Notice Your Local Charities

The Covid 19 virus is affecting more than restaurants and bars. Many charities are in trouble too.

While the current estimate is 25% of restaurants will not reopen, I have seen nothing about the survival of charities. You might want to give that some thought.

Why we need charities

For the last few generations governments have taken over much of what was once done by people. Ninety years ago, during the depression, almost no one went hungry for long. I recall my grandparents talking about neighbours who had trouble and how the others helped out. No doubt, not a perfect answer, but it worked. Governments can’t work effectively at the micro level and are very costly to run. They are fine for big programs like Employment Insurance, but they don’t address the fine detail very well.

Charities can be both huge and bureaucratic, or small, responsive, and local. While I can appreciate the work the Red Cross does, I find the neighbourhood food bank adds value too. I sometimes wonder if charities reach a point where they need a disease or disaster to justify their continued existence and therefore try less hard to fix their assigned problem. Certainly government departments tasked with a particular challenge work as hard to make the problem relevant as they work at solving it.

On of my eartly employers pointed out that people will seldom solve a problem if they are harmed by the solution.

That happens less often with local charities.

The action plan

Examine the charities you are involved with or support, and see how you can help them recover from the financial crisis. Fewer people go to church just now, so donations are way down. Maybe the local animal shelter has more rescued pets than usual. That costs.

I am sure many others have the same issues.

See what you can do to help yur local services. You would miss them if they disappear.

I help people understand and manage risk and other financial issues. To help them achieve and exceed their goals, I use tax efficiencies and design advantages. The result: more security, more efficient income, larger and more liquid estates.

Please be in touch if I can help you. 705-927-4770

Think About Estate Planning In A Productive Way

Many of us will remember a song from childhood.. “Dem Bones.” The melody was composed by James and Rosamond Johnson and it was first recorded by Myers Jubilee Singers in 1928.

Toe bone connected to the foot bone

Foot bone connected to the heel bone

Heel bone connected to the ankle bone

Ankle bone connected to the shin bone

Shin bone connected to the knee bone,

and so on

Your estate plan is the same.

Everything conects and makes a coherent whole.

That’s why you must start it earlier and recognize your asset accumulation plan, your retirement spending plan, your tax plan, your asset management plan following the first death, and the eventual estate distribution are all part of a whole.

If you manage them one at a time, you will get inadequate answers.

Your estate plan should begin now and it should aim at addressing all of the financial sectors of your life.

What happens if you don’t?

You will miss things you could have used to your advantage.

  1. Most people look at estate costs like taxes, probate costs, equalization, and distribution, as separated from their retirement plan. Some things they could have done while living would have minimzed the liabilities arising at death.
  2. Other things they might have done would have reduced the price to have the cash available to meet the remaining amounts.
  3. Still others might have made spending money available cheaper. Notice the difference between cash to spend and income.
  4. Complex assets like rental real estate and businesses need management. Between the first and second death there could be a deficiency. Know how succession works.
  5. People organize their affairs according to conventional wisdom about asset mixes and volatility as it applies to older people. If you have assets that will never be used by you while living, they should be managed on parameters related to the heirs’ position.
  6. Some legacies can transfer much earlier than people think. There are ways to protect both you and the heir.
  7. Some money is good in an estate and some other money is not. Smart people spend bad money before good money. A variation of Greshem’s law.
  8. Never overlook how you handle your charitable ideas. Careful planning can magnify the gifts and reduce taxes all in one package.
  9. Watch the form of your assets. Some assets are indivisible. You cannot tear off 8 apartments from your 24 unit apartment building to pay taxes.
  10. There are cost minimizing tools that most people miss. How many valid wills do you have. If only one, you might want to revisit your asset list.
  11. Eventually you should create a pro forma probate just to see what would happen if you did nothing.

Most people think an estate plan is a plan that covers the orderly payment of amounts due at death and an equitable transfer of the remains to chosen heirs. Some are. Few should be.

It’s not even that simple

Learn about fungible. The costs and delays from poor planning often don’t wreck an estate, but not understanding fungible can wreck a family.

Fungible means having the form that another identical asset can be substituted. For example, $50,000 in an account at bank A is exactly the same as $50,000 in bank B. But, Mom’s watch, the painting over the fireplace in the family room, and granddad’s watch are not fungible. Neither is the home, the cottage, or the business. Non-fungible assets often have emotional hooks that cause rifts in the family.

Some assets are not divisible. Sometimes there is a significant problem to equalize shares. You must know how that will happen.

Even when the dollar value of each legacy is equal, great division can arise.. Be sure you know about the connections to specific assets and deal with them while living. You have a hope of solving the problems, your executors probably cannot.

Speaking of executors, beware of appointing people who don’t know what to do. It is always a mess when the estate lawyer does all the work and the executors just sign paper. Executorship is not an idiot-proof calling.


All of the assets you have now and all of the assets you acquire will end up in one of three pots.

  1. You will spend them to enjoy your life
  2. You will give them or leave them to others
  3. You will lose them

Can we agree that losing is not the best way to go?

Think about it and notice what you can do now to make the whole package work better for everyone involved.

I help people understand and manage risk and other financial issues. To help them achieve and exceed their goals, I use tax efficiencies and design advantages. The result: more security, more efficient income, larger and more liquid estates.

Please be in touch if I can help you. 705-927-4770

When Planning Works Best

Short term plans like annual cash flow budgets are good, even necessary, but they are not very motivating. Because they are discrete.

Connecting them to a longer vision of your personal future will connect the results to a long benefit. That’s motivating.

Directionally accurate

People sometimes become discouraged when they try something and it doesn’t work out as they expected. Without a long term vision and purpose that may be the end of trying things, some of which would have worked.

When you have a general idea of what you are trying to accomplish, vision, everything you try will have value.

  • Things that work move you toward your destination.
  • Things that do not work show defects in the method chosen. The next time you visit the purpose, you will be better at it.

Things that don’t work but move you in the right direction are good for you, but without the idea of where you are going, you can easily miss the lesson.

Perfection is an impossible goal

The context of the goal changes. You have to gradually modify your approach. Green Bay Packers dynasty of the 1960s coach Vince Lombardi had it figured out:

“Perfection is not attainable. But if we chase perfection, we can catch excellence.”

Excellent is an acceptable answer to any problem in life.

The takeaway

  • Planning with no long vision or purpose is too hard.
  • Context matters and it changes. You must adapt as you go.
  • Mistakes help you improve.
  • Your vision must include why you have chosen it. Your why is motivating.
  • Direction matters more than the place you are or the speed with which you are moving.

I help people understand and manage risk and other financial issues. To help them achieve and exceed their goals, I use tax efficiencies and design advantages. The result: more security, more efficient income, larger and more liquid estates.

Please be in touch if I can help you. 705-927-4770

The Ages of Reason

There are three ways to deal with the world. Two of them were expressed by George Bernard Shaw in “Back to Methuselah.” The serpent speaking to Eve.

“You see things; and you say, ‘Why?’ But I dream things that never were; and I say, ‘Why not?’”

Why is the learner mode and according to creativity guru Edward DeBono it is expressed by children up to about age four. Anyone who has spent much time with children that age will recognize “The Age of Why.” It’s the time for acquiring information that exists.

“The Age of Why Not?” is the creative mode. It is another stage of learning and according to DeBono lasts up to about age ten. It is creative. It is the joining together of things found with why and discovering new structures and possibilities.

Why not put the wheelbarrow wheel between the load and the handles. It would be easier to turn corners and when you tip it up you could weigh the load. A type 1 lever versus a type 2 lever for those who paid attention to answers during the why questions. “Why not” is a very useful advantage as an adult, but it disappears early in life.

The third age is “The Age of Because” and for many, lasts for the rest of their life. “The Age of Because” includes two important and unexpressed assumptions.

  1. We know everything we need to know.
  2. Nothing changes

I am amazed that anyone over about age twenty has failed to notice that both of those assumptions are wrong and accordingly over-applying “Because” is wrong.

Encouraging everyone to stay in the “Age of Why Not”

Staying there is more a matter of mindset than it is of skill. If you are looking for new things or new connections between familiar things, it is instinctive. Curiosity takes you back to Why and it can then put the “why not” into perspective.

Do you think Netflix founders, Marc Randolph and Reed Hastings ever said “Movies must be seen in a theatre or on a DVD because nothing else could work?” Apparently not.

The internet has opened up all kinds of things that could have been defeated by because. Because was inappropriate because the method had changed and all of the possibilities had not been discovered.

The takeaway

We limit ourselves when we use some why answers to describe ourselves. Your answers to why you are not good at math are almost always false. The truth according to Paulo Coelho, “There is only one thing that makes a dream impossible to achieve: the fear of failure.”

Why not is the most fun of the three ages. Spend more time there. You will be surprised at how many things appear in your mind and are workable. When they are not, you learn something. “It’s kind of fun to do the impossible.” – Walt Disney

People are more often wrong when they say something can’t be done than when they say it can.

Try it.

I help people understand and manage risk and other financial issues. To help them achieve and exceed their goals, I use tax efficiencies and design advantages. The result: more security, more efficient income, larger and more liquid estates.

Please be in touch if I can help you. 705-927-4770

Understanding Causes and How You Connect

Why climate change matters for most people.

The science is clearly uncertain as to the cause and the time scale is in centuries, at a minimum several decades. The information available is more opinion than fact. It has been my experience when facts exist scientists agree.

In simple terms, we have no idea if it is a problem or a blessing. It likely won’t affect us in half a century and by the time it does resourceful humanity will have accomodated it.

Given then that climate change could be an issue but no one knows enough to devise a plan to address it productively, we must wonder why so many, especially young people, are passionate about it.

The answer is it is part of group identity. In the simplest possible way, it is fashionable. You can avoid building your own self vision while committed elsewhere.

It is a costly waste of time for many

When you are young there are important things to solve for yourself. When you have solved those you can assess the groups to whom you wish to offer your energy. There will be some and you will know yourself and what you want and need, you can do a better job of promoting the things you see to be important.

I think Jonathan Kozol sums up activisim best.

“Pick battles big enough to matter and small enough to win”

There are a great many battles big enough to matter and climate change may well be among them, but from the individual’s position, they are not small enough to win. The large group is made up of many poorly informed and emotional people lead by better informed demagogues who can benefit from the movement. Their job will be to keep the movement alive, possibly even past the point of a solution.

When you understand yourself, and you must eventually, you can judge how solved a problem must be before you can devote energy elsewhere. Would 50% solved but on a clear course to better from there, but maybe over a few decades, count as substantially solved. As you age you are willing to live with less than perfect solutions. Better and getting better still matters.

Some problems are essentially solved

That does not mean we should ignore them but it does mean that we should watch for people who are prolonging the emotion despite evidence to the contrary. There are hustlers in every cause. They cannot afford to see the problem solved.

Like poverty. Poverty is hard to define because it is relative. Someone living on the upper east side of Manhattan would be poor if they made $200,000 per year. Someone in the slums of Calcutta would be wealthy if they made $2,000. If there was an objective measure of the poverty you wished to eliminate you would be well on the way to solving.

If we used a simple metric we could do that. The standard for that seems to be having less than $1.25 per day to live on. By that standard, there are few poor in the world. In fact over the last 50 years the number thus afflicted has dropped from 60% of the world’s popuplation to less than 10%. Clearly there is progress.

It would make sense to understand the drivers inherent in that gain. It is not donations, although they help. It is structural. Access to markets, better infrastructure, more accessible education, better medical care and medicine.

Like race relations I am old enough to remember the disappointing behaviour of my fellow earthlings in the 1950s and 1960s. If 20% of that behaviour survived, there would be an uproar. The problem is on the way to solution if the people who benefit from the cause would let it solve.

You can tell when a problem is mostly solved by how people measure. It was easy to measure racism in 1960. Now people talk about subtle and unmeasurable metrics. “Systemic racism” makes no sense in practice. Neither does subconscious racism. A rational person measures behaviour not what is in a person’s mind.

You can guide behaviour, you can’t guide subconscious beliefs. Over time those will conform to what works.

Like unions Do unions make sense today. Maybe, but the case is unclear. You have to believe employers are dumb enough to create a poor work environment. In the competitive world we live in, those employers would disappear fairly quickly. Today most of the problems unions rightfully dealt with in 1890 have long since been solved.

In 1954, managment professor, Peter Drucker, pointed out that unions had largely fulfilled their reasonable purpose and if they were to survive they would have to politicize. And they did. Do you think education would improve quickly if it was a market thing instead of a tight bureaucratic partnership between governments and teachers’ unions denying competition?

How about police unions that protect all their members equally, even thosethey know should be dismissed, even prosecuted.

I know a union person responsible for dealing with member complaints. In a factory with 4,000 employees he estimates that 80% of the complaints would go away if 50 members left. That inefficiency makes employers less competitive and as processes change towards robotics, how many of the other 3,950 will be unemployed someday?

There are others

Organized religion, the industrial military partnership, party politics, and people who rely on equal outcomes as measure of validity.

“Cui bono” is a legal term. Be alert for who benefits

The takeaway.

“Society exists only as a mental concept; in the real world there are only individuals.” Charley Reese

Know who you are and know what works before you get caught up in group think.

Know how the system we live within is constructed and why. Hint: It evolves to optimize satisfaction.

Focus on what can work, not just the ideal.

Group identity is often a way for people to procrastinate about building their own identity.

Every great cause has leaders who benefit from it’s continuance. Understand their business model.

Mark Twain has pointed out a useful option.

“Whenever you find yourself on the side of the majority, it is time to pause and reflect.”

PS: I am thinking about using Designrr to create some e-books. If you have experience with it, I would appreciate your input.

I help people understand and manage risk and other financial issues. To help them achieve and exceed their goals, I use tax efficiencies and design advantages. The result: more security, more efficient income, larger and more liquid estates.

Please be in touch if I can help you. 705-927-4770

In Society Order Is Better Than Chaos

I read an interesting article on the weekend. The Chinese Philosopher Who Explained “Spontaneous Order” 2,000 years before Adam Smith

In  science, the idea of entropy is strong. Entropy, the tendency to disorder increases in closed systems until there is not enough orderly energy to produce an effect. Biological systems seem to be entropic too. We age. But social systems seem to be unaffected. In fact, left to their own devices they become more orderly with time.

Adam Smith talked about how economies become more fficient as they mature. I suppose it is becasue the people who participate are sentient and they discover what works and what doesn’t and do more of what does. Spontaneous order.

“Spontaneous order” is the idea that order emerges as result of the voluntary activities of individuals and not one which is created by a government. Order adpats to its surroundies and changes as they change. Government edicts tend to be too slow to arrive, poorly attached ot the situation, and last too long. That slows down the change towards order.

There will be other factors than government that dely the growth and COVID-19 is one such. In society, not everything bad is the fault of government action. Left alone though, society adapts in time and the resulting structure is stronger than its predecessor.

The article includes and inteesting grpahic about world GDP from year zero to 2015. The early grwoth say year zero to 1500 is neglible. Less than 0.06% annually. About what a bank savings account pays today. After 1500 the growth rate accelerated. From 1500 to 1820 the growth rate averaged 0.32%. from 1820 to 1913 about 1.2%. from 1913 to 1954 around 2.1%, and from 1954 to 2015 a little over 4.5%

Why does it happen and What does it mean 

Why it happens is not so hard to discover. There are three drivers.

  1. Larger networks have more capability and society as a whole is just a big netwrok with interacting pieces. The spontaneous order posits that it will self optimize.
  2. Better communication ties the netwrok together more strongly. We can share more easily.
  3. As wealth grows more things are possible. Wealth permiots infrastructure investments and research. More effective application of resources makes wealth easier to grow. While a reference library in 1954 was a wonderful thing compared to what came before, for access to information, it pales in comparison to the internet. (Assuming you ignore News outlets, Twitter, Facebook, and the like)

It means prosperity will continue to grow.

  1. Accumulated prosperity and the rate of increase will both grow.
  2. Effortless wealth never existed and that will remain true. In fact as the complexity of the network grows, accumulated wealth will be the differentiating factor. In simple terms we all will become wealthier but we can expect the rich to become richer still and at a faster rate. Politically that will be unpalatable because envy is a very cheap emotion. Except for politicians who use it for their own agenda, there is no payback for envy. While that will harm the growth rate, it will not make it stop. Just slow it.
  3. Skill and insight will have greater value because the opportunities will be more subtle. It didn’t take much vision to know that railroads, canals, highways, and bridges would create wealth. Today, noticing how people connect has value and applications like Zoom are analagous to the bridges of the 1930s and 40s. Think about information traffic and flow instead of physical goods.
  4. Things like articial intelligence, machine learning, and fast prototyping, the ability to turn ideas into products quicker, will provide a boost.
  5. The global birth rate will shrink because poverty requires having many children because some don’t live. Infant mortality is falling and is a fraction of what it was a hundred years ago. Family planning methods are more relaible now than they were. Eventually the total population will flatten. Predicted to be around 10 billion people up from 7.6 billion now.
  6. We will each be wealthier than we are now, but not equally wealthy. A political problem. I wonder if anyone knows how many super rich we need to drive innvoation? You need super-rich because innovation is error prone. I hope someone is looking at that. Failing which, politics will overcome common sense and the market effect. Nature abhors a vaccum and a thought vacuum is abhorred most of all.

The takeaway.

The world wants to be orderly and we can make thate asier or harder depnding on how we apply decisions. Having mor einsight will help us make better decisions.

Societal entropy like we are seeing in the United Sates is not our friend.

I help people understand and manage risk and other financial issues. To help them achieve and exceed their goals, I use tax efficiencies and design advantages. The result: more security, more efficient income, larger and more liquid estates.

Please be in touch if I can help you. 705-927-4770

From The Other Side

Charlie Munger invokes mathematician Carl Jakobi often. His thought, “Invert, always invert” is valuable for thinking about situations. Sometimes you must look at the negative side of the image. It’s like those images where you cannot see one part because you have focussed on one aspect. I have trouble with the Batman logo.

Daniel Kahneman has pointed out how inverting works. “You can’t study how people remember, but you can study how they forget.”

Seeing both sides helps.

For example:

“You can’t expect to win unless you know why you lose.” Benjamin Lipson

Avoiding loss is often easier than finding a way to win. When you know of the risks and potential negatives, you build a field where success is more probable. Success is never certaint no matter how well you prepare, but playing a game where the odds are more in your favour helps.

Avoiding stupidity is profitable. The trick is to know what’s stupid. A little depth and observing the dark side helps.

Avoiding the errors

  1. Like a trial lawyer know the opponent’s case. In this case the opponent is the world you find yourself in. What does it reward? What does it punish? How long does it take for actions to produce outcomes?
  2. Preparation involves acquiring some special skills. Like becoming an electrical engineer, or a doctor, or a plumber, or a teacher.
  3. Preparation also involves acquiring some general skills. The ability to listen, to write, to do research, to have a wide knowledge space, to be curious, to be cheerful. There are many and the courses are not online. General skills are those that allow you to be the intermediary between specialists and the regular folks. A translator of sorts.
  4. Patience. Few things that are complex happen in a few days. If a farmer planted a field of corn and then demanded it mature in a week, we would think him insane. All skill building decisions have a time element. The important ones are never finished.
  5. Beware the Dunning-Kruger effect. Graham Savill offered this image. There is always more to learn.

There is a story that someone noticed Pablo Casals practicing cello at age 83. He was asked why the most capable cellist ever would spend 4 to 5 hours a day practicing? His reply, “Because I think I am making progress.”

The Takeaway

If it is a complex field, you will never stop learning. Acquire the skills to be a good student and never stop using them.

I help people understand and manage risk and other financial issues. To help them achieve and exceed their goals, I use tax efficiencies and design advantages. The result: more security, more efficient income, larger and more liquid estates.

Please be in touch if I can help you. 705-927-4770

Half Of All Effort Is Wasted

Years ago I dealt with a marketing specialist with one of the big consulting firms. It had to do with getting more value from advertising.

My client was of the opinion that half the money he spent on advertising was wasted and the consultant readily agreed.

The conversation went like this”

“Half the money is wasted, but there are other matters to consider:

  1. We don’t know which half.
  2. It is not the same half all the time
  3. It is not the same half for every demographic or location.
  4. It will be different next month and different again next year.
  5. It costs a lot to do testing to make it materially better”

I think we could agree that the points make sense. Do your best and elarn as you go. Quit the dumb stuff and move on with better information.

The half wasted rule applies to more than advertising

How about research and development? Many businesses would be happy to find only half of this was wasted. There are other advantages even when it is wasted. The serendipity effect applies once in a while. Sometimes when you are doing research to solve problem A you find things happening that give you insight into something you had never considered before.

Vulcanized rubber, penicillin, the glue for Post-It Notes, Teflon, corn flakes, and silly putty to name a few.

Every mistake contains a lesson.

What is the important part?

Not everything is deterministic. If you set out to go from A to B, you will likely get there if you know where B is and you have a method to get there. Research doesn’t work like that. You have a vague idea where B is, maybe, and you develop tools as you go. When you come to the end you may find B is disappointing but there was something odd happening back at step 39.

The important part is noticing the unexpected. It has been said that the sound of a breakthrough in the lab is “Hmmm, that’s funny.”

The steps to success in research and innovation.

Not all research is scientific.

Dating is a way to discover things and it doesn’t always turn out as expected. The idea is to be willing to try things and see what happenns and learn from that. By definition new techniques have not been tried before.

If you stick to what is known, you cannot have innovation but by accident.  Be willing to be wrong. On purpose.

Be curious about what you find.

Sometimes experience is of no value. You will seldom see anyone seeking an experienced suicide bomber.

If you want to go into new areas, you have to do so with the expectation most attempts will fail, but each one teaches you something. Sometimes just that it doesn’t work. You must learn that a particular failure doesn’t matter. It is the outcome that matters. Edison built over 1,000 incandescent light bulbs before he found one that would work and last.

Many successful business people had a bankruptcy in their resume. Henry Ford, Sam Walton, and Walt Disney among them. You cannot rely on the first try working and you cannot quit after one try. If the goal is worthy there will be many methods to ge tthere. You really have not failed until youe xperience all of them.

The Takeaway

Half of your effort is likely wasted. But you can’t tell which half and the half that is wasted may turn out valuable some other day or some other way.

Startegic vision is usually right, it is tactics that fail. You learn from that and choose better tactics or maybe invent better tactics.

Have strong values and work persistently at meeting those.

You’ll end up somewhere good.

I help people understand and manage risk and other financial issues. To help them achieve and exceed their goals, I use tax efficiencies and design advantages. The result: more security, more efficient income, larger and more liquid estates.

Please be in touch if I can help you. 705-927-4770

A Sunset To Remember

We moved to an apartment two months ago. I have learned a few things.

  1. You have far more “stuff” than you need.
  2. Other people will value some of it
  3. A smaller space is easier to look after
  4. It’s quieter than you think
  5. The dog won’t adapt immediately
  6. Rent an extra storage locker for a while
  7. The world will look different out the window

This picture was taken a few days ago at sunset. The white building you see is the grain storage part of Quaker Oats.

I am enjoying this life. I doubt I will miss clearing snow in the winter either. I think we hung on to the old life a bit too long. 

I help people understand and manage risk and other financial issues. To help them achieve and exceed their goals, I use tax efficiencies and design advantages. The result: more security, more efficient income, larger and more liquid estates.

Please be in touch if I can help you. 705-927-4770

Two Bad Things Can Make A Good Thing

Almost no one wants to own life insurance and at least as many do not want to own a life annuity. What if you own both?

Think Term Deposit

A term deposit is a collection of promises. The promise to return the capital some time in the future and the promise to pay small amounts regularly in the interim. The characteristics include financially strong issuer, a fixed term, and oppressive taxation. One of the problems is the uncertainty that exists beyond the end of the term.

People who own them are looking for the promise of money returned and some money at intervals in the interim.

An Alternative

Could I create the same thing with better tax treatment and no reinvestment risk. Answer – yes.

Recall a life annuity. Its fundamental is a large capital investment in the beginning and a series of monthly or annual receipts. Similar to the interest on a term deposit. BUT at death the capital is lost.

Consider a life insurance product. Guaranteed capital at death, with small payments in the interim. Exactly the opposite of an annuity.

If you have both, you pay money now and get it back at death. In the interim you get the annuity payments minus the insurance premiums. Does that not look alike a term deposit that matures at death?

Exactly. A promise of return of capital and a promise of regular payments in the interim.

The immediate problem.

With very low interest rates, it will not work for everyone. Annuities pay more when rates are higher, and life insurance costs less when they are higher. Not so good today.

It is worth testing in situations where a term deposit makes sense as an investment. The tax factors may make it better, but you cannot know without checking.

I help people understand and manage risk and other financial issues. To help them achieve and exceed their goals, I use tax efficiencies and design advantages. The result: more security, more efficient income, larger and more liquid estates.

Please be in touch if I can help you. 705-927-4770

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