Appreciate Small Things. They Become Big Things.

As I grow older, I am becoming able to see the Stoic approach to life more clearly. Marcus Aurelias appears frequently with thoughts that I can use.

Today’s thought is on addressing the value of small steps. This has a not-small advantage in financial planning.

“Don’t await perfection… but be satisfied with even the smallest step forward, and regard the outcome as a small thing.”  Marcus Aurelias

Nearly two millennia later, Vincent Van Gogh emphasized the value of small steps.

Great things are not done by impulse but by a series of small things brought together

In planning and life

If we attend carefully to small things with a general purpose in mind, we end up with a great outcome, but because it was a process and not an event, we often see the outcome as a small thing. Curious, is it not? Small things become large and great things are seen as small.

That is part of the problem of learning how to do a good job with things in life that take decades to prove out. It is difficult to focus on small things and stay motivated. People who need the excitement of an event have the greatest difficulty.

It’s a challenge to teach your children or others about the merit of small achievements. Others learn more by watching than by being taught. Be sure to exemplify the small things well done brings pleasure idea.

I build strategic, fact-based estate and income plans. The plans identify alternate and effective ways to achieve spending and estate distribution goals.

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Million, Billion, Trillion, Brazilian

When words sound alike, they are connected mentally in ways we don’t fully understand.

While we consciously know they are much different, our subconscious is not so wise, and politicians particularly can use them indiscriminately. For example, million, billion, and trillion roll off the tongue with little differentiation. Even Brazilian could get caught up.

How much is a million?

Actually, not so much as you think. If you could set aside $10,000 per day, you would have a million in 100 days. Barely more than 14 weeks.

A billion will take longer.

A billion is a thousand million, so it will take 100,000 days to get there. That is just short of 274 years. Clearly, they are not similar. I am reminded of a thought attributed to Senator Everett Dirksen. “A billion here, a billion there, and before you know it, you’re talking real money.”

Real money is where trillions live.

A trillion is a thousand billion, so $10,000 per day, it will take 273,973 years to store up a trillion dollars. If the first homo sapiens had started saving $10,000 a day, his descendants would barely have a trillion dollars by now.

A trillion is beyond comprehension.

That tiny fact allows politicians to spend profligately without immediately losing their place. There is no rational, even sane, argument that demands that governments should spend more money. The result is what we see now in many western countries. Huge debt because politicians fear raising taxes. People might question spending if they did.

The United States federal government owes more than $31 trillion and wants to increase its borrowing limit. With interest rates rising, we can expect the interest bill to grow to some immense amount. When the interest rate on borrowing averages 3.25%, they will owe a trillion dollars a year in interest alone. That’s enough to pay for the military and have $250 billion left over.

A trillion dollars a  year is $2.793 billion each day. In the United States, it is about $8.00 per day for every man, woman, and child. Did your family of four set aside $224 last week to pay your share? Do you think it is possible some people cannot pay their share, and the shortfall will fall to those who can?

Some questions

How many families in the United States could pay one day’s interest? According to the recent Forbes 400 list, there are 379. That’s the first year looked after. Then what? The rich cannot save us.

An important realization is the government cannot repay the debt because they have no real money. Only the people can repay it. How will the government decide to have that happen?

  1. Higher taxes. Politically unpalatable, and therefore unlikely.
  2. Reduced government spending. Also unpalatable.
  3. Inflation that makes $30 trillion a trivial sum. Inflation at 10% annually for 30 years would shrink it to less than $2 trillion of today’s spending power. At that rate, gold would be $35,000 an ounce and oil about $1,800 a barrel. There might be some economic dislocation!!
  4. Perhaps the end of the world will come.

Understand Herb Stein’s law.

“If a thing cannot continue forever, it will stop.”

The wise will think about when and how it will stop. There may be an opportunity there. One of the opportunities might be whether you should emigrate.

The Third Lord Moynahan provides insight. “Of the thirty-six ways of avoiding disaster, running away is the best.”

Pay attention to who is leaving. The rich will leave first.


I build strategic, fact-based estate and income plans. The plans identify alternate and effective ways to achieve spending and estate distribution goals.

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Real Return Bonds

The government is acting to remove their variable rate financing. It is much like you changing to a fixed-rate mortgage.

In early November 2022, the government announced it would no longer sell Real Return Bonds. (RRB) They were never something the average investor bought, so there was little notice. Until recently, who paid attention to inflation? People should have noticed. RRBs are valuable for two reasons.

  1. RRBs help you maintain purchasing power.
  2. If all government debt was in the RRB form, governments would work harder to avoid inflation.

How a real return bond works

Suppose you buy a $10,000 RRB when The CPI is some amount like 220. The interest rate specified is 2%. Assume interest is paid twice a year. You expect $100 every six months.

RRBs invariably pay less than a fixed-rate bond issued for the same maturity.

Six months later, the CPI index is up 3% to 226.6. You receive interest of 1% of $10,000*226.6/220, which is $103, and the bond is now $10,300.

As an investment.

When issued, the RRB will have a coupon rate lower than bonds without inflation adjustment. They are priced based on anticipated inflation. They work better for you if inflation is much higher than expected. They work for the issuer if the inflation is lower than expected.

In times of high inflation RRBs will demand too much cash disbursement compared to a fixed-rate bond issued at the same time. That’s why the government has stopped issuing them. Like you, they expect rates to go higher because of inflation and so change from variable to fixed rates. The government is the most significant contributor to inflation, so we can use that information to estimate the future with some accuracy. They expect more inflation.

You might be able to find one in the market that was issued earlier. The bonds are not very liquid, so you might have to wait to find one.

Taxation is more complicated too, so you should see them as useful in a Tax-Free Savings Account.

Of interest

The government has clearly indicated they expect inflation to be above the 1% to 2% range for the short to intermediate term. Maybe in the long run. When someone who knows tells you something against their interest, notice and act on the information.

I build strategic, fact-based estate and income plans. The plans identify alternate and effective ways to achieve spending and estate distribution goals.

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Meaning Matters; The Numbers Don’t

Planning is, at least on the surface, a rational exercise. One thing that makes it difficult is the question of scale independence.

Scale independence

The idea of scale independence is that we believe changes have absolute meaning. For example, we know four is twice as much as two, and the size of the change from four to six is the same as the change from two to four.

When planning and assessing finances, scale is not independent. We make a mistake in assuming it is. Sometimes changes of identical size matter, and other times they do not.

Some changes are not proportional.

If unemployment changes from 2% to 4%, it would have far less effect on the economy than a change from 4% to 6%.Why? Because there is always some unemployment. People are changing jobs, moving from one place to another, or just taking an extended vacation or leave of absence. Both 2% and 4% are in the range of normal and expected unemployment.

The change from 4% to 6% has a different meaning. Something is happening that is not normal. Jobs that once existed exist no more. For no reason, do Microsoft, Amazon, and others reduce their payroll by 10,000 jobs? Probably not.

We could try to know their reason, but that is less important than the fact that they see something that requires frugality.

Think about meaning

Other changes have a meaning greater than their apparent size.

It matters if your mortgage rate doubles from 3% to 6%. It is catastrophic if it doubles from 6% to 12%. Even the change of 3 percentage points from 3% to 6% has less importance than a change from 6% to 9%. You must consider the interest you pay in terms of the resources you have to pay it with. That’s where the meaning can be found.

Inflation is similar. A change from 1% to 2% doesn’t mean much, but a change from 2% to 4% has meaning because a) some inflation is expected and even helpful, and b) the helpful part is less than 2%. Once you get into 8% or more, serious mismanagement has occurred, and there will be a price to pay to fix it. How much is your share?

Notice that not all scale factors matter. It is in the -25 degree range here just now. That’s about -13 degrees Fahrenheit. Cold enough that you must zip up your coat.

Years ago, I was at James Bay in Wemindji, Quebec. It was early February, and at lunch, my friend Elmer told us it was -55 and that we should be careful outside. A first-time visitor at the table asked, is that Celsius or Fahrenheit? Elmer’s reply, “It doesn’t matter.” proves scale doesn’t always tell the story,


We anticipate events to help us fit into our future. Noticing the numbers and assuming the scale is fixed misleads. Seek meaning rather than the numbers or the change. Meaning matters when it implies a consequence that affects you.

Pay attention, discover meaning, and act on what you discover. That will help your budget decisions and your investment decisions, too.

I build strategic, fact-based estate and income plans. The plans identify alternate and effective ways to achieve spending and estate distribution goals.

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How Money And Interest Should Work

What happens when people lose track of the meaning of money? One of the choices is what Jeff Deist at Mises Institute calls Monetary Hedonism. He explains it in an article recently available on the internet.

The End of Monetary Hedonism

In the introduction, we find this thought

“Millions of people across the West increasingly recognize the limits of monetary policy, understanding that more money and credit in society do not magically create more goods and services. Production precedes consumption. Capital accumulation is made possible only through profit, which is generated by higher productivity, thanks to earlier capital investment. At the heart of all of it is hard work and human ingenuity. We don’t get rich by legislative edict.”

I hope we have all learned that legislative edict is invariably wrong, and we should not accept it as anything that adds to our lives.


The article provides insight into interest rates and how, in a philosophical sense, they should work. The article points out that people under 40, and I expect some others, have no sound foundation on that subject.

Money is a commodity, and interest is the price to use it. Not what the news tells us.

You cannot understand the merit of capitalism until you understand money, capital, and interest in tandem.

Think about the quote above.

  1. Money and credit in society do not magically create more goods and services.
  2. Capital accumulation is made possible only through profit, which is generated by higher productivity, thanks to earlier capital investment.
  3. At the heart of all of it is hard work and human ingenuity.
  4. We don’t get rich by legislative edict.

Are any of those consistent with what government policy consists of?

The closing idea

It will be interesting to see how Japan plays out. They have had low inflation and low rates for decades. Will it change?

“It is past time for all of us to demand better money, not better monetary “policy.” It is time for money to comport with human nature and reward the saving impulse. It is time for us to reconsider our bequest to future generations and make their lives better and more prosperous than ours.”

The article is worth the time to read and think about.

You can subscribe to the Mises Institute’s publications and might find them useful. You can sign up here

I build strategic, fact-based estate and income plans. The plans identify alternate and effective ways to achieve spending and estate distribution goals.

Be in touch at 705-927-4770 or by email at

On Value Investing

Warren Buffett is likely the best-known of the “value” investors. There are others who use the approach, too. The principle is clear enough. Find situations where you can buy dollars for seventy-five cents.

Among the ones who have not come into the spotlight as Buffett has, is Boston-based Seth Klarman. He is the founder of Baupost Group.

His 1991 Book, Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor, is well-respected. It’s been out of print for a long time. You can pick up a used one at Amazon for a little over $3,000.

He has many thoughts on investing that are simple and often obvious, even if not previously familiar. Here are a few.


  • People don’t consciously choose to invest with emotion– they simply can’t help it.
  • All an investor can do is follow a consistently disciplined and rigorous approach. Over time, the returns will come.
  • We don’t buy ‘the market.’ We invest in discrete situations, each individually compelling.
  • Many investors find it difficult to fight the crowd.
  • The cheapest security in an overvalued market may still be overvalued.
  • You can make some investment mistakes and still thrive.

What it means to be an investor

  • Here’s how to know if you have the makeup to be an investor. How would you handle the following situation? Let’s say you own a Procter & Gamble in your portfolio and the stock price goes down by half. Do you like it better? If it falls in half, do you reinvest dividends? Do you take cash out of savings to buy more? If you have the confidence to do that, then you’re an investor. If you don’t, you’re not an investor, you’re a speculator, and you shouldn’t be in the stock market in the first place.

The efficient market hypothesis

  • Buffett’s argument has never, to my knowledge, been addressed by the efficient-market theorists; they evidently prefer to continue to prove in theory what has been refuted in practice.
  • The irony of efficient market theory is the more people believe in it, the more inefficient the market is likely to become.

Investing well is not impossible.

Suppose your directionally accurate thought becomes, “I want to live well at retirement and sleep well in the meantime.”

Would that change your approach?

I build strategic, fact-based estate and income plans. The plans identify alternate and effective ways to achieve spending and estate distribution goals.

Be in touch at 705-927-4770 or by email at

Society Must Solve Problems To Prosper

There are three things that no developing society can be without.

  1. Food
  2. Water
  3. Energy

No society flourishes while there is a shortfall in any of them.

Enter Climate

When costly action happens to support a political agenda, we all lose. Current government actions seem to be limiting the availability of inexpensive energy. Other actions aim to suppress nitrogen fertilizer and thus limit food supplies.

How is that consistent with society prospering or, in the case of the less developed parts of the world, escaping poverty? The answer, of course, is that it is inconsistent with prosperity. We should ask why do it.

The answer is that climate change is an existential threat and requires immediate remediation. We should examine that more fully.

The questions

  1. What is the cost to do nothing, and how do you know?
  2. What is the cost to do something, how much will it help, and how do you know?

If we get good enough answers, we should do what we can. Presently we don’t get good enough answers from the people in charge of designing policy and spending the money. Propaganda is everywhere.

The people in charge have no sound arguments and so rely on hype and, in a perfect world for them, hysteria.

Recall Mencken

“The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by an endless series of hobgoblins, most of them imaginary.”

Let’s examine the Canadian proposals and look for flaws

Is Canada a significant producer of CO2 on a net basis?

Canada is a northern country and uses much energy per capita, but there are fewer people in Canada than in Tokyo. Canada produces about 1.5% of all CO2, but production is a one-sided metric. Given the trees and cropland, the plants may absorb as much or more than we produce. There are more than 350 billion trees in Canada. What is Canada’s net production? Isn’t that what we should care about?

Does the Canadian proposal anticipate significant technological changes over the next 75 years?

If it does, the government is hiding it well. You have to be naive to believe there will not be better technology available in the future. To believe that generating electricity with natural gas, transmitting it to a vehicle and then claiming there is a gain because the vehicle emits no CO2 is merely silly. Again think net CO2.

Does the Canadian plan make a material difference?

One claim I have seen is that if Canada does everything they propose successfully, it will reduce the world average temperature in 2100 by a thousandth of one degree Celsius. I doubt anyone can guess the average world temperature that clearly. So no value.

What does matter?

Stop thinking about the average over the globe and direct your resources where the biggest producers are. Not Canada. Canada doesn’t make the top 10 producers list. On that list, China is number one and produces 20 times more than Indonesia at number 10.

Where to next

  1. When addressing problems, go where the problem is and deal with it. Dealing with averages is a numbers game and always confuses people.
  2. Have an answer to how underdeveloped countries flourish in the face of politically motivated nonsense in the developed countries.

Wasting money to make politicians feel good about how much they care is insane. Feelings are not truth.

I build strategic, fact-based estate and income plans. The plans identify alternate and effective ways to achieve spending and estate distribution goals.

Be in touch at 705-927-4770 or by email at

The World Continues To Change

In the 1800s, as many as 90% of the people lived on farms. By 1900 it was about 40%.

What Changed?

There was more opportunity in the 20th century than in the 19th, and people moved to cities and towns to take advantage. The growth in the availability of farm machinery made the transition easier and did not imperil the food supply for a growing population.

The trend of shrinking rural living to more urban living has not diminished. Today only about 1% of people live on farms, and in the United States, about 2.8 million people have the career farmer or farm worker. Given the importance of food supply in the world, that seems a tiny number.

I suppose more and better equipment, seed, fertilizer and pest control products, and livestock make it possible.

Given the continuing change, there may come a time when you might not know a farmer. Decades ago, everyone knew a farmer. Rather like the old times when everyone had dozens of first cousins. Rare today. Most children today have fewer than ten.

The future will be different still.

There is a limit, though. Unless we can use robots or get the food to grow itself, there is a need for people who farm.

How much has the world changed so far? There are 2.8 million farmers and farm workers in the United States. The farmer count can give you a hint when compared to other professions. There are 3 million real estate salespeople. If I had projected that outcome to my grandfather 60 years ago, I doubt he would have believed me.

Farming today is a serious business. It is not for amateurs. It takes experience, knowledge, and skill to get along. As the numbers shrink, efficiency matters and small family farms cannot easily provide everything they need. As the number of suppliers shrinks, the ability to keep food prices low will shrink. Governments have not had the problem of uncontrollable food prices before, and I doubt they can overcome the shift to stronger market entrants.

Your life is no different.

Build your life plan, assuming change will happen, and you will be forced to adapt. Observation and anticipation are critical parts of planning. Learn the trick.

I build strategic, fact-based estate and income plans. The plans identify alternate and effective ways to achieve spending and estate distribution goals.

Be in touch at 705-927-4770 or by email at

A Tiny Insight Into Problem Solving

One of this blog’s most commonly viewed articles is on problem-solving. A well-defined problem is half solved.

So far, it has been visited about 7,500 times. I have not checked to see if it is the most visited, but I am sure it is in the top ten. Since it first appeared in November 2012, I have done about a dozen more on the same topic, but from different angles. This is another in that scheme.

People are good at problem-solving

That creates problems of its own. People jump to problem-solving too soon. Solving poorly defined problems is weak. People ignore fuzzy or unpleasant variables in their definitions and underestimate how long the solution will take and how much it will cost. Essentially they adjust the problem to fit the solution they prefer.

Problem-defining matters more

As you can appreciate, solving a poorly defined problem seldom generates the desired outcome. No matter how good the solution is if it doesn’t competently address the real problem, it fails. I recall a public relations committee meeting at The Institute of Chartered Accountants of Ontario where we were to deal with a million-dollar-plus advertising proposal. My fellow committee member Lyman MacInnis listened carefully to the proposal and summed it up this way. “What you are proposing is an elegant solution to no known problem.”

That is a hard objection to overcome.

The key issue

Good problem solvers often fit the solution to the problem they wish to see. That is not usually the same problem the client has. The real problem may never be fully developed if the client relies on them. Possibly never known at all.

“It isn’t that they can’t see the solution. It is that they can’t see the problem.” G.K. Chesterton

That benefits no one. If you want to be able to deliver solutions that work and last, you must first help the client develop their view of the problem and the ramifications if it is not solved.

Once that is clear, solutions make sense and are easier to accept and implement.

From then on, it is just a question of keeping in touch and addressing changing contexts.

The other side

Exploiting opportunities is the same as solving problems. Don’t overvalue the projected future.

I build strategic, fact-based estate and income plans. The plans identify alternate and effective ways to achieve spending and estate distribution goals.

Be in touch at 705-927-4770 or by email at

Good Ideas Only Have Value When Implemented

If you go to the good ideas store, you will find them at the regular price of $1.39 a dozen. The spring sale can sometimes see them below $1.00.

Many people think good ideas are exceptionally valuable, and were it not for the price of a worldwide patent, they would patent them and reap vast rewards. The world does not work like that. Not even close.

“People who pride themselves on having ideas often fail to understand that only after ideas have been filtered through real-world experience do we know whether they are right or wrong. Most turn out to be wrong.”

Thomas Sowell

Thus, the price. Most are wrong. If good ideas come with guarantees, they would be immensely more expensive.

The Facebook case

You might remember the case brought by the Winklevoss twins claiming Mark Zuckerberg had purloined their terrific idea and turned it into Facebook. While there was little dispute that the idea was theirs, the judge awarded them a nearly insignificant amount because he decided the implementation was where the value lived.

That is the general situation. The doing is where the money is. The team building, the strategic direction, the invention of skills as well as product, the marketing, the financing.

In general

If you examine business start-ups, you’ll find most fail. There is a good side to that. Most fail quickly. The lingering deaths are far more costly.

People are delusional about how easy it is to run a business. Any business. Because you make killer hamburgers on your barbecue says nothing about your ability to operate a restaurant. Buying a used cargo van is not the key to being a plumbing contractor.

Even people with some skill make mistakes on this point. I had a senior executive with a multinational company, who I knew casually from the golf club, approach me about starting a business. His reason was simple. He had noticed that many of the top golfers at the club owned their own businesses.

That is not a good enough reason.

Businesses are like children. They are all different; they all have challenges; the solutions don’t always work, yet many problems can be overcome by working harder. If hard work and solving problems you have not seen before is not your thing, a business may not be a solution.

Think about your style in terms of guitars and pianos. Entrepreneurs are like guitars. They make the note before they play it. Employees tend to like the piano model better. The note is provided, and you play it. Either style will work for a person, but someone who wants the problem and the solution to be defined before they work at it will find businesses challenging.

No good idea persists. Even Amazon has changed immeasurably. I doubt book sales generate a large share of their profits. If change is troubling, businesses will be terrifying.

As with other things, know yourself.

I build strategic, fact-based estate and income plans. The plans identify alternate and effective ways to achieve spending and estate distribution goals.

Be in touch at 705-927-4770 or by email at

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