Survival of the Smartest?

I’ve posted before that being smart is not always a good thing. I believe an enthusiastic bias-to-action coupled with sensible risk taking will outperform a risk-averse solution under most measures. I’m talking about business and investment here not space exploration or surgery.

Ben Hyde at Ascription is an anathema to any enthusiasm pointed out this New Scientist report that dumb flies out perform smart flies. Basically there is a cost to being smart and it is possible to envision or create an environment that favours the dimwitted.

Ben further commented

For example lets say that the environment rewards risk taking (i.e. the environment is rich and full of opportunities). For a few generations the risk takers thrive. Suddenly the environment shifts so that the careful and risk adverse win. If a species evolves too quickly to fit the first environment it’s going to be in big trouble when the environment shifts.

The environment that favours the slow learners is one of scarcity. What economic environments allow careful and risk-averse entities/entrepreneurs/investors to outperform? Economic depressions and prolonged bear markets would qualify. Systemic risks causing a meltdown of modern western capitalism would also reward the risk averse, but there wouldn’t be much of a reward.

What about mature or declining markets? If a market approaching the end of its life-cycle there could be deminishing returns for innovation. So the risk exceeds the reward.

So I prefer enthusiastic risk-takers. Playing it safe is historically a bad bet. One last quote that sums it up beautifully.

I remain hopeful that we are in the last generation that rewards people who can spell.

–Ben Hyde

Given a choice of one or the other, I’d take, rather than spell, action.

1000 unique visitors

Wow. Over the weekend we crossed 1000 unique visitors threshold for September. That’s a fantastic growth rate for this blog without promotion.

Some September statics
16.6% of the page-view traffic comes from search engines. Nearly 20% of that search engine traffic is from Tony Robbins searchers. Another 15% of that traffice is looking for Steve Navra, NavraInvest Ltd or Chris Batten.

There are over 100 IP addresses which have visited the site at least 5 times in September.

So please comment below if you are willing to help promote the blog (especially if you don’t know how) or have suggestions. You can start with a vote for my site at blizg. You can also rate the blog on bloghop (see the menu-bar links on the right).

Picking great advisors

I got this question from an unknown reader:

how much is a high net worth individual? I remember Paul when you said that part of the reason that you went bust during the last property boom was that you should of upgraded your advisors. When should one go to a guy like Batten or his equivalent in other professions?

A high net worth to me means $1 million in investable assets. In Sydney, Australia, if you’ve owned a house in the eastern suburbs for 10 year you could have $500K but zero investable assets. The question of definition is not as relevant as the second part of the question.

I went broke in the recession we had to have (after the boom) when interest rates hit 18% for first mortgages. My bridging finance with penalties hit 33%.

I should have upgraded my advisors sooner. They may have suggested alternatives or been stronger against the banks. Who knows? But I would have had a discretionary trust in place and would not have had cross-collateralised loans.

Advisors like Chris Batten are experts whom your advisors consult. So talk to your advisor about this.

Get the best advice you can afford from people who either do it themselves or are recommended to you by someone more successful than you. Good advisers will tell you if your asset base is insufficient to justify their fees. That’s why referrals are so important. And that’s why I have a more experienced friend or mentor to chat to.

Property investors who intend to build a large portfolio should have accountants and lawyers who specialise in these areas. They will offer brilliant due diligence assistance because they have greater deal-flow across their desk.

Character and Principles

I don’t think think anybody is interesting until they’ve had the shit kicked out of them — Jim Carey

This quote has been bouncing around my head for a month since I heard it on a doco about Jim Carey.

It says something about a persons character. Can I go through nasty times and retain my principles. How will life’s disasters shape my character.

Well losing a million bucks at 27 can be character forming. I decided to do the right thing by people whenever I can. I point out when I get too much change from a checkout operator.

I also paid holiday leave loading for an employee who quit (that is not an obligation in NSW at the moment). But that former employee could have taken holidays (and got the loading) then not returned. I hear many businesses complaining about this sort of behaviour. The employee gave me fair notice and helped with the transition. So I asked the remaining staff what they’d expect in the situation. They all said they’d expect the loading. I agreed, yet it was a good experience to have staff input.

So Jason got paid a leave loading he wasn’t entitled to. But had he done the mercenary thing he could have guaranteed his entitlement. I paid him because he did the right thing.

Interestingly if I ran a public company a different set of corporate governance rules kick in. I could only have paid the loading if it was part of official company policy. That makes my head hurt to think about.

Guru critique

Tony Robbins and Unleash the Power Within is upon Sydney. There is a huge amount of search engine traffic through WealthEsteem.org looking for comment and critique.

NigelW, another very smart person I know, made this comment on Personal Development Industry guru’s.

I’m becoming more and more convinced that the whole “personal development” industry is just a bunch of P.T. Barnum style bunkum being peddled to people who are generally disillusioned with their lot in life and need something to “believe in”. It sometimes seems just one step above those dubious spam emails one gets promising to increase the size of one’s wedding tackle!!!

It seems to me that some people join the church, some people join a cult, some people believe in aliens and conspiracies and some people go along to personal development seminars . 🙂

I’ve been to a few introductory nights for various NLPesque practitioners (adam hudson and jamie mcintyre spring to mind). They all try to imitate TR right down to the tight black T shirt and head mike…but somehow just can’t pull it off (probably has something to do with Robbins being about half a foot taller and 100 pounds heavier than the wannabes…)

Most of it just seems to be recycled, repackaged POP-psychology and common-sense presented as some kind of secret information that only the rich and successful know…

Maybe I’m having a cynical day, but people should just rent a funny video if they want to be entertained and feel good about themselves. The firewalking metaphor is the prime example of the shallowness that’s being promoted. Let Tony walk across a plate of sheet metal heated to just a paltry 100 degrees celius compared with the 300-400 degrees for the bed of coals and I’ll agree there’s something in this personal mastery stuff!

Glass half-empty signing off! 🙂

Sometimes it’s good to pause to consider.

Go into business

I read this post over at the Somersoft Property Investors Forum.

I found it very hard when I realised I was working hard to build someone else’s dream. Starting or buying a business often appeals as a perfect solution. But getting into business may not be the best approach.

We’ve all had friends unhappy in a series of identical relationships — often they are the problem, not their partners. Changing partners or jobs or careers or hair colour doesn’t help people if they don’t know what they want. I’m not suggesting ChrisJ is this sort of person. Rather I found myself typing on a thought and it became a mini essay.

I would suggest reading Brad Sugars new book Billionaire in Training. Beware it paints an “easy” picture of life in business.

I jumped back into owning my own biz after 6 years in IT consulting. I figured I’d made hay while the sun shone, now it was time to focus on the important things in my life.

Many smart people, once they see it, reject the idea of working to build someone elses dream. Not wanting something isn’t a good enough reason to go into business.

Stop and reconsider that decision to go into business — unless you already have an idea you are passionate about. Passionate enough that you’d do it even if you don’t get paid.

What will keep you going during the inevitable hard times? The setbacks are part of the training course. I get to practice my mistakes over and over, until I learn the lesson.

If you have the skills to invest successfully in Real Estate; and your portfolio will eventually maintain your lifestyle; swapping a regular paycheck for self-employment could be bad to your net worth. Finance becomes harder. All financiers know how to deal with “normally” employed people. A committed investment strategy will free almost anybody in 5-10 years. Go to a [URL=http://www.navra.com.au]Steve Navra[/URL] seminar to get an idea of what is possible to Pay-As-You-Go income earners.

Don’t let the Robert Kiyosaki’sc ashflow quadrants blind you to the boring, predictable path to wealth. Steve tells people that their job for the next 5-7 years is to earn a steady income, their investments will take care of the rest. Jan Somers built a multi-million dollar portfolio the boring way

residential property, properly financed and kept long term.

But I want to be a successful entrepreneur. I want that badly enough that I hire and fire distributors; open and close offices and warehouses; make great and bad decisions; profit and loss. All the time getting better and better as an entrepreneur. Not as an importer or exporter, retailer or wholesaler, product seller or service provider. I am an entrepreneur and I wouldn’t swap it for financial freedom tomorrow.

Structured Giving

In a recent post at Michael Simmons – Young Entrepreneur Journey: To Give or Not to Give wrote:

Living in the big city, I’m asked for money about 10 times a day. I probably give money about 2 out of the 10 times depending on how much money I have, how bad I feel, and how convinced I am. When I don’t give money, I always feel a little bit bad.

It’s a shame that con artists can affect our generosity. Giving is a decision we make in our own hearts.

As an excercise in abundance for one month I gave to anyone who asked, no matter how apparently worthy or unworthy they were. That took effort to overcome my Drug and Alcohol intervention training – never give money to a derelict alcoholic as they could use it to buy the drink that kills them. Luckily (!?) no derelicts asked me that month.

I have reduced casual giving to pan-handlers, they get loose change if I have it. Instead I give in a more structured way. I sponsor a child; tithe a percentage of my income; and give sacrificially to causes – that means I give enough that it hurts, not just what is comfortable.

The lesson is to make a difference with my gifts. I don’t think I’ve learned it yet. And I’m not talking about getting recognition for those gifts — many are anonymous. A casual $2 in the Red Cross appeal makes a difference if enough people do it. $100 in one go to a local Meals on Wheels has a more focused result. Making a $100,000 endowment for community outreach and leadership training in disadvantaged areas would make a huge difference in the right hands.

Laughter

I subscribe to the Bothwell Group Management Thought of the Week e-mail. I can’t find last week’s thought on their website or I’d post a link. So here it is in full…

My grandfather always said that if I laughed before I cried and sang before I spoke I was a happy guy. Laughter was part of my growing up and is a part of my leadership style. Why do we take situations and ourselves so serious? Lighten up already have a good laugh relax and get back in the game. Laughter engages the right side of your brain; the creative side that helps you solve problems.

Home work, laugh at yourself this week and have some fun. Email me back and let me know how it went. jack@bothwellgroup.com

Bothwell Group also do a Sales Thought of the Week email.

It is very easy for investors and entrepreneurs to get bogged down with day-to-day problems, challenges and tedium. When I find myself frowning as I drive or think, I remember some really fun times of my life. Who needs a frown? Does it prove I’m the more successful person? Maybe in Victorian times it did. Know that I think about it, most of the portraits of my schools’ Principals were of frowning bald guys. Maybe frowning makes you bald?

Fun is important I’ve seen grown men chase each other around with paintball guns. We had a blast, we had fun, we made great decision that made money.

As an investor and entrepreneur, I believe in long term payoffs. I like the slogan

Today I do what others will not, so I can do tomorrow what others cannot.

But that does not mean forgetting to have fun along the way. If I’m going to wait for the long term it will help to have some laughs before it arrives.

What do you think?

Maintenance

We (and all the others on this server) have recently been hammered by bots (and spiders) indexing and otherwise slurping this website. After a group of them from NameProtect grabbed 15 megabytes of bandwidth I decided to do something.

After many false starts and misadventures I believe I’ve set things up so bad bots will get themselves automatically banned. If I have broken anything please let me know.

For those of you who are intersted I grabbed ccisecirity.php from and implemented as scaled-down version of IP banning via .htaccess

It’s kinda cool.

Free Favours

On occassion I’ve bought lunch for an entrepreneur or investor for in return for the opportunity to pick their brain. It is a fascinating and rewarding passtime. So when I read Philis Rockower’s latest Real Estate Investors Club of Los Angeles newsletter, I got a short sharp shock.

Many newbies always expect they can take a veteran investor out to lunch to learn the business. Most
veteran investors won’t do this, unless they are fairly certain you will bring them deals.

Philis went on to explain

I know this from personal experience, having taught dozens of newbies the business for FREE, thinking they would come bring me deals. At one point, I woke up to reality – people who don’t pay for their education RARELY USE IT!

Aha! Of course. Am I one those I use it people? I’ve noticed how successful networkers make things happen. More likely I establish my credibility first. If I haven’t got credibility, I had better have the only available lunch reservation this century at the city’s finest restaurant otherwise I’m not buying.

To do me a free favour they have to know that not only will I use it, but make them feel good about my using it.

Sadly too many people don’t value what they haven’t paid for. I went to a free talk last night on health and nutrition. The speaker told me that 75% of people who say they’ll show up don’t. That is the rough truth out there. Are you helping or hindering they cause?

What do you think? Any expamples? Click the comment link (email addresses are optional).