Managing A Liability

Today mortgages are quite inexpensive by historic standards, or at least so they seem.  For most people organizing their home mortgage is among the more important decisions they will make.  Most people stop there and fail to find options that can be productive for them.

I happened to hear Richard Kyosaki (Rich Dad, Poor Dad) speaking recently.  His view is that your home is not an asset.  It is a liability because it costs money to keep it even when offset by the reasonable cost of living somewhere.  Obviously it is not a financial asset like a rental property, stock, or bond, but it has a certain  assetness about it.  While I do not fully agree with him, it leads to thinking. Particularly, how to manage the liability part of the program to reduce its cost.

Some things to think about:

  • The mortgage does not fall by 10% if the house value falls 10%.  The result is that you wipe out all your equity if the value falls far enough and you sell.  Be cautious in exposing yourself to the liability.  Do not overbuy.
  • The price to debt ratio may matter at renewal.  Especially if the rate is materially higher.  When doing your maximum affordable mortgage payment, consider what that might be if and when rates increase.
  • If you don’t need to move and you don’t worry about renewing, then the price of the house does not matter until you want to use its value for something.  Sale or security.
  • There are other financial instruments that can replace a conventional mortgage and some may be better for you.  Consider a hybrid mortgage where some is fixed and some floats.  If you have cash flow you can pay down the floating part  and re-borrow it as you need to do so.

In Canada, ManuLife Bank offers a program they call Manulife 1 that is even more sophisticated.  In that program, your fixed mortgage, floating mortgage or line of credit, your credit card and your bank account are all one for interest purposes.  As soon as a deposit hits the account, a loan that costs you money is immediately reduced.  The loan rises again as checks or internet payments are processed.  A few days of interest saved does not seem like much at first but it adds up quickly.

For people with chunky cash flows, this can save quite a considerable amount over several years.

If some of your loans are for investment and the interest is tax deductible, you will find the reporting quite easy.  The personal loans and investment loans are isolated.  That preserves deductibility and eases the reporting to the government.  Obviously you would like all payments to repay high cost debt before deductible debt.  Easy.

Should you reach the point where you have net cash on deposit, they pay an acceptable rate on your balance.  1.55% today.

They also offer US$ accounts and tax free savings accounts.

For many people, the account structure offers meaningful savings at no cost and little inconvenience.  You should consider it at renewal.  At a minimum it will provide useful information for negotiating with your current lender.

Don Shaughnessy is a retired partner in an international accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario.  |  Twitter @DonShaughnessy  |  Follow by email at moneyFYI


How boring is your job? Strangely even the most interesting and exciting jobs have boring parts. Often significantly large boring parts. What should we do about that as an employer and what should employees be doing about it?

How boring is it for Harrison Ford to learn the lines for movies like “Raiders of the Lost Ark” or “Star Wars?” Not to mention the 13th take of some difficult scene. How long does it take a popular recording artist to create a new album? Probably in both cases, the artist would prefer to work in a factory.

But they don’t. Because the payoff when the task is accomplished is bigger than the payoff for working in a factory. They have the motivation to do the tough work. Employees and students need to know the payoff.

It is not so obvious for employees, students and people who are building anything of consequence. Boring is an excuse. Boring is not something that ever goes away and it is harder to deal with while whining about it. Look for the result.

Most boring things are just intermediate steps to excellence in the things that matter. Students and employees usually cannot see a big enough picture to be able to integrate the material, but when it comes together they can see why they learned all the parts.

That is where employers and teachers and parents and coaches come in. They can help provide big picture visions that make the mundane useful. They can help people understand that everything fits. Everything matters. Attention to detail provides insight into the deeper aspects of the task and makes the person doing the task far more capable and satisfied.

Many years ago, an organizational psychologist told me that if people found 20% of the work they did stimulating they would rank their job as satisfying. Think about that. As an employer, do you think that an hour and a half per day of stimulating work would be a stretch goal? That should be easy. But, here is how you can fail at it.

  • Pay no attention to the work people do.
  • Never compliment them for extra effort.
  • Never provide training to expand their horizons.
  • Micromanage
  • Delegate poorly
  • Try to pay them the least possible
  • Never let them know how their work fits

Smart leaders do the opposite of all these instinctively. It is merely common sense. People can satisfy themselves but not for long. They need validation of their worth. They need to know how they contribute.

Satisfied people are easier to motivate. It is in every employer’s, teacher’s, and parent’s interest to figure this out. You don’t have to get it right all the time, just an hour or two per day.

It is not even especially difficult. Do a little more of the smart stuff and less of the dumb stuff.

Don Shaughnessy is a retired partner in an international accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario. | Twitter @DonShaughnessy | Follow by email at moneyFYI

Investing and Situational Awareness

Investing as a tool in a financial plan is not as simple as merely choosing to buy some fund or portfolio and then forget it.  It is more like the process that a baseball infielder goes through before every pitch.  What can happen and what should I do about it if it does.

Let’s suppose I play shortstop.  There is a runner on first with one out.  What can I estimate about the future?  I know some things that are useful.

The batter is left handed and a decent hitter.  He likes to pull the ball so will tend to not hit the ball to me.  However, our pitcher is throwing hard and pitching him away so there is a good chance that if the ball is hit on the ground, it will be my way.  That probability changes with every pitch.  A low inside change up would almost never come to me.

The runner on first is very fast and I have agreed with the second baseman that I have the bag if he steals.  I am positioned to take advantage of the double play possibility and to cover the steal and to acknowledge that he likes to pull the ball.

If the ball is hit to me:

  • On the ground and hard, go to or toss to second base for the front of a double play.
  • On the ground soft, charge it and if able, toss to second but probably take the out at first.
  • Line drive check first base to see if the runner is back
  • Pop up.  Probably infield fly rule applies

If the ball is hit elsewhere:

  • Base hit to left or left center field.  Go to cutoff position.
  • Base hit to right, cover second base.
  • Hit to first, or second baseman, cover second base

And some more but in general I need to know what I am going to do before the event because that smooths my response and optimizes the outcome. 

Same with investments.

If the $US strengthens against the $C what parts of my portfolio need work.  Probably gold is falling and maybe oil prices.  Canadian manufacturing may be improving relatively.  What will bond rates do?

What if the $US weakens materially?  Bigger problems and fewer opportunities probably.  I need to set some of the portfolio as if this will happen.  Small share in precious metals or commodities maybe.

What happens when I don’t understand what is happening.  Like 2007 and early 2008.  That was what one of my fund manager friends calls a “Chicken Market.”  Bulls and bears are not the only animals represented in markets.  In a chicken market you get more liquid and wait until you do understand it.

The best fund managers are extremely sensitive to external events and actions.  In many cases they have a prepared script for their next move.  The idea is to control uncertainty by anticipating and understanding potential financial situations better than the others and acting on changes first.

Anticipate your next action before you need it. Especially watch for adverse events. Remember the rule. Avoid panic but if you must panic, panic first.

Everything might matter so good managers are curious and interested people.  Paying attention is a good habit to develop.

Don Shaughnessy is a retired partner in an international accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario.  |  Twitter @DonShaughnessy  |  Follow by email at moneyFYI

Procrastination Pays Off Now

In the military there is a maxim which says, “In the never-ending battle between warhead and armor, warhead wins.” There is a similar rule in financial planning. “In the never-ending battle between present self and future self, present self frequently wins.”

A recent edition of Investment Executive included a story about life insurance sales in Canada and it pointed out disturbing trends.

  • Households that own life insurance down to 68% from 79% in 2006.
  • New individual policies in 2012 down to 681,600 from 871,135 in 2002

Future selves of the world beware.

At the same time however, two other trends are of interest.

  • In 2012 the total face value of policies sold increased to $2.25 billion from $1.23 billion in 2002.
  • The number of advisers dropped by 15% over the same period

Present selves must become proactive. No one is chasing you any more.

A simple summary. Fewer people are buying much more insurance from fewer advisers.

What does that mean?

Some possibilities.

  • The number of advisers will continue to fall as the existing people retire or grow tired of infantile regulation
  • Few new people see the career as valuable.
  • With fewer advisers the incumbents will be fussy about who they deal with.
  • The people who are adequately informed by a skilled adviser, will buy amounts that reflect their needs.
  • The others, who have no adviser, will buy none.

The future selves of the unserved will suffer. The present self can easily avoid the unpleasant decision without an external conscience requiring that they do something about the obvious.

The universal rule of life. Action pays off tomorrow, procrastination pays off today. It has been ever thus. Try to balance.

Don Shaughnessy is a retired partner in an international accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario. | Twitter @DonShaughnessy | Follow by email at moneyFYI

Common Sense Investing

Investing is a difficult bit of work for most people. There are a huge number of variables some of which don’t matter all the time. Sometimes the most trivial connection results in massive change. Anticipating everything is impossible and properly weighing everything you do know is unlikely.

We face incomplete information and when we are honest with ourselves, we have trouble dealing with complete information. What to do?

Learn how to deal with complete information. That will require some study. Learning how to draw the nuance out of a financial statement is unlikely, but you can learn to dismiss the likely losers. That alone is a worthy skill.

For instance, I am aware of a very successful fund manager who has a simplifying method. It tells him little about winners but it frees time for him to think harder about potential winners.

“I read the MD&A (Management Discussion and Analysis) in the financial statement. If I see the words challenge or challenging I throw it away. My portfolio has only 50 to 60 stocks, why would I deal with guys who have challenges?”

An interesting question. How many of your investments have challenges and why do you keep them?

Another simplifying factor is the ability to sell positions that have losses. Canadian investment guru Ira Gluckstein has a thought,

“If you keep stocks that lose, with the hope that they will recover, you will eventually own every dog that ever hits the floor of the exchange.”


But how to know when to sell a losing position? After all there is no loss until you quit.

My own rule is straightforward. Raise or fold. The decision to hold a security at a given price is identical to the decision to buy at that price. Whether you buy or hold, either way you have no cash and you have the security. If you would not buy at the price, you should logically be a vender. If you would buy, you should. To hold but refuse to buy at the price is not fully rational. Quit. To fold is, at most, a small mistake.

When looking at buy opportunities, some people make a mistake. They look too narrowly at the situation. Be more expansive. Look industry wide, not just at the company. Maybe world wide and look out for substitute products. Especially, try to estimate a time frame. See your target as a tiny blip on a much larger field. Pay special attention to the time frame.

“You cannot imagine a butterfly by studying a caterpillar in detail.”

Lastly, data is not information and information is not knowledge. You must always try to connect the knowledge you can acquire about external things like securities with your knowledge of internal things like your needs. That connection is wisdom and wisdom is the answer to your problem.

The process is:

  1. Know at least what you want, when you need it and what you have to get it with. (Strategy)
  2. Know the tools that there are that can address your strategy. (Tactics)
  3. Select and apply the tools and check frequently against achievement of the strategic goal. (Logistics)
  4. Quit Quick, and carry the lesson learned from the mistakes to the next iteration of your plan.

No mistake is too expensive if you learn something useful from making it. But there is a cheaper way. Learn as much as you can from the mistakes of others.

“Fundamentally he was an amateur – though a gifted one – who learned from his mistakes readily enough, but who lacked the formal training that might have enabled him to learn from the mistakes of others ……..”

Clear & Present Danger, © 1989 by Jack Ryan Enterprises Ltd,

RIP Tom Clancy

An easy recipe. Study, act, review, revise. Repeat as necessary.

If you don’t want to do it all by yourself, retain the strategic level, retain decision selection over tactics, and hire a helper for the rest.

Don Shaughnessy is a retired partner in an international accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario. | Twitter @DonShaughnessy | Follow by email at moneyFYI

What Is Your Fear Factor?

Halloween seems the right day to talk about fear. Ghosts and Goblins may not be the only fears we have. Everyone has a fear capability so possibly it makes more sense to talk about what to do about it.

We need to know about fear, and our response to it, because it affects our risk profile and it profoundly affects “the meaning” of what we observe in our portfolios and in the world at large. Fear limits.

Let’s start with what it is.

Fear is an emotional reaction to a perceived threat. It is instinctive and is an important part of the survival response. The “Fight or Flight” response provides powerful chemical responses to the perceived threat. While these responses may be appropriate when faced with a mountain lion, they may not be so useful when the value of your RRSP falls 15%. The chemical response is physically harmful if you do not use it to either fight or flee.

I do not know how to fight a decline in the stock market and fleeing seems to open the possibility for other even more devastating outcomes. Fear responses are not necessarily good responses.

We need to learn to address what to do about fear when fight or flight won’t work.

There is a considerable resource on the subject. For example, I Googled the phrase, “antidote to fear” and got more than 500,000 hits. Without the quote limitation you will get ten times that many.

There are themes in that vast horde and some are dependent on what created the fear. For example imminent death of self or a loved one derives different answers than does fear of investment loss. The common antidotes prescribed for fear generally, include laughter, courage, initiative, information, creativity, reason, knowledge, acceptance, faith, love, trust in self, action, joyful appreciation, presence, and hope.

While I am sure any of these would deal with the symptoms of fear, and that is important physiologically, I am not as convinced that all would provide a cure.

Besides, fear of investment loss is a tiny and uncomplicated matter. To make it non-tiny you will need to connect up other fears like death and suffering and loss of status and the like.

I think there is hope for the collection of antidotes above to include a solution for the fear of loss of money. Consider initiative, information, creativity, reason, knowledge, and action. I have previously pointed out that people with knowledge and experience are not afraid of things that might frighten the rest of us. Bry Loyst. We can learn that too.

The oldest and strongest emotion of mankind is fear, and the oldest and strongest kind of fear is fear of the unknown.” H. P. Lovecraft

I am no expert, but a good answer seems not to be fear avoidance. Fear is useful. If nothing else it focuses your attention. The answer that will work seems to be to learn (gain knowledge and experience) from the things that frighten you. As you learn about what frightens you, you gradually reduce your set of “unknowns.” The greatest fear.

Enlist the assistance of a knowledgeable adviser. They can get you past the obvious material more quickly than you can experience it yourself.

“Many fears are tissue paper thin and a single step would carry us clear through them.” – Brendan Francis

With knowledge, your response to future situations will be more organized and effective than will be the response of someone who has not taken the trouble to learn about themselves and their emotionally limiting behaviour. Unemotional investment decisions tend to be better decisions.

Start soon.

Don Shaughnessy is a retired partner in an international accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario. | Twitter @DonShaughnessy | Follow by email at moneyFYI

A New Tax For Canadians?

There are some interesting things to think about while looking at the financial wreckage of governments in North America.  The one that matters will be, “What are they going to do about it?”

The second question is “What should we do about what they are going to do?”

The first question is pretty obvious.  The governments need to get more money in ways that do not destroy initiative and innovation.  Read this as new taxes.  Perhaps “Revenue Tools” if you listen to Ontario politicians.

Looking at the US we discover that they have estate taxes at both the federal and state level and no national sales tax.  In Canada, there are no estate taxes at any level and there is a national sales tax.

I think it is safe to assume that both jurisdictions will eventually have both a national sales tax and estate taxes.

Canadians should pay attention.  Estate taxes dislocate superficial estate plans.  When this tax is present, the planning level becomes more complex and the premium on liquidity becomes very large.  The Americans are a little better off.  A 5% sales tax would be enough to wipe out the deficit and would not dislocate the economy too severely.

An estate tax is not politically difficult, because there is currently a disingenuous argument that people who make a lot of money somehow don’t deserve it.  The system made it for them and they were just there to pick it up.  You have it, you need to give some back when you are finished with it.

As long as the new tax does not harm many voters, politically, all will be well.  That is not a difficult hurdle.

  • Exempt the first $1,000,000 so at least 80% of the people are unaffected.
  • No tax between spouses
  • Maybe something for disabled children
  • Smallish but graduating rates.  Something like 25% on the next $8,000,000 and 35% beyond.

It is time for us to recognize the possibility.

The answer to the second question of what to do is not especially difficult now, although it will become more complicated in future.

If you have valuable and illiquid assets, like a business, move them to things that do not form part of your estate.  Trusts come to mind but frozen holding companies may also provide significant value.  Minimizing your taxable estate this way will reduce the need for liquidity.

Liquidity will be the issue.  Owning significant life insurance is a reasonable tactic.  If estate trustees have enough cash, writing the tax checks is not a burden.  Without the cash, it becomes treacherous.  Sell or borrow are weak choices.

Preparing your estate for the possibility of a tax catastrophe is unlikely to cost much in comparison to the possible liability.  Preparing might even (probably will) provide you with a better result even if the change never occurs. No planning generally is not the most effective approach.

It is like people buying gold as defense to some possible financial catastrophe.  Being proactive to potential adverse results pays even though it costs a little.

It is possible that the government will not call the act they produce, “The Estate Tax Act.”  A more accurate and descriptive name would be, “The Accountants, Lawyers, Financial Advisers and Life Insurance Company Relief Act”

Don Shaughnessy is a retired partner in an international accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario.  |  Twitter @DonShaughnessy  |  Follow by email at moneyFYI

What Can Knut Wicksell Tell Us About Interest Rates?

Knut Wicksell had quite a lot to say about how interest rates work. He was born in 1851, died in 1926 and was an economist who influenced both the Austrians Hayek and Von Mises and at the same time Keynes. He is a resource in at least six economic schools of thought. Clearly a useful thinker.

He might be able to tell us a little about the current situation. Why do near-zero rates fail to stimulate the economy as much as our politicians expect?

In economics there is a concept of the “Market Clearing Price.” The price at which all of the production will be sold and all of the people who wish to buy a product are able to do so. If there is too much production, the price falls until it is sold. If there is too little, the price rises until demand matches.

Interest rates are the price for money, so why is there so little demand for the product when the price is so low?

Wicksell proposed that there are two interest rates. The “Natural Rate” which is the rate that arises based upon the expectation that people can profit in the future as the result of borrowing at the rate. There is another rate, the “Financial Rate” which is what lenders actually charge.

Wicksell believed that if the financial rate was less than the natural rate, then people would borrow almost infinitely to take advantage. They compare their price to the natural rate – the fair price for the opportunity to earn in the future and see a bargain.

Why is there no investment today given that in some cases the guaranteed financial interest is near zero?

The answer is just common sense. Because the natural rate today may be even lower than zero. There is little demand for the money because if you borrow money, at any price, even zero percent, you have to pay back the interest and the principal. To pay them back, you need to know that:

  • in a business or an investment situation, what you invest the borrowing into will supply sufficient income to pay the loan off in the required time, or
  • in a personal situation that your future take home income will be enough to make the necessary payments.

Today we find that many people do not as yet have the confidence in either of these two conditions to undertake significant obligations. It is not the interest rate that is troubling, it is the principal payment that is troubling.

If you could borrow at 0% interest and had to pay back only 90% of the principal, would you borrow? Some people would say no today. How about 75% of the principal?

We find that the market clearing price for money is irrelevant as long as lenders want the capital back. A 0% loan is not attractive if you cannot see how to pay the principal.

Clearly the policy approach is to pay less attention to the price of money and more attention to economic expectations.

Business people, and I suppose everyone else, are avoiders of uncertainty, so the solution for the policy folks is reduce the uncertainty. Have a clear economic path that government follows. Avoid trivial regulation. Do not disparage those who invest and profit. Promote reality instead of illusions like having a degree provides you with a great living. Keep your word. Be transparent. Give indications of proposed changes in direction.

The best incentive to economic growth is removing disincentives to economic growth and personal prosperity. Without that there will be no price that induces people to borrow or invest. At least not here.

Don Shaughnessy is a retired partner in an international accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario. | Twitter @DonShaughnessy | Follow by email at moneyFYI

Do Index Funds Always Beat Managed Funds?

Maybe not. It will behoove you to notice the parameters.

It is a tenet of my life belief system that it is better to know nothing than it is to know something that I believe to be true but which is in fact untrue. When I know nothing I could be right by accident.

For some time I have made the argument that index funds do not beat manged funds all the time, or even most of the time. Management fees, therefore, may be worth their price. Many disagree.

There are several points to my belief:

  1. Index numbers do not mean the same thing as they used to mean. It is possible that losing to the index means nothing. At one time, say pre-1995, the index numbers represented the value of the businesses in the index and changes measured how the underlying fundamentals of the businesses changed and how the expectations of the buyers of the securities saw things into the future. That is not the case any longer. High velocity trading is different. At one time much of the trading in large corporations was of the buy and hold variety. As late as 2006 high frequency trading was about 9% of the trading, but by 2010 it was over 60%. The index value to volume correlation was once strongly positive, it is now random. The “meaning” of a trade that is fully cycled within 10 milliseconds is different than a trade that cycles over 10 years. No one invests for the dividend return in a millisecond world. Dividends are an important part of the definition of a business. Therefore a large percentage of the trades do not relate to the business aspects of the index.
  2. The existence of index funds alters the value of the index. As index funds grow in popularity there is greater demand and thus price increase for the securities that make up the index. That demand has exactly zero to do with the business expectations of the companies in the index and exactly zero to do with the buyer’s expectations for their future success, but it does depress the comparative results for managed funds.
  3. There is empirical evidence to dispute the idea that index funds beat managed funds. Capital Group, the proprietor of the “American Funds” family is pretty obscure but large. By December 2007 they ran 7 of the 10 largest funds in the United States but were nearly invisible. They issued three press releases after 1925.They recently compiled information based on rolling monthly periods from December 1933 to December 2012, a period of 80 years. (I am aware of the value of end point biases and checked December 1933. It was low but not as low as 1932. It may affect some of their results, but the index itself covers the same periods.)
  • They compared their funds to indices over several rolling month-end hold periods, 1-yr. 3-yr, 5-yr, 10-yr, 20-yr, and 30-yr. There are over 30,000 results in the study. For instance there are 600 month-end results for 30 year holds for each of their funds. They found that the funds beat indices as follows:
    • 1-year period – 57%
    • 5-year period – 67%
    • 20-year period – 83%

The Capital Group information conflicts with a comparison provided by S&P in June 2013. An example of its result is that over 5-year periods, the index beat managed equity funds 72.14% of the time. Quite a difference. How come?

The average fund as used by S&P includes both the best and the worst managers. You can deal with whoever you want but you cannot deal with “average manager.” Averages then are not meaningful to you if you can choose to deal with particular managers. Index funds beat the average managed fund is not equivalent to Index funds beat all managed funds.

It pays to notice how particular managers do what they do. Some can approach index return values after fees while holding 20% or more of the assets of the fund in cash. While not producing the highest yields year over year, they tend to be more stable and more tax efficient.

Fund management fees include custodial, trading and tax reporting costs. More importantly they used to include amounts paid to local advisers. It is probable that advisers add nothing to fund returns but despite that, people who use advisers tend to end up with more money.

You can spend money, you cannot spend percentage gains. A large portfolio is only partly the result of investment returns. Capital value arises from disciplined capital investment, tax sensitivity, and from choosing the better managers. Advisers add great value to those parameters.

A competent adviser will spend time organizing a plan and a portfolio, but even more time managing you. That is where the real money turns out to be. You should not expect to get the service for free.

As always, pay attention. The world, fundamentally, is just organized common sense.

Don Shaughnessy is a retired partner in an international accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario. | Twitter @DonShaughnessy | Follow by email at moneyFYI

Seeking Critics

Everyone likes praise and nearly no one likes criticism. If you have a business, pay attention to this allocation because the weighting of “like” is exactly backwards. Learn to love the criticism.

For a business, there is a reason to acquire this love.

A customer who complains (offers criticism) is helping you. All customers are, to some extent, your quality control department. You would need to spend a good deal of money to get a quality control department that had as diverse a set of standards and could perform as many tests as customers and here we have it offered to us for free. Most people reject it.

Have the wit to accept the gift. Learn to accept the advice; act on what you can and explain what you cannot.

I was briefly involved with a restaurant; a form of business that easily generates complaints. One of the old hands told me two important things.

  1. You make your money a penny at a time
  2. For every customer who criticizes your efforts, there are 25 more, just as unsatisfied, who do not. The other 25 will be unlikely to return.

I know of a case where a manufacturer, who on pointing out that he could buy the equivalent amount of product from a supplier by purchasing 40 little packages instead of one big one was told by an order clerk, “We don’t need your help to run this business.” It appears there is no limit to dumb. He bought 120 little packages to help them toward oblivion.

For those who cannot handle critics, learn the skill. Seek and encourage complaints. Teach your staff to seek and communicate complaints to you. Thank the complainer for their time and trouble.

You will learn little from what you do right, but you can learn a great deal from your shortcomings.

Don Shaughnessy is a retired partner in an international accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario. | Twitter @DonShaughnessy | Follow by email at moneyFYI

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