.  Invest in domestic U.S. stocks and international stocks.  Invest in growth stocks and value stocks.  Invest in large cap, mid cap and small cap stocks.  Also take note of sector weightings.  Being fully invested in energy or technology is a disaster waiting to happen.  So ensure that you have exposure to a broad range of economic sectors such as healthcare, manufacturing, energy, technology, utilities, retail, consumer durables.
3. Invest for the long term.  Oh yeah, one more time...invest for the long term.
4. But low and sell high.  I can't tell you how many people violate this common rule.  When markets are down, they sell.  When markets are rising fast and overpriced, they buy to get in on the "easy money."  Regardless of how many people have tried, buying high and selling low just doesn't seem to work for some reason???
5. Build a portfolio that is designed for long term prudent accumulation of wealth and preservation of capital.  Don't take unnecessary risk.  Large firms (mainly investment banks) violate this rule to the detriment of the entire company and all of the stakeholders.

Finally, one of the good things about the equity markets is the ability to turn to instant liquidity.  If you no longer want an exchange traded security (like a stock), you have the opportunity to sell it at market prices (which are dictated by supply and demand).  But as we see, market prices can often be strongly influenced by emotions such as fear or greed as opposed to intrinsic value.  We often forget that a good strategy during emotional markets is to just sit and wait it out.  Nobody says that we have to accept the offering price of that day, hour or minute.

Imagine for a moment that you owned a 2008 Honda Accord that was worth $22,000 and somebody came up to you and offered $5,000 bucks.  Without hesitation you would tell them to take a hike and wouldn't think twice.  The same would hold true if you owned a $400,000 house and someone offered you $250,000.  You wouldn't sell unless you were desperate (which does happen from time to time).  But that's the point.  From time to time, others act irrationally, with emotion, they may actually be cash strapped, or desperate and make rather bad short term decisions.  If you are an opportunist, a capitalist, a savvy investor you welcome those opportunities.

If you can keep your wits and stick to logic, you might just be able to tune out the noise, put all the fear in the drawer and be greedy when others are fearful.  In a few years and on the flip flop of another cycle, it will be time to be fearful when all others are greedy.

Work the plan.

Are We Lemmings? - September 17, 2008

"Lemmings - Small rodents often associated with odd behavior.  Lemming suicide is a frequently used metaphor in reference to people who go along unquestioningly with popular opinion, with potentially dangerous or fatal consequences."

As a practicing student of what I call "behavioral finance," the moves in the financial markets over the past few days give me plenty of opportunity to study human behavior.  The main behavior that can be witnessed is "mob mentality" mostly pointed in the direction of people displaying the ability to "FREAK OUT!"

Mob mentality and FREAK OUT sessions are well documented and well proven.  These sessions can create enormous momentum through what could be described as a snowball effect.  The more the snowball moves downward, the larger and more powerful it becomes.

The difficult part is having the ability to calculate and predict when human behavior crosses a threshold that ends in a self-fulfilling prophecy of personal defeat. 

Maybe some observations could help:

1. If I started out stating to the average person that the key to long term investing success is to "buy low and sell high," I would get a lot of heads nodding in agreement.

2. If I stated that "An investor in stocks can yield very good returns over long periods of time if they could buy quality investments and hold them over these long periods of time," I would get a lot of heads nodding in agreement.

3. If I stated that "Most people can do themselves a favor by having a long term game plan and could do very well by sticking to the fundamentals of investing which includes buying quality, diversifying, using asset allocation, not getting caught up in high risk areas/bubbles and not trying to time the market," I would get a lot of heads nodding in agreement.

4. The average investor cannot assess the intrinsic value of a publicly traded corporation.  What I mean by this is that if I asked a random investor, "How much should Coca-Cola or IBM or Johnson & Johnson be worth if we wanted to buy the entire company ourselves?  How much would we pay?"  They would have no idea other than to say, "Probably somewhere between a million and a trillion dollars..."

5. The stock price of a publicly traded corporation should be nothing more than the intrinsic value of the entire enterprise divided by the number of stock shares outstanding.  However, we just stated above that the average person doesn't have any idea what the intrinsic value of the entire enterprise is and can't figure that out.  So by default, they aren't making decisions on the stock price based on their own knowledge but rather the numbers determined by others.

6. If others one day FREAK OUT and say that an enterprise is no longer worth X or Y or Z but something less than X or Y or Z, the average investor will most likely go with the mob mentality.  Again, they have no idea how to value stocks themselves.

7. As we act like lemmings and FREAK OUT we lose focus on our personal goals and objectives.  We no longer think about being long term investors with a game plan.  We no longer think about asset allocation and diversification.  We no longer care that holding quality stocks over long periods of time earns very good returns that will fund our retirements.

We are all "long term investors" with a game plan and a strategy until others FREAK OUT.  Then we're not.  When we stray from our game plan and strategy we become short term investors acting on emotion and making decisions that are no longer based on our long term plan and strategy.  We feel it is better to "make decisions on the fly" because everybody else seems to be doing it that way.

I know it's hard to keep the emotion out of our lives.  But the best investors make decisions based on math, logic and revolve around a game plan/strategy.  The best investors don't FREAK OUT, they assess and make decisions as an opportunist.  They often find that the best opportunities are the result of the masses making big mistakes and taking advantage of those opportunities.

Reasons to FREAK OUT;

1. Half of your house was relocated to Oklahoma free of charge from someone named "IKE."  The other half is still in Texas.

2. Your 16 year old daughter comes home late from school one day with a tattoo that matches her 18 year old boyfriend.  When you ask where she got the money from, she responds with, "I just took a little from the money that Grandma gave me for college...there seemed to have been plenty..."

3. You are a New England Patriots fan and you watched Tom Brady go down on opening Sunday.

How often do people FREAK OUT in financial markets?  About once every 5 years.  We've had 11 instances where markets have gone down greater than 20% in the last 55 years.  The last FREAK OUT session followed the tech crash of 2000 and the attacks of September 11th.

Some perspective.  Many people remember (or are at least aware of) Black Monday which was the stock market crash that occurred back in 1987.  The Dow Jones Industrial Average (DJI) closed on Black Monday at a level of 1,738.74.  After the tech bust and attacks of September 11, 2001, the Dow Jones was at 8,920.70 on September 17, 2001.  Today, after people had their FREAK OUT session, the Dow is above 10,600.  Can you see a trend here?  1,738.74 to 10,600 after a pull-back.

But I can tell you first hand, when emotions get in the way, "Buy low and sell high" goes right out the window.  Being a long term investor goes right out the window.  An investing strategy and game plan goes right out the window.  Instead people end up buying high and selling low.

It's awfully tough to secure a comfortable retirement by buying high and selling low.

Ask Kindzia - September 16, 2008

In turbulent and uncertain financial times (like many feel we are in right now), I get many questions from individuals and clients.  Often the same questions or types of questions come up.  Here are some of the questions that you may find useful;

Question #1 - With all of the stuff that I have seen on TV and read in the newspapers over the past few days, I'm starting to become afraid of losing all of my money.  Why shouldn't I be?

Answer #1 - If you are executing a long term investment strategy that encompasses the fundamentals of investing, you should feel quite confident that you aren't going to lose all of your money.  The fundamentals of investing include (but are not limited to); proper asset allocation, diversification, avoiding unnecessary risk, buying quality investments and holding quality investments over a long term horizon.  In 1957 the S&P hit a low level of 38.98. Fifty-one years later and after the current pullback, the S&P is hovering around 1,164.  The risk for most Americans isn't from being in the market, it's not saving enough and NOT investing IN THE MARKET!!!  If you aren't executing a long term strategy that encompasses the factors listed above, then perhaps you should be afraid of losing all of your money?

Question #2 - I still don't get it.  Some companies are going out of business and the stocks are becoming worthless.  Those investors are losing all of their money.  Shouldn't I be concerned that it could happen to me?

Answer #2 - Regardless of economic times, there are always going to be companies that not only survive but make a profit.  People aren't going to stop eating Cheerios, using Kleenex, fueling their cars, watching TV, buying prescriptions drugs, and playing video games.  The profits of some companies may go up or down, but I'm pretty sure that the grocery store around the corner from you is still going to sell Cheetos and beer to you on Saturday.  When you have a diversified portfolio, your investments are spread out into different economic sectors such as health care, manufacturing, technology, consumer durables, energy, etc.  So in summary, a few companies may go belly up from time to time, but by diversifying, you are invested in plenty of companies that more than make up for the ones that go bust.

Question #3 - I hear about all of these investment banks going under. What happens if Fidelity goes under.  Will I lose all of my investments?

Answer #3 - First a quick distinction between an investment bank and a company like Fidelity. Investment banks may have a brokerage department and a financial advisor department, but investment banks actually invest in their own deals and lend capital in an effort to earn significant rates of return.  They also use large amounts of leverage, sometimes in the neighborhood of 20, 30 or even 40 to 1 ratios which becomes very dangerous.  Investment banks hire smart people.  I mean WICKED smart people most often from Ivy League Schools like Harvard (properly pronounced Hah-vud if they are speaking to lowly state school educated people like myself).  These wicked smart Ivy league dudes are too smart to use simple investing practices like risk avoidance, asset allocation, diversification and sticking to quality investments.  Those fundamental investing principles are for simple folk (like guys who ride bicycles rather than yachting).  So investment bankers use their big brains to make "real money".  Investment bankers regularly make between $200,000 to $2,000,000 a year with bonuses.  Anyway, they keep going after big scores until they blow up their firms and either get bought by people that still have money or they file bankruptcy.  Good examples include Solomon Brothers, Drexel Burnham Lambert, Bear Sterns, Lehman Brothers, and even Merrill Lynch (Morgan Stanley may be on it's way as I write this).  Being a stockholder in an investment bank is a real hoot.

Fidelity on the other hand is what can be referred to as "custodian."  Rather than their business revolve around making investments and lending money to people that can't pay them back, they simply keep track of holdings for their clients.  Fidelity is similar to Charles Schwab and E*Trade.  If I own 100 shares of Coca-Cola and you own 500 shares of AT&T, Fidelity helps us buy and sell these shares on Wall Street (for a transaction fee) and keeps track of our holdings and sends us monthly statements.  If for whatever reason a custodian would find themselves in trouble, it has no impact on the underlying investments of people like us.  We would simply move our 100 shares of Coca-Cola to another custodian.

Question #4 - Shouldn't I go to cash when markets are bad and then re-invest back into the markets once they return to higher levels?

Answer #4 - WHOA! Easy tiger!  The idea of investing is to buy low and sell high. If we buy something and it goes down and then we sell it, you ended up buying high and selling low (not too swift...)  Getting out and cashing in when markets decline might make you feel better emotionally but it's not helping you make money and execute a long term investment strategy.  To get back in when the market comes up is just another definition of waiting to buy when the market is high (so you didn't buy low, you bought high).  Rather elementary but I guess it's what prevents people from being successful investors.

Question #5 - What should I expect in the short run?

Answer #5 - This one I could tell you with 100% certainty.  The markets are either going to go up, go down or stay the same (I swear to you!).  I don't think we are going to get much clarity until we get past the election.  For now we have a lot of uncertainty in the economy.  We don't know what our foreign policy is going to be.  We don't know what our economic policy is going to be.  We don't know what our tax policy is going to be.  We don't know if we are going to bail out companies or not and which ones.  It's also probable that not much is going to happen as we get into Thanksgiving, Hanukkah, Christmas and the New Years (everybody will be getting drunk on egg-nog).  But what is important to keep in mind during the short term?  The short term is just an opportunity to execute on our long term investment strategy.  We want to buy quality investments when they are low and hold on to them for long periods of time (we want to be a long term investor).  When can you buy stocks low?  When the market is down.  When is the market down?  When people FREAK OUT!  When are people FREAKING OUT?  Right now. 

Buy low, sell high.  It's not that complicated.

Exceeding Personal Limits - August 26, 2008

 On Sunday, August 24, 2008 I completed my 11th Ironman Triathlon.  Hailed as one of the most grueling endurance competitions, the Ironman consists of a 2.4 mile open water swim, a 112 mile bike followed by a complete 26.2 mile marathon run.

The Ironman has been providing me with an endless opportunity to challenge myself on a physical realm.  It all began when I did my first running race, the popular July 4th Peachtree Road Race in Atlanta, Georgia.  I trained for the race but still was unable to finish in under an hour.  I remember crossing the line completely exhausted, a desire to vomit and anxious to lay down.  Yet, as depleted as I found myself as I crossed the line, I left that race with a burning desire to push myself to new limits.

I continued my run training with new vigor and I set my sights on a longer race, the Atlanta Half Marathon held on Thanksgiving morning.  Not only did I want to complete the distance, but I wanted to do it in under 2 hours.  This was a big challenge as the half marathon is 13.1 miles.  The Peachtree Road Race was a 10K (6.2 miles) and I couldn't finish that in under an hour.  But with the help and encouragement of some good friends (Mike and Kate Parker), they paced me and encouraged me to run my very hardest that morning.  I finished in 1:58.  That was it, I WAS HOOKED!

The rest is history.  I HAD to do a marathon.  Then I HAD to do another one to see if I could go faster and finish in under 4 hours.  Then triathlon entered my life.  I wanted the extra challenge of swimming and biking prior to the running.  The only swimming experience I really had as a child was doing cannonballs in my neighbors pool and doggy paddling back to the exit ladder.

What I'm reminded of is that I am most fulfilled in my life when I strive to exceed myself and push myself past my current limits.  I attempt to push myself in three dimensions; mental, physical and emotional.

This past summer I decided I was going to push myself to new heights in my career and my skill set and am learning new technology skills.  At 39 years old and years and years of education under my belt, I didn't think I would have the desire (or the courage) to expand my continuing education.  It comes with nervousness and fear.  What if I can't keep up with the younger kids?  What if I can't do it?  What if I fail?

So I'm left staring at a quote that I tucked away for just such an occasion;

"It is far better to dare mighty things, to win glorious triumphs, even though checkered by failure, then to take rank with those poor spirits who neither enjoy much nor suffer much, because they live in the gray twilight that knows not victory nor defeat." - Theodore Roosevelt

Here is to exceeding our personal limits!!!

Knowing Our Objectives - August 18, 2008

Life often throws us all kinds of curve-balls, speed bumps and surprises.  At times we may feel as though we are either in a good groove or even a stale rut but undoubtedly, something changes and forces us to make some decisions.  The changes could be welcome but they could also be overwhelming as we try to figure out the course of action to take.

How often are we faced with major decisions such as;

• Should I change jobs
• Should I pursue a hobby
• Should I go back to school
• Should I date this person
• Should I buy a new house
• Should I have a child (or another child)
• Should I start a business

These questions can bring our internal decision making ability to a screeching halt.

It seems as though I could think and think and think about a problem or a decision endlessly without getting anywhere until my brain locks up like my computer that reads at the top "NOT RESPONDING."  An inability to make a good decision often becomes very frustrating.

I often find that I can get past the mental stalemate by backing up and asking myself, "Big picture...what is my objective here?"  More specifically, I like to remind myself of my objectives and values in life.  What do I value, how do I want to spend my time, where are my resources best invested and how will the possible decisions impact the quality of my life.

A good example might be when a client comes to me and says, "We are thinking about buying a bigger house.  What are your thoughts on this Paul?"  Now what I've noticed is that they are subconsciously (or consciously) asking for permission or a holy blessing from their financial advisor.  Truth be told, they really want a bigger or nicer house.  I may start out by asking why they want a bigger or nicer house and may get one or many of the following reasons:

• We need more room
• We want a nicer kitchen
• We want a better neighborhood
• We want a three car garage

What they are really trying to ask me is, "Can we afford the nicer/bigger house?"  The decision is usually not clear as there are trade-offs.  It's not like many people just have an extra few hundred thousand lying around and feel the urge to shop for a new house.

So this is a good time to ask ourselves, "What is our objective (big picture) over the next twenty years?"  Is the objective to live in the biggest house that we could make the monthly mortgage?  Is the objective to keep up with some friends or co-workers who just bought a new house?  Is our objective to take on another 30 year mortgage when the buyer might be 45 years old which would allow them to make the final payment when they are 75?  Is our objective to increase the amount of financial risk of a major setback?

Is our objective to retire at a certain age that requires a particular annual savings goal?  Is our objective to be stressed about making larger monthly payments?  Is our objective to work more to support higher living expenses?  Is our objective to spend more time with our family?  Is our objective to pursue hobbies and fun stuff versus spending more time with housing upkeep?

If we know what our values are in life, how we want to spend our time, what is required to keep healthy and balanced relationships, and meet our long term goals (including financial), our decisions often become easier to make.  It's when we don't think about our long term objectives and personal values that we end up making rash decisions that will clash with our core principles or values.  When we live in a way that doesn't mesh very well with our core values, stress is inevitable along with a sense of frustration.

How often do we feel trapped in life because of monthly financial commitments or are stuck in a job that we no longer like but made decisions in the past that prevent (or make it very difficult) for us to proceed on a better future path to fulfillment?

So if we are stuck on some big decisions in our lives, we might want to just take a big step back and ask ourselves, "What are our objectives and what decision will most likely align the results with my values."

The Worry Never Left - August 7, 2008

I thought I should throw out a "blanket definition" of wealthy before I begin.  I describe "wealthy" to myself and to my clients as a state of financial life whereby the individual can simply live off of financial assets.  There is no need to work.  If wealthy people work, it's because they want to, not because they have to.  Big difference.

Once we understand "wealthy," I would supercharge that definition to describe what I would call the "super wealthy."  These would be individuals who have a personal net worth not just in the millions but in the tens or even hundreds of millions of dollars (perhaps even billions).

As a student of behavioral finance, I'm always searching for links between our state of wealth and our state of health and happiness.  Having one, doesn't necessarily lead to having the others.

One thing that most "non wealthy" experience, even on a daily basis is the emotion of "worry."  We worry about everything.  We worry about paying the mortgage, our jobs, our retirement, our time (or lack thereof to spend on personal items), our wants and desires and what can be taken away from us.  In simple terms; humans are "worry-warts."

When I study those who are "non-wealthy" I often ask why they want more money or more financial wealth.  A common answer I get is, "So I don't have to worry anymore."  Their thought process is that by obtaining more wealth, the worrying goes away.

But I've had an opportunity to study the wealthy as well and what I am finding is, they worry too (and sometimes a lot.)  What do they worry about?  Here's some examples;

• They worry that some of the top performing private equity funds are closed and won't take their money.  There are so many super wealthy individuals trying to invest in the same private equity funds that require sometimes $5 to $10 million in minimum investment amounts that these private equity funds are turning investors away.
• They worry about running out of money due to inflation (I am not kidding on this one).  The cost of living for the wealthy is rising in double digits even though the core inflation rate is much lower.  Financial markets are down and their spending behavior is not being adjusted accordingly.  I know you feel sorry for the cost increases in maintianing a Lear Jet and associated jet fuel prices for these people...
• They worry about staying competitive with their peer group.  When they go to the Hampton's, or Palm Beach, or Jackson Hole, or on their yacht while flying their private jet, the guy next door has a bigger house, a bigger yacht, a newer jet.  These are driven people that are used to being at the top of the food chain.  It kills them to see someone pull ahead of them.  They all want to be the kingpin, the big cheese.  So they worry about how they will pull ahead of others in their peer group or they worry about falling behind in their peer group as in, "I feel like a loser since I only am worth $25 million and these people are all worth $50 to $100 million..."

So what motivates them is a combination of fear and greed and while they deal with both of them, their lives are still full of worry.  The worry in their lives never left.  What is worrying you and is it something that is controllable or non-controllable?  Are the things we worry about really important in the scheme of life.  If we were 85 years old, dying on our death bed while lying in a nursing home bed, will we look back on our current life and say, "I'm glad I worried about all that stuff 40 years ago...Oh wait...what was I so worried about?"

Stress, Anxiety and Worry - July 28, 2008

I often believe that we seek out and find stress, anxiety and worry.  This happens regardless of our circumstances.  Simply put, no matter our situation in life, we'll find something (or many things) to worry about.  I often like to think in terms of extremes and use extremes to help me in my thought process or analysis with issues.  Once I start at the extreme, I'll then move towards the middle and see if my examples hold up to solidify my theories on things. 

Here's an example of using the Kindzia method of extremes to test human behavior;

First, I want to envision a truly stressful situation in life (an extreme) that I might not even be able to fully comprehend.  Let's pretend that I'm living in Darfur, Africa.  Rebels have killed off many of my family members, the government is corrupt and is backing their own militia which is responsible for raping women and killing children.  Financial wealth is non-existent.  My home was burned by the rebels.  There is no organized health care, my safety and the safety of my family is constantly at risk and I'm forced to be a refugee living in a tent at a camp that relies on infrequent food distributions from global aid organizations.  I dream of an ice-cold Coca-Cola.  The closest Starbucks is about 2,000 miles away.

Question - "Do I feel stress, anxiety and worry?"  Answer - Yes, I think it would be overwhelming at times.

Next, let's make some improvements in my life.  Now, rather than living in Darfur, a third world living hell, I live in Iraq as an Iraqi citizen.  I have a home, some very basic utilities, access to food and there is a government that is attempting to improve the situation.  In-between limited work, I have access to basic healthcare, clothing and local transportation, but there is still random car bombings, unlawful citizens, a war going on in the neighborhood, corrupt militia's and a split government. 

Question - "Do I feel stress, anxiety and worry?"  Answer - Yes, I think it would be overwhelming at times (especially each time a car bomb goes off and kills people that I know.)

Next, let's go a place in Eastern Europe (more improvements).  Gone are militia's and car bombs.  The government is running a nice and comfy socialistic society.  I am assured food and basic healthcare.  I have a house (albeit a small one) and my family is safe from random violence.  I have freedom to go places.  I have a job.  But I'm stressed because I can't get ahead in life.  I can't be entrepreneurial, obtain work more, be creative or try new things.  Getting by and trying to keep my head above water is the perpetual norm.

Question - "Do I feel stress, anxiety and worry?"  Answer - Yes, I would feel stressed, despondent and anxious of my situation.  I don't have enough to fill my needs.

We continue until we get into the United States.  I'm now low middle class, maybe even "poverty" by economic definition.  I live in a free country.  There are no wars going on in my back yard.  I have cable TV, Internet, food, transportation, access to jobs (or multiple jobs), clothing, education and a personal cell phone.

Question - "Do I feel stress, anxiety and worry?"  Answer - You betcha.  I'm a living stress case living on the lower rung of the social ladder in America.  "The Man" is keeping me down.  I can't get ahead and can barely keep my head above water.

I'm now upper middle class in the United States.  I work in an office, with air conditioning.  I eat at restaurants quite a bit.  I usually have a car that is less than 3 years old.  I have a 4 bedroom house.  My kids go to a nice public school.  I vacation twice a year.  I have health insurance, car insurance and homeowners insurance.  I have season tickets for my college football team. 

Question - "Do I feel stress, anxiety and worry?"  Answer - "Yes.  My kids need college education money.  I have a high car payment.  My mortgage rate re-adjusts in 4 months.  I didn't get the big promotion that I was counting on.  My wife keeps nagging me to cut the grass, paint the bedroom, and help with the laundry more often.  I'm behind on retirement savings.  I want a bigger house and a nicer car.  My credit card bills are starting to escalate.  The big screen TV will need replacing soon to plasma.  My cellphone is so old school.  I need an iPhone."

That's when I realized, it doesn't matter our circumstances.  We don't have extreme stress in our lives but sometimes we create it.  Do we REALLY have problems or are we creating situations that lead to problems (that are far from life threatening).  How many things are we stressed about, anxious about and worried about that really don't matter in the scope of life?

Stress is real and it has a real impact on our health and well being.  It causes increases in blood pressure, poor sleeping habits, dependency on drugs, depression, amongst other things.  Are we doing everything we can to create a life that is less stressful or are the decisions we make each day contributing to our stress?

Taking Action - July 22, 2008

I often find that I get stressed or anxious when there is personal conflict between what I desire in life and what I seem to be doing with my time.  Simply put, if my behaviors are not in alignment with my goals or dreams, I end up feeling unfulfilled or frustrated (maybe even disappointed with myself).

One way for me to get back on track is to realize that I often have more choices than I seem to think I have.  If I step back, open up my mind and explore possibilities, I'll discover that there are many more options if I am willing to be open minded and try some things that are "outside the box."  We'll often find that we tend to limit ourselves to things that will be socially acceptable or understood by our peer group, friends, family or significant other.  But the more creative we can be in seeking choices, the higher the probability of getting on a path to personal success rather than staying in a rut that is proving to be going nowhere.

We all choose a path in life.  Even if we do nothing and sit on our asses, it's still a choice. Nobody forces us to sit on our butt's all day and stay in a rut.  Once we decide on a choice, we've made a commitment to that choice based on why that choice is attractive to us at the time (and nothing says we can't change our mind later about that choice).  Ideas are great, but unless we have a commitment towards a particular choice, we'll be stuck with nothing but "great ideas" in our lives.

If we made a choice to change and we are committed to change, then we need to ultimately take action and modify our future behaviors and habits.  What exactly needs to be done to move in a new direction?  What needs to change?  What do we need help on and from who?  Do we need more skills?  Once we take action on a choice that we made a commitment to, we begin to modify the probability of success.  They say, "anything is possible", but it's highly improbable if we continue to sit on our butt's and do nothing towards our goals.  What we want is to take action.  The more action we take, the higher the probability of success.

Finally, as we take action, we learn (albeit sometimes the hard way).  But learning is part of the game.  Mistakes are part of life and if we fear mistakes, we'll never try anything (and thus stay in a rut which we've already determined is unfulfilling).  So the final necessity in taking action is the process of self-observing and reflection and holding ourselves accountable to moving forward.

I recently received a quote from one of my training partners in Ironman that I think is worth sharing here;

Choices

"What we have is based upon moment-to-moment choices of what we do.  In each of these moments, we choose.

We either take a risk and move toward what we want, or we play it safe and choose comfort.  Most of the people most of the time chose comfort.

In the end, people either have excuses or experiences; reasons or results; buts or brilliance.

They either have what they wanted or they have a detailed list of all the rational reasons why not."

-Anonymous

Negative Influence Based On Social Habits - July 17, 2008

We begin with a quick story.  An employee of a large publicly traded health care corporation attends a small group corporate meeting.  Part of the meeting is spent on discussing the current trend of declining division revenues and to boost efforts and morale within the group.

The division manager brings in 3 bags of candy for the group (and it's a small group of about 15 individuals) in an effort to "butter up" the employees and do something nice for them.

By the end of the meeting, all of the candy is consumed by the corporate employees of the health care corporation.  Our first question is, "How much candy would be consumed if the manager brought in 2 bags?  How about 4 bags?

Without getting into the well publicized actual statistics on the declining health of average Americans, let's assume that the health and well being of this group of employees represents that of the greater American population in terms of obesity, cholesterol, blood pressure and the rest of the "goodies" that are used to measure our basic health.

Now I think most people, especially college educated corporate workers employed by a health care organization would understand that eating candy throughout a morning meeting probably isn't the best thing that could be done for their bodies; excess sugar, fat, calories, etc.  Yet, they still ate the candy.  Why is that?  My observations lead me to believe that their behaviors are reflected by social influence.

Simply put; candy tastes good and more importantly, "everybody else was eating it."

Scientists have now shown that obesity is contagious.  Not the same type of "contagious" as a disease or as a virus but one that can still be spread from person to person as a result of negative social influence.  If those around us eat unhealthy, we are more apt to eat unhealthy.  If those around us smoke, we are more apt to smoke, or drink alcohol, or use drugs, or live inactive lifestyles.

So now the question becomes, "How do we have a positive influence on others around us."  Social influence works in both directions, both positive and negative.  It's an important lesson that parents learn (or fear).  If a child starts hanging around with the wrong crowd, perhaps a crowd of hooligans and punks, the child is more apt to become a hooligan or a punk.  So back to the question, "How do we or can we influence others in everyday situations?"  Some thoughts include;

• We could talk about the statistics of declining health in America (shown to only be moderately effective in most situations)
• We could possibly bring in a mirror and have people look at themselves in front of others (probably won't go over very well in a social setting.  Good luck with trying it though)
• We could bring in a scale and weigh people (I'm not sure I would want to be beaten with a scale by an angry mob of corporate sales people)
• We could ask them to think about their families and how they would feel if we died prematurely due to preventative health issues like obesity, heart disease, etc. (this has shown to impact some)
• We could ask people to think about how good they would feel if they were in better physical shape (may also help some but not all)

Although a few of these could possibly have an impact in correcting the behaviors of others, I'd bet most of them would be quite impractical.  The most practical and effective method that would impact the group would simply be "TO NOT BRING IN THE CANDY!"

How often do we influence others, even if meaning well to show love, appreciation, support or congratulations with things that negatively impact the recipient?  How often do we offer to take our buddies out to get smashed, pig out on ice cream/cake, reward children with candy for good deeds, etc.?  Why is it that we help people make poor personal choices when we are supposed to help them make good choices?

How do we carefully select our own actions and behaviors so that we are a positive influence on those around us rather than a negative influence?

The Effects of Stress - July 14, 2008

Stress has evolved as humanity has evolved.  Long ago, our ancestors didn't suffer less stress than us, they just experienced a different kind of stress.  They didn't have washing machines, microwave ovens, Whole Foods grocery stores, 6 cylinder automobiles, Pearl Jam CD's, or the ability to text their spouse with questions like, "What are we having for dinner tonight?"

Our ancestors were probably worrying about a saber-tooth tiger jumping out of a bush when they were seeking a cure for their munchies.  Today, our stress is social stress.  It rarely is physical stress.  The stress takes a toll on us emotionally and mentally.

One common cause of stress is the feeling of a "lack of control" in our own lives.  The less we perceive control over our daily actions, the higher the tendency to experience emotional and mental stress. 

The effects of stress are real.  Stress impacts our concentration (and not for the better).  Consistent stress impacts our brain's natural balance of chemicals.  Other common effects of stress are high blood pressure, heart disease, diabetes, stomach problems, headaches and depression.  As the level of stress rises and continues, so does the concentration of cortisol in our bloodstream.  Increased levels of cortisol negatively impacts our immune system making us more vulnerable to sicknesses and diseases.

It's important to keep things in perspective of what we can control and what we can't.  Some things are way beyond our control.  In other instances, the decisions we made in our lives have had a cumulative effect on our current circumstances.  If we constantly make decisions that benefit short term satisfaction over long term well being, it's easy to corner ourselves into very stressful situations.  Consider the following situations;

• Rather than eating a healthy meal, we justify to ourselves why we deserve food that places taste over nutrition.  We continue to repeat this habit over days, weeks, months and years.  We eventually find ourselves in poor health.
• Rather than being prudent with our financial resources, we justify to ourselves why we deserve to purchase goods and services, often on credit, rather than saving money.  We eventually find ourselves in a poor financial situation.
• Rather than pro-actively scheduling downtime in our daily, weekly and monthly lives, we over commit to social functions.  We eventually find ourselves running around like chickens with our heads cut off rather than enjoying some downtime.

Eventually, in life, problems arise.  Sometimes the problems can be solved.  Other times, they really can't.  If a problem is solvable, there isn't really a need to worry.  For the problem can be solved and thus all we need to do is correct it.  If a problem can't be solved, it doesn't make sense to worry extra about it either.  For the problem can't be solved.  There is simply nothing that we can do about it.

"I've suffered a great many catastrophes in my life.  Most of them never happened." - Mark Twain