Richard Yong

Are you a Taker or a Giver? hint: It's not about the Value Add

We tend to view success by wealth (what was taken) because it's a simple indicator. It's easy to forget what you need to give to get that wealth.

Why don't the hundreds of other mp3 players have the 80% market share of the iPod? Because Apple gave the consumers what they wanted, a small sleek portable extremely well designed and easily integrated player. Giving before taking. They didn't just create 'enough' they created something people wanted.

Ebay used to be a giver too, they supplied a great service that no one else had and people flocked to them. Now they've become a taker, and it shows in their tanking market share. I can just imagine a beady eyed MBA manager calculating the value of additional picture in your listing costing $0.10.Take without giving and your customers will punish you. If I was ebay, I'd make listing free and increase the ways people could pay.

IBM is an example of a turn around. They became a taker in the 90's thinking they could bull doze the PC market they were leading. Intel and AMD decided they could give more, and take less. IBM soon found themselves in a rut, they couldn't keep taking anymore. So what did they do? They gave. They totally changed course, and became a consulting firm. Consultant's don't get paid unless they give.

I heard a story about a local millionaire that said only two things matter in a successful business:

1. Look after your customers, and do it damn well.

2. Look after your employees, and do it even better.

Imagine the following employee:

1. John Doe only gives as much as he takes in salary.

Compare this to Jane.

1. Jane Doe does whatever is required, regardless of her title.

Who gets promoted? They guy nickel and diming and present valuing his time? Or the girl who isn't there just to do her job, she's there to do the right things.

People who take but don't give have to compete with all the other takers, the mediocre masses, the average. If you focus on giving, you're probably already selling a remarkable product or service.  You're probably also looking at your stakeholder's welfare before you even dare look at your bank account. You don't have to compete with all the takers anymore, because you're playing on a level above them.

Stop talking about 'value' and start asking the question.

Are you a taker or a giver?

flickr cred: kevinthoule

Playing at it.

It's almost instantaneous when you watch someone's eye movement, diction and body language that you know they aren't wholly committed or altogether there. We all have a finely tuned liar's meter, we suspect when someone isn't altogether there.

Gordon Ramsay (chef) loves to tell people that they are fakes or just 'playing at it.' While he's harsh, I like that phrase, a lot.

The problem with playing at it is that we are lying to ourselves about what we want to do. Instead of applying judgment and wise decision to life, it becomes about denial and playing the victim. The attitude problem of just playing at it seems to be infectious.

The opposite of playing at it, isn't working at it. It's playing. When you see people who are intense, focused and committed, they look, sound and feel different. They are authentic. They aren't just playing at it. They work hard, but they are also at play. 

Richard's been down with the flu, he hopes everyone out there with the flu is carrying on o.k. He's also in the middle of a few pretty exciting projects! Stay tuned!

flickr cred: carf

Best of RichardYong.com

I'd like to welcome new readers, especially those from The Simple Dollar.  I'm an entrepreneur and consultant in Sydney, Australia. I have a colourful history in the corporate world, as both an investor, worker, consultant, auditor, partner and interviewer.

My focus is to share ideas about happiness, from finding financial freedom, mental freedom to doing what you want.

I've put together a short list of favourite articles.

The three little lies we tell ourselves about work

The economy of ideas

Be demanding

Why Kinokuniya hates books, Apple hates computers and how to kill money.

Paperless in four hours

Persistence and carrying 74.6 Big Macs

Cut the overhead. Sleep better. How I pay $50 a year in mobile phone bills

Trust your gut, not the bell boy.

On October 20, 2007, I woke up and liquidated my entire share portfolio. If you look at the graph of what the market was doing, you'd think I was crazy, things were still looking up (it usually is before it goes over the cliff). Over half my net assets were invested in stocks. I collected my profits, sat back and waited.

The decision was instant. I worried some time after, at how quickly I made the decision.  A quick call to my wife to tell her we were getting out, and that was that.

No prolonged anguish, research or advice saying 'hey it's time to get out.' In fact there were no signs of an imminent crash. Everyone still talked about how great the markets were. In fact, I was getting stock tips from just about everyone.

Although the decision was instant, none of the experience and research behind it was.

Recently I read Blink by Malcolm Gladwell, I now understand that these decisions are quickly made, but require long periods of learning. Here are some habits I've practiced since I was young, which helped me piece together the facts behind my intuition.

1. I've been reading the business news daily since I was 15.

2. I've been reading about successful investors and business managers since I was 15

3. I've been watching and working with the actual businesses behind the 'stocks' for years. Watching the successful ones, and the not so successful ones at work. Walking the floors of businesses gives you a whole new perspective on who you trust with your money.

4. I've studied and watched economic theory in action for years. Including as part of a degree majoring in finance and accounting.

With this information, I realised back in October that the U.S economy was going into a recession, businesses were finding it difficult to find cheap financing and that the reported losses from the sub prime credit crunch had yet to be totally exposed (and reporting season was coming up...)

Here are some tips for investing:

1. Don't buy into the market, buy into a company. Make sure you would invest into these guys long term, even if you're only going in short term. If you can, try to see if you can spend an hour walking around the company's office, interview employees, check out their bathrooms. Knock on the walls. This might seem odd, but it will really change your perspective on how companies are run. If not, make a trip to their lobby, or call them up and see what their receptionists are like.

2. Pay attention to the news, even if it's just browsing the top 5 headlines everyday. I'm sure you do it with blogs and the Sunday paper, why not with those thousands of dollars you've invested?

3. When everyone is running one way... poke your head up and make damn sure they aren't running over the cliff. Don't be the lemming.

4. The title comes from a tip I heard once, when the bell boy starts giving you stock market tips. Run. That was just before the dot com bust, and it's what happened 6 months ago.

5. Trust your own judgment. If you keep trusting everyone else, you end up just like everyone else. Do you want to be the 80% of people in the 80/20 rule? or the 20% of people with 80% of the wealth?

6. It's not magic.

If you have sharp sight, use it: but, as the poets say, add wise judgment

Marcus Aurelius - Meditations

picture credit: reuters - The graph is a three year chart of the australian stock exchange.

CPU will make your wallet fatter. and it's got nothing to do with computers.

As the weekend approaches and a weekend of glee is upon us, I want to share a cautionary tale on shopping.

Read this cracker. 10 xbox games sitting idle is the same as not going for a weekend holiday to Hawaii. I'm not kidding. Intuitively you and I would rather have a weekend in Hawaii lazing on a beach than a pile of unused stuff, but realistically, we all have a pile of stuff somewhere, and it comes from our relationship with buying stuff.

I use a simple concept when I buy new things. Cost Per Use. CPU. To justify a purchase to own something, the CPU has to approach zero. I like to use my things so much that by the time it's broken, given away or sold that it's pretty much cost nothing per use. Here are some examples:

Clothes - I hate unused clothes, every piece of clothing I own must have a cost per wear approaching zero. So if I buy a $200 jacket it better be lasting at least 20 years. That's a long time for a jacket to last. Alot of my clothes end up being of a multi use or utilitarian nature. It makes you think twice about buying that really nice shirt when the cost per use is in the hundreds of dollars. More if it's on credit.

Video Games - I abhor owning video games. Counter intuitive for a gamer like myself? Well it isn't. In the gaming industry there is a term called an 'attach rate' which is the number of games sold for every console. For the console to be worth losing money on (and Sony and Microsoft are losing money on every console sold) there needs to be a correspondingly high 'attach rate'

What this means is that consoles are great value for money, but games aren't. So owning games I don't play has never made sense to me. I only ever have one or two games at a time, and once I'm done with them, they're off to Ebay. The loss I make between purchase and sale is my cost for having played it for however long, and the cost per use generally starts to approach zero (because I used to game a lot).

Why CPU rocks.

CPU changes our behaviour towards purchasing stuff, it's not about owning stuff anymore, it's about use and enjoyment. I don't mind paying $7 to rent a dvd rather than pay $29 to own it outright, because the utility I get out of a dvd, is the one night watching it. I'd love to find a person with a large library of dvds that has watched them all twice.

One of the biggest paradigm shifts for me was over my ownership of books. Cost per use for most of my books is the cover price, which is ludicrous, $30 to read something once? I now use the library, why buy when I can borrow, and my cost per use hits a whopping free.

It also turns decisions into no brainers when it comes to experience. The thing with experience, whether it's exotic holidays or deep learning, is it's in constant use while you are paying for it. That 30 euro a kilo fiorentina steak, in Florence, cooked rare in front of me, in a crowded trattoria... worth every penny.

So next time you look at something you just must have. Take 10 seconds, ask yourself... what's the real cost per use? And if it is really valuable, spend with all your ability and happiness!

Have a great weekend!

Flickr cred: John Pannell

Design is dead. Long live design.

Everything I designed was unnecessary

So Phillipe Starck said. Design is dead. Long live design.

I'm not totally on board with this. Pointless and unnecessary design will always live on, as long as we are human, we will always love beauty and pride, it was true in Homer's (of the Iliad...) day, and true in ours. Positional goods (goods valued mostly by desirability, e.g. LV, B&O, Ferrari) will always continue to attract massive demand.

There will be a massive shift in design, buoyed by enforced frugality (recession), voluntary simplicity and a socially and environmentally aware generation.

Design will evolve and shift to an utilitarian focus. The winners will design the way we eat, live, sleep, think and love. Designers will direct the way we spend our money and time and only focus on the necessary.

Here are six unconventional counter-intuitive designs (and a sign of things to come):

Kiva.org - Micro financing for third world countries. Designed as a portal to lend small amounts of money (I'm talking $100 to fund a Tanzanian store for 10 months) to businesses in developing countries. This is sociopreneurial design at it's prime, and it isn't charity.

One Laptop Per Child - Designing a laptop under $100. This is technological, business and charitable design at the same time. All in a world where people are looking for faster computing, people are out there making sure our neighbours don't get left behind.

Grameen Bank - A micro financing bank for poverty stricken communities based on trust. No contracts, no collateral. Sounds like no one pays right? Wrong. They are profitable and the socialpreneur won a Nobel prize for it.

iPod - Apple brought music back to the people. Once a positional good, now a commodity. You can get to music in three clicks, brilliant. It's marked a gigantic shift in music design. For years audio quality was like wine tasting, snobbery was rife. Now it's just about the music.

Youtube - What Apple did for music, Youtube did for T.V. This is why HD TV, High End audio will become even more cut throat niche markets in the next decade. Youtube and Apple showed the masses that bigger, louder, faster isn't better, the quality is in the content.

Nintendo - When everyone wanted more 'awesome graphics' and '12.5 surround sound,' Nintendo pissed it's shareholder's off in 2006 by saying that people want fun. No, I'm not kidding, Before the Wii's launch Nintendo's stock price was sitting at the same levels as when the first Nintendo came out in the 90's.

Nintendo got it right. People want fun. The quality is in the content. By the way, Nintendo is the only game console manufacturer making a profit on every console sold. Yep, Sony and Microsoft lose dollars on every playstation or xbox sold.

There I said it. Content is King. The frill and whistles aren't necessary and people are catching on.

In future there will be no more designers. The designers of the future will be the personal coach, the gym trainer, the diet consultant

Phillipe Starck

Flickr cred: nedrichards

Poker. Playing the hand you're dealt.

We cannot change the cards we are dealt, just how we play the hand.

- Randy Pausch, Carnegie Mellon University Professor, Disney Imagineer, The Last Lecture, and remarkable guy. Oh, he's also 47 and dying of pancreatic cancer.

1326

The number of starting card pairs in poker.

15

The number of hands worth playing.  That's just over 1% of all cards possibilities.

The hand doesn't change, but how you play your cards can.

Life is the same. How you play your cards can change everything.

Recently Dr. Adam Fraser from the Glucose Club shared a story  with me, about a business man. This man, had been brought up in family with a single mother, who had an extreme disability and very little money. From a young age, without a father, he became the sole caretaker and breadwinner for the house. By 16, he had started his own company, and is now a successful multi business owning, multi millionaire.

Surprised by his carefree, positive nature from such a stark horrible childhood, Adam asked him why hadn't he been stuck in his misery, poverty and pain of his terrible circumstance? He responded,

'You play the cards you're dealt.'

This resounded deeply with me, this guy understood that you can whinge, be jealous, sad and miserable about what you've got, or you can accept that life isn't always fair, and make the most of it.

Personally, I like the cards I've been dealt. I'm not going to apologise for them and I'm not going to be jealous of those who have more. Now this is the really difficult bit... I've just got to make the right bet.

flickr cred: Kevin Labianco

SMS and Mobile Calls. Kinda like Alcoholism.

There was a key message about my $50 a year mobile bill.

I had two bad habits that became normalised behaviour.

1. I called back any missed calls and made calls while walking between meetings or doing things I didn't need to concentrate on.

2. Replied by sms to any messages received, instantaneously.

The mobile phone companies thrive on because everyone thinks it's normal. Normal doesn't make it right. Or valuable.

The reality of communication is that almost nothing is required instantaneously. The world doesn't fall over because Bill in Accounts Receivable wanted to find out if you had the invoice for the taxi trip in your left pocket. Or your boss wants that budget sent to him ASAP.

So how do we stop normal but pointless expensive behaviour?

Habit change using filters.

Filters are quick rules to live by. Here are my filters for choosing to make a call from my mobile, and not when I reach a land line or PC.

• Can I personally do anything about it right at this very second? No? Then there is nothing to worry about.
• Even if a catastrophe has happened, could I do anything, or is it just more (useless) information?

The most powerful single change though was this question, if I'm using a mobile right now, and I've let myself be interrupted, is what I'm doing even that important? If it isn't important, why the heck am I wasting my attention, energy and ability.

These two filters mean that I don't react to missed information anymore. 99% of calls are made from home. I've had to fight the itch when I'm delayed 10 minutes by the pizza man to call my wife, because either way I'm late and if I make the mobile call, nothing changes (except i might as well have thrown some coins in the bin).

Mobile phones (and any bad habit) reminds me of the Alcoholics Anonymous Serenity Prayer.

God grant us the serenity to accept the things we cannot change,
courage to change the things we can,
and wisdom to know the difference

Flickr cred: Kian Esquire

Why Kinokuniya hates books, Apple hates computers and how to kill money.

Bear with me, this one isn't really about books, computers or about killing money.

Kinokuniya hates books.

Kinokuniya would rather have no books on its shelves. It's true. If they could have it their way, they would have a shop so small, it would only stock books that are looked at or sold. Unsold books sitting on shelves costs Kinokuniya big time and they don't like it one bit.

What cost, exactly? Every dollar spent buying, housing, presenting, packaging and transporting books is working capital not invested in growing or developing the business.

Apple hates computers.

Gil Amelio (ex-CEO) liquidated two billion dollars worth of Apple's computer inventory and turned it into one and a half billion dollars of cold hard cash. Why? Working capital. A dollar in his pocket is a dollar free to spend on decisions. Anything tied up in unsold computers sitting in warehouses is dying money.

Amelio realised the opportunity and freedom of working capital.

Okay. So this is basic business management 101 for any business with inventory right? Basic stuff right? Liquidity is king yadda yadda, right? Right. Well let's take a different look at working capital.

Consider working capital in our daily lives. Not a common water cooler topic I'm guessing, but bear with me.

Consider every single thing you own as inventory. Also consider that your money might be dying.

Consider that for the lucky person, you have two eyes, two ears, two arms, two legs and two feet. Anything you own or use can only be used one at a time. Every single thing outside of your senses is not being used (let's call it 'warehoused').

Anything you own has a value, and if unused or under utilised, it's dead money. Heck, even if you sold something you didn't use for ten cents and stuck it in the bank, it'd be doing more than money being warehoused to die.

A good example of unused stuff is my library of over 100 books, lots of books I've bought over the years have been read once and shelved. Wasted working capital. First, it's a waste of my money, second and more importantly is it's selfish. If it's sitting on my shelf, nobody else can read it either. Dead, warehoused books. I've trimmed it down to about 25 now.

Apart from unused stuff, there is under utilised stuff too, a $1500 fish tank that I used to look at for 5 minutes a day and clean for one hour a week. I've stuck it on sale. That $1500 buys a heck load of entries to the best aquarium in Australia (over 55 visits actually) and no more cleaning!

When I look around now at the stuff I own (at least what's left of it) I see piles of unused capital or things I value highly. I spent over a thousand bucks on a camera, and have not regretted a single penny, but I regret buying my unused Playstation 3 (but don't worry I'll be selling it at a profit).

So why would anyone personally want working capital? I mean we're not walking, talking businesses.

Well, personal working capital buys opportunity and freedom.   

Working capital for the urban battler means freedom to choose what you do with your career, your time, your entertainment and your education. Nothing is warehoused and wasted. Your resources are either used to make great decisions, or invested into things of value. It's shedding the exuviae of life.

So what if we don't have working capital? Well... no freedom and mental slavery. Being forced to do things we don't want because we have no choice. The kicker is, it almost doesn't matter how much you earn. Just look at some companies who earned a lot, but didn't have any freedom to choose (Apple and IBM are great examples of companies who turned those ships around).

Many people have asked me if I'll be okay for money. I'll be fine. I'm no millionaire (yet), and it's got nothing to do with how much I earn, or how many assets I own, It's about the fact that I've set myself up with enough working capital to make free decisions.

Working capital buys opportunity and freedom. Warehousing does everything but that. It's not just me saying it, but successful businesses, everywhere. Don't resign your money to a cold lonely death!

Flickr cred to paul+photos=moody

Meditations Monday: We're just human.

The pain of labour for hand or foot is not contrary to nature, as long as the foot is doing the work of a foot and the hand the work of a hand. So lifewise for a man, qua man, there is nothing contrary to nature in pain, as long as he is doing the work of a man.'

- Marcus Aurelius - Meditations 6:33

We're just human.

I will only ever have two eyes, two ears, two hands, two legs and two feet (If I'm lucky). No matter how much stuff I own, I can only ever be doing one thing at a time. No matter how much stuff I own, I'll still only have 24 hours a day.

This works two fold.

1. I appreciate what I have more. Everyday I see people with perfectly normal legs catching the escalator up from the train station. I love to walk up them. While I've got them, I'll be walking everywhere I can, if I lose them, I guess it's time to catch the escalator.

2. I'm careful about what I own. With my limited time and my physical human limitations, I can only use so much at a time. So why have anymore than I need?

In the quest for more, we're still just human, bound by physical boundaries equal to all men.

Cut the overhead. Sleep better. How I pay $50 a year in mobile phone bills.

I've met corporate workers with no time,a frenzied schedule of things to do and a life on schedule. I've also met unemployed people with bucket loads of time, but nothing to do. So it's a a conundrum, how can you work, afford the things you want and have the time to do what you want? It's simple, if a little audacious:

Do what you want, as work.

It seems crazy, there are bills to pay, and the work you want might never pay the bills. The phone, the car, the mortgage, the credit card, the vet, the doctor, the this, the that, the, the, the. the list goes on.

I don't disagree at all. Money is a concern, but how much is enough? a lot less than most people think, but you need to think first. Most people go to work, then spend what they earn. I propose a better solution. Work out how much you need to spend (and invest), then go and earn it. It doesn't matter whether or not you love your work, because once you reach enough, the rest is a bonus, and buys you freedom of choice. You work on your terms, terms of what you do, where you do it, how you do it and when.

It's not about ascetism. I'm ambitious about my financial goals. It's about doing what you need, even if it's not that great to meet the necessities, then having the time, energy and resources to focus on the important. This is different for each person, everyone has unique dreams of building a business, spending half the year surfing, travelling the world, spending time loving and nurturing children and family or giving time to charity. I've seen too many people drained, with great financial resources but so much overhead that they ran out of energy to live, be healthy, be loving, be good people, let alone dream.

Well here is another audacious idea. Cut the overhead. AKA cut the crap. I recently spoke to Anthony Herro of Herro Solicitors in Sydney, and he said the single biggest factor of struggle in small businesses is overhead.

Here is how I've gone to a minimum overhead life, and these rules apply as much to business as they apply to life.

• Say no to fixed costs. In business, fixed costs are the devil, they are unavoidable costs that come whether or not your business is making money. These become an expectation of your income. For businesses, these are things like rent, for people, these are the cable TV bills, the 24 month mobile phone plans and the devil of all fixed costs, personal loans (cars, holidays, whatever.) These are the bills that enslave you to work to continue servicing them. Ouch.
• Say yes to variable costs. In business, variable costs are those that change with your level of revenue. These are things like raw materials and utility bills. Personally these are things like charges per use and buying outright. No financial ties. Not using it? Don't pay for it. It's dodging the monthly repayment contracts for the internet, phones, cars and any other expenses.

In reality, it's difficult to always kill off all fixed costs and move to variable costs, but you can reduce them. Here are ways:

• Don't subscribe to anything. Cable TV sucks. Mobile phone plans suck. Leases, loans anything with the word 'repayment' or 'instalments' suck.
• Maximise your pay per use services. Pay by the call and you'll start using your mobile less (contrary to popular belief, you don't need to call every missed call back or reply to every single sms). I've gone to $50 a year prepaid mobile service, and I use Skype and VOIP for my calls. I pay less for calls, and I only pay what I use. It's scalable to use.

Fixed cost is the whip that send you to work, there will always be a minimal amount, and it's different for each person (rental, mortgage, food, hygiene, etc.) Variable cost is the stuff you can say no to unless you use it.

Cut the overhead. Be scalable and be free.

Persistence and carrying 74.6 Big Macs

Nothing in this world can take the place of persistence. Talent will not; nothing is more common than unsuccessful people with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent. The slogan "press on" has solved and always will solve the problems of the human race

Calvin Coolidge, 30th President of the USA

Yes, I've said it's a false belief to believe thats it's always true that you have to work very hard to be successful.

No, it's not true either that being lazy is going to get you success.

It's about working persistently on the right things.

It's about focus and working only on the valuable. I'm not talking about the corporate doublespeak of 'adding value to our customers/clients.' I'm talking about a complete shift of focus from let's do it better by increments to should we be doing something entirely else?

The pain of not doing the valuable is evident in the politics and infighting of nearly everything. For example, labourers in Australia have worked so hard, but are now trying to keep their jobs in car manufacturing plants, when it's fundamentally not valuable to do it here.

Big businesses that have eaten 'working hard but not on the valuable pill' include giants like IBM, Microsoft and Apple. Because while they were running hard up the mountain, someone moved the peak.

It really comes down to value per awesome.  You can be closer to success if you spend your time on the value (awesome) work instead of the flurry of not so awesome work. Sounds simple, but in reality we go through a masochistic habit of doing painful things for little or not gain, working in jobs we might not like so much, surrounding ourselves with distractions. Then we tell ourselves stories about how it's what we do to live. The risk of this reasoning, is that you never really end up anywhere you want to be.

So if we've got the right goals now what?

Persistence.

The art of self discipline. It's not about being perfect, it's about being on mission critical 80% of the time. I learned a lot about persistence a few years ago.

In one year of work and university I put on 15 kilos. That's like carrying 3 bags of oranges, 15 bags of frozen vegetables or 74.6 Big Macs all the time. A 20% increase in my body weight, I was 1/5th more Richard. Something was wrong, and it was a mixture of sleep, nutrition and exercise. I had to have a plan.

• I ate nothing but oats for breakfast, yoghurt and nuts as snacks, and lean chicken with steamed vegetables for lunch for a few years. But once a week, cheat day, I would flip out and gorge. 10 chocolate self saucing puddings? sure why not...
• Scheduled gym time between lectures. Contracted in, no matter how tired I was, I would just turn up, change into my gym clothes and do it. To be honest, I think the biggest obstacle to exercising is a gym membership (I don't have one now).

The plan wasn't so simple to keep. But I ignored emotion, headfaked it. Persistence goes beyond emotion. It's all about the mission. Happy, sad, anxious, upset, tired, gym membership or not. It never matters. You just do it.

So what is persistence?

• Focusing and working on mission critical tasks only.
• Forgeting emotion, emotion doesn't get things done.
• Reflecting often on what mission critical is. Cut the distractions.

I dropped down to 78kgs, sometimes I falter, but never long.

I'd put a caveat here and say that, sometimes, work is a job, and if it lets you find freedom, pays the bills and can let you get on with the best bits in life, then it's well worth it.

Happy Easter, and press on... on the right things!

Richard

   

Flickr courtesy of lakshmi.prabala

Meditation's Monday - Freedom

'How then, can you secure an everlasting spring & not a cistern? By keeping yourself at all times intent on freedom' - Marcus Aurelius, Meditations 8:51

For a long time I wasn't sure exactly what I wanted. When I was a teenager, I was set on being the richest, wealthiest man in the world. As I've grown, I've realised a different kind of wealth, the wealth of freedom. Financial, work and time freedom. Time is a funny one, we try to kill or pass, but in the end, we realise that's all we ever had.

For a long time I looked for the answers to success, and I looked at my peers and seniors. But I'm not sure I ever found the answers there.

I have a sneaking suspicion that the story I used to tell myself was that freedom was when you could afford to have more, or when you reached some vague level of financial and material wealth. While I'm very much commercially minded, I think there is a clear separation between being commercially driven and being selfish or greedy.

I recently caught up with Dr. Adam Fraser from the Glucose Club, and he told me a story about a wealthy businessman, who said his two keys of running a business wasn't by being about the money, but about helping others and keeping your employees happy. Here was a man who has found financial freedom and is also free of being attached to money.

So my mission critical is  being free. That's the balcony view... Now I've got to dance. 

Freedom is not idleness, freedom is not about doing nothing. It about being the sole arbiter of what one does, and what one does not do. - Some random French movie

Flicky credit: abnelgonzalez

Fish in a barrel and Jewellery.

Shooting fish in a barrel and selling luxury jewellery have eerie similarities. Take a look at today's Sydney Morning Herald.

'Couples Hit By Gold Spike' - Smiling couple bemoan price increase of $400, paying $2200 for groom's white gold ring. Jewellers cite price of gold.

I'm going to rename the article. 'Couples Hit By Stupidity.'

Yes. The price of gold has gone up. Incredibly.
Yes. Your ring uses gold.
No. It does not justify the price. Not even close.

Here's the 'back of the napkin' analysis.

If the 18ct white gold ring is 10 grams, 7.5 grams of it is pure gold.  Today, that's $270USD of gold ($1000USD/ounce). Back in November it would have cost $216USD ($800/ounce).

A $54USD change, does not, a $400AUD price increase make.

Price rise gouging aside, that's about a $1900AUD premium they paid on a 'simple wedding band'. That's about 80 hours worth of work for the average Aussie. If it was down to craftmanship, exotic design or any esoteric reason I might bite, but from experience of the industry... It's a brand premium. It's the Tiffany's phenomenon. 

Don't get me wrong, I love to buy nice things and I'd say a wedding is a pretty darn good time to buy nice things. But no matter what sales people might say, the luxury and brand price premium on jewellery will never represent your love for anyone.

While the ring itself might represent your love, the cash, dearly departed, has more similarities to ceremoniously standing around a toilet, putting bundles of crisp fifty dollar notes in and hitting flush. It might just buy your jeweller his next Ferrari too.

I'm no stranger to expensive tastes. I've paid more for a single fish (as in swimming around in a fish tank), a watch and other assorted dross... But always at fair market value.

It seems people don't want to be rich anymore. They just want to look rich.

Flickr credit: Paul Watson

Investing

The idea of someone else going out and making money for me is very tasty. That's why I love investing.

Many people I've talked to about investing who don't invest themselves seem to tell themselves stories about investing, just like a job, they think it's too hard, it's gambling or you need to know too much. Sure there is some learning, but it's not rocket science.

I first invested in the share market at 16. It was the summer of 2000 and I'd earned my first grand from two weeks working in a factory polishing and soldering electric thingamibobs onto printed circuit boards for  ten and a half hours a day. It introduced me to hard work, but I loved it.

My plans were to buy a massive fish tank but my plans were put on standby when my dad told me about something called the share market. The next weeks were spent carefully researching, and I invested half in IT security, and half in petroleum. I doubled my money in a month, it was the tech boom. I sold out before the bubble burst.

Everyone has an opinion, but here are mine for the next few months.

I expect aggressive acquisitions of fundamentally profitable companies by cashed up companies. The share market has reacted violently and indiscriminately, especially in Australia where very few companies are exposed in a big way to the sub prime and credit crisis. This means that a few jewels in the market are being sold at a massive discount compared to what they should be worth. If I was buying a company... I'd be watching the market very carefully...

I would look for stocks that are easy pickings for aggressive takeover actions, those trading with extremely high dividend yields, earnings consistency and very low P/E ratios. I won't buy vapour stock based on analytics alone, they have to be a strong business. I'm either going to be using short term trades to  profit on volatility, or long term holds to profit on long term capital gains, tax concessions and dividend yields (at least 1 year). It'll take fortitude to take a long term hold on any counter in this market though...

After working in many listed companies, I've found out they differ like chalk and cheese, some you would trust to look after your grandma, others you wouldn't touch with a ten foot pole... These days, almost anyone with enough capital and nouse can launch a 'company' on the markets, so make sure you know more than just the ratio and trend analyses.

Other investments I would consider would be long term positions in listed investment companies trading at discounts to their net tangible assets (what the shareholder would theoretically get if the company sold all assets).

My other investment interest at the moment is in China. Everyone knows the Ren Min Bi is trading at a huge discount, and the economy is kicking along at ~9% growth this year... The share markets have taken a beating, but what about the fundamentals? Time to invest long term? The indicators are right, strong economic growth, discounted securities, incredible trade surplus and an artificially discounted currency. One thing I could feel when I was in China was the buzz.

As a final note on trading, one thing I've found over the last 8 years of trading though, is what everyone knows seems to be very different from what everyone is doing.

15/03 update, if you're interested in more detailed reasons, a fantastic article interviewing Mike Tilley the CEO of Challenger is up on businessspectator.com.au - here's a taster

Retail pricing has very little relativity to the underlying value of the assets, so you’ve seen these funds really take a hammering and from a personal investment perspective I think that many of them offer enormous value at the moment because the underlying quality of the assets is such that you’re able to buy through some of the retail funds into assets that in the wholesale market will trade at 30, 40, 50 percent premiums to the look-through value that’s on offer in the retail market.

Flickr credit: Rednuht

The dance or the balcony?

Dancing or watching?

Rosamund Christie, executive coach and adjunct professor at the Australian Graduate School of Management recently spoke on cultural diversity and team building. She raised an interesting study by Ronald Heifetz (author of Leadership without easy answers) at Harvard, on the challenge of adaptive leadership and how team members and managers can perform with more awareness and direction.

The concept of the balcony and the dance floor is explored by Heifetz, the distraction, the bright lights and the constant action of the dance floor is the metaphor for the day to day 'on the ground' flurry of work and meetings that lead us astray of our goals. Heifetz believes most leaders spend too much time in the dance. The balcony view, is the step back approach, looking from a far, seeing the big picture and making sure everyone is dancing to the same tune.

Dancing and watching can happen at the same time.

By being mindful while in the flurry of activity, a more strategic view can be taken. It gives more meaning to our day to day actions and there is a plan and direction to our individual actions. The dancers are the individual bricks, and the balcony view is the blue print. You can't have one without the other.

It's easy to get caught up in the minutiae of to-do lists but take a step back and ask, is the ship even going in the right direction?

Flickr credit: Lillian3000

Paperless in Four Hours.

I went paperless today. I've planned to exorcise our household of this anachronism for some time, so it feels great to have done it!

There were, however, a few important requirements before I embarked on this epic journey of minimalisation, I had to be able to:

1. Scribble and take notes

2. Back up scanned files

3. Be more efficient than paper

4. Access information faster than paper

How did I do this?

Three pieces of technology and about four hours. Two hours to install, setup and implement a simple usable process, and two hours to cleanse myself of my arboreal sins.

1. Lenovo X61T tablet - Lets me annotate scanned documents with a digitizer pen. I like to scribble. I can now carry and create information wherever I go. The ace up my sleeve is I can take written notes and write on existing documents anywhere.

2. Canon Lide50 scanner - My trusty workhorse scans multiple documents into a single pdf and has the fantastic ability of one button scanning. I scanned over 5 years of financial, personal and business data in 2 hours. The double paged stuff is being outsourced to a business scanner, it's not worth the time to do it myself.

3. Microsoft SyncToy - A free application (bless you Mr. Gates) that allows you to backup a pair of folders. Using some simple jedi mind tricks, I've paired folders on separate networked hard disks mirroring the scanned data between them. It's brilliant, simple disaster recovery planning for home use (Unless we get attacked by an EMP, somehow I don't think anyone will need paper then)

So how much paper do I have left?

• Ten page paper folder. Birth, marriage, citizenship and other important certificates, I'm not worried, they're scanned too!
• 4 blank and mildly scribbled notebooks.
• 2 guitar tabs I'm not sure I can find online easily (Canon in D and Tommy Emmanuel's Angelina)

So there you have it, paper less with all the benefits!

Flickr credit: Thaths

Flip!

Monday Morning

8:45 AM - Relax in a cafe. Green tea and breakfast with a friend, shooting the breeze on photography.

9:59AM - Eagerly anticipate the opening of the stock market. (yes... eagerly). Finger poised over the refresh button.

11:25AM - Finalise my positions and close out of the market to earn over half my monthly income.

That was Monday morning for me, the second Monday without traditional employment, and in a stock market slowly crashing and burning to the ground.

Some people would call it crazy to buy in this market, but Peter Sheahan would agree with me. In his book FLIP, he studies succesful ventures that think counter-intuitively and then act boldly. He uses case studies of business giants like Richard Branson, Google, Toyota, Rupert Murdoch and Apple to prove his point.

So how did I use FLIP thinking? I bet against the herd.

Everyone hears about buying low and selling high, but when the market is slow grinding to a painful halt, people are screaming to sell, not realising it's time to buy low. Not one person told me to buy on Friday. Every person I met told me it was like catching a falling knife. I started having butterflies on Sunday... Had I made a devastatingly wrong decision?

No.

I used some careful counter-intuitive thinking and bold action.

Oh, and I used some basic trading fundamentals too (don't be counter-intuitive just to be bold. Action from stupidity is still stupid). Every stock I bought was trading at what I affectionately call a discount. People had been scared by horrible news in the U.S. and had sold my stock beyond it's real value. So I bought them, knowing that the downside was minimal, the potential upside tasty.

I haven't always listened to my sound logic. Two years ago I had plans to buy Nintendo stock, which were being buffeted and had reached the same price levels they had in the early 90's. They were about to come out with the Wii. I knew that. I love gaming. But no one else did. The market definitely didn't. I didn't buy because people told me it was risky to buy tech stocks. I try not to think about that mistake anymore...

I've learned my own lessons in thinking for myself. More recently I closed my sizeable stock portfolio about 4 weeks before it started tanking at the end of last year, I was still being told to BUY BUY BUY. I dodged a flying bullet there. Some call it luck, I like to call it thinking.

Remember, fortune favours the brave, but not the stupid.

Flickr credit - Y roc30

Necessity.

'Some things are really necessaries of life in some circles... which in others are luxuries merely, and in others still are entirely unknown.'

Henry David Thoreau - Walden

A lot of what I have is taken for granted. Sometimes luxuries become necessities for me. A car, a phone, a watch. Many things, really. 

Three things have helped me clarify my understanding of necessity. Perspective, reflection and appreciation.

I love hiking, camping, traveling and meeting different people. I'm forced to realise that life is lived differently all over the world - an iPod isn't de rigueur, contrary to popular belief.

Thoreau was right, my neighbours in Alor Setar, Malaysia showered outside, a luxury to them would have been a hot shower indoors, a necessity for many, and maybe entirely unknown to the long house villagers I met in the jungles of Sabah.

When I visited India and saw the throngs of people who earned less in a year than I did in a day, I realised I was lucky. When I visited Japan and saw the busy streets, I realised Sydney isn't that cramped. When I camped in a shelter built using a plastic sheet strung over a line between two trees, I realised how little shelter I actually needed.

My necessities are being pared down. Refined. If I own something, then it better be used. Careful reflection on the things I own showed me two things - under utilisation and under appreciation for lots of things. Books lie unread, cds and video games lie unplayed.

My aim is to reduce and catalogue the vast majority of things I own, down to necessities, amenities and a few luxuries, and to appreciate the few things I do have. I share my exciting week with you next post.

'When I think about all the stuff I own, I get a little nervous sometimes'

Jessica Church

flickr credit: creativesam

Punctuated change.

Punctuated equilibrium is the theory that evolution can occur at a rapid rate (thousands of years instead of millions). This rapid evolution happens when there are major changes in the environment, usually catastrophic.

Developing as people is a lot like punctuated equilibrium. Big changes come when there are new and constant challenges. If you sweep floors all day, you become very good at sweeping floors, but not much more. But if you are constantly exposed to new ideas, new people and new challenges your mind naturally expands.

For many this can take the form of a career change, sabbatical or further study. Outside of work, punctuated change can come by learning something new, pursuing a dream or exploring other cultures and philosophies.

It's uncomfortable to change. In punctuated equilibrium, it's not a chosen path, it's from catastrophe. It's easy to be comfortable. Change means being different and growing, and being different doesn't always mean following popular opinion.

Seek not the favour of the multitude; it is seldom got by honest and lawful means. But seek the testimony of few: and number not voices. But weight them.

- Immanuel Kant

Flick credit: practicalowl