Change Is The New Standard


General Electric is not in the Dow Industrial Index 

GE, once the icon of old and established, is no longer part of the Dow. Those few that take the Dow seriously are no doubt a little upset. After all, GE was the last of the original Dow companies to leave.

  1. American Cotton Oil,
  2. American Sugar,
  3. American Tobacco,
  4. Chicago Gas,
  5. Distilling & Cattle Feeding,
  6. Laclede Gas,
  7. National Lead,
  8. North American,
  9. Tennessee Coal and Iron,
  10. U.S. Leather pfd. and
  11. U.S. Rubber

all disappeared earlier and no great calamity befell the market. This time will be no different.

Greek Tragedy

One of the great themes in Greek tragedy is the flawed hero. Commonly hubris brings down the once lofty hero and we are to draw the lesson into our own lives.

Being a member of the Dow or the S&P 500 is hubris inducing.  It’s like being on the all-star team. Clear evidence of success. Something to notice and be proud of. But like star athletes, eventually they ask, “What have you done for us lately?” Businesses have the same problem. The customers soon take for granted your best efforts and look for more.

Do not fall in love with your current business and its lofty position.

Adaptation.

I had a client whose office decor included a large poster on the wall. It was a dinosaur, in a swamp, enjoying an unstressed lunch of vegetation. The caption on the poster was meant to keep him focused. “Adapt or Die!”

So it is with business. Especially now and likely even more so in the future. Staying informed about markets, products, people, and change is crucial. The ability to adapt is quite often the only skill that really matters. Change is difficult and change is accelerating. We become aliens in our own world. The old is not the way of the new. Values change. Motivation changes. Customers, employees, and suppliers acquire different priorities.

Businesses must meet those needs, not rely on their “good old days”

Connectedness changes everything.

People must connect to a business in order to process a transaction. That method changes towards price advantage and convenience for the customer. Retail is easy to see.

Catalog shopping was once a big thing. It is no more. Malls were once a big thing. They still are big, but their future is cloudy. Box stores and Walmart are huge, but growth is flattening. The dollar stores are reminiscent of the old Woolworth’s five and dime. They will last as long as delivery of cheap items is economically impossible. Online is not yet an enormous share of retail, 6%, but growing faster than any other sector.

If a capable retailer from 1975 reappeared today, they would have difficulty adjusting to the changes.

Other areas where connectedness matters

Retail is the easiest to see the connection factor advantage, but it will affect everything. Universities for example can be replaced by Massive Open Online Courses. MOOCs. University professors often think they cannot be replaced and they are wrong. A well crafted MOOC could replace anyone. And at a much lower price.

Barbara Oakley’s “Learning How to Learn” is the most frequently downloaded course. It cost less than $5,000 to develop initially and has been downloaded nearly two million times. Its cost to take is negligible. Some courses, like ones with a laboratory, will not lend themselves as well to MOOC format, but those are not dominant in number.

Businesses will be using this format for staff development. You would be smart to examine the Coursera syllabus. Extension courses may vanish eventually.

Education in general will change with programs like the Khan Academy.

Delivering service

Tesla was recently panned by Consumers Reports for braking problems in the Tesla 3. The company remedied the problem with a software change delivered wirelessly to the vehicles. Tesla is the leading edge at this, but other car companies will not be far behind. What should dealers do as the repair department shrinks?

Electric engines will change things too. An electric engine has only about 10% of the parts of a gas engine.

Connectedness matters

As people learn and use new ways to connect, they will change the way they buy things. Even the things they buy. We don’t fully understand it yet.

Businesses will face new questions. Ones like, “Why must our head office be in one place and downtown in a major center?” Connectedness will allow distributed head offices in less costly places.

It is early innings. The changes in the future will be profound. Ubiquitous, faster, and better connected processors will accelerate change. Old rates of change and methods of change will seem quaint. Change will change too.

There are great opportunities and there are great catastrophes in the making. Think it through.

Every business must adapt or die.


I help business owners, professionals, and others understand and manage risk and other financial issues. To help them achieve their goals, I use tax efficiencies and design advantages to acquire more efficient income and larger, more liquid estates.

In previous careers, I have been a partner in a large, international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business.

Please be in touch if I can help you. don@moneyfyi.com 705-927-4770

Entrepreneurship Teaches


Entrepreneurs dream big

Every first-time entrepreneur expects a rapid rise to capitalist stardom. They see Mark Zuckerberg, Bill Gates, Jeff Bezos and Elon Musk, and assume it is easy enough. Maybe they can’t reach $50 billion, but hey, $50 million would be good. How hard could one part in a thousand be?

Reality is a bit different.

The list of successful entrepreneurs over history is dotted with failure. In most cases failure first. Here is an incomplete list:

  • Sam Walton
  • Henry Ford
  • Walt Disney
  • H.J. Heinz
  • Roland Macy
  • Donald Trump
  • Milton Hershey
  • William C. Durant
  • Abraham Lincoln

A formidable crowd. From the biographies, it appears that most of them attribute their success, to their earlier failure.

The key to success

At one time people assumed they had to begin in a garage. Like Apple, Hewlett-Packard and many more. Maybe they missed the point. Possibly a better beginning is with failure. Beginning in a garage is a symptom of scarcity and dealing with scarcity is a helpful skill. An early bankruptcy is useful too. The lessons of failure are quite vivid. People learn quickly from clear mistakes.

An interesting observation

The people on the list above had no deep need to protect their self-image. Some had huge egos, but not the kind of ego that required people to see them in a way they were not. They did not take financial failure personally. There is no evidence of cognitive dissonance.

Those people use their ego as a tool. They value their experience more than another person’s belief about them as a person.

Ego protecting gets in the way. Try to be objective. Mistakes are your friends.

Capitalism’s big advantage

Economist Joseph Schumpeter has pointed out that capitalism destroys misallocated resources. In simple terms, it will tell you when you have failed to produce enough value to get a profitable trade from your fellow humans. It is quite objective about that and often prompt. Only about half of new businesses last four years.

Capitalism holds no memory. You can have a second chance and with your highly priced experience, a better chance for success. Learn every day.


I help business owners, professionals, and others understand and manage risk and other financial issues. To help them achieve their goals, I use tax efficiencies and design advantages to acquire more efficient income and larger, more liquid estates.

In previous careers, I have been a partner in a large, international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business.

Please be in touch if I can help you. don@moneyfyi.com 705-927-4770

An Easy Mistake


Understanding significance

In science, and I suppose elsewhere, the words that describe an impending discovery are, “Gee, that’s odd.” Something unexpected leads to knowledge. The problem of course is that the knowledge is not always closely attached in time to the discovery.

We can “know” quite a lot before we know what they mean. Knowing things and knowing what they mean are vastly different undertakings. Someday, someone will discover the cure for cancer and the immediate observation will be, “We knew it all along. We just didn’t know we knew.” Facts without meaning are not useful.

In a recent post on Dollars and Data, The Privilege of Knowledge, Nick Maggiulli pointed out that the first dinosaur bones were found in 1787, but the idea of a dinosaur as species was not recognized until 1841. People knew about dinosaur bones, but not dinosaurs. Sixty years is a long time to go from discovery to meaning. Today it is much less. Likely less than thirty years. Maybe twenty.

Facts and meaning do not usually coincide.

Usually meaning comes much later. Pasteurized milk first appeared in 1864. Dutch scientist Antonie van Leeuwenhoek had discovered bacteria by 1683. Knowing about them and knowing their capabilities and tendencies are different.

Sometimes the reason for the problem is there is no descriptor tool. In the early days of quantum theory, the knowledge was little more than a collection of observations, heuristics and assumptions. While not fully developed, the field was well along. Today it is known as “old quantum theory” and its end is usually taken as 1925.

Why 1925? Because in 1925 Max Born and Werner Heisenberg created the matrix mechanics representation of quantum mechanics. With a better descriptor, progress was swift.

There are two realities

Discovery doesn’t come with a grasp of the future possibilities

The future is not presented like a history book. We can study breaking news and try to guess its significance. Very profitable if you are good at it. Unfortunately, when meaning eventually emerges, it is often unlike anything we already understand. That’s why there are so many famous failures when estimating the probability of success.

  1. President of Decca records after watching a 1962 Beatles audition, ‘We don’t like their sound, and guitar music is on the way out anyway.”
  2. Thomas Watson, IBM Chairman in 1943, “There is a need in the world for no more than five large scale computers.”
  3. Tris Speaker, HOF baseball player in 1919, “Taking the best left-handed pitcher in baseball and converting him into a right fielder is one of the dumbest things I ever heard.”
  4. Martin Luther, 1530, “The multitude of books is a great evil. There is no limit to this fever for writing; every one must be an author; some out of vanity, to acquire celebrity and raise up a name, others for the sake of mere gain.”

There are some that think Martin Luther’s thought was right then and remains so. Time will tell.

Inability to connect the past to the present.

History does not repeat exactly but the events rhyme. Old news. Uninteresting. Let’s find new and exciting.

Among the more deadly ideas is, “This time is different.” We like different and new, even though, as seen above, we are not very good at applying it. In Nick’s article, he points out an historic artifact that people spend time and trouble to ignore. The stock market goes up.

We could all learn from this, but sadly patience is a virtue few of us have in abundance.

What we know

  • It is more than difficult to assign meaning in the short run.
  • Long run meaning is not exciting.
  • People like the action of the unknown.
  • There are things that have worked for a long time.

What it means

Use long run meaning for the bulk of your investments. Use short term excitement to help you learn about the stock market and gain experience in losing.

Warren Buffett has been open about how he does what he does, but almost no one does it. Why? According to him, “People don’t want to get rich slowly.”

Put a large share of your investable money in the get rich slow mode. Get rich quick is a trap.


I help business owners, professionals, and others understand and manage risk and other financial issues. To help them achieve their goals, I use tax efficiencies and design advantages to acquire more efficient income and larger, more liquid estates.

In previous careers, I have been a partner in a large, international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business.

Please be in touch if I can help you. don@moneyfyi.com 705-927-4770

Using Statistics


Statistics matter

I recently chatted with my older granddaughter about statistics. She is planning to take a course in these and is a little concerned. Statistical math can be quite challenging, but for the rest of us, the math is not the problem. Everyone should understand statistics better because people use them to lie.

You should have an intuition about what people present to you.

“Facts are stubborn things, but statistics are more pliable.” – Mark Twain

Statistics are inferences, not facts

There is nothing wrong with inferences if you know how they came to be. Thus the course in statistics. To draw a reliable inference you need several things:

  1. Competent data. You need a method of sampling. You cannot ask every human their opinion or preference on any subject. By the time you finished, many would have changed their mind.
  2. Objective data. The form of the question matters. Do you prefer Coke or Pepsi, is pretty easy, although you might want to know the gradation of the preference. Some survey questions imply a “correct” answer. No reliable inference can follow from those.
  3. Entire population. If you want to infer something about society as a whole, you cannot draw your sample from a tiny part of it. Drawing taxation preferences from poor people is quite different than from the rich. Surveying teachers would get different results about education than would surveying parents or students.
  4. A method of analysis. There are many ways to analyze statistics. They include simple ones like average, regression, standard deviation, correlation, and significance. Average is most commonly seen and most commonly abused. The average human has slightly fewer than two arms. There are no humans who have exactly the average number of arms. When there is no specific observation that matches the average, beware.
  5. A method of presentation. Some people like tables of numbers with columns headed by little Greek symbols lying on their side. Other like graphs. Some will want both. The idea of presentation is “As simple as possible but no simpler.”

How easy is it to lie with statistics?

Example #1 – Suppose I told you that 20% of American children lived in poverty while only 13% in the OECD did. Would you want government programs or an explanation of where the numbers came from. The key element is how you define poverty. The liars know people have simple ideas about poverty so if they can recast the meaning of the word, they can get a reaction. In this case, the term poverty means someone who has a family income less than 50% of the mean income in the population. In the United States mean household income is $72,000. In Mexico a little under $10,000. A household in the US just at the border of poverty has nearly four times the income of the average Mexican household and seven times the threshold of the poor Mexican. You will notice two things.

  1. Under this definition poverty cannot be eradicated no matter what the government or anyone else does. There will always be people below the threshold.
  2. The statistic is for polarizing not presenting useful information.

Example #2. The three richest Americans have more wealth than the bottom half. Technically true but a little meaningless. If you have $100 in a bank account, you are wealthier than about 50,000,000 Americans. Why? Because many Americans have no wealth accumulated. Very young children for example. The bottom half is a net number. All of the below zero amounts are netted with the above zero amounts. The nature of the population of billionaires is not like the population of others and numbers don’t connect them.

Example #3. Ignoring the base rate. Suppose I may have some unusual disease. The disease occurs in one in ten thousand cases. There is a test and it has no false negatives and 5% false positives. I take the test and it shows positive. What should I do then? Step one. Establish the meaning. My odds of having the disease are now about 1 in 500. In 10,000 tests you should expect 500 positives and I am one of them. I suppose I could take the test again and if positive now about 1 in 25, so a third time and if still positive, pretty close to 50-50. Be very cautious relying on one outcome when the incidence is rare to begin with. The false positive rate matters far more.

Example #4. Notice the presentation. I once saw a graph where there were two lines, one going up and the other, unexpectedly going down. Upon examination I noticed the graph had two y-axes. The left side one went up as you would expect. The right side however went down. Higher numbers at the bottom. In fairness it did , in tiny print, note “inverted axis” The story that came with the graph was based on both axes being in traditional form. Misleading.

Example #5. Misused regression. Regression often fits a line to data. The trend line. People like trends, but regression analysis is not valid outside the range of the data you have. It does not predict the future. Suppose you had information about the number of people in cars on the highway. The data runs from 1920 to 1970. We observe that the number has fallen each decade. From the data, what year would the number of people in cars on the highway be less than 1? Clearly the data predicts driverless cars.

Example #6. Absence of evidence is not evidence of absence. In simple terms nothing proves nothing. You could argue that as there is no evidence of old telephone lines and switchboards in the Sahara, the people in the Sahara must have been the first to use wireless telephones. This is an example of misused correlation as proof of some fact. There are many spurious correlations available.

What to do

Assess the purpose of the presentation. If you see an argument based on statistics, assume the provider has a reason to present them as they are and in the way they have done so. Assume they want to convince you of something. Be skeptical and assess whether the methods to collect the data and create the inference make sense. If not, assume they intend to deceive.

Always know you can create statistics to prove anything if you are willing to tinker with their collection and analysis. Correlation is interesting but does not, by itself, imply cause. Trend lines have meaning only within the range of the data.

You can soon become intuitive about what is possible and what is not. Keep in mind that statisticians can prove that 42.3% of all statistics are made up on the spot.

In short. Beware received wisdom.


I help business owners, professionals, and others understand and manage risk and other financial issues. To help them achieve their goals, I use tax efficiencies and design advantages to acquire more efficient income and larger, more liquid estates.

In previous careers, I have been a partner in a large, international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business.

Please be in touch if I can help you. don@moneyfyi.com 705-927-4770

Canada Day


Canada Day.

The 151st of them was yesterday, 1 July. There is a good deal to celebrate each year.

Canada is a remarkable country. It is beautiful. From the many lakes here in Ontario, to the mountains in BC and Alberta, to the prairies, to 16 meter tides in the Bay of Fundy. The Arctic is compelling. You don’t fully understand “cold” until you meet -60 degrees with a wind. The cities are all different. Toronto is hectic and congested. Montreal is beautiful, as is Vancouver. Calgary and Edmonton are younger and spectacular in their enthusiasm. Ottawa is pristine and a great place to raise a family. Halifax and Quebec City are wonderful places to see, and I am sure to live. Old yet fitting in to modern.

This a sunset at Buckhorn, a little north of where I live. We were at my daughter’s place on Buckhorn Lake and this picture is from a spot near there. Spectacular.

And the people. Usually helpful and welcoming. From my Irish Ancestors to my mother’s French family, none came here expecting something for nothing. It takes generations to build a culture and its supporting infrastructure.

People are in a hurry today. It is worth looking at some of the books people wrote about their experiences 200 years ago. It gives you perspective on the hardship and the joy. We seem unable deal with deferred gratification today, never mind hardship.

We take too much for granted.

Gratitude is the precursor to the other virtues and is seldom seen in people who are not socially capable.

Take a little time each day to notice and appreciate what you have. You will be surprised at how you have most of what you need. Perspective is a huge advantage in organizing yourself for success.


I help business owners, professionals, and others understand and manage risk and other financial issues. To help them achieve their goals, I use tax efficiencies and design advantages to acquire more efficient income and larger, more liquid estates.

In previous careers, I have been a partner in a large, international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business.

Please be in touch if I can help you. don@moneyfyi.com 705-927-4770

Principle Based Planning


Principles are the foundation

Financial plans have two clear demands

  1. They must work
  2. They must last

It is not too hard to get a plan that works, but it is very difficult to get one that both works and lasts. Circumstances change, and plans that work in one environment may not in any other. How should you deal with that?

Establish principles

My friend Brian MacKenzie sent me a piece recently. It makes exactly the point you can use for your financial planning. Jordan B. Peterson: Trudeau could learn from America’s ‘wise’ founders. The simplest point in it is this. Build a system that will do no harm.

“Imagine that your theory could go spectacularly wrong, What would that look like? This is one of the things that’s so great about the way the Americans set up their political system — because it was never utopian. Their idea was, “Look, we are probably going to be governed by halfwits who are not any smarter than we are.” It wasn’t, “We’re going to set up the perfect system.” It’s like, “How can we ensure that if we are governed by halfwits that are no smarter than us that we won’t end up in hell?

Governed by halfwits seems a probability instead of a possibility. Not that they aren’t smart, it is that they aren’t practical. Same thing really.

Important principles in the formation of The United States and its constitution

Declaration of independence,

“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, ….”

Your plan exists to make your life better. The plan is not the goal, just like the government is not the goal.

The bill of rights

These amendments to the constitution make clear that the government may not infringe on the people. The bill of rights is essentially a group of negatives. All are in the form, the government may not do certain things. The first amendment is a good example.

“Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.”

The ninth and tenth amendments are the key

Article [IX] – The enumeration in the constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.

Article [X] The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

Government is in support of the people, not the people in support of the government. Your plan is in support of you, not in support of itself and certainly not in support of your advisors.

The halfwit problem.

If you stick to simple principles, even halfwits are unable to add complex flourishes to their advantage and to your detriment. Regarding investment, Peter Lynch has made this point too.

“Go for a business that any idiot can run – because sooner or later any idiot probably is going to be running it.”

Build your plan on simple principles

Overarching factors

  1. Know your purpose. Financially independent given my preferred cost of living would be okay. Be rich is not a governing principle. Rich is relative. Did you know Bill Gates is the second richest person on his street? Jeff Bezos lives less than 1,000 yards away. I wonder what the average net worth is in that zip code.
  2. Be cautious with debt. What is a convenient cost today may be less so in the future. There is both good debt and bad debt. Good debt acquires an asset that produces income or reduces costs more than it costs. Bad debt does neither. Know the difference.
  3. Balance the present, the past and the future. The past created debt payments and the ability to earn. The present is about consumption and earning today. The future is about expenditures to come when income may be only from investments. Personal earning power is perishable. Be sure the present spending, lifestyle, can be maintained. You balance by careful use of debt and saving money and investing for the future. That means careful planning of lifestyle.
  4. Understand risk and prepare for it. Have an emergency fund. Insure yourself. Life and disability insurance are important parts of guaranteeing the future. Earning power is your largest asset for a long time. Be sure money replaces it if you cannot use it.
  5. Understand Money. It is only valuable in use. It is not a goal in itself. It is barely a way to keep score. Money lets you do things you want and need to do. Being the richest guy in the cemetery is a losing purpose.
  6. The economy is a non-linear system. Chaos theory deals with it a little. It is not like orbital mechanics where precision rules. Predictions might not work.

Implementating

  1. Command and control matters. Write down your purpose, your plans and your decisions around them. Include the reasons for those decisions. At regular intervals revisit and assess. The 3Rs matter. Record outcomes, review outcomes in context of the reasons recorded when you made the decisions. You cannot use today’s variables, because context changes. Learn from that. Revise you plan using new contextual elements.
  2. Clarify your purpose and begin implementation by strategic vision. The “W” questions. What do I want, what with, when, who, where, and what if. Reserve why as a method to motivate and clarify. sometimes knowing why makes staying the course in tough times easier. Why not makes many offerings very easy to dismiss.
  3. Select methods. Tactical methods exist and have been proven over history. Never start planning with tactics. There are many that don’t match your purpose and strategic vision. Stick to your strategic principles. Do not let anyone drive you away. Advisors advise, “with the consent of the people.”
  4. Implement. Logistics matter. Nothing comes from a perfectly conceived plan that has not been implemented. Implementation automatically includes the 3Rs.

Eventually the process is circular. Back to revisiting purpose and then through the cycle again.

Why it matters

Entropy is the universal condition. The second law of thermodynamics. In simple terms, things descend towards chaos. It is easier for things to go wrong than it is for them to go right. Things that are begun or implemented at random go wrong faster. Planning is a never ending procedure. If you think it is easy, you did it wrong. Complexity fails. Simple survives. Remember the thought from yesterday.

“Simplicity is hard to build, easy to use, and hard to charge for. Complexity is easy to build, hard to use, and easy to charge for.” – Chris Sacca

People who have clear principles tend to have simple plans and they know why the plans are the way they are.


I help business owners, professionals, and others understand and manage risk and other financial issues. To help them achieve their goals, I use tax efficiencies and design advantages to acquire more efficient income and larger, more liquid estates.

In previous careers, I have been a partner in a large, international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business.

Please be in touch if I can help you. don@moneyfyi.com 705-927-4770

Simple Is Easier To Operate


I read Dan Solin …. sometimes

This is one I found interesting, probably because I think simplicity is a huge factor in success. Solins Simple Rules.

As always I agree with his strategic view but cannot always find the ability to agree with his tactics. I think he oversimplifies his approach. That probably works for him. But, keep in mind, context is always a consideration and we are all a little different.

This idea from the article caught my eye.

“Simplicity is hard to build, easy to use, and hard to charge for. Complexity is easy to build, hard to use, and easy to charge for.” – Chris Sacca

If everyone knew that and acted on it, the world would quickly become a better place. Seek simple even though it is harder.

Dan’s rules

  1. Insure before you invest
  2. Keep your investments simple
  3. Focus on “doing nothing”
  4. Getting help

Insure before you invest

The strategy is strong, insurance can make plans self completing should tragedy strike.  I would argue a little about the tactic of using term insurance and accident and sickness insurance is a necessity. Term is only right some of the time. For young people, a lot of the time. A strong tactic still must fit the context.

Keep your investments simple

Again a fine strategic position. Tactically though it’s a bit too simple. There is more to portfolio design than having a single fund. The mix of asset classes will change as you age, or as your skill and economic circumstances improve. Done once, done forever is a losing tactic in a world that changes. Consider adding the 3Rs. Record, review and revise.

Focus on doing nothing

There is no doubt this works as long as it is about strategy. Tactics change.. People are their own enemy. They do not value objectivity, discipline, and patience enough. The market is a completely objective place. Being competitive with your fellow investors seems like a winning approach, but over time, you get squashed. Trading for short potential advantages is beyond the skill of all but a few. And they don’t do anything else. If you have special skills, you might find opportunity within them. You will have better insight into innovation and markets than most.

Get help

It’s not so much about investing help as it is overcoming the emotional devils that ruin the best of plans. Plans never work out. In the words of renowned American philosopher, Mike Tyson, “Everyone has a plan until they get punched in the mouth.” You need a good corner man to help you stop the bleeding and refocus.

Plans are best when based on principles

These are four good principles. It will be difficult to find someone who achieved great success without using them. Pay attention.


I help business owners, professionals, and others understand and manage risk and other financial issues. To help them achieve their goals, I use tax efficiencies and design advantages to acquire more efficient income and larger, more liquid estates.

In previous careers, I have been a partner in a large, international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business.

Please be in touch if I can help you. don@moneyfyi.com 705-927-4770

Just Do It


The purpose of knowledge is what?

Candidate answer: “To allow us to make better predictions about the future.”

You will notice “better” not good or perfect.

The future is unknowable, but knowledge can help us reduce the range of its possibilities. We hate surprises.

Where does knowledge come from?

Philosopher Immanuel Kant has it pretty well pegged.

“Neither experience nor reason is alone able to provide knowledge. The first provides content without form, the second form without content. Only in their synthesis is knowledge possible; hence there is no knowledge that does not partake of both.”

The necessary joining of what you have learned from others, books, classes, and thought, to what you have learned by doing things creates functional knowledge. Doing provides both success and failure. Theory never does. There is no test with theory.

Experience helps more. Mistakes are part of that and are usually remembered more vividly. They contain the real message. People who are book smart may not know enough to be effective.

Knowledge fits in a four part matrix.

  1. The Known – Known. The sum of all the things where Kant’s idea of knowledge has been implemented.
  2. The Known – Unknown. The space where education has provided us with insight into the bigger subject or where experience has shown us there is still more to learn. More to do on joining theory and practice.
  3. The Unknown – Known. Things we have learned but forgotten or things we have not yet had the experience of using, but are innate in our being. Sometimes these are cultural. They are learned at a subconscious level. Things your parents taught when you were five fit here. When the time comes to use them, they will be there.
  4. The Unknown – Unknown. The troublesome one. The past has included things that happened and things that did not. We tend to think things that have happened are more real. We overvalue those. Because a thing did not happen does not mean it could not. Maybe the one that happened was the anomaly. Eventually there will be something that happens for the first time and it will surprise us. Like Black Monday 1987. The stock market lost 22% in one day. On October first that year, not many had that possibility in their 30 day forecast. Recall Black Swans.

How does planning help?

All plans eventually fail because they address the future and the future provides surprises. Like Black Monday.

Planning offers help with the unknown-unknown by providing perspective. In the Black Monday scene, it would provide several perspectives

  • That the portfolio has no current use and because money is only valuable in use, there is no immediate concern.
  • A knowledge of how markets work, previous experience with sudden drops, albeit smaller, could allow a person to be an eager buyer.
  • Markets recover
  • Not every portfolio will be equally damaged

Planning often asks “what if?”

What if is a question that offers the gift of anticipation. Anticipation permits preparation. Preparation is the precursor of success. Be sure to ask lots of what if questions when doing your plan or organizing your investments.

Planning always requires adjustment

No plan survives first contact with reality. The discrepancy fuels better plans in future, but you must notice what failed. A mistake improves our experiential knowledge and drives us to seek theoretical information about history, psychology, science, economics, and sociology. We become more complete and the memory of the mistake reinforces the lesson.

The goal of planning is to reduce the unknown-unknown. Recall knowledge as the tool that allows us to predict the future a little better. Experienced knowledge is accomplished best by planning. Plans provide a template for future assessment. Mistakes can be assessed in context and thus provide useful meaning. Keep track of your decisions so you can compare them to outcomes.

Learn from mistakes.

This little piece will help. A one minute read with a big payback if you pay attention. Two kinds of mistakes


I help business owners, professionals, and others understand and manage risk and other financial issues. To help them achieve their goals, I use tax efficiencies and design advantages to acquire more efficient income and larger, more liquid estates.

In previous careers, I have been a partner in a large, international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business.

Please be in touch if I can help you. don@moneyfyi.com 705-927-4770

Family Business Succession


Wealth is more than money

Your family business is tradition and history and experience and memories, both good and bad. In many ways it is you. I have noticed that business owners often think of their business the way they think of their children. Pretty good. Getting better. Growing. Achieving. Someday they will be great, but for now there a few blemishes. Those will work out.

There are few things as exciting, as frustrating, and as rewarding as an owner operated business.

Corporations may live indefinitely, while you will not.

Thus business succession as a smart move. Properly done, business succession takes years. There is a school of thought that claims it is is never done. The successors to one must know how they will make the transition. There are many stakeholders. Each wants you to succeed for selfish reasons. Each has helped you become what you are. Business succession is more than agreements and tax plans and structure. It is your life. Probably 40 years or more of it. Easily 100,000 hours of effort. Not something to be taken lightly.

The key is understanding the place of the business.

There are many facets.

  1. Family wealth. For giant privately owned business like Cargill or Koch, money to live on is not relevant. For some families the business is really a purchased job and there is little to transfer other than the job. That becomes an issue when there are several children. It is no easier to split up a job as marketing director for the Royal Bank than a business that provides a nice living but little more. More planning is needed here than in many large businesses.
  2. Community. You won’t see many children’s sports teams or high school plays sponsored by someone other than a business in the community. United Way is heavily funded by businesses and their employees. Communities rely on businesses to pay high municipal taxes so residences can be less costly.
  3. Employees. Many have skills that don’t transfer well. If you are a bullet ballistics specialist where do you go for work if the factory closes? Many have been loyal supporters through the good and the bad. They have allowed the owner to be their best best. They have contributed to the outcome in ways that are difficult to articulate, yet valuable.
  4. Customers. No business succeeds without its customers. They may grind you a little sometimes and they may move to a competitor from time to time, but they need you. They depend on you and you depend on them.
  5. Suppliers. The same as customers. Mutual need and mutual success. All suppliers, especially lenders, would like to know that your side of the co-dependent relationship will remain intact.
  6. Family. The simple guidelines are easy. Security for spouse. Opportunity for children. Equitable if not equal division of family assets. Eventually you must decide who is the new owner-manager. It is unlikely that each child has the same skill, interest, and drive. How do you accommodate that fact? When? How much training should you provide? How much of your life lessons, contacts, and talent can be transferred? Not all of it for sure. You will be wise to try though. Debriefing the boss is important. A poorly prepared child does not receive a gift when thrust into ownership unexpectedly.

Succession planning is not new

There are skilled practitioners. They know how to create structure and they know how to prepare the participants. Don’t leave it too long. It is a process that takes years to mature.

Its success will be your legacy.


I help business owners, professionals, and others understand and manage risk and other financial issues. To help them achieve their goals, I use tax efficiencies and design advantages to acquire more efficient income and larger, more liquid estates.

In previous careers, I have been a partner in a large, international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business.

Please be in touch if I can help you. don@moneyfyi.com 705-927-4770

We Are Led By Incentives And Disincentives


Incentive – “a thing that motivates or encourages one to do something.”

We love incentives. Everyone uses them, stores have prices like $99.99 instead of $100. Las Vegas will give you a lunch coupon if you play long enough. Bank a big sum and they will give you a suite. 10% off. Summer sale. Cash rebate. Overtime pay. Put your toys away and have a cookie.

Disincentive – “A factor that tends to discourage people from doing something.”

Alligators are a disincentive to looking for golf balls in the rough in Florida. Crowded restaurants are a disincentive to dining there. High taxes are a disincentive to working. Regulation is a disincentive to opening a business. Acne is a disincentive to eating fatty food. Electric fences. Fines. Jail.

Most rules have a disincentive attached.

Perhaps it is the way we are conditioned when young, but not many laws or rules come without a disincentive. Possibly it would make sense to view the sea of disincentives and see what one could do to advance their cause by providing incentives instead. That is what “Tax Havens” are about. Some have found a way to get what they want by giving other people what they want.

Do you think it is an accident that successful companies like Apple incorporate the way they do. Not only is it not accidental it is near mind boggling. Designing a skyscraper would be easier. It is the work of highly skilled professionals, some of whom guide lawmakers in other jurisdictions, and it is hideously expensive. But it works.

Governments don’t like tax havens much

It is not that tax haven countries are evil, it is that they refuse to enforce the tax laws of other countries. They have their own rules and if you play by them, they are content. Presumably capital, jobs, and growth accrue to them instead of someone else. The someone elses take that seriously. How can they extort money from their subjects if someone else offers to extort less? If a country, or a state, or a province, even a city is losing tax revenue that they think is rightfully theirs, it is because they have not examined their tax system with a view to making it transparent, efficient, and as unintrusive as possible given their need for revenue to carry out civic functions.

“Given their need for revenue”

There is the problem. Governments who have revenue problems are misdirecting you. They have spending problems. They do things they don’t need to do and for political gain. Some overspending may have happened years ago, but the debt it created is more durable. It is no different than your household. If you borrow and spend for five years, get everyone used to a certain lifestyle, and then try to cut back to meet the debt obligations and the increasing cost of living, you don’t have an income problem, you don’t have a revenue problem.

Really!. It’s that simple.

Revenue would solve it, but the problem is spending. Worse historic spending.

If you try to solve it as a revenue problem by raising your salary demand or your prices, someone will replace you. Could be a competitor or a contractor.

When governments raise their price beyond what is reasonable, they lose revenue and the more they raise their prices, the more they lose. Study the Laffer Curve. There are not enough “revenue tools” to solve the problem without spending constraint. Worse yet, there is no way you can argue a tax is fair if you intend to waste the proceeds.

Outcome.

Only low tax, high administrative value jurisdictions can survive. That’s just common sense. People complain about the effect Walmart and Costco have on local businesses. It is the same with tax havens. People shop where they can get the best value for their money. To make it work effectively, people must be smart shoppers and the provider must understand the idea of value for money.

You get more of what you reward and less of what you punish.

It’s time for governments to catch on. Right now they are like the 3,000 square foot variety store trying to compete with Walmart. It is like taking a knife to a gunfight. Put governing effectively ahead of political power and it gets easier. Hard decisions are coming. Charisma will not solve them. No pain – no gain, does not apply to tax policy.


I help business owners, professionals, and others understand and manage risk and other financial issues. To help them achieve their goals, I use tax efficiencies and design advantages to acquire more efficient income and larger, more liquid estates.

In previous careers, I have been a partner in a large, international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business.

Please be in touch if I can help you. don@moneyfyi.com 705-927-4770

On Choosing


We make hundreds of choices each day

We guide the trajectory of our life by choosing. It is decision making if you want to be more formal and search the literature. There is no shortage of literature either. Making decisions is a well worn subject and each of us feels the need for more help.

How did we come to feel insecure about choosing?

Every decision automatically excludes at least one available option. We fear being wrong. But, would we not create the possibility of being wrong by doing nothing? Could that be a greater wrong? Would it matter if we are wrong if we can learn from it and repair the decision?

No one learns much when they’re right. Mistakes are your friend if the provide a useful lesson. Avoiding mistakes is itself a mistake.

Decisions fall into four categories

  1. They are right
  2. They are wrong and can be repaired
  3. They are wrong and cannot be repaired
  4. They are absent

Of those, only 3) is a serious problem. But, how many of those are there? The answer usually comes down to how costly is it to repair the decision? There are very few that are totally irreparable. Suicide I suppose.

Problem 4) is not a problem at all. Number 4 is a decision and it will fall into one of the first three categories. If you choose to do nothing, do so by analyzing the possible outcomes, variations, options and costs. Just like any other decision.

A mistake

Over-complicating decisions leads to chaos. A clear question is more easily solved than one that has many facets and changing conditions. Some problems are complicated by nature, but the vast majority are manufactured by the user. You can gain nothing by making a problem a collection of smaller problems all bundled and interacting with each other. Perfecting answers is a little desirable, but complexifying problems is not.

Perfection – Procrastination – Paralysis.

Sometimes there is no clear approach. You have considered all the possible solutions and cannot choose. It is a Gordian Knot situation.

A Gordian Knot problem is a complex and intractable problem solvable only by bold and decisive action. Sometimes decisive action will work and sometimes it won’t. You should consider, “What then?” If what-then-fail is catastrophic and has no recovery, then another course is required. If failed is not catastrophic then what is there to lose?

Tossing coins

Maybe you don’t have a large sword and so the Gordian Knot solution is unavailable. You can begin with introducing randomness into a complicated problem. If it is a yes-no decision, tossing a coin will help. Heads – this; tails – that. That sounds foolish but it can work in two possible ways:

  1. It creates a decision. The best outcome is a good decision. The second best is a bad decision. The worst is no decision. Letting the coin decide moves you from worst to at least second best.
  2. It provides insight. Suppose you are young and say to yourself, “Should I take math or philosophy?” Either has upside and downside. Rather than be trapped, toss the coin. Heads math and tails philosophy. Hardly the textbook method for making profound decisions, but it gives you insight. Let’s say it come heads. You have an emotional response. You are pleased or a little sad. That impulse is a clue to where your heart lies. Some decisions need emotion to carry them through. Coins help identify it.

Outcome.

Life depends on action. Action depends on decisions. Success depends on good decisions or repaired poor ones. Learn how to connect what you know to a problem. It will never be enough and the space between what you know and what you should know is risk. Learn to minimize that kind of risk by using candidate decisions. Baby Steps as Bob would say.

In an earlier formulation of Jordan Peterson, he pointed out that stress was the accumulation of many small undecided questions. Clear the easy stuff off your to do list.

Try it you’ll like it.


I help business owners, professionals, and others understand and manage risk and other financial issues. To help them achieve their goals, I use tax efficiencies and design advantages to acquire more efficient income and larger, more liquid estates.

In previous careers, I have been a partner in a large, international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business.

Please be in touch if I can help you. don@moneyfyi.com 705-927-4770

Ask For More Information


The 3-second sound bite

When I was young, it was common to see a 30-second highlight of a speech on the news. Not so much now.

The problem for us is you can make a coherent point in 30 seconds. In three seconds you get nothing. 7 words or so. Not enough to supply a reason and alternatives. Three and five second sound bites are the new standard. They are the standard because they work. People are busy and emotional impressions are enough.

So, the 3-second sound bite

Since most media is interested in impressions rather than facts, argument, and options, you will be required to do some work of your own if you want to know what is really happening, you will need more. Not all of it will be difficult. You can find comment outside the media. The internet is marvellous for making such things available. You may want to use more than one search tool. Google is a bit bent.

An example of what should happen

Recently the former premier of Ontario decided the minimum wage was too low. In late 2017, it was $11.60 per hour. The premier decided $15.00 by 2019 would save thousand from poverty and the employers could easily afford it. Beginning in 2018, it became $14.00.

The unasked important question. “What then?”

It should have been asked and the answer would have been quite easy to discover. Employers did not simply absorb the increase. They cut hours, benefits, and in some cases jobs. They are not finished. Many jobs can be automated away. You may have noticed order kiosks at McDonalds. So who was better off. Certainly not the workers and given the decimation of the Liberal party in the recent election, not the politicians either.

The nature of the problem matters. The economic landscape of minimum wage earners. A recent publication from the Fraser Institute is entitled, Increasing the Minimum Wage in Ontario: A Flawed Anti-Poverty Policy. It makes several points, each of which would have been visible to government policy wonks.

  • In 2015, the latest year of available data, 90.8% of workers earning minimum wage in Ontario did not live in low income families.
  • In 2017, the year before Ontario was to increase the minimum wage, 59.2% of all minimum wage earners were under the age of 25 and the vast majority of them (86.3%) lived with a parent or other relative
  • Just 2.1% of Ontario minimum wage earners were single parents with young children.

Their summary:

“In addition to ineffectively targeting the working poor, raising the minimum wage also produces several unintended economic consequences to the detriment of young and inexperienced workers. These include fewer job opportunities, decreases in hours available for work, reductions in non-wage benefits, more automation, and higher consumer prices, which disproportionately hurt the working poor.”

As you can see, the “solution” has created problems, all of which were visible beforehand. It is necessary to ask the question, were these consequences unintended or were they a part of bigger package of “necessary” government services yet to come?

The bonanza for politicians is the solution to no known problem created further problems to address and a bureaucracy to do so.

Who is naive?

It is the people who trust these cynical politicians. The ones taken in by 3-second sound bites. The ones who think politicians are acting in our interest. Minimum wage is a political hoax that even the least skilled should be able to see through. There are dozens, even hundreds more programs that exist to establish the need for more government.

Given their not so exemplary history of success, I am astounded that people still take politicians seriously.

Yesterday I commented that conservatives think liberals are stupid. That was unkind. They are merely trusting and naive. They have a good heart and wish for things to turn out right for everyone. Idealists.

Outcome

The world has been taken over by cynics who rely on the goodness of the average citizen to endow politicians with power and prestige. Start asking harder questions, and start expecting less from these snollygosters, and the world will be a better place. (I love that word)


I help business owners, professionals, and others understand and manage risk and other financial issues. To help them achieve their goals, I use tax efficiencies and design advantages to acquire more efficient income and larger, more liquid estates.

In previous careers, I have been a partner in a large, international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business.

Please be in touch if I can help you. don@moneyfyi.com 705-927-4770

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