Do you ever feel like you’re going insane? Do you do the same things over and over again expecting a different result? Is your business becoming more and more like Groundhog’s day? That’s the real definition of insanity. How do you avoid going insane? Here are some of my free-wheeling thoughts.
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Big picture folks - we are in a bad, vicious, negative economic cycle with no end in sight. I hate to repeat bad news, but we’re in for a much longer recessionary period than we can imagine. Even though I’m not an economist, I’ll try to highlight in this post why we’re in for a long dark period and how we’re going to get out of it (hint: it’s not the government).
We’ve gone through a tremendous period of leverage where everyone was able to get credit, this led to assets to being way overvalued (stocks, homes, businesses). This took a while and it will take a while to get out of this. The US government is also highly leveraged, the stimulus bill and new bills to be passed will add trillions to our debt. The credit markets are still badly frozen. All this on top of a recession where people are losing jobs and unable to pay mortgages, education which leads to more freezing of the credit markets. What does this mean?
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I play poker occasionally and the achilles heel of many poker players is that they think they are better than they really are. They’ll play in tough games where they’ll lose in the long run. The players that honestly assess how poorly they play will avoid situations where they are bound to lose and play games that their skill level will excel at. I’m not a great poker player, but generally I can assess pretty darn quickly if I’m the sucker at the table and admit it. (Stop playing those A9s, it’ll kill your bankroll 
The same applies to your personal review.
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Great results never come easy, right? Losing weight, running a marathon, building a successful business, having a great family life. It takes hard work, perserverance, resiliency, focus, and a rock solid attitude. As I’m working long hours on executing our ‘09 strategy, I always try to keep in mind that it is a marathon that we are running and not a sprint. Building long-term value isn’t easy and it requires hard work. I’d like to share five myths about startups that I’ve learned only after hard blood, sweat, and tears.
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I’d love to hear how you are redefining risk in these historic times. Do you define risk as entirely financial? Or, is risk a game to you? Is your fear of risk keeping you from achieving your dreams?
I think we as humans are very risk-averse. We’re absolutely afraid of failure. My question is why?? I think we’re afraid of the unknown, we’re afraid we’ll lose our standard of living, we’re afraid we’ll look stupid if we fail, ultimately we’re afraid we don’t have what it takes to succeed. If you’re not starting your new company or pursuing your dream because of risk, I’d challenge you to think differently, rethink and redefine your perception of risk.
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This weekend I’ve been asked to share some thoughts on personal finances in a forum setting. They’ve asked me to share about investing and giving. I’ve shared a bit on my blog about giving so I thought I’d highlight some of my hard lessons about investing. I think overall, I’ve done pretty well, but not great. If I had to do it all over again, I’d definitely do some things differently. So, here are my top 10 investment mistakes from experience:
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In a recent article about Zimbabwe in the NY Times, an economist estimated that inflation had reached 18 quintillion percent, literally 8 with 18 zeroes behind it. The country has a 1 trillion dollar bill. Every report that I’ve read about Zimbabwe has been unbelievable times 10. No country in the history of the world has had this sort of inflation. There is a cholera outbreak that could affect half the 12 million population in the country, there is no fresh water, there is high unemployment, there is tremendous unrest and a government that is corrupt and incapable of governing. The world economy is not helping.
These days when we are all in crisis, our natural inclination is to hunker down and block out what is going on around us. We cannot ignore our common humanity and if we are able to help, we must.
Here’s a gut-wrenching story about two girls living in Zimbabwe (NYTimes):
Aisha Makombo, 15, has been raising her 11-year-old sister, Khadija, since their mother died of AIDS last year. An expressive girl with a soft, round face, Aisha, who is H.I.V. negative, has been struggling to get drug treatment for Khadija, who is now sick with AIDS.
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We live in a world that is go-go-go 24×7x365. I can’t seem to get unconnected, something is always happening, something is always interrupting. Everything seems urgent. Things always seem to be stressful, there is always something to worry about. My focus plan has things that will keep me busy well into the early morning hours every day. Instead of adding more items to the checklist and worrying about more things we have no control over, we need to take a deep breath, relax, and take just 5 minutes each day disconnected to get perspective. When was the last time you took a time-out (other than sleep) away from the chaotic workplace to gain perspective and clear your mind for 5 minutes not with music/noise, but quietly with no interruptions? I want to encourage you to do it. It’s totally counterintuitive to set aside time not to do work in order to do more work. It works for me and I think it’ll work for you.
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Remember the movie Groundhog Day with Bill Murray? Everyday was the same thing over and over again. Sometimes we feel today is the same as yesterday and the same as the day before. We feel like we really haven’t accomplished much and if we had to recall what happened yesterday, we can barely remember anything significant. I sometimes feel trapped in this merry-go-round more often than I’d like to admit. Do you?
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Everyone from investment advisors, business school advisors, Jim Kramer, etc. espouse the ideology of diversification. They tell you that in order to grow your assets and reduce your risk, you should diversify because you don’t know what will work. Well, this strategy works fine as long as the world doesn’t go into a deep recession. The thing is, the worst happened in 2008 - everything went down, commodities, stocks, bonds, and real estate. It’s like the A-Bomb was dropped and everyone who diversified lost money. I was well diversified as well, investing in bonds, stocks, foreign, domestic, etc. I definitely wasn’t shielded. It’s time to shift strategies not only in investing, but also in business.
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