Friday, December 28, 2007

Life is an Optimization Function

Wednesday morning, I got out of a meeting with an older gentleman that I consider an informal mentor (but that will be changing soon). I have never felt so inspired to write a blog post as I did after that meeting.

That's when I began writing this.

In the 40 minutes or so that we spoke, he told me about his experience with a small-ish tech company that he joined after leaving the bureaucratic, sclerotic company we both used to work for (and that I still work for). I asked him what he learned from his experience, at which point he described, with an accompanying drawing, his experience over the last few years. It would be an understatement to say that I was blown away! Although I knew the stuff he told me, and I've heard it before, I've never heard it presented the way he did.

During the conversation, my will-be mentor drew 3 horizontally oriented boxes, side by side, with a line of progression through the first 2 leading into the last. In the first he wrote "Workers", although the word "Labor" would fit just as well. 80% of people fall into this group - those who go to their jobs, make payments on a mortgage or rent, raise their children and generally are blissfully unaware of the other 2 groups.

In the middle box, he wrote "Wealthy". This group makes up approximately 15% of those involved in economic activity - corporate managers and the like. They have some money, and have generally enough to live the kind of life they want to live. Nothing wrong with that, or with the "Workers" for that matter. However, the third box is where he and I both aspire to end up - "Investors". Calculating their percentage of the population is left as an exercise to the reader.

From there, we discussed some of the things he saw while with this small-ish tech company as a member of the management team. Lessons learned. Relationships formed. How money works. How this opportunity has allowed him to move from the "Workers" group into the ranks of the "Wealthy"; unfortunately, it has taken him a far longer amount of time than he would have liked had he been aware of these distinctions sooner.

Its just staggering, in a beautiful way. I literally had flashbacks to "Wall Street" after walking out of his office.

As I made my way back to my car to leave, I realized that life is an optimization function. It really is about maximizing every opportunity, every moment, every minute, and that, as Bud Fox told us in Wall Street, "Well, life all comes down to a few moments. This is one of them." Optimizing every single opportunity that presents itself should be your goal. That's what I'll be working on in 2008. I have 2.5 years to accomplish my biggest goal. Playtime is over. I get it now.

"Money never sleeps." Neither will I.

Saw This Coming


I knew this would happen and I didn't write about it here!!! Damn damn damn!

I remember thinking about a week ago that Berkshire was in perfect position to move into the municipal bond insurance segment. It only made sense. Here's a company with $45B in cash that is looking for more cash generating businesses. Its primary line of business is insurance, specifically direct insurance on easily modeled quantities - autos (and now rental insurance, according to the Geico ads I heard on the radio recently), re-insurance, and probably some other things. No lives, no health, nothing with too many variables, as if there products Berkshire insures currently don't have enough variables already. So the question for me became when does Berkshire start insuring munis. The monolines are getting their asses kicked, he's got cash and is looking to both put what he has to use and generate more, and he already has the big brains on staff to model the products. It was a natural product line extension.

And here it is.

And you didn't hear it here first.


Wednesday, December 26, 2007

Lessons from "Wall Street"


I apologize to all of my readers for not posting at all in the last month. I have no excuse for it. I failed to honor my word. In the future, starting 1 January 2008, I will have blogging formally integrated into my weekly schedule. I am planning 2, maybe 3, 90 minute sessions per week where I only work on getting caught up on my blog writing and reading.

So in the last month, I went out and picked up the twentieth anniversary edition DVD of Wall Street. The more I watch this movie (again), the more I love it. The special features really tie it all together and are great in their own right. However, at the core, the movie is still pure perfection, even 20 years later. (While I was 12 when it came out and first saw it on cable when I was 13, I was already into investing and finance as a hobby by the time I did.)

"And if you need a friend, get a dog." -- Gordon Gekko, Wall Street

I don't like dogs, but I have seriously been considering getting one. The urge gets stronger every time I hear that line. Why? Because I have a vision in my mind that grows clearer daily, a vision of where I plan to take my life. Every time I watch Wall Street, and that has been almost every day since 17 December, the vision solidifies a bit more. And it looks like it may require me to ditch some of the people in my life, which I don't really want to do, but they're no longer supportive of me or my goals. I do like friends and my inner circle will remain, I'm sure, but there will be a clearing for a pet (much like the WASPs Gekko mentions to Bud Fox in the sauna). I can feel it in my bones.

Now, I'm very clear that Gordon Gekko is "the bad guy". However, I think the movie is instructional in other ways, besides promoting unbridled greed. Commitment. Drive. Persistence. Pushing yourself beyond your perceived limits. Being prepared. Knowing exactly what your goal is. Basic ideas, but the very ideas I've been grappling with for the bulk of this calendar year. This is what I see when I watch this movie. These all transcend the notion of intent; how you direct this energy is your choice, but being successful in any arena requires directing that energy at some goal. This movie is a classic, and it gets better every time I watch it.

Anyway, its time for me to go. I'll have a new post tomorrow about a great meeting I had earlier today. This meeting re-inspired me with regard to my blogging. And like Wall Street, it has helped focus my mind on my goals. 2008 is right around the corner. Its time to get ready!

"Money never sleeps, pal." -- Gordon Gekko

Until next time...