April 4, 2016
by Bill Sweet
On average, internet users spend more time staring at Facebook than any other website. For active users in the US, this amounts to about 40 minutes per day. That’s a lot.
Approximately 1.2 billion people use Facebook daily, of which about 204 million or so are active users in the US and Canada (out of a total of 349 million). Google may outpace Facebook in visits to the site, but the entire point of a search engine is to help you find what you’re looking for, which usually means routing you away from the search engine.
Because it commands so many eyeballs in the aggregate, the top of your Facebook news page is one of the most valuable pieces of real estate on the internet.
Like the Google search algorithm, the system that controls the Facebook news feed is shrouded in secrecy. The company says that it determines which stories to show based on your connections and activity. Advertisers are very interested in connecting and being active with you, and so there is a natural fit for someone who has merchandise and wants you to notice their products to connect with you on Facebook. Like Google, targeted advertising is how Facebook makes most of its income.
Like any system, the Facebook news feed can be manipulated to achieve a certain result. One way to counter this is to use a special link – instead of simply www.facebook.com – after you’ve logged into the site:
http://www.facebook.com/?sk=h_chr
That snippet at the end – “?sk=h_chr” lets Facebook know that you want your News feed sorted in chronological order, instead of sorted by the News feed algorithm. That gives Facebook less of an opportunity to sort your friends’ posts for you, and instead you’ll just get the recent stuff. I don’t have a ton of connections on Facebook – I use it solely for personal communication – so this is perfect for me. Getting this to work in the mobile application is a little trickier, but still possible (click the “More” button, or the horizontal lines, and look for “Most Recent” under “Favorites”).
Another way to have fun with the news feed is to trick it. While we don’t know for sure, based on observation, we assume that Facebook’s system is designed to give extra weight to posts that are 1) exciting, 2) personal, 3) involve major life events. In theory, putting words like “new baby,” “marriage,” or “new job” are going to be more likely to be noticed than “Going to the gym now.” To see this in action, check this post out. Or this one.
Advertisers have figured this out as well, and because so much money is at stake, someone was going to find a shortcut to getting their content promoted. Similar to the issues of click bait with Google, services labeled as “Like Farms” now exist to generate buzz around an advertiser’s products via their Facebook page. Because the news algorithm appears to be reinforcing (more attention results in more promotion), generating a rapid amount of “Likes” and hence traffic early is an inorganic but quick and dirty way to get noticed.
“With AuthenticLikes, we observed likes from more than 700 profiles within the first four hours of the second day of data collection,” say De Cristofaro and co. After that, there was not a single additional like.
The team say this is likely to be the result of automated bots operating a set of fake profiles. Just why Facebook is unable to prevent this kind of activity is not clear.
 |
| Organic vs. Farmed “Like” Growth |
The quote above is from MIT’s Technology Review, which recently studied the phenomena. Another study from Cornell is coming soon.
Facebook itself is very aware of all of this, of course. In late August they implemented some policy changes to crack down on the more egregious click-baiting.
In conclusion, I don’t think that any of this is necessary bad or evil. Like radio and broadcast television before it, Facebook, Twitter, and Google all provide us with incredible services in communication and search capability without directly charging us anything, which is amazing when you think about it.
If you don’t want Facebook or other companies offering targeted advertising, you can always delete your account and not use the (free) service anymore. If that’s a bridge too far, don’t volunteer any information about yourself other than the bare minimum. When you spend 15 minutes telling Facebook which TV shows you like and what kind of car you drive, what do you think they do with that information?
– Bill
March 28, 2016
by Bill Sweet
Thank you very much – particularly our fantastic clients here at the firm – for an incredible tax season.
I wasn’t able to post much this year because we had 17% more clients this year than we did in 2014. We’re incredible grateful and humbled by the fact that we’ve been able to meet so many fantastic new people, and sincerely hope that we were able to make a tough time for all of us just a little bit better.
The final figures show that we filed 1,196 tax returns. In the aggregate we reported a combined $117,064,480 of adjusted gross income, and processed $3,793,784 of Federal tax refunds for our people. Thank you everyone for your tremendous support of our small firm. I can’t begin to explain how much it means to me personally and to our team.
– Bill
March 20, 2016
by Bill Sweet
Two families are in need of assistance following a devastating house fire last night. Both households include veterans, in addition to two small children. I don’t believe that anyone was hurt, which is fortunate, but the effect of losing your home is obviously catastrophic.
The Town of Tuxedo is organizing a drive – see details below – summary:
– Household goods can be donated at the American Legion Hall
– Gift cards can be left at the Tuxedo Police Department 24/7 (for personal hygiene, clothing)
Clothing is the immediate concern since both of these families lost everything they own.
Update on 04/20 from Shari Brooks at the Town:
A fund has been set up at GoFundMe.com. See link below. Monetary donations can be made at the secure site for the families who lost their homes in the duel house fires this past weekend.
http://www.gofundme.com/se6e2pg
We are accepting house hold items at the American Legion Hall. (16 Orange Turnpike, Southfields, NY 10975) For large bulky items please call Town Hall to make drop off arrangements: 845-351-2265. Items such as microwaves, beds, cook ware, towels, sheets etc.… are needed. We will organize and store these items in the basement for the families. When they are ready it will all be there for them. Any unused items will be donated to other families in need.
I am very proud of Tuxedo for how it supports those in our community who are in need, very recently with Hurricane Irene / Sandy. It is the best and most admirable aspect of the Tuxedo community.
Thank you for your support.
– Bill
UPDATE 05/01:
I spoke with Paul this week and everyone seems to be doing fine. No one was hurt in the fire, and that’s always the most important thing. The families are deciding what to do – to rebuild, or to move on – but all have been touched by the tremendous outpouring of support.
Thank you – everyone.
March 12, 2016
Worth reading, even if you have no intention of ever trying to be a short seller – Short Selling: Cleaning Up After Elephants by Guy Judkowski on Seeking Alpha. He describes in understandable, brief yet explicit detail how he did it successfully. It made me realize the exacting, relentless, painstaking effort involved.
March 4, 2016
by Bill Sweet
Just a really quick look this morning at what the US population distribution looks like at the moment (well, as of about a year ago):
I was surprised to learn that the most common age in the US isn’t in the baby boomer zone (50-65), but rather 22 year olds.
The effects of the that echo boom have yet to be realized, in my opinion, on the greater economy. While we certainly have an aging population (look at ages 0-3), we don’t have a lack of US citizens in their early 20s. This group is currently graduating from college, looking for jobs, and will likely shape the US economy with their purchasing power and choices over the next several decades.
– Bill
February 27, 2016
Today is International Women’s Day and I want to write a blog about a topic that has occupied a lot of my research in the past few years: gender differences in financial literacy. Starting from the very first paper I wrote on financial literacy, I found over and over that women were less likely to answer correctly to financial literacy questions. I did not focus on that finding until more recently, when I performed an international comparison of financial literacy. I found the same finding in as many as eight countries: women were less likely to answer correctly to the same financial literacy questions I had asked in the United States. And strikingly, in countries as different as Sweden, Italy, Japan, Russia, the Netherlands, New Zealand, and Germany, women answered in the same way to the financial literacy questions: they said they “did not know” the answer to the questions (the paper is posted on-line at: http://www.financialliteracyfocus.org/alusardi/Papers/FLAT/FLat_World.pdf).
I remember sitting in front of my computer and looking at the papers that became part of a special issue of the Journal of Pension Economics and Financeand comparing the tables across so many countries. It was so clear, so stunning, so evident; yet I had not seen when I considered the data from one country only. It took that comparison, which was done for a completely different set of reasons, to unveil that striking gender difference in financial literacy.
The finding can be interpreted in different ways and this is what my current research is exploring. First, women may simply be aware of their lack of knowledge and they are willing to admit it. This is consistent with some of my other data that show that women tend to give themselves low rating when assessing their financial knowledge. So, women know that “they do not know.” This may, in fact, be the first step to acquire or want to acquire knowledge. Second, women may have financial knowledge but are less confident in their knowledge and are less willing to guess or choose an answer when they are not sure it is the correct one. Some may view this attitude as a drawback, but I see it as a potential advantage. It takes gut to admit one does not know or does not know enough. Humility in the world of finance may give better results than being bold, assertive, and.. well wrong. In case you did not notice, we have experienced a lot of that in the past few years. Third, women may be less comfortable with the jargon that is used in finance. We assume that people know the technical financial terms, few bother to explain them, but most people do not have a clue about what inflation, real interest rates, and risk even mean, and women are willing to say “I do not know.”
What makes this result so important is that women may be the ideal target for financial education programs. Why attend such a program when one thinks he/she knows (according to my findings, only one third of the population has a very basic knowledge of financial literacy; believe me, that program is so much needed!). Many studies have found that women are not only more likely to attend financial education programs (in the program that I myself run, the large majority of participants were women), but women are also more likely to change their behavior after attending the program.
In summary, empowering women with the financial knowledge, the confidence, the terms that are used in finance could be a powerful tool; women may willing to use it. Happy International Women’s Day.
February 20, 2016
SfLR is a classic, a book that every self-directed investor should read. Primarily history, but with a good dose of explanation, and primarily about the USA, it’s the best overview of the equity side of investing one can find. It’s a book about stocks in the broad collective sense, not about individual stocks or analysis thereof. Anything you wanted to know about stocks (see the table of contents in the Amazon preview of SFLR) and were wanting to ask and get a succinct intuitive (non-academic, non-mathematical) answer, this is the book.
The mere fact the book is now in its 5th edition twenty years on from initial publication is testament to its enduring well-earned popularity. Author Siegel has not rested on reputation, the main update being an account of the 2008 financial crisis and its aftermath in the first 70 pages.
It’s hard to say these are criticisms, but here is what I would like to see expanded (I’ll gladly take another 100 pages despite the book being already almost a brick at 400 pages):
- Central thesis past vs future? – The fact in the following quote accounts for the fame, and the title, of the book “… stocks, in contrast to bonds or bills, have never delivered to investors a negative real return over periods lasting 17 years or more” (going back to 1802 up to 2012 in the USA). OK, so how about the future? What are the chances this streak will continue and what are the factors to support the expectation? Is it just that the USA is lucky, as the-world-is-random folk believe? Siegel does address this crucial question to some degree – yes, since i) emerging markets country investors will buy up the assets of the boomer generation as they sell to finance retirement, ii) prosperity comes from productivity growth in the USA, which will continue. This is not totally convincing. How have stocks done around the world? The experience of other countries is not examined to any degree (Canada itself gets a couple of insignificant mentions), especially those where stock investors lost everything. Others like Elroy Dimson, Paul Marsh and Mike Staunton in Triumph of the Optimists and in their annual Credit Suisse Global Investment Returns Yearbooks have taken a much more extensive long term look. Siegel really considers only volatility risk since that is all that has transpired in the USA. It would be helpful for him to consider other long run equity risk, such as William Bernstein does in Deep Risk (which I discussed here).
- Investing strategies beyond cap-weight and fundamental weight? – As his own dissection of the Dow Jones Industrials and S&P 500 stock indices makes clear, cap-weight indices and the funds that implement them are strategies themselves, with significant inefficiencies, despite being miles better than actively managed mutual funds. There are better alternatives but he covers only one – fundamental weighting. Siegel describes small size, value and momentum factors but neglects low volatility and then misses the chance to tie all that together by describing the current state of the art indices/strategies being developed in places like the EDHEC Risk Institute in Smart Beta 2.0, such as maximum diversification, efficient maximum Sharpe, maximum decorrelation, minimum portfolio volatility, risk parity etc.
Nevertheless, it’s hard to knock Siegel too hard for the tremendously useful contribution this book makes to investing knowledge.
There’s plenty of footnoting for further reading of sources. There are lots of charts and tables. The lengthy 17 page index is excellent. The writing is clear and jargon-free for the ordinary investor though it helps to have basic knowledge of investing. It’s a book one can return to again and again. It gave me plenty of blog post ideas.
Rating: 4.5 out of 5 stars.
Disclosure: The publisher provided me with a copy of the 5th edition for review.
February 11, 2016
The American Academy of Arts and Sciences convened a group of experts on Thursday and Friday of last week, March 14-15, in Cambridge, Mass. The title of the conference was “Financial Literacy and the Educated American.” As you know, the Academy is one of the nation’s oldest learned societies, and during the reception on Thursday night, the President of the Academy guided us through parts of the building, showing us some of the acceptance letters which are framed and posted on the walls, including one by George Washington. I thought it was good omen and that all of these wise historical figures would inspire and watch over us at the meeting.
A special meeting it was. The caliber of the participants was extraordinary. We had members of the President’s Advisory Council for Financial Capability, the Assistant Secretary of Labor for the Employee Benefits Security Administration, the head of the Government Accountability Office, the President of FINRA Investor Education Foundation, and the heads of some of the top not-for-profit institutions working on financial literacy. The conference convened some of the top academics in the country, including the dean of one of the best business schools in Europe. We also had fellows of the Academy who work in the private sector and the CEO of a firm. These people normally do not meet in a single place, but the Academy was able to bring all of them together.
The invitation letter outlined the intent of the conference: “Recent financial crises in the US and abroad have highlighted the urgent need for an increased focus on educational and policy initiatives designed to promote financial literacy in citizens of all ages. To address this need, the American Academy of Arts and Sciences will convene a nonpartisan forum for diverse experts from academic, financial, private nonprofit, and government institutions to share theoretical approaches, best practices, and research methods and findings. The conference will focus on the beginning and end of the financial life cycle of American citizens in order to emphasize the necessity for sustained fiscal education from kindergarten through retirement.”
I co-chaired the first panel, Financial Education over the Life Cycle. We had a rich set of presentations and discussions in that panel and throughout the day. New ideas percolated and bounced around from presentations to discussions, and I kept an ear out for what could be implemented and could make a good next step for this extraordinary group. The importance of financial education in schools could not be overstated, and there was a lot of discussion about content, standards, implementation, and whether to add financial literacy questions to the SAT. There was a very engaging discussion about workplace financial education as well and what the government can do in this regard, given that it is one large and very important employer.
Our lunch speaker was the Chairman of the President’s Advisory Council and CEO of Ariel Investments. He spoke with simplicity, describing how the Ariel Community Academy in Chicago was created, how the students there manage a fund with the help of advisors from Ariel Investments, and how proud he was of it. He started that initiative many years ago and I am pretty sure without having any studies using control and treatment groups demonstrating that financial literacy works in schools (what we all want to see today). He did not mention it, but today the Academy outperforms all schools in the district and is ranked as one of the top elementary schools in all of Chicago. He also helped McDonald’s put in place financial education programs so that employees, in particular minority employees, could save more for their retirement. He had seen data about disparities in saving among African Americans and Hispanics and thought it was important to address that. Again, I do not think he had seen studies showing that workplace education works, but what important was to address a problem. I asked him what motivated his work. He replied that his father had given him stocks as a Christmas gift; that started his journey. I forgot to eat lunch when he spoke. He is a person with a vision, someone with the capacity to look into the future, which is critical when one is dealing with education.
But back to my panel. In my twenty years of work, I had never chaired a panel with the CEO of a company. But I did so at this event and I hope I will be able to do it again. I do hope that this conference was just the beginning of a conversation and partnerships among the public and private sectors. In a time of tight budgets, it is important to take leadership and have a vision of what academics, not-for-profits, and the private sector can do together to combat financial illiteracy.
Despite much enthusiasm for financial education initiatives, there were doubters and skeptics at the event, too. Some said we lack data. Others said we lack evidence. I hear such comments over and over at every conference I go to, and—true to form—one conference participant stated, “We do not have any evidence that financial education works.” Dorothy Wallace, a mathematician from Dartmouth, leaned toward me and whispered, “We do not have any evidence that ignorance works.” So, I would say we are even. I look forward to the next steps.
February 5, 2016
Henry David Thoreau wrote in his book, Walden, “I went to the woods because I wished to live deliberately … and not when I came to die discover that I had not live. I wanted to life deep and suck all the marrow out of life … to put to rout all that was not life.” While written more than a century ago, we might inquire what Henry David Thoreau might write about today. Perhaps that we know how to live life fast, but not deep. Or perhaps that we are so distracted by television, video games, and other mindless activities that we don’t actually live life at all.
EXPAND YOUR COMFORT ZONE …
Over the past few years I’ve assigned students in some of my classes various activities designed to expand their “comfort zones.” The result? While some students did not obtain all they could out of the assignment, most appeared to gain significant benefits from it. Here are a few of the comments I’ve recently received:
- “These experiences have taught me that it doesn’t always matter what people think about you in life. The ones who matter don’t mind, and the ones who mind don’t matter.”
- “What scare me most? Rejection … but now I will try to take more risks and I now understand even if someone does say no to me there is nothing wrong with that because there will always be more opportunities.”
- “I want to change my fixed mindset to a growth mindset.”
- “This assignment helped me realize how small my comfort zone really is. It forced me to do things I wouldn’t normally do and got me to expand my horizons. I think this assignment can be beneficial to whomever is doing it.”
Make the most out of your college life. Decide right now to make the next seven weeks the most impactful of your life. Choose to undertake one activity a week, from the list (see excerpt from Ron’s book, below), and you can dramatically change your life for the better. You own self will love you for it!
CAN THESE VIDEOS CHANGE YOUR LIFE?
There are great pearls of knowledge and skills to be learned in the classrooms at college. But not all learning is done in the classroom; much wisdom can be found elsewhere. Hence, in addition to choosing to expand your comfort zone through the attached activities, I also suggest you team up with a friend or a family member and watch one or more of the following videos, from my personal list of favorites
Just take one hour out of your next day, and you can propel yourself down a path of greater success with the insights you obtain from these interesting, and often entertaining, short videos:
- Kalina,”Before I die I want to…” [Big Talk] (6:23)
- Carol Dweck: The power of believing that you can improve (10:24)
- Paul Solman, PBS Newshour: ‘Sesame Street’ Tells You How to Get to Sunnier DaysFinancially (9:35) (be certain to watch the last half of this video!)
- AngelaLee Duckworth: The key to success? Grit (6:12)
- TheSkill of Self-Confidence – Dr. Ivan Joseph (13:20)
- Eric Thomas, “Success … How Bad Do You Want It?” (5:30)
- “LiveLife the Real Way” (4:58)
Believe in yourself. And act to become a better friend, companion, family member, student, and person – each and every day.
Carpe diem.
Ron A. Rhoades, JD, CFP®
Ron is a college professor, where he provides innovative instruction in financial planning and other business courses. Commencing July 2015 he will be joining the Department of Finance at Western Kentucky University, Bowling Green, KY, where he will serve as Program Director of its rapidly growing and nationally reknowned personal financial planning program.
Eleanor Roosevelt once wrote, “Do one thing each day that scares you.”
I once met two brothers, students in my class, who – despite having characteristics of introverts – were outgoing, friendly, and always willing to tackle new challenges. Having lunch with them one day, I discovered their secret. Each and every morning, as their mother sent them off to school, their mother said: “Do one thing today that scares you.”
We must realize that our brains are hard-wired, from the days of the cave men, to flee from danger. But in today’s society, where interpersonal skills are so highly valued, we need to learn to overcome fear. Otherwise fear prevents us from achieving, and it takes a far greater bite out of our life than we should permit it to do.
While not all fears should be overcome, many fears cause us to be anxious in social situations. To overcome these and related fears, each of us needs to seek to “expand our comfort zone.”
As you expand your comfort zone, you actually grow as a person to fill out these new boundaries.
If you have a larger comfort zone, and continue to push the edges of it out, you really do grow as an individual – you have more experiences, undertake more learning, and acquire more wisdom.
Understand the Need to Say “Yes”!
In the 2008 movie “Yes Man,” Jim Carrey plays Carl, who reluctantly promises to stop being a “No Man” and vows to answer “Yes!” to every opportunity, request or invitation that presents itself thereafter. While the result (in the movie) is both hilarious and, at times, moving, the movie is actually based upon a real experiment. In fact, after the movie, some individuals chose to say “Yes!” for an entire week. Here’s one blog post indicating the results: http://vladdolezal.com/blog/2009/my-real-world-yes-man-experiment/
If saying “Yes!” to everything for a week is too much of a challenge, then consider an alternative – calculated activities to expand your “comfort zone.” For much of the past 30 years, I’ve taken on the challenge of expanding my comfort zone. Being a severe introvert, I first learned how to socialize at receptions and similar events (a skill I am still working on). I began to give speeches and presentations, first to small groups; this evolved into my current ability to give speeches to a several hundred or a few thousand people at various conferences without any undue nervousness.
Each and every one of us has her or his own “comfort zone.” Studies have shown that 40% of college students possess social anxiety – i.e., shyness. And the remaining 60% possess anxiety in other circumstances, such as public speaking, meeting someone new for the first time, etc. The truth is that each and every one of us can expand their comfort zone, significantly, over time. And college is a great place to undertake this effort.
Why do this? Life’s magic occurs largely outside your current comfort zone. If you want to suck all the marrow out of life, as I do, you need to be willing to put yourself out there into areas of “discomfort.” Then, as you adjust, you become more and more comfortable in those situations, thereby expanding your comfort zone, you actually grow as a person to fill out these new boundaries.
If you develop a larger comfort zone, and continue to push the edges of it out, you really do grow as an individual – you have more experiences, undertake more learning, and acquire more wisdom.
In short, you experience life more fully.
As an added bonus, when you interview for a job in your career field you will be a better interviewee, and job candidate. The better jobs go to the graduates who are more personable and well-rounded!
Learn to Rush Toward Your Fears!
I am deathly afraid of heights, and always have been. As a child, during a visit to New York City, I was very nervous about going up the Empire State Building, and even more so when my parents urged me to peer down from the observation deck to the streets below. My fear of falling was intense; and my parents could never get me to ride any roller coaster – regardless of how small or tame it may have been.
So at the age of 18 years, I faced a dilemma. I was in my first summer at the U.S. Coast Guard Academy. I found out that on the summer cruise, in just a few weeks’ time, I would be required to climb the rigging of the tall ship, the U.S.C.G. Eagle, and to work aloft handling the sails.
While at the Coast Guard Academy I received instruction from a Boatswain’s Mate, who had been in the Coast Guard for about a decade. He previously had served on the Eagle, and as he taught us various types of knots he explained where on the Eagle we might find a use for each one. As he was teaching several cadets and me the intricacies of tying a bowline (a type of knot), I asked the Boatswain’s Mate, with some apprehension in my voice, “How difficult is it to climb the Eagle’s rigging?” The Boatswain’s Mate paused from working the line in his hands, looked me straight in the eye, and simply said: “Rush toward your fear.”
A few weeks later, my fellow swabs – that’s what they called first year cadets – were flown to Miami, where we picked up the Eagle to take her on a week-long training cruise. So here I was, at the Port of Miami, aboard the docked ship, with my gear stowed. It was an early summer evening, and I was on deck, looking up at the three masts, the 10 yardarms, the crosstrees, shrouds, halyards, and all the other rigging. As I was looking up, contemplating my fate, the Officer of the Deck approached me and asked, “Want to go aloft?”
I imagine I turned white a bit, but just then I remembered what the Boatswain’s Mate had said. “Rush toward your fear.” So I nodded to the Officer of the Deck, stowed my hat, and headed up the rigging. I climbed up the rope ladder, past the first platform and the lowest yardarm. I continued higher and higher, pausing every several steps to look around – and at times down to the deck, appearing smaller and smaller as I went higher and higher. Past two more yardarms, and finally I made it to the second and higher platform upon which I could sit, pause, and regain my senses.
But just then the Officer of the Deck shouted up, “Keep going. Touch the commissioning pennant.” I looked down, then up, terrified. The shrouds (lines running up and down) were very narrow at this point, and it was difficult to fit my big shoe in the rigging to go higher. But, keeping in mind what the Boatswain’s Mate had told me, higher I did go, the last thirty feet, and touched the commissioning pennant at the top of the mainmast, some one hundred fifty feet above the deck.
As I headed back down, I traversed out onto the footrope that hung beneath each of the yardarms. My big feet found each single footrope that hung beneath each yardarm with ease with a firm grip on the handrails affixed to each yardarm. I traversed out to the end of each yardarm, then returned back to the mast.
I also paused and sat on each platform, partly to rest and partly to enjoy the view. In the rays of the setting summer sun, I felt a sense of accomplishment. Not only had I climbed the rigging, far beyond the point where I ever thought I would, but I was the first among my classmates to do so.
From that day forward, I was known as a “rigging rat,” always willing to go aloft to furl or unfurl the sails.
A year later, I was aboard the Eagle for a longer summer cruise, this time across the Atlantic and back. When returning, just northwest of Bermuda, the ship encountered a low-pressure system. (A better description of the low-pressure system would be “minor hurricane” – although I was not convinced that hurricanes could be minor.)
It was the middle of the night. Cadets were not allowed on deck, except for the bridge crew. The Eagle was under sail, in seventy-five knot winds, with gusts up to ninety knots. Even though it was the dead of night, the sea was awash in white, as the wind and waves combined to brew a froth of whitecaps and foam atop the thirty-foot high waves.
That night I was on duty on the ship’s helm. I led a team of six cadets, on three connected six-foot ship’s wheels, as we sought to keep the ship on course. The Eagle did not have power steering, so turning the rudder, via the wheel, required a good amount of muscle applied by the six cadets.
Only the three lower sails on each mast were deployed that night, as the top two sails had long been furled in order to not strain the masts too much. Suddenly the gaskets that constrained the topsail to the yardarm blew out. This posed a dangerous condition – not only could we lose a sail in the powerful wind, but the stress being placed on the mast by the sail flapping in the high wind could cause it to snap. If the mast snapped, it could fall to and through the deck, even punching a hole in the hull of the ship. In short, the ship was at risk.
The Captain quickly sent an experienced enlisted man aloft to secure the sail. After twenty minutes, the enlisted man signaled down that he needed more line. The Captain looked around, spotted me on the wheel, and asked: “Rhoades, want to go aloft?”
I wouldn’t say that I wanted to go aloft in those conditions. But a request from your Captain was more like a very strong suggestion, and somewhat close to an order. So I headed down to the Boatswain’s Locker, measured out eighty feet of line, cut and spliced the ends of the line, and wrapped it in a coil. With the coil of line slung over my shoulders, I headed up to the deck, crossed to the side of the ship, and in a pause between the waves crashing over the ship’s side, I then grasped the rigging and headed aloft.
The Eagle, though under sail, reeled from side to side and yawed fore and aft. Climbing the rigging was instantly a challenge, for as the ship careened over onto one side I found myself not climbing vertically, but rather at times almost horizontally, looking down at the deck. Then, as the Eagle careened to its other side, I hung on, for I would find myself hanging on to the rigging, looking straight up to the sky, with all fours – and even at times with my head seemingly below my feet.
Fifteen minutes of effort later, I finally reached the top yardarm. I left the rigging and traversed out onto the footrope beneath the yardarm. There I encountered the enlisted man – the very same Boatswain’s Mate who had taught me knots more than a year before. We looked each other in the eye, and he nodded at me, with a slight smile passing his lips. I nodded back, and then together we set to work, wrapping up the sail with the line and tightly securing it to the yardarm. Some thirty minutes later, we were back on deck, exhausted from battling the high winds and sea spray as we worked aloft. Yet it was a physical exhaustion only, for our minds raced as we recalled the journey we had together pursued during the past hour.
Rush toward your fear – or you will miss out on the great experiences in life.
Today I am still afraid of heights. But I have been on roller coasters since I was eighteen years of age. And I have gone up in many tall buildings (and even, at times, I have peeked over the edge).
If you are confronted with some fear, realize this. Whatever fear is facing you – whether it be the fear of meeting someone new for the first time, or the fear of public speaking, or some other fear in life – rush toward it. For once you are past it, life is great on the other side.
Your Assignment:
First, watch the following TedX talk, only six minutes long: “Measuring Comfort Zones” by Marcus Taylor at TEDxMelbourne. (6 minutes).
Then, for each of the next seven weeks, choose two activities each week from the list below. Choose those activities that scare you – i.e., those activities that expand your comfort zone. Please note that you may not repeat any activity.
At the end of each week, you should write down your progress in your journal. Schedule a reminder on your smart phone for the same day and time, once a week for nine weeks, to record your journal entries.
Your journal entries might start off in the following manner:
I expanded my comfort zone over the past week by undertaking two activities I would not have normally undertaken.
For the first activity I … (Describe the activity. What was the result for you? How did it make you feel?) As a result of all of this experience, I have realized that ….
For the second activity I … (Describe the activity. What was the result for you? How did it make you feel?) As a result of all of this experience, I have realized that ….
Here are the activities to choose from:
1. Eat something different – a food item you have not tried in at least a year.
2. Give at least three people compliments on any day, when you normally would not (counts as one activity).
3. Smile at (all) strangers, and say “Good morning” or “Good afternoon” or “Hi” to all the people you pass by, for one entire day – and wherever you are!
4. Get to sleep (bed) one hour earlier for four nights straight, and at the same time each night (this counts as one activity).
5. Speak up in a class – when you normally would not speak up.
6. Go to an on-campus event or which you typically would not go to, or engage in a new activity on-campus.
7. Thank a friend or family member for their ongoing support.
8. Tell someone they are loved.
9. Let go of your self-judgment for a day. And do something others would never think you would do. Feel good about yourself. If others think ill of you – they do not matter; they are no longer part of your personal universe.
10. Peform on Karaoke night.
11. Show three friends or acquaintances the benefits of the “Power Pose” and show them the video (Google search: “TedX Power Pose”).
12. Unplug your t.v. and video games for one entire week.
13. Use the writing center on-campus for assistance in reviewing the draft of an essay or paper.
14. Do your math homework in the math lab, seeking assistance when needed.
15. Ask for a tutor.
16. Form a study group, or join one, during the next seven days.
17. See a professor for guidance on “how to do better” in a particular class, or on a particular assignment.
18. See a professor for tips or career paths and/or “how to best network to find jobs or internships.”
19. Obtain counseling at the student health center to talk through a problem or to seek ideas on how to relieve stress.
20. Apologize to someone you have done wrong / admit you were wrong.
21. Write a “personal log entry” in which you forgive someone for a wrong done to you. Let go of bitterness and anger. Let go of a grudge. (Whether you choose to communicate your forgiveness to the other person is up to you, and dependent upon the circumstances.)
22. Perform three “random acts of kindness” in one day (counts as one activity). For ideas on random acts of kindness you might undertake, Google search the term “random acts of kindness.”
23. Go up to a stranger in a student dining or coffee shop area. Introduce yourself and ask him or her if you can ask them a few questions, for an assignment you are working on. Find out the person’s name, major or occupation, hometown, and what they like most and least about the college or the program they are in.
24. Change your group of friends (i.e., don’t “lie down with dogs”), or disassociate yourself over time from one friend who tends to drag you down.
25. Undertake a civic engagement activity with others.
26. Post a “success tip” once a day, each day, or your dorm room door or another place on campus, or on your social media page, for five straight days. Make certain you indicate below the success tip your identity, such as: “This success tip provided courtesy of (your name).”
These exercises can be powerful, if you approach them with an open mind and a view toward personal growth.
Prior comments received from students include:
- “Some students don’t really understand the point of these exercises. But, it’s teaching the confidence that you need to survive in the business world.”
- “As a result of all these experiences, I have realized how important it is step outside your comfort zone. I never realized how much you could be missing out on when you stay within your safe day-to-day routine. Although not every experience was a pleasant one I still enjoyed all of these exercises.”
- “I feel that doing things which are uncomfortable can make life more worthwhile.”
- “I know some of these tasks might come by easy to some people, but they were hard ones for me. I realize that stepping outside your comfort zone not only builds strength, but it also helps you realize things about yourself you would have never known if you didn’t do the unusual.”
- · “I would do this project one hundred times over again.”
January 28, 2016
I have started to write a blog for the Wall Street Journal, and I hope you will follow my blogs there. I provide the link below. However, I will keep posting the blogs here as well as I write a longer text than it is published because there is a hard word limit at the WSJ.
http://blogs.wsj.com/experts/2015/04/15/three-key-concepts-every-personal-finance-class-should-teach/
More than ever before, we must make financial decisions that are important and consequential. How much should we contribute to retirement accounts and how should we invest our retirement savings? Should we enroll in a health insurance plan with a low or high deductible? What do we need for our children’s education? Household finances have become sufficiently complex that simple intuition or the advice of family and friends is not enough to guarantee good choices.
There are courses in corporate finance and specialized curricula for managing firms’ finances, but what is available when we serve as our own Chief Financial Officer (CFO)? Fortunately, personal finance is a subject making its way into schools, from high schools to colleges to graduate programs. Online courses are also springing up, and some employers have started to offer financial education programs to their employees.
What should the content of such courses be? As member of the Board of Directors of the Council for Economic Education, I served as an adviser on the National Standards for Financial Literacy. From these standards, we can identify some of the crucial concepts that everybody needs to make informed financial decisions. I am going to focus on just three, the Big Three as I tell my students.
One fundamental principle of personal finance is the power of interest compounding. This knowledge is key for saving, borrowing, and investing decisions. It enables us to understand, for example, why it is important to start to save early. And we need to do calculations to see results. If I borrow at 20 percent on my credit card, how long does it takes before my initial debt doubles? If expenses and fees reduce my rate of return by one percentage point, how is my wealth affected over a 30-year horizon?
Because financial decisions are inherently about the future, we must consider how money’s purchasing power changes over time. We must also acknowledge that the future is uncertain. That brings into play two more building blocks: knowledge of inflation and risk. Distinguishing between real and nominal values is essential to keeping a stable standard of living over a lifetime. Indeed, personal finance is where we can fully appreciate the critical role the Fed and its monetary policy play, especially when it comes to low and stable inflation and its implications for financial planning.
Knowledge of risk and risk diversification is at the basis of portfolio choice. We can formally prove that the old adage “do not put all of your eggs in one basket” is, indeed, good advice. Even more, we can learn how to implement it well. Moreover, we can protect ourselves and our wealth from the many sources of risks: interest rate risk, health risk, and the risk of living too long!
The Big Three are the stanchions of a personal finance course we launched three years ago at the George Washington University School of Business. While I cannot say whether this course will lead to smarter financial decisions, students’ eagerness to enroll, performance on the tests, and comments when they complete it give me much hope.
« older entries
