THE FINANCIAL PHILOSOPHER

The 'Four F's': Pressing Your Buttons

"Memes involving danger, food, and sex spread faster than other memes because we are wired to pay more attention to them--we have buttons around those subjects." ~ Richard Brodie

In his best-selling book,Virus of the Mind: The New Science of the Meme, Richard Brodie provides an interesting and insightful look into the impact of memes--what he calls the DNA of human society. 

A meme is a basic unit of imitation.  All trends, social conventions and religions are built on memes.  Like DNA, a meme's purpose is to copy itself.  Genetic evolution can take decades, centuries or millennia.  However, a meme--an idea, a catchy phrase, a trendy behavior--can evolve almost instantaneously, especially in the incredibly interconnected world in which we live today.   

The most effective memes are the ones that spread the easiest.  Think of a photograph or video that gets spread quickly on the Internet.  It is said to have gone "viral."  Memes can also survive beyond the short-term trend and spread across vast regions of space and time. 

But what makes the most effective memes successful?  How do some ideas, images and messages catch our attention more than others?  According to Brodie, memes are like a computer software that builds on basic brain functions or "hardware design."  The hardware (brain) is driven by the most basic human drives, such as hunger, fear and sex.  The software (memes) enhance the functionality of the hardware.  This hardware/software design has been fundamentally the same since primitive man.

"In other words, our brains made us better at pursuing the four basic drives animals have, fondly referred to by zooligists as the "four F's": fighting, fleeing, feeding, and--er--finding a mate." ~ Richard Brodie Virus of the Mind: The New Science of the Meme

The marketing adage, "sex sells and we're buying," is true.  This can be extended to fear, food and fighting.  From these basic brain functions our figurative buttons are formed.  Mass media and marketing messages use these buttons to get your attention.  The buttons are commonly pressed by asking questions with one of the four F's imbedded:

• Are your children safe riding the bus?
• Got milk?
• Hungry for Pizza?
• Will the European Debt Crisis Tip the World into Recession?

One of the key lessons I took away from this book is that there are few human beings who are conscious of their surroundings and are therefore rarely acting authentically -- they live in a kind of dream state -- by eating, buying and socializing without knowing why they do what they do -- they imitate and replicate -- memes and DNA go on surviving long after we are gone.

"The word pay in 'pay attention' is quite apt.  As we are conscious beings, attention is our most precious commodity.  Attention is a piece of our consciousness, a slice of our human life.  When we direct our attention at something, we are spending a piece of conscious life." ~ Richard Brodie,Virus of the Mind: The New Science of the Meme

Imitation is human but it may be best used as a tool for learning, especially when young.  Once we learn how to function in our environment, we may then move on to learning about ourselves.  The challenge, however, is that self-knowledge and self-awareness take a conscious mind, which is not part of our hard-wiring.

It is not necessary for a computer to understand how it is programmed--it just runs the program.  Similarly, our brains naturally and automatically perform very simple and specific tasks.  Therefore the natural tendency for humans is to go on through life without consciousness and our buttons are easily pressed.

Try finding the memes that have become your programming:  Where did your attitudes about money come from?  Why do you tend to vote for the same political party?  What made you buy the food item that wasn't on your list?  Begin by recognizing how you are programmed to think and act in a certain way.  You are then enabled to "de-program" yourself and act consciously and authentically. 

Now, if we can only spread this meme to others we may build a better world!

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Source: Virus of the Mind: The New Science of the Meme

Related Post: The Paradox of Habit Part II: Antonyms of Creative Thought

The Shortcomings of Words

"Occasionally in life there are those moments of unutterable fulfillment which cannot be completely explained by those symbols called words. Their meanings can only be articulated by the inaudible language of the heart." ~ Martin Luther King Jr.

Ironically, it is only words that can communicate their own inadequacy.  Words, symbols and language are wonderful tools to communicate ideas but they also fail and mislead.

A few days ago, I started looking at quotes to share with my parents on their 50th wedding anniversary.  It was an amazing coincidence that I randomly chose a file on my computer with dozens of quotes from various authors.  My eyes went directly to today's featured Martin Luther King, Jr. quote.  The coincidence is that MLK day is only a few days away and this particular quote summed up my own thoughts perfectly:  What do you say to someone on such an amazing occasion?  How does one sum up 18,250 days of dedication, trials, tribulations and joys?  There are no words that are adequate; therefore we use words to express the failings of words.

In that spirit, here are few more of my favorite quotes on words, language and meaning:

"Words, he decided, were inadequate at best, impossible at worst. They meant too many things. Or they meant nothing at all." ~ Patricia A. McKillip

"Man acts as though he were the shaper and master of language, while in fact language remains the master of man." ~ Martin Heidegger

"Words, no matter whether they are vocalized and made into sounds or remain unspoken as thoughts, can cast an almost hypnotic spell upon you. You easily lose yourself in them, become hypnotized into implicitly believing that when you have attached a word to something, you know what it is." ~ Eckhart Tolle

"To the extent that language forces experiences into categories it is a screen between reality and the human being. In a word, we pay for its benefits… Therefore, while using language, as we must of necessity, we should be aware of its shortcomings." ~ Abraham Maslow

"The word is not the thing. I may describe a mountain most beautifully, paint it, make a poem, but the word, the description, the poem, is not the actual. We are generally carried away emotionally, irrationally by the description, by the word." ~ Jiddu Krishnamurti

"If I can assign names as well as pictures to objects, the right assignment of them we may call truth, and the wrong assignment of them falsehood." ~ Socrates

"The supreme paradox of all thought is the attempt to discover something that thought cannot think." ~ Soren Kierkegaard

Happy 50th Anniversary, Mom & Dad.  Thanks to Martin Luther King, Jr for all that you've done for humanity.  The greatness of the anniversary and of MLK are beyond words...

Lau Tzu Beats Wall Street in 2011

"Those who have knowledge, don't predict. Those who predict, don't have knowledge." ~ Lau Tzu

The title to this post was written with tongue only partially in cheek: The passive investor, in the spirit of Lau Tzu and the Taoist philosophy, proved once again in 2011 that going with the flow of nature most often provides the greatest results.

"Nature never hurries, yet all is accomplished." ~ Lau Tzu

Lau Tzu's Taoism is largely based upon the wisdom of applying the rythms and balance of nature to one's behavior and to one's life in general.  Humans are a part of nature and, as I often like to point out here, human nature extends to financial markets. 

As I addressed in my Angles post, going against the crowd has its merits at times both in life and in investing, but unless the investor receives intrinsic value from the act of investing, the go-with-the-flow nature of passive (index) investing is the best approach.

This passive indexing style vastly outperformed actively-managed funds in 2011. For example, the S&P 500, including dividends, was up 2.11% in 2011 while the average large blend category fund gained just 0.02%. In different words, it paid to just go with the flow of the broad market last year rather than buy an actively-managed fund. 

Index funds don't beat fund managers every year but there is certainly enough historical data to show that most fund managers do not outperform the broad market indexes on a consistent or long-term basis. As I enter my sixth year as the owner of an independent investment management firm, I've become increasingly humble as I continue to align my investment philosophies with balance and passivity (the attempt to beat the market often ends in the opposite result).

"Health is the greatest possession. Contentment is the greatest treasure. Confidence is the greatest friend. Non-being is the greatest joy." ~ Lau Tzu

Unless investing provides a significant level of non-financial reward for you, there is no good reason to ever attempt to "beat the market."  In 2012, enjoy the richness of life by applying the natural virtues of patience, moderation, contentment and simplicity.

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Related:

Angles

(Why You Need to) Get Rich Quickly

Quotes on Contentment

Are You Thankful for Money?

Imagine sitting around a table on Thanksgiving with family and friends.  Everyone around the table takes a turn vocalizing the things for which they are most thankful--health, personal relationships, money...

Wait.  Did someone say money?

"A crust eaten in peace is better than a banquet partaken in anxiety." ~ Aesop

The truth is that money is not something that people consciously include as the highest priorities in life but actions often say otherwise.  When someone says they are thankful for their health, friends, family and/or significant other, they really mean it.  However, the time and energy spent on the pursuit and acquisition of (and anxiety related to) money vastly outweighs the time and energy spent on those highest priorities of life--those things you are truly thankful for during a time of honest reflection, such as Thanksgiving day in North America.

Adding more evidence of this misalignment of priorities and actions, almost at the very moment thanks have been given, the planning strategies for Black Friday--the day hoards of Americans compete to acquire material goods at "discount" prices--shifts away from what little focus was given to life's greatest treasures and back to money and the things it can buy.

"Be content with what you have; rejoice in the way things are. When you realize there is nothing lacking, the whole world belongs to you." ~ Lau Tzu

For those of us in North America and for anyone elsewhere on the planet reading this blog, please take time to reflect, not only on those priorities of life that money cannot buy, but on the fact that this kind of reflection should be practiced on a daily basis: Every day is Thanksgiving; every moment is an opportunity to live life now--to remind yourself of who you are and why you live and to align those with what you do.

Here are a few guiding points for thankfulness in daily reflection:

• Don't worry that your investment portolio could lose value today; worry that you may miss another valuable moment with a loved one or doing some other thing that is meaningful--a moment that cannot be retrieved (money can come back, time cannot).
• If you pray to God, don't ask for things; just give thanks for what you have now.
• Believe that everything at this moment is exactly as it should be.  This removes the desire for control and the anxiety surrounding it.

Consistent reflecting--giving thanks daily--will help maintain the healthy perspective that money is a tool for life, rather than perpetuating the herd behavior that says life is a tool for money.

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Related:

Be Thankful (and Remain That Way)

Mind vs Brain Part III: Habits of the Reflective Mind

Quotes on Contentment

Quotes on Money, Greed & Investing

Why 'Retiring' At 80 is Good

"It is no measure of health to be well-adjusted to a profoundly sick society." ~ Jiddu Krishnamurti

I recently read a MarketWatch article, Retirees are confident, but workers can't retire, which essentially states that many of today's retirees will financially survive the Great Recession but "fears were palpable" among today's workers and non-retired people that they won't be able to retire until the age of 80.

This article is a case in point that the conventional idea of retirement is exactly the opposite of a healthy perspective.  At a minimum the sentiment of the article, assuming it matches that of today's workers and non-retired people, is a reminder that the conventional idea of retirement essentially means "not working anymore."  It also underscores the unhealthy conventional thinking that working in a job or succession of jobs you don't like (or even hate) for most of your life is a fact of life to be accepted, is a tragedy.

This thinking further supports the notion that retirement is considered a kind of escape from reality and may only be enabled by financial means:  If you save well, you can get out of the rat race and live out your golden years relaxing, travelling and playing golf; however if you don't save well or you have been victimized by a terribly timed recession, you'll have to sacrifice another 10 or 15 years of your life to reach the Holy Grail of personal finance--retirement.

"Health is the greatest possession. Contentment is the greatest treasure. Confidence is the greatest friend. Non-being is the greatest joy." ~ Lau-tzu

I can certainly see how "fears are palpable" for workers who are generally unhappy with their existence and the ultimate and hopefully permanent escape from this existence will occur at age 80--a long, long time from their current age.  However, if younger people today--those significantly under the conventional retirement age of 65--want to find the means of early retirement they will consider career planning as an important aspect of retirement planning.  In different words, find work that you enjoy and you won't want to "retire" by conventional means; you'll want to live a long life and keep doing things that are meaningful and rewarding.

This way, if retirement means "not working anymore," one would not want to hasten the conventional retirement age--health would become the highest priority (above money) and "working" until age 80 would be a blessing.

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"Rat Race" Image by Polyp

Related Posts:

The Non-Financial Cost of Retirement

Man's (Career) Search for Meaning

Balancing Human and Being

"You are a human being. What does that mean? Mastery of life is not a question of control, but of finding a balance between human and Being." ~ Eckhart Tolle

Does the stock market make you anxious?  Do you get angry when someone cuts you off in traffic?  Do you spend more time thinking about and planning for the future than you spend living in the present moment?  Have you put off taking steps toward the life you've imagined?   Of course you do!  You're human!  But how human are you?

If you answer 'yes' to most of these questions, you have an unhealthy balance of human and being; you are more brain than mind, more ego than authentic self, more money than meaning, more plan than purpose, more somewhere else than where you are now, more human than being.

"The ego doesn’t know that the source of all energy is within you, so it seeks it outside." ~ Eckhart Tolle

There is no denying the fact that you are human--you are flawed. So you easily forget who you are and why you live because you get caught up in the illusion of a world of forms (thoughts, words, things perceived by the senses) that your brain/ego can grasp and use as identity.  Translation:  You think you need outside things (money, material wealth, other people) to give you a sense of self; and as you continue seeking these things, you lose the life that you are.  You need to get back to Being.

"Whatever has being does not become; whatever becomes does not have being." ~ Friedrich Nietzsche

Conversely, the attempt at denying the human in you--to move too far from human--can create its own illusion.  Even the attempt to force away outside influences--to become an island unto yourself, if you will, is a work of ego.   You decide to create your own reality and rationalize away anything that disagrees with your thoughts and ideas. 

So what can be done?  Your human nature can be self-destructive and denying it can cause incredible tension and inner termoil. Accepting your human flaws is to flow with nature.  However, the human that exists without awareness is a child without a parent, a brain without a mind, a mindless existence.

"What this has taught me I think all of us had better learn.  There are no perfect human beings!  Persons can be found who are good, very good indeed, in fact, great.  There do in fact exist creators, seers, sages, saints, shakers, and movers.  This can certainly give us hope for the future of the species even if they are uncommon and do not come by the dozen.  And yet these very same people can at times be boring, irritating, petulant, selfish, angry, or depressed.  To avoid disillusionment with human nature, we must first give up our illusions about it." ~ Abraham Maslow

The antidote to the disease we may call the human condition is simple awareness--a balance of Human and Being.  The mind becomes the adult and the brain is the child.  Both have their redeeming qualities; both have their destructive tendencies; but together they strike a healthy balance of responsibility and adventure, chaos and order, dreaming and consiousness, wrecklessness and control, play and work, observer and observed, lost and found, planner and wanderer, selfishness and unselfishness and so on.

Human and Being are not opposing forces but rather two parts that create a balance.  See it, enjoy it, embrace it.

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Related:

Mind vs Brain Part I: We are only Human

The Death of Steve Jobs: In His Words

I just learned that Steve Jobs died.  At first, I was saddened but then I smiled because I know he lived a full and authentic life.  Consider this powerful quote on death from Steve Jobs that is sure to be repeated many times today and in the future:

"Remembering that I'll be dead soon is the most important thing I've ever encountered to help me make the big choices in life, because almost everything--all external expectations, all pride, all fear of embarrassment or failure--these things just fall away in the face of death, leaving only what is truly important. Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason not to follow your heart." ~ Steve Jobs

This quote on death is even more powerful now than it was when Steve Jobs said it to a class of graduating college students in 2005. 

I am also proud to say that this quote is featured in my forthcoming Ebook, which begins with a chapter on death--because death is what gives meaning to life, just as darkness gives meaning to light and sadness gives meaning to joy.

Here is an excerpt from my Ebook's chapter on Death:

If one is to begin with the end in mind, the true end is not some destination reached in a financial plan, a career path or some other end. All ends in life are subordinate to the end of life; the plans we make—financial, career, and personal relationships—may be given meaning and purpose by holding close the thought of mortality: Death gives meaning to life—your life—and it enables the perspective that will allow you to form your own philosophy—your life philosophy—the meaning and purpose of your life and all that you do. The end is where you begin.

Rest in peace Steve Jobs.  You are truly an inspiration.

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Related: Why Steve Jobs is CEO of the Decade (Not What You Think)

 

Ode to a Friend: On Life, Death & Perspective

"What the caterpillar calls the end of the world, the master calls a butterfly." ~ Richard Bach

My mother-in-law, my friend, died two days ago.  Suitable words are not coming to me at the moment but as I begin writing and thinking of what I might say today, it is striking me now that she, among many greater things, was one of the biggest fans of this blog. 

I recall a past blog post, Awakening to Your Dying, that elicited a profound response from her.  The final two sentences of the post were these questions: "Are you living or are you dying? Are you living the day or merely surviving it?"

In her response to me, she simply wrote, "I'm livin' it honey!"

I can't help but smile as I imagine her saying that in her wonderfully unique accent, which was equal parts Maryland and South Carolina. 

Her final year was often physically difficult for her and not always filled with optimism but she still managed to find the will and means to fulfill her most meaningful and rewarding activities, such as shopping at thrift stores to buy trinkets for her grandkids or to care for her ailing cats.

In reflection of her life, my thoughts remain flooded with memories of her, combined with the love, support and concern I am feeling for my wife, kids and extended family.  Therefore, I thought it appropriate to share some quotes that I imagine she might say at this moment, if she were able to send us a few lessons she learned before, during and after her passing:

To live in this world you must be able to do three things:
to love what is mortal;
to hold it against your bones knowing your own life depends on it;
and, when the time comes to let it go, to let it go.
~ Mary Oliver, 'In Blackwater Woods'

To die is poignantly bitter, but the idea of having to die without having lived is unbearable. ~ Erich Fromm

Stop acting as if you have 1,000 years to live. ~ Marcus Aurelius

Sometimes even to live is an act of courage. ~ Seneca

Fear is static that prevents me from hearing myself. ~ Samuel Butler

My life has been full of terrible misfortunes -- most of which have never happened. ~ Michel de Montaigne

People have a hard time letting go of their suffering. Out of fear of the unknown, they prefer suffering that is familiar. ~ Thich Nhat Hanh

A crust eaten in peace is better than a banquet partaken in anxiety. ~ Aesop 

The family.  We were a strange little band of characters trudging through life   sharing diseases and toothpaste, coveting one another's desserts, hiding shampoo, borrowing money, locking each other out of our rooms, inflicting pain and kissing to heal it in the same instant, loving, laughing, defending, and trying to figure out the common thread that bound us all together. ~ Erma Bombeck

I have nothing more to add, except to simply say, "Peace, love and thanks always..."

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Sadly, my cat Sunny passed away just a few hours after I wrote this post.  Rest in peace, little one...

We who choose to surround ourselves with lives even more temporary than our own, live within a fragile circle, easily and often breached.  Unable to accept its awful gaps, we still would live no other way. ~ Irving Townsend

Balancing 'Life' and 'Planning'

"Don’t seek happiness. If you seek it, you won’t find it, because seeking is the antithesis of happiness." ~ Ekhart Tolle, A New Earth

Last week's post demonstrated how life planning is a contradiction of terms:  Life is now, planning is future.  Adding more challenges, life is not something that can be accurately predicted.  Did you know where you would be or know what your perspective of life would be today ten years ago?  Humans are great at thinking of the future but accurately predicting it or creating it is not one of our greatest attributes. 

As the great pre-Socratic philosopher Heraclitus famously said, "You cannot step into the same river twice."  Extending upon this metaphor, you cannot predict what the river will look like or where you'll step five, ten or twenty years from now.

"Although imagining happy futures may make us feel happy, it can also have some troubling consequences. Researchers have discovered that when people find it easy to imagine an event, they overestimate the likelihood that it will occur." ~ Daniel Gilbert, Stumbling on Happiness

If planning takes us away from life now, and humans are terrible at predicting the future, does this suggest we just float through life like a leaf in the wind?  As the old saying goes, ignorance is bliss.  Unless you were able to remove the frontal lobe of your brain (i.e. a frontal lobotamy) there is no stopping your anxiety about the unknown or your desire to predict and control future events.  Some people may find it easy to be the leaf in the wind but most people cannot.  To reconcile the futility of planning and the innate behavior to think about and plan for the future, there is a balance to be found.

"Plans are worthless.  Planning is essential." ~ Dwight D. Eisenhower

I believe any type of planning can be good if it is a reflective exercise that enables an individual to identify and direct their energy to the highest priorities in life now.  More importantly, this reflection can end with a return back to life--back to the present moment.  This suggests a healthy form of life planning--the balance of life and planning--the kind of planning that always returns you back to where you are now--where life exists.

To add to the semantics study, the word planning is a dynamic verb, which implies that it is an ongoing process.  Once the plan is created, it is a static (motionless) piece of history--almost worthless for a life that evolves.  However, the process of planning can uncover and clarify your current direction and remove the human anxiety over the unknown; the plan continues to evolve along with your life and you've satisfied your desire for control.

"What is important in life is life, and not the result of life." ~ Johann Wolfgang von Goethe

In summary, to balance life and planning, the goal of planning must not be the creation of a plan; the goal is the ongoing, reflective process of planning.  To use a metaphor, you look forward to view a mirror; however the image reflects back to you.  Life is the journey, not the destination.

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Related:

Balancing Responsibility and Adventure

Life Planning Part I: Are You a Tool?

Life Planning Part II: The Search for Meaning

Life Planning Part III: Creating the Plan

Life Planning: A Contradiction of Terms

"Always we hope
Someone else has the answer.
Some other place will be better,
Some other time it will turn out.
This is it. No one else has the answer,
No other place will be better
And it has already turned out."
~ Lau Tzu

Planning and thinking of the future is a part of being human, assuming the prefrontal cortex of your brain is working properly.  We can't help but imagine ourselves in some other place and time, beyond the present moment, improved and happier than we are now.  And so we apply our energy today toward the acquisition of power to make a better tomorrow.  We think this power is given by money--the tool that enables the future happiness.

"Whatever has being does not become; whatever becomes does not have being." ~ Friedrich Nietzsche

Philosophers call this obsession with the future Becoming.  Most of us are always trying to become someone or something else and on our way to somewhere else.  In fact, most of the products and services in the western world are formed around the idea of escaping from the present moment.  And because money is something that is perceived to buy what we have imagined (or what some media message has inspired us to imagine), we spend the largest portion of our energy and our lives seeking money. 

We don't want to just make money, we want to make more money; we want to make our money make more money.  And thus we are always Becoming and never Being--we are never present to ourselves--we are never in the present moment, where life exists.

'Life' and 'Planning' as Opposites

In my profession of financial planning, there is a rising movement toward the idea of life planning.  Instead of blindly making goals to acquire a certain amount of money for purposes of financial security, life planning asks its participants to imagine the life that they want and allow money to help them acquire this life.  In essence, life planning makes life the goal and money the tool; whereas traditional financial planning is both the goal and the tool.

In other words, life planning does partially succeed at making life a higher priority than money but it potentially fails at engaging the participant directly with life, which is happening now: The future aspect of the 'planning' negates the 'life' aspect.

"As long as you are unaware of Being, you will seek meaning only within the dimension of doing and of future, that is to say, the dimension of time. And what ever meaning or fulfillment you find will dissolve or turn out to have been a deception." ~ Eckhart Tolle

Perhaps I am being too literal or getting too far into semantics but life can only exist in the present moment; planning is for purposes of future time.  The term life planning, therefore, is like saying present future or today tomorrow. The words are opposites.  This returns us to the ideas of Being and Becoming: You cannot be here and somewhere else at the same time--if you are always becoming, you are never being.  If you are not engaged with the present moment, you are absent from yourself--absent from life.  Life planning, paradoxically, can be life crippling.

Next week's post will be a "part 2" to this one and will provide guidance on how to move beyond the contradiction of life planning and find a balance between 'life' and 'planning'...

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Related:

10 Potentially Perilous Paradoxes: On Investing, Planning & Life

The Experience-Stretching Hypothesis