Uvalde Tragedy Followup. Politics or Action?


I have watched this 20-minute video twice. I have learned many things from it. Matthew McConaughy Complete Remarks at The White House

Among them,

  1. Matthew McConaughey is a Uvalde, Texas native. He has a strong personal connection.
  2. Matthew is an excellent public speaker. The speech itself is emotional, and his delivery is well punctuated with appropriate body language. That he read it was a little off-putting, but not awful.
  3. The message has real people attached to his points. The theme is that these people had life ambitions that would not be met.
  4. He referred to several similar tragedies with the unstated thought that had we done something earlier, would Uvalde have occurred?

The reasoned question is, “What must we do (not what must be done) to prevent anything similar in future. That will assign meaning to the lives of those destroyed in this event.

What then? is always a good question. 

There is no shortage of talking heads offering what should be next.

Notice one thing.

All the ideas are tactics – methods. That’s wrong. No tactic is strong enough to overcome a weak strategic vision. Plans that begin with tactics and a poorly defined understanding of the strategic context invariably fail.

All good plans follow a similar path. Some have more parts to consider than others.

When you start with How?

You miss two crucial preliminary steps.

Step 1 Establish your reasonable vision.

Suppose we decide that for mass shootings having none would be the goal. In the interim, duration to be defined, possibly some will happen. The vision probably means that school shootings would be eliminated, but something driven by different variables, like the Las Vegas shooting, might happen. Address those as separate questions.

Establish what limits exist, and can they be overridden? Will privacy rules hamper the identification of potential shooters? This is a cost-benefit issue. When and why will privacy concerns cause the possible solutions to become inoperable. Will race, ethnicity, wealth, or family connections be a barrier?

Las Vegas is more complicated because it is contextually different. Adult shooter. Weapons were already owned. Possibly an accomplice who is not on site.

Step 2. Establish contextual variables.

Where do the shootings happen? Why do they happen there instead of someplace else? Soft targets. It’s about risk considerations. Animal rights activists do not spray paint on Hell’s Angels’ leather jackets. Wealthy women in fur coats are a safer target.

Who commits the atrocities? A single person, a connected pair, a small group, a big group? What are the known perpetrator’s similarities and differences? Things like age, gender, ethnicity, social status, family, physical description, relationship to victims, and community involvement. There are many more.

What resources does the perpetrator require? How can they get them? Can they do that without alerting someone?

What skills are necessary? What missing ones would provide an advantage for the defence?

You cannot have a viable plan if the vision is unclear or the context is misdescribed. Tactics won’t fix the weak strategic vision.

Tactics flow nearly automatically from the strategic vision(s)

What might be possible? 

First, dismiss any tactic not tightly connected to the visionary purpose and the context. Ideological goals are out of bounds. Elimination of guns is just rhetoric. Even if it were possible, is it worth the trouble? What share of the population is a threat to commit mass murder? I’d be surprised if it was more than 1%. More likely 0.001%. Think cost-benefit.

Next, assess the demographics of the shooter. Massive reduction in possibilities.

Assess obvious indicators. Social media postings, discussions with friends, and life events that might trigger outrage. Look for a motive, however irrational. People do things for their own reasons. Motives in the shootings are not necessarily connected to the shootings themselves but are looser. Look for explanations related to the expression of the anger, not the connection to the particular harm.

There are other ways to express outrage. What alternatives could be developed in the ambit of the people who might consider the mass shooting option? Would no interest in team sports be a clue? Similarly, a gym, hobby, or activities like camping, fishing, and volunteering, provide an opportunity to use emotional energy more productively.

Limiting means and opportunity

Reconsider the time delay for gun ownership. Many people have a clean background check but are still a problem. Suppose the ability to purchase a given weapon occurs X months after application where X is 25 minus your age.

Banning specific clip sizes and weapon capabilities is not the purpose. They are rhetoric for the simple-minded. I had a client who was a weapons wholesaler. He explained it like this. “if I have a Glock 19 with a fully loaded, standard 15-round clip. I remove 10 bullets and point the gun at you. Do you feel safe?” Not likely, but it might be better at five rounds if the purpose was to have a short duration, mass homicide. In a long-duration situation like Uvalde, there would be lots of time to reload

Suppose further that the background check changed its form depending on the weapon requested. AR-15 or similar is an intense one. It might have the condition of a training program. A semi-automatic .22 with a 6-round clip would be less intrusive. I have fired both of those, and I am sure the AR-15 is a more capable weapon for delivering harm. But that isn’t the question. The question is what variable creates the result. The bullet, obviously. The gun is the delivery system, and the shooter is the problem. You get weak answers when you don’t even address the real problem.

The logistics of implementation.

Forget fair. There is no definition of “fair” that includes mass homicide as an acceptable condition within the meaning. Same rule for privacy. Those are both rhetoric to keep the potential solutions from being measurable. Discard them.

Some steps are easy to implement. Like the deeper background check for some weapons and the longer time delay for the young.

Others are more difficult but given time to develop programs to involve youth who have gotten outside the mainstream of society, still worthy.

Encourage people to report concerns. They need not be intended to convict someone, just give them a chance to avoid a destructive path. It’s like taking the car keys from a drunk. The deep background check should be accomplished as an immediate priority.

Train first responders. Many rules without action are the same as no rules with no action.

Make schools and any similar potential targets harder. How difficult is it to understand the one hardened entrance and many exits idea? In a hardened target, convenience is a very low priority. You cannot prop open a locked exit door so you don’t have to return to the main entrance.

There should be no press coverage whatever. The victim’s family and friends care, and most of them prefer to be left alone. Why should an old guy 2,000 miles away be interested in the event?

It is contagious, so permit fewer people to know. Many people would not consider implementing an idea themselves until it is presented. For confirmation of the, it gets easier as more happen view, work out a sequence. From first to second, how many months. From second to third and third to fourth, and so on. Things beyond the pale become more possible as more of them happen. Could the government define any of them as having top-secret security standing and prosecute anyone who breached? If there was no publicity, there would be fewer if no other factor changed.

The points to take away

Talking about problems and finding reasons to not fix them is fine for deciding what colour to paint the warehouse doors. It is not workable in every situation.

Gun control is a non-starter idea. People kill people. Guns are their tool.

You can create disincentives for gun ownership without mandating the exclusion of them.

Think the classic triad. Motive, means, and opportunity. You can make means harder by changing gun acquisition procedures. You can reduce the opportunity to something very difficult by hardening the targets. Over time you can work on motivation. In the meantime, act on all concerns presented to authorities. How many of the events we know about were a complete surprise to everyone?

It’s a difficult problem if you complicate it. It is solvable if you don’t.


I build strategic, fact-based estate and income plans. The plans identify alternate ways to achieve spending and estate distribution goals. In the past, I have been a planner with a large insurance, employee benefits, and investment agency, 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. I have appeared on more than 100 television shows on financial planning. I have presented to organizations as varied as the Canadian Bar Association, The Ontario Institute of Chartered Accountants, The Ontario Ministry of Agriculture and Food, and Banks – from CIBC to the Business Development Bank.

Be in touch at 705-927-4770 or by email at don.shaughnessy@gmail.com.

Understand Organizing Principles And Efficiency


The model for dairy farming and a government raising tax money is identical.

The organizing principles

Cows don’t give milk; you have to take it from them. People don’t pay taxes; you have to take their money from them.

You must find the best way to take it.

It helps if you know how to measure achievement.

Operating rules for dairy farming.

Almost every farm is an owner-managed entity. The owner succeeds or fails depending on how well they allocate resources and manage their day-to-day effort.

They emphasize efficiency but are aware of how they allocate their capital. Farmers acquire new equipment or other infrastructure only when it produces more milk or reduces the costs.

They know the price of a barn, milking equipment, feed, and vet services is the same if a cow provides 30 litres per day or 20 litres.

Efficiency aims to provide more milk for the same inputs or the same amount for less cost. Things that matter are breeding the herd for greater productivity in future generations, using efficient equipment, minimizing the owner’s time and capital commitment, using easily digested and nourishing feed, providing clean and organized housing, and maintaining good herd health.

All farmers have an overarching strategic objective. Their idea is to optimize the mix of structure, inputs, and revenue. To do that, dairy farmers keep records to identify variations in their plans. Similarly, I know a poultry farmer who could tell you his business’s feed consumed to meat produced conversion ratio to two decimal places.

Farming involves earning money a penny at a time. Details are how you control that over-arching problem.

All farmers organize for simplicity. Complexity makes it harder to be efficient.

Operating rules for government and tax collection agencies

No one in either government or the tax agency is an owner-manager. Their career success does not rely on the quality of their strategic or tactical decisions. The rules to judge how things are working are opaque and possibly unknowable.

The efficiency is quite good on money collected per dollar of input. The agencies do that by assigning the duty to take money from the taxpayers to others. Payroll deductions, hidden taxes such as on gasoline or cigarettes, and sales taxes are aggregated by businesses and remitted in bulk at almost no cost to the government.

Other tax payments, such as those on capital gains, investment income, and business income, use required instalment payments. Compliance is ensured by audits, the threat of audits, and Draconian collection methods.

There are guidelines for how much revenue must be achieved by a day’s audit effort. Audits have a cost-benefit, or else the targets are revised, and the auditor is retrained or reassigned.

When the audit raises a balance due and the taxpayer objects, the system becomes complex and confrontational. The strategic idea is if it is easy or comfortable to fight the tax agency, more people will do it. In their view, complexity, delay, and discomfort are efficiency-inducing advantages.

The government supervises the law, and that law addresses much more than revenue collection. Governments have found that society-amending economic incentives and disincentives are cheaply imposed by tax law.

Complexity grows as they address definitional detail and expand the nuance in particular situations. The two fundamental conditions for income tax, being what is income and who must pay, are only generally defined. The taxpayer is the one at risk of misinterpretation.

Administratively the government invests in processing capability, communication on the internet, and the assessing of and collection or refund of overpaid or amounts owing. They are respectably good at that.

Governments generally don’t see efficiency the same way as others because it is organized where complexity works in their favour. No employee elected official pays or loses if they are inefficient.

The points to take away

  1. How much would milk prices go up if the tax agencies’ methods were applied to dairy farming?
  2. Can you command a cow to give you a particular amount of milk every day?
  3. How should you define and manage efficiency in a government or government agency?

 


I build strategic, fact-based estate and income plans. The plans identify alternate ways to achieve spending and estate distribution goals. In the past, I have been a planner with a large insurance, employee benefits, and investment agency, 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. I have appeared on more than 100 television shows on financial planning. I have presented to organizations as varied as the Canadian Bar Association, The Ontario Institute of Chartered Accountants, The Ontario Ministry of Agriculture and Food, and Banks – from CIBC to the Business Development Bank.

Be in touch at 705-927-4770 or by email at don.shaughnessy@gmail.com.

Many Laws Are Non-Functional. Maybe On Purpose.


Only intelligent, well-educated dumb people can do much harm.

I have known several federal and provincial elected representatives over the years, and I will say that none of them were dumb. I can assume that the rest I don’t know are not dumb either. The question then arises, “Why do they do dumb things?”

It is a bit like the movie “Moneyball,” where  the question is, “If he’s such a good hitter, why doesn’t he hit good?”

It is about being seen as doing something rather than actually doing something. Doing is both far more difficult and far more measurable. Measurable makes you subject to criticism.

The first problem

When you make a rule, whether it is a zero-tolerance for bullying in schools, the prohibition of handgun ownership, or the demand that potentially dangerous behaviour be reported to the authorities, it comes with an implied second part. What are you going to do if someone ignores the rule?

If the victim of bullying at school fights back, they will be in trouble. With handguns, a group in society ignores such laws while encouraging their creation. Defenceless future victims are a valuable thing for them. Given the morass of privacy rules and regulations, should a report of potentially dangerous behaviour be filed, no one does anything beyond making a note of it.

Any law, rule, or demand that is not enforced, or even in some cases not enforceable at all, is meaningless.

The second problem

Have you noticed politicians, police, and school principals try to explain away things that were clearly a known and continuing situation? If anything was done at all, it was ineffective, and there was no satisfactory explanation.

They have the responsibility but not the tools or attitude to act on situations that come up.

The third problem

Many people in authority are oriented toward procedure rather than an outcome. Procedure is safer because if you can establish you did what the book said, the result is beyond your control, and you are blameless for the bad outcome.

Suppose you delegate a task with careful instruction on how to perform it, like getting your 14-year-old to mow the lawn. When you over-instruct, you take away judgement. Straight lines, trim around the trees carefully, and be careful of flowers will never be enough guidance. There will be rough places, grass clippings in the flower beds, on the driveway, and even in the pool. When brought to their attention, they say, “I did what you told me.”

They are safe because they followed the prescribed, albeit too limited, method.

It is a delegation problem. Delegating the outcome and leaving implementation to the doer, perhaps subject to minimal restrictions, works better. Go mow the lawn. The mower and gas are in the garage. When it’s all the same height, nothing else has been cut, and all the clippings are either on the lawn or in the composter, you’re done.

The fourth problem

Most people revert to a procedure or create one if none exists. When Ross Perot sold EDS to General Motors, he became a board member and discovered that GM managed the business differently than he would have.

“Where I came from, if you see a snake, you kill it. But at General Motors, if you see a snake, you hire a consultant on snakes, then you form a committee on snakes, and then you discuss it for a couple of years.”

The GM approach seems consistent with how we manage our troublesome situations in society.

The bits to take away

If you are not going to enforce the rule you create, do not create it. Rules that are not enforced diminish the power of all regulations.

Learn effective delegation. You cannot delegate effectively unless authority over the method and the resources needed to accomplish the task are given alongside the purpose.

Politicians and many others in society want prestige, money, and control. Most of them value their position more than their duties. We must demand practical action instead of wishful thinking and rhetoric.


I build strategic, fact-based estate and income plans. The plans identify alternate ways to achieve spending and estate distribution goals. In the past, I have been a planner with a large insurance, employee benefits, and investment agency, 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. I have appeared on more than 100 television shows on financial planning. I have presented to organizations as varied as the Canadian Bar Association, The Ontario Institute of Chartered Accountants, The Ontario Ministry of Agriculture and Food, and Banks – from CIBC to the Business Development Bank.

Be in touch at 705-927-4770 or by email at don.shaughnessy@gmail.com.

 

Is ESG A Valid Investment Metric?


I have been puzzling over ESG as an investment metric. ESG is Environment, Social, Governance, and purports to explain how a given corporation relates to its place in society. I can see the point but I have trouble estimating its worth in making investment decisions.

The dichotomy

There are two distinct viewing points.

  1. Corporations have a far wider place in society than previously recognized. They should align themselves with the ESG metric to estimate their contribution to stakeholders. Call that Value(s)
  2. Corporations exist to provide a service to society so as to create value for their shareholder/owners. Value.

The distinction between value and value(s) is persuasively explained in Mark Carney’s book, “Value(s)” but it includes an assumption that Values(s) should be the route of choice. While I appreciate there is a purpose in understanding all the ways businesses influence their world, I am not convinced that Value(s) is the optimal route.

I am concerned about the implementation. Do we need to change how we do it now? What would be a fair price to do so? Given that most economic decisions are based on selfish incentives, and what we know how to do, would it even work?

Implementation of the “Value” idea

Implementation has a near-zero cost to society. People use their own resources to begin, run, and expand a business. In so doing they must consider two things to be of primary importance?

  1. Does their offering provide enough value to the buyer to justify its price?
  2. Is the cost to produce the offering less than the customer’s price?

These are the organizing principles of every business and all business decisions are made within those limits.

If the business is able to meet those goals, it will prosper and grow. If not, it will fail and the resources it has been using ineffectively will end up being used by others.

Implementation is by trial and error to some extent, and with the idea that the right answer will evolve.

That’s how capitalism works. One strength it has is what economist Joseph Schumpeter called “creative destruction.”  The ability to remove obsolete or ineffective products and entities from participation in the marketplace. That destruction seems a good thing when viewed from afar.

The organizing principles that create value are the ones that will destroy the entity should it be unable to deliver.

Implementing the “Values” idea

Businesses begin in much the same way, but with the added cost to the people of subsidies, grants, and loans to support whatever the government has decided is a worthy purpose.

What will be the organizing principle?

I’ll leave you to assess that answer. Bear in mind it cannot necessarily be the one that demands the lowest cost to produce consistent with the quality required by the customer. All of the ESG components involve external costs and those costs must be recovered if the business is to survive.

Perhaps the idea is that corporate profits will be reduced enough to pay those costs. What will then destroy the failed entity? Mostly likely government subsidies and ball-outs in perpetuity. Can’t have those employee stakeholders without work.

Compare the two and what do you find?

    1. The Value(s) approach assumes that by involving and assessing a score based on stakeholders’ values rather than stockholders’ value, a great advantage to society as a whole will be assured.
    • Is there any objective evidence that supports the idea that value(s) for all is betterment for all? No!
    • Have bureaucrats typically been successful policy makers and sound implementers of their economic ideas? Again No.
    • Is there any reason that people will invest in this sort of business enterprise? No, once again.
    • Who will benefit from such a reorganization? The ones promoting it right?

2) The value approach disenfranchises some and excessively rewards others. That is objectively true. What is lost in the value(s) rhetoric are the reasons.

    • Entrepreneurs work more than almost any other group in society. 60-hour weeks are normal and 100-hour weeks are not uncommon.
    • Entrepreneurs accept more risk than others. If you work at a business, do you go bankrupt if you make a mistake?
    • Entrepreneurs spend time assessing what customers want and deciding if they can produce it for less than customer is willing to pay.
    • Entrepreneurs stop doing anything that cannot meet their organizing principles?
    • Who will benefit? The ones who work the hardest, the smartest, and who provide the greatest service to the customers. Entrepreneurs are not common.

What should we expect?

Thinking people will resist. The general rule is proposed by Spencer Johnson, “A change imposed, is a changed opposed” We could expect that the change will not be overtly imposed. No one suggests the “values” crowd is dumb or poorly led.

ESG is a way to move future investment towards things they favour and away from those they do not. How hard would it be to tinker with the metrics in ESG? Better than policy. Just make the guidelines useless. For instance, Exxon is in the S&P sustainability index but Tesla is not. There might be objective reasons. Who knows even what the ESP standards are? Opinion and fact can differ.

The ESG assessor career will become a real job. It may be a little more subjective than the CFA, Chartered Financial Analyst course of study, but in demand.

The WEF and Klaus Schwab are at the forefront and deservedly so. They are brilliant marketers and fundraisers. Do those skills transfer easily to running a world bureaucracy? Have they learned all there is to know from the failure of the European Union bureaucracy? Jordan Peterson recently asked an interesting question on Twitter: “Who the hell is Klaus Schwab anyway other than a conference organizer?

In the short run, maybe as long as 20 years, the elite will be enriched and the others will be impoverished, or at least their upward mobility will be limited. The USSR lasted 70 years and was an abject failure throughout its existence.

Facts and reason will disappear in favour of expert opinion.

The idea of trying many things and keeping only the successful will disappear in favour of command and control.

The thoughts to take away

Value(s) are luxury goods funded by Value.

There is no objective evidence you can have an emphasis on value(s) without diminishing value. Perhaps it is possible but so far there is no evidence. Who is accumulating that evidence and who is challenging it? What happens if “Value” falls precipitously?

The decision becomes can you achieve more “value(s)” with fewer resources? Alternatively, do you believe in something for nothing?

From what we can see from The World Economic Forum, a leader in the field, the development will be through the guidance of a global elite directorate composed of academic, government, and business leaders. Has central planning ever produced benefits for the masses?

What are the logistics and how is “value” allocated in the process? Essentially, “How is that supposed to happen?”

The idea of ESG is compelling only so long as you look at the perceived advantages.

How should you invest now? What parameters still have meaning? Your decisions will include more risk than you have been accustomed to.

Do you value prefer process or outcome?

It won’t be easy or conflict-free. Be ready.

As a personal goal, should you try to become one of the elites or one of the resistors?

Watch for the cue words – sustainability, stakeholders, value(s.)


I build strategic, fact-based estate and income plans. The plans identify alternate ways to achieve spending and estate distribution goals. In the past, I have been a planner with a large insurance, employee benefits, and investment agency, 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. I have appeared on more than 100 television shows on financial planning. I have presented to organizations as varied as the Canadian Bar Association, The Ontario Institute of Chartered Accountants, The Ontario Ministry of Agriculture and Food, and Banks – from CIBC to the Business Development Bank.

Be in touch at 705-927-4770 or by email at don.shaughnessy@gmail.com.

Are Crypto Coins Money?


I suppose the answer will depend on what money is.

Why do we need money?

We sometimes think the barter system involves trading fresh salmon for deerskin coats or a bag of grain. That is a barter system, but so is ours; we trade money for what we want and trade our skills and efforts for money.

Why you use money

Money allows us to overcome the biggest defects in the barter system.

  • Money is easier to carry around than fresh salmon. –Convenience
  • Money lasts longer than fresh salmon — Store of Value
  • The person who has what I want might not want fresh salmon. – Medium of exchange
  • Nobody knows how much a fresh salmon is worth – Unit of account

Money saves us a lot of time and trouble whenever we need something.

How does crypto work as money?

First of all, each lives on a blockchain. Bitcoin and Ethereum and a few others have their own network and their crypto is called a coin. These coins are earned, mined is the term of art, and are restricted in number. Tokens are on someone else’s network, and value is assigned rather than earned. You should note that most permit infinite production. Their price changes as people buy and sell.

Coins are closer to money than tokens.

With some latitude about what the word means, they can be considered to provide a store of value. If we look at recent volatility, though, that option seems debatable.

They are pretty much useless as a unit of account. Even Tesla has stopped accepting them to pay for a car. Businesses like predictability, and if you buy a vehicle when Bitcoin is $68,000, Tesla will be disappointed when it drops to $37,000. It’s hard to be profitable when your unit of exchange has an unknown value.

Convenience – not so much. they are difficult to trade, and fees to exchange them (the gas) can be substantial.

They are, however, becoming a medium of exchange. It is unlikely the tokens will fit the idea of money, but some coins will. If they can develop ways for merchants to use their coins, they may prosper. From the 19,000 or so choices today, there will likely be fewer than 50 when it settles out. The trick will be to have a way to exchange the few that remain for each other. Much like the foreign exchange problem now.

The crypto market is not flat.

I have seen an estimate that 50% of Bitcoins are controlled by five entities. The whales. We have seen how the LUNA was manipulated into extinction recently. When the people involved are not evenly matched in terms of capital and knowledge, the smaller participants are at a considerable disadvantage.

Why do people choose to own crypto now?

I was thinking of using the word investing for a second there, but that is not what most people are doing. They are speculating. Hoping to find a buyer at a higher price. There is no certainty such a buyer will exist, and you cannot “earn-out” if one does not appear. There are no earnings.

The Future

It is challenging to see the intrinsic value of tokens. Coins that are native to their particular network have opportunities. As these few networks add services other than the coins themselves, we will begin to see the strength of the blockchain, and that will be exciting. There is the potential for a real business here.

For now, though, you have to believe you can sell at a higher price to make the purchase attractive.

Warren Buffett and Charlie Munger dealt with the issue recently. Buffett’s attitude was simple. If you offer him all the Bitcoin in the world for $25.00, he would refuse to write the cheque. This video is worth watching both with respect to Bitcoin and how he sees investing. It’s about seven minutes long.

He looks for his investments to produce lasting value.

The bits to take away

Crypto, especially the tokens, are speculative instruments. They are not and cannot be investments in the usual sense.

Investments involve the production of disposable cash flow from operations. No crypto situation does now, but a few have the opportunity.

For complete diversity your portfolio might wisely include a sliver of crypto.


I build strategic, fact-based estate and income plans. The plans identify alternate ways to achieve spending and estate distribution goals. In the past, I have been a planner with a large insurance, employee benefits, and investment agency, 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. I have appeared on more than 100 television shows on financial planning. I have presented to organizations as varied as the Canadian Bar Association, The Ontario Institute of Chartered Accountants, The Ontario Ministry of Agriculture and Food, and Banks – from CIBC to the Business Development Bank.

Be in touch at 705-927-4770 or by email at don.shaughnessy@gmail.com.

Where Developing Wealth and Wisdom Begins


Financial independence is a reasonable goal for many people.

  1. Some will far exceed the amount needed to ensure being able to live as they wish.
  2. Others will have just enough and will be forced to monitor spending and pay attention to their investments.
  3. Some will have too little and must develop coping skills.

As with all goals, outcomes vary.

What matters most?

There are many choices for an answer to that question. Almost as many as there are pundits on TV telling you what to do. None are very wrong, but they are a step ahead of where people should start. They assume context.

The place to begin is with the idea that there are many paths to your goal. It depends on time and the steps you take to achieve it. Those steps work better if you know how they tightly connect to your resources and goals.

Do the majority of people analyze those factors and make rational decisions? They do not.

Instinct and experience have created a hodge-podge of possible tactics. Some of which will work if conditions are right. None are universal. Objective assessment of skill is highly overrepresented in the list of important factors people think they possess. It’s the Lake Wobegon or the Dunning Kruger effect. There is a way around it though.

Simulating rational

People should discover their “organizing principle.” It could be wealth acquisition, personal growth, lifestyle, security, risk avoidance, or even random chance. Possibly each of them to some extent. It’s about luck if you don’t organize. You will be hard-pressed to find a casually developed plan with no random chance component.

You can work out many details without much trouble if you have a clear organizing principle.

It eventually adopts a 1964 song lyric created by Hal David and Bert Bacharach and performed by Dusty Springfield. It points out,

“Wishin’ and hopin’ and thinkin’ and prayin’
Plannin’ and dreamin’ each night of his charms
That won’t get you into his arms.”

The obvious answer that neutralizes random chance is noticing that wishin’, hopin’,prayin’, and dreamin’ are not organizing principles. They might provide some motivation, though, so don’t completely discard them. Plannin’ and Thinkin’ hold the possibility of success.

What to think about and plan around

There are many questions and answers to know. A few weeks ago, this article, Good Planning Is Not Automatic, covers them in some detail. Planning begins with identifying the playing field and the rules of the game.

As an introductory exercise, consider four questions

  1. Who am I?
  2. What do I want my life to mean?
  3. To get that, what financial and other resources will I need?
  4. When do I need it?

Those will help you focus on what you want and can do and simplifies life by quickly dismissing presentations that don’t fit. It  will also address priorities

“The difference between successful people and really successful people is that really successful people say no to almost everything.” Warren Buffett

Warren Buffett has clear and straightforward organizing principles.

You won’t get it all right initially, but if you keep thinking about organizing principles, you will speed up the development of your personal method.

The bits to take away

Dealing with problems in order smooths the path to success.

Without an organizing principle, anything can happen.

Randomness is not your friend.

Anticipation prevents unwelcome surprises.


I build strategic, fact-based estate and income plans. The plans identify alternate ways to achieve spending and estate distribution goals. In the past, I have been a planner with a large insurance, employee benefits, and investment agency, 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. I have appeared on more than 100 television shows on financial planning. I have presented to organizations as varied as the Canadian Bar Association, The Ontario Institute of Chartered Accountants, The Ontario Ministry of Agriculture and Food, and Banks – from CIBC to the Business Development Bank.

Be in touch at 705-927-4770 or by email at don.shaughnessy@gmail.com.

SMALL EXPENDITURES ARE HARD TO CONTEXTUALIZE.


Context is one of the key factors in financial planning. If you overlook the meaning of what you do within your own circumstances, it usually works out poorly.

Small purchases add up. Be careful.

In 2012 The Bank of Montreal reported that Canadians spend $3,720 per year on impulse purchases. That’s about $4,500 today.

That’s not so good for the savings plan, but possibly there are mental health benefits. Buying something just because you want it cheers up an otherwise bad day. Impulse buying individually may be among the least of the self-sabotaging financial behaviours, but that’s on a day-by-day basis. Over a year, it’s more serious. It adds up. A $600 a month raise would produce $4,500.

Which would be easier? Get a raise or reduce the spending.

Big once or small many times?

A 100-foot fall will kill me, but a 1-foot step repeated 100 times will have no noticeable effect. It’s the same with spending.

If I had to buy a Starbucks or Timmy card once a year, I would relate to coffee shops differently. When I spend $4.00 per day, I pay $1,460 per year. The money drifts away without much conscious thought or effort.

If I were required to spend $1,460 in a single transaction (the 100-foot fall), I would do without coffee shops.

It’s harder to see that context when all you see is the $4.00 bill.

The same thing happens with lottery tickets, cigarettes, magazines, movie downloads, chocolate bars, etc. Marketers have learned that people will spend a bit of money many times, far more easily than they will spend a large sum once.

Assess the opportunity

With respect to small repeated purchases, how much do you spend annually? The threshold for meaning is having decidable information.? It is different for each of us. Some of us don’t like to break a hundred-dollar bill. Others among us don’t want to break a quarter. Establishing your threshold of meaning and deciding what to do about it is essential to financial maturity. Spend some time and negotiate it with yourself.

People do not lose their money in a rush like water through a broken dam; they lose it like a leaky tap.

“How did you go bankrupt?”
Two ways. Gradually, then suddenly.” ― Ernest Hemingway, The Sun Also Rises

Rewards for behaviour

Maybe you need an incentive. Would it matter if you spend $4,500 a year now but decided to save it instead? Maybe. If we assume investment in tax-free savings account at 5% and further assume inflation at 2% annually, after 35 years, you get a surprising answer. $561,000! To be fair, it is only about $275,000 of today’s money. That’s more than enough today to buy a comfortable 2-bedroom condo in some parts of Florida. If you shop, there might be enough left over to buy a Lincoln to get back and forth

Economics and finance always involve tradeoffs. Coffee and other stuff traded for a winter vacation property at retirement. How hard is the choice?

Looking for leaks

It doesn’t take much effort to find the leaks. Once you know what they are, you can decide if you want to make a change.

  • What is a little thing, is (just) a little thing.
  • But to be faithful in a little thing
  • is a great thing.

Augustine of Hippo.

Not every little thing is obvious.

Check your life insurance and disability insurance premiums. (Except Universal Life.) If you “conveniently” pay them monthly, the insurer charges you a service fee and interest for that convenience. It is almost a month’s premium per year. Call your agent and pay annually.

How much credit card interest do you pay? Get a cheaper loan and be more careful with credit card purchases.

Easy money.


I build strategic, fact-based estate and income plans. The plans identify alternate ways to achieve spending and estate distribution goals. In the past, I have been a planner with a large insurance, employee benefits, and investment agency, 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. I have appeared on more than 100 television shows on financial planning. I have presented to organizations as varied as the Canadian Bar Association, The Ontario Institute of Chartered Accountants, The Ontario Ministry of Agriculture and Food, and Banks – from CIBC to the Business Development Bank.

Be in touch at 705-927-4770 or by email at don.shaughnessy@gmail.com.

DO-IT-YOURSELF Is Inefficient


Scottie Sheffler, Tiger Woods, Jack Nicklaus, and Dustin Johnson are golf polymaths. All are at least good at every aspect of golf and are excellent at many factors.

You need not be good or better at everything in life and business. Golf does not provide a good organizing model.

If you wanted to beat Nicklaus in his prime

Think what you would do if you wanted to beat any of them at golf. If you could organize the game, you would choose to use specialists for every condition you might face.

  • Who is the optimal person for driving? Accuracy plus distance tradeoffs.
  • Best putter in close and from a distance.
  • Trouble players. Rough and sand specialists.
  • Approach shot specialists, maybe sorted by distance.
  • Short game.
  • And a psychologist.

You become the strategist/leader of a large, specialized team. You know you would win against the best. Maybe not win every time, but winning would be the way to bet.

One-dimensional businesses don’t work.

Why do we insist on doing so many things ourselves, both in our lives and our businesses? Even things we know too little about.

In the beginning, you may not be able to afford the specialists, but don’t get into the do-it-yourself habit. Discover the mix of the doer and the strategic leader for your circumstances.

Do-It-Yourself is a trap.

It is leftover from our agricultural heritage where a successful farmer had to be able to do most of the tasks himself because experts were not close. That is not how it is in our interconnected world.

You should not prepare your own will, do your own tax return, prepare your own financial plan, invest by yourself, or perform a root canal on a molar. Funny how the plan, the will and the investments are okay, but the root canal isn’t. Do you think the others are easier, or it won’t hurt if you make a mistake? You might want to think about that.

Charlie Brown knows, ‘Stupid should hurt.”

There would be some yelping in Washington, Ottawa, and most other world capitals if it did.

We must face the fact that as technology and methods change, our experience becomes obsolete. Several years ago, a mechanic told me that I should not touch anything under the hood of my car unless it were liquid. No more Saturday morning mechanic.

“In times of great change, experience will become your worst enemy.” J. Paul Getty

The bits to takeaway

Buy specialty skills. It’s cheaper. Notice you will not become good at the things you do only a few times.

Hire people to do things you can do if it frees up time to do the things you are best at doing.

Time is the critical resource.


I build strategic, fact-based estate and income plans. The plans identify alternate ways to achieve spending and estate distribution goals. In the past, I have been a planner with a large insurance, employee benefits, and investment agency, 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. I have appeared on more than 100 television shows on financial planning. I have presented to organizations as varied as the Canadian Bar Association, The Ontario Institute of Chartered Accountants, The Ontario Ministry of Agriculture and Food, and Banks – from CIBC to the Business Development Bank.

Be in touch at 705-927-4770 or by email at don.shaughnessy@gmail.com.

Whose Money Do You Borrow?


Dumb question, right? It could be anyone. The banks, mortgage lenders, car finance companies, and maybe even the mafia.

Surprise! Those are not who you borrow from. They are intermediaries. You borrow from your future self.

Have you consulted your future self to see if they’re okay with the decision?

Maybe they will be okay.

Borrowing today reduces your Available income in the future. Sometimes your future self might go along with your plan, and other times, maybe not.

What would be the difference? The answer is obvious. Some debt doesn’t harm your future self, and other debt does. You really should know the difference now.

Your future self would prefer that you know the difference.

Some debt doesn’t hurt; other debt does. If the income or cost-saving resulting from the purchase is enough o pay the loan, there is no harm if circumstances don’t change.

Assets you acquire with debt that provide income above the cost to service the loan seem reasonable. Borrowing at 3% and investing at 10% seems sensible.

Other loans acquire assets that reduce costs that you would face otherwise. A careful comparison of rental accommodation versus home-ownership is sometimes rationalized this way. That comparison frequently is flawed because the comparison does not compare identical situations. Owning a home creates all sorts of additional costs. Municipal taxes, repairs, maintenance, added insurance costs, and at least some of heat, hydro, and water. Add to that your own time commitment. Shovel snow, rake leaves, plant flowers, and mow the lawn. Then there is the issue of size and amenities. No one moves from an 800-square-foot two-bedroom apartment into an equivalent house. Unexamined lifestyle improvements have financial consequences.

The same approach applies to car purchases and leases, even smartphones. Your future self wants value, and it takes effort to be sure they get it.

Student loans are a common failing here. If the loan won’t pay for itself with excess earnings, why do it?

Let’s suppose

As a couple, you make $125,000 per year. After taxes and other charges are taken from you, your spending money is around $90,000. Less if there is an employer pension or if you pay for group insurance.

Let’s further suppose you pay $2,000 in monthly rent with no other charges. You also save $2,000 a month towards a house purchase. That leaves $3,200 for cars, food, clothing, entertainment, travel, cell phone service, cable TV, and internet. How much could you pay monthly on a mortgage and not affect the $3,200 cost of living? Some people say $4,000, rent plus savings. That is clearly wrong. It is, at best, $4,000 less municipal taxes, $400, heat hydro and water, at least $500, additional insurance at least 100, plus repairs and maintenance, at least $250, leaving $2,750 for the mortgage.

If you have saved 20% of the purchase price and can pay $2,750 on the mortgage, then you could buy a home today with a 5-year, 4% mortgage at $500,000, leading to a price of $625,000. You would need quite a bit more to furnish it and pay closing costs. Think about $25,000 more, at least. I don’t know where you live, but $625,000 here buys a serviceable but not a fancy house. You could look for yourself. Peterborough MLS. Be sure your expectations are under control.

Let’s check in with your future self. 

Five years later, mortgage rates are 7%, and house prices have not gone up. You don’t have any emergency funds, and the roof is starting to look worn. Maybe the furnace too.

All the monthly costs have gone up, especially energy. You paid $120,000 off the mortgage, but the payment goes up to $2,900 when it renews at 7%.

Your future self might not be panicked, but they are restless.

You will be stressed. It is hard to see how you are getting ahead. It isn’t big problems that cause family catastrophes; it is little persistent ones. Having too little money each month is like a stone in your shoe on a long hike. Future self doesn’t like the commitment.

You, of course, argue your income will go up over those five years, and it likely will. But enough to get out from under the monthly burden?

Maybe, but not for sure. Any other plans like having children, or savings for another purpose, seem beyond reasonable. Perhaps a little more thought would have avoided the problem. Be sure your life vision is considered before committing to something at the border of what you can do easily.

The bits to take away.

If you want to use debt to improve your life and the numbers work, you should carefully consider it.

If your future self looks at you with the evil eye, give it up now. They are looking at risk. Higher interest rates, new expenses, lost jobs. Stress minimizes life.

Talk to people who have “been there.” They know about the future self idea.

You borrow from the wealth your future self provides. Debt requires a share of future income. How much of that do you want to offer?

Be sure you understand non-productive debt. Some debt is both productive and non-productive. Too much house, car, or too costly an education for the income expected all fit there.

Steve Burns understands non-productive debt.

“Debt is nothing more than impatience expressed in money.”


I build strategic, fact-based estate and income plans. The plans identify alternate ways to achieve spending and estate distribution goals. In the past, I have been a planner with a large insurance, employee benefits, and investment agency, 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. I have appeared on more than 100 television shows on financial planning. I have presented to organizations as varied as the Canadian Bar Association, The Ontario Institute of Chartered Accountants, The Ontario Ministry of Agriculture and Food, and Banks – from CIBC to the Business Development Bank.

Be in touch at 705-927-4770 or by email at don.shaughnessy@gmail.com.

What Does “Value” Mean?


The examination of value leads us to conclude that it is not a single number, and depending on what you consider, it can be quite challenging to assess.

What is the value of a cup of coffee at Starbucks?

Clearly, my value as a customer is different from Starbucks’ value as a provider.

My value is situational. If I am with a friend, I get the coffee, the cream, the cup, and the lid, but I also get the ambiance and the company. Maybe I would pay $5.00.

Starbucks sees coffee, lid, cup, cream, and sugar. Their cost for those is likely somewhere in the $0.40 range. Additionally, they must recover the cost of the baristas, the space, the electricity, the equipment, and all the other overhead. Some of those are fixed, like rent, and on a  per cup basis that depends on how cups many they sell. Additional costs may vary directly with the number of units sold.

All things considered, they might value the coffee at $2.00

So at any price between $2 and $5, we will both be happy with the price.

Price and value are not the same, and we make a mistake when we assess them as equivalent.

Understanding different values.

Economists and philosophers have argued for millennia about value. Why is gold per ounce worth more than water? We need water, and situationally it can be precious. A thirsty hiker in the desert would pay more than someone sitting beside a good well.

Parachutes would be more valuable on a crashing airplane than on the ground.

Value depends on how the thing will be used, and that price is independent of the cost the provider must incur. We each have a value judgement that depends on our own circumstances.

Some things don’t depend on their use for value. Gold is an example. It has value in exchange, like a currency, or it has value to store its value for a long time. Its price will vary depending on how people see the need for predictable value.

So the philosopher’s question.

What is the intrinsic value of something? And, if there is such a thing, how do you calculate it?

Those questions tend to be unresolved. Marx and others argue it is the value of labour that matters. That was likely more reasonable 200 years ago. How do you value intellectual property that runs robots that replace labour? The object produced has value in use to a consumer that may be quite high. How do you allocate the price to what’s involved with creating it?

That allocation seems to be the source of conflict. If all value depends on the use of the product, the customer side, the cost to acquire the money to pay for it, also the customer side, and the cost to produce it, the vendor side, how can we come up with a value that is Universal?

Answer: You can’t.

Prices are prices. You decide to buy based on your value for the object being higher than the price, and vendors provide based on the price being higher than their costs.

The bits to take away

Price does not necessarily provide an idea of value unless you consider all the possibilities for use and consequences. Absent more information, factory second parachutes must have a very low price before anyone would use one.

Cheap is a price idea, not a value idea. Buying based on price often leads to too little value received. Cheap is expensive, connects the two ideas but not enough to assess a universal value.

Think value before you assess the price. Sometimes the money is not worth much.

Think about your cost to have money. If the green fees for a round of golf require that you work for half a day to get the money, is that a good value exchange for you. Sometimes the price disguises the cost. Dollars in your pocket hide the effort you had to use to get them.

Cost, which includes price and more, is the thing you exchange for value. Work out the factors included before assessing whether the price suits you. When you think about value first, you don’t fall into this trap.

There is hardly anything in the world that some man cannot make a little worse and sell a little cheaper, and the people who consider price only are this man’s lawful prey.” John Ruskin


I build strategic, fact-based estate and income plans. The plans identify alternate ways to achieve spending and estate distribution goals. In the past, I have been a planner with a large insurance, employee benefits, and investment agency, 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. I have appeared on more than 100 television shows on financial planning. I have presented to organizations as varied as the Canadian Bar Association, The Ontario Institute of Chartered Accountants, The Ontario Ministry of Agriculture and Food, and Banks – from CIBC to the Business Development Bank.

Be in touch at 705-927-4770 or by email at don.shaughnessy@gmail.com.

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