Look for the Tailwinds

I never fully appreciated the impact of tailwinds and headwinds until I started cycling. I couldn’t believe the difference they make. Even when the winds are light, a tailwind does wonders. I wish I’d better understood this phenomenon earlier in life — not with respect to cycling, but with respect to life generally.

Recently, I read some comments by Warren Buffett about tailwinds and headwinds. Buffett stressed the importance of being in a business where tailwinds prevail.

“There are some businesses that are inherently far more opportunity than others,” he said. “So you want to give a lot of thought to which train you’re getting on.” It’s important to be “in businesses where tailwinds prevail rather than headwinds,” he added.

Take Mr. Buffett’s advice seriously, Vera. It will make life so much easier.

Twice in my life I joined businesses with headwinds: once with a chemical company and once with a small private college.

It’s not that either experience was bad. It’s just that there were limited opportunities. And the job was so much harder than it needed to be.

From an employment perspective, the chemical industry had been contracting for quite some time (still is). Technology, competition, demographics, globalization and commoditization had taken a heavy toll. It’s also a capital intensive business, which presents its own challenges, especially in this era of high-margin, capital-light businesses. In short, it’s an industry with headwinds, particularly with respect to employment and career opportunities.

That doesn’t mean you can’t have a satisfying successful career there. It just means there are industries with far more opportunity. And which are more exciting and dynamic. Why deal with headwinds if you can avoid them? (Of course, if you’re a chemical engineer, perhaps it’s the right place to be.)

The headwinds at the college were even stiffer. The 20th century was the century of colleges; the 21st is the century of universities. For a myriad of reasons, the vast majority of students want to attend a university, not a small college, especially one that is nestled in a rural community far from centers of commerce and industry.

Small, under-resourced colleges have a tough go of it these days. Most are struggling financially. There’s never enough money. Many are struggling academically, too.

Maintenance ends up being deferred. Salaries can’t keep pace with wealthier institutions and research universities, and it’s tough to compete for the best talent. The colleges have a hard time competing for the strongest academic students, too. It’s a constant struggle.

Again, it doesn’t mean you can’t have a satisfying career there. But it does mean the opportunities will be limited. And it means the environment is one of scarcity and not abundance.

Why deal with such headwinds? Why not go where tailwinds prevail?

One of my faults (there are many) is that I’m a sucker for a challenge. It’s a fault because it makes life harder than it needs to be. Looking back, I’m convinced I’d had been much better off looking for tailwinds instead of being attracted to headwinds, even though, from a career standpoint, things worked out pretty well for me. But perhaps not as well as they would have if I’d ridden more with tailwinds.

Don’t make the same mistake, Vera. Life is hard enough. Strive to ride with the wind, not against it. It will make the ride so much easier.

Should Anything Stand In The Way of Making Money?

Last evening, I took issue with this tweet of a financial blogger whom I had followed for his investment insights (Cullen Roche):

The idea of a “sin stock” never made sense to me. Who is the arbiter of whether a company makes the world worse or not?

Cullen went on to say:

The point I am getting at is that if these companies were truly sinning then the economy would divest them. Their stocks would go to $0.

[I]f they operate legally & have customers they’re not sinners.

There you have it, Vera: the market is the arbiter of what’s right and wrong.

I’d feel a whole lot better if I thought Cullen was an outlier in this regard. But I’ve seen too much. And lived through too much. I know better. I know that, often, the market — more specifically, money — is the arbiter.

Who’s to say what makes the world worse? Or better?

Some people say, “Let the market decide!”

Others say, “There is such a thing as morality and ethics that should constrain the markets. And individual choices.”

Today, I am so thankful you have the parents you do.

The Boomers’ Last Hurrah

About 10,000 Baby Boomers (those born between 1945 and 1964) retire each and every day in the United States. And now a large number are reaching age 70 each and every day. Our last hurrah is about to unfold.

The aging of my generation will produce a couple of indisputable consequences. First, outside of health care, the massive wave of retirements will depress consumption — that is, spending — in a very significant way, which will limit growth and exert deflationary pressures.

Second, this retirement wave will exacerbate our pension mess by increasing pension and Social Security costs dramatically. This comes against a backdrop of underfunded plans.

Despite what the right-wing propaganda machine persistently spews forth, Social Security is a relatively easy fix. But the state and private pension fix isn’t.

State and corporate pension plans are grossly underfunded. Some have already failed. More failures are to come. In short, some will renege on their obligations and retirees will not be receiving the monthly checks they’re expecting. (The only “bright”spot for the pension plans is that Americans are now dying earlier, thereby reducing the plans’ payouts.)

Saving some of the public systems will require tax increases, which will further suppress consumption.

Third, equity prices and, therefore, investment portfolios, will take a hit. Take General Electric for example. GE’s underfunded pension hole is $31 billion. Yet the market has yet to fully price into the stock this huge deficit.

Many other companies have large unfunded pension commitments. This will not be good for asset values and, by extension, individuals’ and endowments’ portfolios. Less spending. Deflationary pressures.

There are 72 million Boomers in the U.S. My generation had a major impact on our economy and society as we moved through adulthood. Don’t expect the impact to be any less as we move through retirement. It’s just that the impact will be very, very different.

When Debts Are Fun, and When They Aren’t

“Some debts are fun when you are acquiring them. But none are fun when you set about retiring them.” – Ogden Nash

I don’t mean to beat a dead horse to death, Vera. But I know you’re going to be bombarded with people, banks, credit card companies, stores and others encouraging you to borrow. And making it really easy for you to borrow.

Why wait when you can have it now? And you can have it all!

That’s the message. What you’ll never hear, however, is anything about the pain of paying it back (retiring the debt). And of not having enough savings to become financially independent and enjoying the freedom that comes from that.

Borrowing has come to be the American way. I’m not really sure why. But I am sure that excessive debt — and, in particular, the incurrence of huge amounts of unproductive debt — have caused all kinds of problems for people, companies, and local and state governments.

Yet we seem never to tire of debt. In fact, we borrow even more.

Oh, well, I suppose you’ll figure out what’s best for you. Just try to remember Mr. Nash’s point when you’re considering whether to get into debt: there is nothing fun about repaying loans.

That’s not to say that all debt is bad. Indeed, debt for productive uses can be good. Debt that yields a robust debt-income stream can be good.

But much of the debt incurred doesn’t. Paying that back will hurt the most.

A Series of Provocations

I suspect few would describe me as a provocateur. But it occurred to me that that’s what I’m being with these posts, Vera.

Part of me wants you to know me if I’m not around when you’re old enough to know or care. But that’s just a tiny part of it. The far more important part is the desire to provoke.

Provoke what?, you might ask. It’s simple really: Thought. Curiosity. Passion. An ethical bearing.

It’s my deep desire you become a thoughtful person. And a doer with intentionality, compassion and zeal.

But to think deeply, to become you — someone apart from the herd — you must be provoked. Many forces are aligned to instill obedience, compliance and herd mentalities. Indeed, many of our schools and workplaces are unwitting instruments of such forces. Consequently, it takes effort and intentionality to be an independent thinker, one who claims his or her own agency. One who fulfills his or her unique destiny.

It occurs to me that life might be easier for the unquestioning person. I would never fault anyone for choosing that path. But perhaps it’s the path that chooses us.

It also occurs to me that it is in the doing that life is lived. Thinking alone, living in one’s head, is a recipe for loneliness and despair. It is rare the person who can be contented there.

Work is a means of fulfillment. Dignity. Empowerment. Identity. And, ultimately, it can be the source of a sense of purpose.

Yet without thought we are merely instruments of production. Tools for others to use. And to discard.

You will be bombarded with many messages. Many claims of truth. Yet I have found many to be lies.

Distinguishing lies from truth is not always easy. More often than not, lies come well disguised. But reason (deep thinking) is there to help. Be wary of allowing it to be supplanted by the loudest voice.

The voice many claim as true is that of a taker. Yet I have found that it is in giving that the soul finds delight.

Your mind is a powerful instrument. Don’t be shy about using it. But don’t think it has all the answers.

Answers come in different ways. Never ignore that which tears seek to reveal. Or the lessons of laughter.

Sometimes, when we play and I’m sitting on the floor, you run and throw your entire body into me. And laugh.

It seems you are a provocateur, too.


Where You Choose To Live Could Have Dire Consequences

Watching news reports last week about explosions at one of my former plants in Crosby, Texas, rekindled these thoughts in me once again. To be precise, the plant really wasn’t mine. I didn’t own it. But I was responsible for it. I was the CEO of the company that owned and operated the plant.

But that’s not the point. The point is this: Why do humans fail to address threats until they’ve materialized?

The most notable example was 9/11. We had been warned that terrorists might fly planes into buildings. But we ignored the warnings and then, when the threat turned into reality, made excuses by claiming no one could have foreseen such an event (even though some did).

There are countless other examples. The Crosby plant is just the latest. The situation there was avoidable. So why was it allowed to happen?

Vera, the answer to my first question (why do we fail to address threats?) is this: I’m not sure.

I don’t know why people are so reluctant to address threats when there’s time to do something about it. Complacency? Poor judgment? Laziness? Lack of concern? I’m not entirely sure.

But I do know one factor that plays a role: money.

Solutions often require spending money, either on capital or higher operating expenses. But you get ahead in corporate America by cutting costs, not increasing them. So the incentives reward deferral and avoidance. And the system usually doesn’t tolerate people who force it to confront risks, especially ones that require money to ameliorate.

(As an aside, this is why I’m bemused by people who say we don’t need regulation. All that tells me is the person is utterly clueless and has never run a business that has the capacity to inflict harm (to people, the financial system, the environment, etc.). Opinion grounded in ignorance can do a lot of harm and we’re seeing that play out on the national stage today. But that’s beyond the scope of this post.)

Well, I suppose there isn’t much you or I can do about it. Money rules. Safety often doesn’t.

So does that mean we can do nothing about it? Not quite.

We can limit our own exposure to avoidable risks.

In that vein, here is one thing we can do to reduce those risks materially: avoid living near train tracks or chemical or fertilizer plants (or certain other industrial plants for that matter).

I don’t want to share details because I don’t want to risk giving anyone an idea that may not have occurred to them. Suffice it to say the risks associated with living near train tracks, fertilizer plants and certain chemical plants are much higher than most people think.

Take Toulouse, France as an example. On September 21, 2001, a plant that was owned by a sister company of Arkema Inc. (the company that owns and operates the Crosby, Texas plant) had an incident. The explosion killed 31 people and injured more than 2,400. Property loss was massive. The only reason the explosion didn’t receive more attention was that it came on the heels of 9/11, which, understandably, still captured America’s attention.

In short, where you choose to live can have dire consequences.

If you can’t avoid proximity, at least be sure not to live downwind. Know the direction of the prevailing winds in your area.

I made the mistake of failing to take this into consideration when we moved to Westtown, Pa., not far downwind from a chemical plant that could put the community at risk. I hope not to make the same mistake again. (Fortunately, nothing happened at Westtown when we lived there, and, of course, I hope that nothing ever does.)

Now I realize, in most cases, the risk of something bad happening isn’t high. But I also know that humans tend to think the worst that could happen has already happened. Yet reason tells us that’s merely an embedded bias and isn’t supported by fact or reality. The worst that could happen may be around the corner.

And although the risk of something really bad happening may not be high, the risk of something really bad happening if an event does occur can be very high. Indeed, it can be catastrophic.

I’m aware of one chemical plant that could threaten (lethally) people 18 miles downwind. And I know that groundwater is contaminated at and around many chemical and other industrial sites in the U.S. (and other countries, too). And that a lot of bad stuff (including carcinogens) still spews from stacks and plants.

I’m also aware that few people know what’s being transported on our rail lines and what could happen if a breach occurred, in just one rail car, in a populated area. If they did, something would change.

But as it is, the companies and their lobbyists bend laws and regulations their way via their campaign contributions and other means and we go on our merry way — unless and until catastrophe strikes, that is.

Nothing good can come from living near a chemical plant or other industrial site that handles or produces toxic or hazardous substances or emits such substances into the air or disposes of them into the ground.

And nothing good can come from living near a train track.

But a lot bad can come from living near a chemical plant or train track. The fact that most people don’t appreciate what can happen doesn’t make the risk any less real.

It would be nice if we could count on our fellow human’s to avoid doing things that put others at risk. It would be nice. But we can’t.

Therefore, each person has to take responsibility for his or her own safety, Vera. We can’t eliminate all of the risks. A plane could fall from the sky onto our house. A driver could cross the road and hit us head on (I lost an aunt and cousin this way). The possibilities for something bad happening are seemingly limitless. But you can’t control what you can’t control. And, frankly, I don’t worry about those risks.

But there are things we can do to minimize unnecessary risks. One thing we can do is to be mindful about where we live.

Know your surroundings. There is no upside to taking avoidable risks when better options exist.

Too Afraid To Be Away From the Office

Americans don’t take roughly half of their allotted vacation time because of fear. Vera, if you ever find yourself in the position of being afraid to take your allowed vacation time, know that it’s time to take stock of your life.

Sixty plus years of life has convinced me that fear is the most persistent and powerful force in the universe. And that one key to a happy life is to overcome it.

It’s no easy task. In fact, some people may say it’s an impossible task. But they’re only partially right. It is impossible to conquer fear entirely, but it is quite possible not to allow it to dominant your life.

But it may take some planning. And willingness to take some risks (or what will be perceived by many people as risks).

If you’re going to be beholden to anything eternal to you, such as an employer, a particular client, an image or certain position in life, then it’s likely you’ll fear losing that thing. And it’s possible that that fear will lead you to do things you’d otherwise not do, and to feel things you’d rather not feel. It’s because the thing owns you.

The antidote to fear, in my experience, is freedom: the freedom to walk away, the freedom to live your life in harmony with your values and heartfelt desires.

Yet freedom can be illusive. Things seek to steal it, to deprive you of its glory. Fear tells us freedom is risky. Unreliable.

To the contrary, the risk lies in allowing fear to convince us that the other is the source of freedom and happiness. And that it doesn’t reside within.

We think we need more than we do. Fear convinces us of that.

Many people are afraid to spend time away from the office. They fear losing their job. Or their privileged position.

I hope you know freedom, Vera. My hope for you on this Labor Day is that you’ll never be afraid to leave the office and, if you find yourself in that position, that there will be a path out to freedom.

Mission Complete (Almost)

A chief reason we bought the house we did was walkability. My goal was to be able to walk everywhere. I’ve previously written about my late-in-life commitment to walking and hiking. One of my regrets in life is my dependency on the automobile and all the time I’ve spent in one (including long commutes and being stuck in traffic). At your grandmother’s insistence (smart woman!), this time we were going to live someplace that was highly walkable.

Mission accomplished!

We walked to the movie theatre last evening (our first experience at a cinema brewery, where you can have dinner at your seat). Other places walked this past week or so include the grocery store, optometrist, farmer’s market, drug store, restaurants, coffee shop, dentist, library, city park, bakery, insurance agent, ice cream shop, bank, wine store, post office, brew-pub and Monon Trail. I haven’t yet walked, but could walk, to Whole Foods, the doctor’s office and the hospital. In short, I can walk everywhere — well, just about everywhere.

Walking to your house would be a stretch, Vera, although I could get there by bike. And we have walked farther than that before (at high elevations in the Rocky Mountains no less). The only other two places that require pedals or engine are Home Depot (Lowe’s is closer but Home Depot is so much better) and Costco (the only store, other than Wilbur’s in Fort Collins and Hazel’s in Boulder, that I actually like love).

So what’s the big deal?, you might ask. For me (us, really), it’s a big deal for a couple of reasons.

First, it’s a matter of health. It’s not the only exercise I get (Peloton cycle and free weights in my home exercise room being my main indoor exercise activities), but it’s an important one, especially as we get older.

According to the Mayo Clinic (and common sense), walking helps you:

  • Maintain a healthy weight (note above references to ice cream shop, bakery, brew pup and wine store);
  • Prevent or manage various conditions, including heart disease, high blood pressure and type 2 diabetes;
  • Strengthen your bones and muscles;
  • Improve your mood; and
  • Improve your balance and coordination.

I’ve also found that it’s good for one’s mental health, creating some space away from work and other things (sometimes, stressful things) that vie for my attention. To that end, I’ve started leaving my iPhone at home during our walks, something I should have done sooner.

Second, it’s a matter of environmental stewardship. It may be a drop in the bucket, but drops add up. Actually, the miles add up. A car sitting in the garage doesn’t contribute to pollution and global warming.

The downside of walking — at least, outside of a dense urban setting — is that it takes longer. But I now have the time — not always, but usually.

So what’s the point of all this, Vera?

Where I live and how much I walk aren’t really of concern to you or anyone else, I would assume.

The point is this: I’ve learned (albeit slowly) that place matters and where we choose to live matters.

There is no one best place for everyone, of course. And the best place may change, depending on the stage of our lives. The best place for you in your 20s may be very different from the best place when you’re in your 70s.

The best place for some people may be an inner city. For others, it may be a remote mountain town. Or alone in the Plains.

I realize not everyone gets to choose. I get that. Being able to choose is a luxury. I am grateful that I have a choice.

If you’re fortunate enough to be able to choose (and naturally I hope you will be), try not to focus so much on the house or apartment. Rather, focus on the place.

The house is part of it, of course. But it’s not all of it. The surroundings are a big part as well.

And consider what the impact will be on your lifestyle and well-being. And whether it will foster or inhibit the activities that are important to you — whether it complements or detracts from the things you value.

It’s no secret that I’d be living in Colorado if it weren’t for family. But I’m incredibly blessed with family, including you, Vera. So, at this time in my life, the place that’s best for me is here.

I can’t hike or bike the Rockies every day.

But I can walk Carmel.

Endlessly. And with an overwhelming sense of gratitude.

Unprecedented Is Irrelevant

This latest article in the Financial Times reiterates the excuse given by Arkema that the flood at its Crosby plant, which started a stream of events that ultimately led to evacuations of both plant personnel and nearby residents and businesses (mile and a half radius), deflagration of certain organic peroxides stored at the site, intense fires and pollutants being expelled into the air (and possibly ground and groundwater), and damage to the environment, was unprecedented. Continue reading