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February, 2009 | Inthon

Today I was reminded of an excellent article I read a while back called Secrets of Greatness.  This simple article stuck in the back of my mind for years after reading it and it came into my mind recently after seeing Tiger Woods back out on the golf course after his surgery.

The article concludes that while talent is important, it is not nearly as important as “deliberate practice”.  Deliberate practice is a focused, concentrated effort to improve oneself, rather than simply practicing for the sake of practice (apologies to Allen Iverson).

The article’s most salient point is:

The best people in any field are those who devote the most hours to what the researchers call “deliberate practice.” It’s activity that’s explicitly intended to improve performance, that reaches for objectives just beyond one’s level of competence, provides feedback on results and involves high levels of repetition.

For example: Simply hitting a bucket of balls is not deliberate practice, which is why most golfers don’t get better. Hitting an eight-iron 300 times with a goal of leaving the ball within 20 feet of the pin 80 percent of the time, continually observing results and making appropriate adjustments, and doing that for hours every day – that’s deliberate practice.

As a result of taking 15 minutes each day to sit quietly and think about my day, I’ve noticed an increase in my awareness of my behaviors, patterns, habits and most importantly, my actions.  Rather than just  thinking every once in a while about things I’d like to do more of (volunteer, travel, learn about fixed-income markets), writing in a journal and quiet thinking time has helped keep me honest about where I’m going and where I’m headed.

Thinking about the person I’d like to become has made me realize that if I don’t take action to turn hopes into reality, those hopes will never materialize.  This deliberate thinking process has actually given me the peace of mind to make it easier for me to take action where it previously seemed difficult to do so.

It is an exciting feeling to know that you are learning more about yourself and you can improve your habits and behaviors faster by incorporating quiet thinking and journaling into your everyday life.  This attention to detail is a very useful form of deliberate practice and it has certainly helped me move in a positive direction.  I hope you give it a try.

Thanks for reading.

Read more about practicing introspection.

At the heart of this error is the government, not the free market, which has never existed since the creation of the Federal Reserve.  A free-market organization would have gone bankrupt long before it could ever screw up on a scale this large.

The inane setup of our monetary system has led our problems, where government sets short-term interest rates, manipulates its currency, lets overleveraged banks borrow at below market rates via the Discount Window, engages in open-market transactions, and creates money out of thin air to fight wars for no clear reason, et cetera.

That, coupled with government initiatives like “making homes affordable” leads to such ideas like buying subprime mortgages (via Fannie and Freddie) and then having the taxpayer bail out the government entity when it inevitably fails.

The mindset that we will ease out of this crisis in a few years is delusional.  People’s expectations have been warped into believing the last six-seven years of growth have been genuine.  They haven’t.  The credit boom started after the dot-com crash and only when prices of assets (housing, equities) return to those levels will we see the start of a healthy correction.  Yes, house prices need to come down.  This happens by foreclosures and assets moving from those that cannot carry the debt burden to those that can.  Letting people who can’t afford to stay in their home stay there isn’t a solution.  Having the taxpayer buy the mortgage via Freddie Mac, then “renegotiate” the mortgage and take a loss should aggravate anyone with a sense of responsibility.  The hero-worship that President Obama is going to miraculously create compounding wealth by printing up cash and paving roads thereby returning us to the good old days is simply not going to happen.

Only a repudiation of our current banking and monetary system will solve this problem in the long-run.  A free market in money and currency is needed as well as the total separation of Economy and State.

To read more about our economic woes, read here.

George Soros has it totally wrong. This financial disaster is not the death of, or the failure of, a free-market system.  It is the obvious, predictable failure of government mismanagement and bureaucracy.

What do you call a system where…

The government controls the money supply by buying and selling securities in the open market?

Legal tender laws prohibit competing currencies?

The former CEO of an investment bank becomes the watchdog of the very organization he used to run?

A government literally creates money out of thin air to attempt to CONTROL the expansion of the economy?

The government sets short term interest rates via committee?

The government jawbones to strengthen or devalue its currency at the whim of whoever is in charge?

Banks leveraged 30:1 borrow from the government at below market interest rates?

You CANNOT POSSIBLY call that free-market capitalism.

We are witnessing government failure before our very eyes.  By attempting to manage our economy and using fiat money to pay for a welfare/warfare state we cannot afford, we have taken our financial system to the brink of insolvency.  This is positively *not* a free market system.

Free markets arise naturally where two parties engage in mutually beneficial transactions without interference.  Free markets are man’s way of trading goods and services with one another that will leave both parties better off.  It is the reason you find markets all over the world, in every culture, in lunchrooms, prisons, workplaces and homes.

Governments cannot “create” free trade with acts such as NAFTA or 400 page trading documents, they arise only in the absence of government interference.

Free-market capitalism in America?  We should be so lucky…

To read more about how our economic system is not a free market, read here.

Having an accurate model of reality is one of the best things a man can have.  If you have an accurate model of reality, you will be better prepared for life’s surprises.  An accurate model of reality gives the ability to intelligently prioritize what is important to you in your life; rather than letting others dictate what your priorities are or should be.  There is nothing worse than finding your definition of “success” is not what you had imagined it to be.

As I’ve tried to increase my awareness of reality, I have noticed certain trends and themes become more and more apparent:

  1. I need to take responsibility for my own life since I cannot rely on anybody else.
  2. The world is throbbing with suffering and I should be grateful for my fortunate circumstances.
  3. The more I learn, the more I realize how ignorant I am.
  4. I create my own priorities, set my own attitude, manage my own time, and face the consequences of my actions and inactions.

Personal Reality – The most important.  How much time are you spending alone with yourself determining whether or not you are taking steps that will improve your happiness and wellbeing? Time alone to reflect is critical.  What makes you happy?  Money in the bank?  The respect of your boss?  Your daughter?  Spouse?  These are important issues which no one can determine except you.  In a materialistic world, it is easy to let others determine your priorities for you.  Taking time to sit quietly and think can dramatically improve your understanding of your priorities and values.  From there, you can take intelligent action to improve your life.

Economic Reality – I consider myself a student of economics and even I am ignorant to what extent the government exerts influence with our economy.  Understanding the role macroeconomics plays in our lives is critical.  Knowing how to invest our savings, guide our businesses, and what countries are contracting or expanding economically can serve us in numerous ways.  They can earn us profits by intelligent speculation, or they can help us steer an enterprise by making better decisions.  As I learned about economics and viewed the world around me (debt of individuals, intelligence of individuals, job abundance/scarcity), I began to increase my skepticism about our economy.  This view helped me seek out like-minded thinkers and I discovered a whole new school of thought about economics.  Thankfully, reading contrarian economists have provided me peace of mind and great insight as to what is happening in our world today.

This economic crash should have come as a shock to absolutely no one.  There were dozens of warning signs that astute people pointed out.  It merely took some open-mindedness to listen to those called it.  By listening to all sides of the argument, it was easy to discern whose logic was more ground in reality.

News Reality –The news last week revolved around a woman who had eight babies and a baseball player who used steroids, neither of which are the least bit helpful to improving my life. What are you trying to accomplish by reading/watching the news? Your time is extremely valuable, so use it judiciously.  The time spent watching news/adverts can be better spent reading specific information sources which will help you improve your job/relationships/habits/health.  You can use targeted info sources (Bloomberg, Google News) to find relevant, intellectually-stimulating news and save time.  The major networks (NBC, ABC, CBS, CNN) all didn’t see this slowdown coming.  Mish, Gary North, Nassim Taleb and others saw this slowdown coming years in advance.  Triage your news sources to those that are honest and upfront about their views, even if those views are currently unpopular.

Political Reality – There are many individuals who have become reliant on the government for health care, salaries, education/day care and other things.  When observing the systems that underwrite these promises, it becomes obvious that these promises have been fulfilled in the past by rising assets values, taxation, and further expansion of debt.  These are not sustainable and we are finally witnessing reality intersecting with these promises.  As reality intrudes, we will see many individuals who have become dependent on the government be forced to deal with the reality that they can no longer have a cushy retirement or guaranteed benefits without a taxpayer revolt.  Had these individuals formulated a more accurate worldview, they would have realized this inevitable insolvency and potentially avoided the pain they will now suffer.

Attitude Reality – You can choose to view life as a punishment or an opportunity; the choice is totally up to you.  You can pretend that you’re a spoiled brat and that work is a nuisance, or you can have the attitude of a fresh-off-the-boat immigrant, who sees nothing but opportunity.  You can eat whatever is convenient and abuse food and alcohol, or you take the attitude of a cancer survivor and treat your body with love and respect.  A trip to a hospital or serious illness will impress upon you the reality of taking care of your body.

You choose our own reality.  Choose wisely.

Shaping Your Reality
Here are tips that have helped me gain a better understanding of reality and helped me focus on what matters:

  1. Developing an insatiable curiosity for connecting with others and seeing what drives their thought process is key to improving your understanding of the world around you.  The more “sets of eyes” you see the world through; the clearer your vision.
  2. Why do you eat what you eat?  Read what you read?  Interact with those you interact with?  To grow as a man, I’ve found that putting these things under the microscope is very helpful.
  3. Consume different sources of information from different points of view.  Make sure you periodically read things from people you intensely dislike.
  4. 15 minutes of silent thinking will yield tremendous insight about who you are and what your priorities are.  Listen to this voice of reason and let it guide you.  Nothing mystical about it, just good old-fashioned introspection.
  5. Listen to those who matter (YOU!) and tune out those that don’t (anyone that wants your power and money).
  6. You’ll often discover that you, your family, or your religion has been incongruent with reality.  This is a great discovery to make since it allows you to abandon incorrect beliefs in favor of more accurate ones.

Finally, I have linked to some great thinkers in the upper right hand corner of this blog.  All of the links are websites written by people who have shown a great degree of independence in formulating their worldview and they all show a great deal of logical thinking when drawing their conclusions.  Check them out and learn from their experience.

Thanks for reading.

To read more about what really matters, read here.

An amazing story from the New York Times. Trying to figure out what the price of worthless debt is? The institution owning it says 97 cents on the dollar, S&P’s “model” says it’s worth 87 cents on the dollar, but (in my best Bob Barker impression) the ACTUAL RETAIL PRICE is…

38 cents!

Yes, the last traded price for that particular bond was 38 cents, less than half of what both the institution and the S&P model say it was… you don’t have to be Treasury Secretary to realize that banks holding these assets at inflated values are simply kidding themselves.

As CEOs talk up their books, even the “clean” ones like GS and JPM, don’t forget that since they are not forced to mark to market, we are not getting full disclosure. Stay away.

To read about the financial problems we are in, read here.

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