Holistic Financial Wellness Principles: Principle #6 – Optimism Bias

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For this, my final essay on the principles of Holistic Financial Wellness, I need to disclose some aspects of my life that in normal circumstances I would never consider writing about and posting where strangers can read. I do so, however, because throughout Money Mountaineering and in the previous 5 essays, I have not shied away from sharing aspects of my life that bear directly on the issues I am discussing. To not do this now, would be the height of hypocrisy.

HFW #6 is all about our irrationality and the blind spots we all have when it comes to making important financial decisions. It advises you to strive for “fearless self-awareness” and to take note of our limitations when we consider our own situations and the areas where we may need help. So today I want to walk my talk and share one of my blind spots that has disrupted my financial life, and unfortunately was not explicitly addressed in Money Mountaineering.

In What’s Your Future Worth? and in Money Mountaineering, I have expressed my view that predicting the future is impossible, but imagining it is not. In fact, my recent essay about HFW#4 addresses this directly by noting how important it is not to anticipate what the future will hold, but instead we try to imagine what might happen and then prepare for it. In my most recent essay on HFW #5 I counseled that you follow my father’s advice and “hope for the best but prepare for the worst”.

And while I have generally been able to adhere to the 6 principles I espouse, my financial life was recently upended by one of the most important financial contingencies out there that affects several hundred thousand of us every year and millions overall. In retrospect, I wish I would have included at least a brief discussion of it in Money Mountaineering, but for reasons that will soon be apparent, I didn’t.This essay is my attempt to rectify that omission, while at the same time expanding on the notion of what I mean when I say that financial wellness requires that we “acknowledge our cognitive and emotional limitations as human beings”.

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Optimism Bias and a Failure of Imagination

In Chapter 11 of Money Mountaineering, I describe what I consider to be the most important emotional biases and cognitive errors that we can fall prey to when we make financial decisions. In preparation for writing Money Mountaineering, I reviewed much of the Behavioral Economics literature and discovered that in the years since I had been immersed in the subject, many more “system bugs” in our make up had been discovered and explored. To make the book as useful as possible, I decided to focus on what I considered to be the most important and “dangerous” aspects of our “programming errors” that can prevent you from making good financial decisions.

In the book I describe 8 emotional biases and 7 systematic cognitive errors that we are all prone to, but I left out one emotional bias that not only is important but is also one that I recently fell prey to in my own life. Ironically enough it was probably this bias itself that caused me not to explicitly address it anywhere in the book, and it is one which I want to talk about now. Specifically, I am referring to what is called “Optimism Bias”.

Optimism bias is a bias that “causes someone to believe that they themselves are less likely (vs what the actual probabilities are) to experience a negative event” (see for example https://en.wikipedia.org/wiki/Optimism_bias). While this bias has been observed by psychologists since the 1980s, systematic analysis of this bias only began in the last 20 years (see for example http://www.crossingdialogues.com/Ms-A14-09.pdf).

I doubt that adding one more bias to my Chapter 11 catalogue of our emotional biases and cognitive errors would have made for better reading, but still, I regret not discussing it – especially because the financial consequences of optimism bias can be significant.

Right now, I am suffering the consequences of what can happen if you ignore the full range of unpleasant ways a decision might turn out. Fundamentally, I experienced a failure of imagination and I want to talk now about how it happened.

Time Traveling and Imagining a Painful Future

In the last chapter of my first book What’s Your Future Worth? I describe the first conversation I had with my wife about our respective personal balance sheets. It happened on our very first date as we were getting to know each other, both of us very much realizing that we liked each other very much. We disclosed our financial situations to each other — my significant accumulated assets and her bright red ledger full of student debt accumulated in pursuit of her Ph.D.  I had no doubt in my mind that pursuing her was the right thing to do, and in the book, I describe my thought process (clouded by emotional biases of all sorts as it undoubtedly was).

That initial conversation took place in 1995, and the next time we addressed the subject was shortly before we got married at the end of 1998.

In that second conversation a few months before our wedding date, my bride-to-be asked me whether I was going to ask her to sign a pre-nuptial agreement to deal with the wildly different financial situations we were bringing to the marriage.

This question was, in one sense, not about money, but in another sense, it was only about the money. In fact, it was a very specific question about what would happen to our money during the marriage, and more importantly – what would happen to our money if our marriage did not survive.

It was not as if I hadn’t thought about the question. I had. In fact, I had thought very deeply about it and when my fiancé asked the question, I was not the least bit surprised.

Before I tell you how I answered her, I need to first acknowledge what many of you already know, but perhaps some of you don’t. My wife and I separated at the end of March 2020 shortly after COVID locked us down together in our house in Berkeley. I moved out to live full time at our farm in Santa Rosa, and that is where I live now.

We are currently in the process of working through the excruciating details of a legal divorce that I hope will end soon. As I say, Divorce is a financially significant life contingency that affects many hundreds of thousands of married couples every year. And that is in normal years when there are no wars or pandemics – events that seem to bring some families closer and blow others apart. For example, right after World War II the divorce rate in the US was dramatically higher than it was in 1955, just a few years later when my parents got married (3.7 per 1000 people in 1947 vs 2.3 per 1000 in 1955) My parents recently celebrated their 66th wedding anniversary, but I won’t — even though the annual divorce rate throughout most of my marriage has “only” been between 3.5 and 4 per 1000 each year (https://divorcescience.org/2013/03/12/us-divorce-rate-2001-2011/).

Part of the issue is just pure math. Note that over a 20-year marriage even a 3.5% annual divorce rate means that you will have less than a 50-50 chance of emerging from two decades still together. This was a fact that I was well aware of when I got married, but I did not let that dissuade me. For me, the risk was far, far outweighed by other non-financial considerations, and if you read What’s Your Future Worth? you will understand why.

I think there are two main reasons that I am in my current situation. The first and obvious reason is that I simply fell prey to optimism bias. The fact is, I just didn’t believe it would happen to us. It’s not like I shouldn’t have known better.  As I said, the data told a pretty clear story. But the problem with average data is that we all like to believe we are not average. In fact, we aren’t, but averages do matter, and our emotional biases very often steer us to ignore the odds that we can use to make better decisions.

Actuaries are people too, and I was not immune to the perils I outline in Chapter 11. I was convinced I knew better, and even though I periodically visited actuarial websites where an algorithm would calculate my actual individualized odds (always telling me I was a heavy favorite to get divorced), I simply would find reasons for their being wrong. Finally admitting defeat was not easy. Especially when my optimism bias made it so much harder to realize that my marriage was finally over. 

Had I realized what was happening at the time I might have written about it, but had I done so, I wouldn’t have written it in the way I would now. I understand the nature of the financial risk divorce poses much better now and it is a very complicated one, particularly with respect to the timelines and unexpected financial surprises (mostly bad) that inevitably arise when two human beings decide to end their marriage. We are not rational creatures, and I guess that is why we have lawyers to help us sort things out.

That being said, there was a time when I was thinking pretty rationally, and that was before the marriage. When my fiancé and I sat down to discuss the pre-nup, I had done my work on considering as many scenarios as I could imagine, but almost all of them involved enduring some very painful Time Traveling, and while I did do my due diligence and took steps to prepare for the contingency, it was not an exercise I enjoyed or did particularly well.

The fact of the matter is that not only is every individual’s probability of getting divorced a function of many variables – some known, like age and duration of marriage, but there are many others that are unknown and often random. And not just random, many are random events that come from an unknown distribution which we can never discern.

One thing I did do, and you can do as well – in addressing this as well as all the other life contingencies that you don’t want to think about — is to ask yourself a lot of “what if” questions and then try to inhabit your future self. When you get there, look at the possible financial situation you will find yourself in, and try to imagine how you will feel under each one. It’s painful work, but it can help you make better financial decisions.

These days, when I am often tempted to kick myself for making a bonehead decision, I remember Annie Duke’s counsel against “resulting” – i.e., thinking you made a mistake just because your decision turned out badly. I still feel like I did the right thing, it just didn’t turn out as I had hoped.

For obvious reasons—both legal and ethical, I won’t disclose any more of the details of my divorce. I will, however, tell you the rest of the conversation my wife and I had before we got married – at least I will tell you my memory of my side of the conversation. I do so, because one of the first decisions you might have to make before you get married and before you must decide whether to say “I do” to whoever is empowered to witness your contract, is to decide whether or not to have a pre-nup.

As you may have come to realize – I don’t like to give advice. Instead, I’d rather simply tell you what I did and why I did it.

My fiancé asked me whether I was going to ask her to sign a pre-nup before we got married and I said no. I said I thought that California Divorce law was perfectly reasonable – whatever assets each party brings to the marriage is separate property and only the assets that we would acquire as a couple would be split 50-50. For me that was fair, and I didn’t see any need to make it any more complicated than that.

I still believe it was a reasonable decision and I would make the same decision today if I was faced with that choice. However, I now know, and I want you to know that I materially underestimated how complicated (and painful) ending a long-term marriage like ours could be – but that is another story that is yet to be written.

This is the last essay that will be posted before Money Mountaineering is published in a few days, and I want to sign off on a more optimistic note, because even though I have not been immunized against optimism bias, I am fundamentally an optimistic person even though I act with more than a little caution about the extreme risks, both financial and otherwise, that lurk in the wilderness in which we live. It is reflected in how I manage my financial life, and I am sure it affects the lens through which I consider financial decisions.

And so, the last message I want to give you about Money Mountaineering is this. I hope that my book will help you see some things about your money that you hadn’t, but I also want you to do your due diligence on me. As I say, I try not to advise anyone on what I think they should do, but instead will tell you what I do and why. In the end you are the expert on your own financial decisions and the only one who can ultimately make them.

I hope you choose to read about my ideas, and you find them helpful.

Happy trails,

Pete

Holistic Financial Wellness Principles: Principle #5 – Hope for the Best, Prepare for the Worst

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My minder, social media coach, cheerleader, and overall brave new world guru, Julia Page must take some responsibility for this essay about Holistic Financial Wellness Principle #5.

It’s not that she told me what to write. One of the reasons I hired her is because she is so good at letting me be me. I love to write but breaking my thoughts into bite size memes doesn’t come easily to me, and while Julia tolerates my long windedness, she told me that I needed to discard my original draft and write a crisper, more focused version of this essay so that it would be both easy to read and helpful to readers who struggle with money issues.

I understand that these days, people have very little time to devote to reading – maybe checking out a link during a break, listening to an idea passed on by a friend, or maybe, if you’re lucky, finding an insight from the avalanche of information in your daily feed that will help you solve a problem that is keeping you from making progress.

This seems to be the state of the world and a consequence of an acceleration and a compression of the time we are given to solve the problems we face. That is neither good nor bad, and I don’t spend much of my time trying to figure out who or what is to blame – it is just a feature of the world we live in.

And so, in this essay, while just as long as the others in this series is focused on the essential task of trying to help you understand the essence of HFW#5 and why it can help you survive and thrive financially.

Holistic Financial Wellness Principle #5 is perhaps the most difficult and counterintuitive of the principles I espouse. In addition to using the word “antifragile” – a word that doesn’t appear in any dictionary you are likely to have in your house, it relies to a great degree on the work of Nassim Taleb, a man who is not easy to understand – particularly the mathematics that forms the rock-solid basis for his conclusions. But just because Dr.Taleb is hard to understand doesn’t mean it is hard to understand what will help you survive and even thrive in a world of Black Swans and fat-tailed distributions. You won’t learn it all here, but at least you’ll get a taste of what Chapter 8 will tell you if/when you end up reading Money Mountaineering.

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Fragility, Hidden Risks, and How the World Changes

“I know that history is going to be dominated by an improbable event, I just don’t know what that event will be.” ― Nassim Nicholas Taleb, The Black Swan: The Impact of the Highly Improbable

What Dr. Taleb says above has been shown to be the case again and again in the last several thousand years, but it took reading his three books (Fooled by Randomness, The Black Swan, and Antifragile) for me to really get it and start incorporating his insights into how I structured my financial life.

Fooled by Randomness taught me that most of the Probability and Statistics I learned in college and as an actuary, was, at best, incomplete, and, often, downright misleading. The Black Swan was sobering, but not as disorienting to me since as an actuary I was used to helping my clients protect themselves against things that almost never happen, but reading it helped me appreciate that the low probability/high impact events that do happen are the things that, in fact, change the course of history. This was hammered home by both the Financial Crisis of 2008 and the Pandemic of 2020 – which I think most of us would agree were exactly the kind of Black Swan events that Dr. Taleb talks about.

In 2012 Nassim Taleb published his third book Antifragile. By then I was enough of a fan to buy it as soon as it came out and devoured it immediately, learning that “fat tailed distributions” weren’t just the place where Black Swans come from, but are also the breeding ground for events that can make you stronger when the world changes in dramatic and unexpected ways.

Understanding Nassim Taleb and Using his Insights

Holistic Financial Wellness Principle # 5 says:

“Organizing your financial life to survive a severe economic or life event is essential for long-term financial health. Strive to be antifragile.”

What that means is first and foremost, that you should prepare to survive a potential Black Swan event, and second that you should try and structure your assets and liabilities in such a way that you benefit rather than suffer from the volatility that long term exposure to markets governed by fat tailed distributions will inevitably produce.

When the Financial Crisis of 2008 occurred, I was living and working in Paris, France and had the benefit of being able to watch the financial world crack and crumble from a safe distance. For the first time in my life, I realized that almost everyone who was responsible for “managing” our economy and keeping the global financial system operating didn’t know what was happening and, worse,  didn’t know how to stop the wildfire that was destroying corporations,  banks and even a giant insurance company (AIG) along with the financial lives of millions of people who were losing their homes, their jobs and even their pensions and retirement savings.

It is easy to forget how scary and uncertain those times were, and though our economy and the markets have recovered, the experience told me that not only can it happen again, but eventually it will happen again – not a “real estate bubble induced financial meltdown” but something else just as unexpected and just as world changing. When the Pandemic of 2020 came ashore and crashed our economy so severely that the country’s unemployment rate increased from under 4% to 14.7% in one month (something that had never happened before) I was ready, or, if not ready, at least prepared enough to not have to worry about by income or my ultimate financial survival.

Now that the economic crisis associated with COVID has passed, or at least morphed into something else, we are beginning to forget again how scared we all were about our money and our jobs and feel that things are getting back to normal – economically at least. Maybe so, but I still think the lessons of these two Black swan events should be incorporated into how we manage our financial lives and I believe that keeping Holistic Financial Wellness Principle #5 in mind can help.

So, what did I do to prepare, and why am I feeling ok financially?

It is because I took a “barbell” approach to my financial life to become antifragile and, through redundancy and insurance, made sure that if one part of my personal balance sheet disappeared, I would still have enough resources to sustain myself and rebuild anything that was lost.

I will tell you, in a minute, a little bit about what I did, but first I want to go slightly deeper into the insights that informed that strategy. From Dr. Taleb’s books I learned that

  1. Pronouncements by investment experts about the future behavior of many investment markets that are based on “historical patterns” including those based on capital market assumptions that come from  “sample means,  sample variances, and sample correlation coefficients” are almost certainly wrong because one of the statistical consequences of being in a fat tailed distribution is that you will never  be able to collect enough historical data to know just how likely or unlikely extreme returns (positive and negative) will be in a given market whether it be soy bean futures or cryptocurrency.
  2. The situation is not as hopeless as the above would suggest because it is possible to gain some insight into the nature and extent of the “fatness” of the tail of a given distribution, and, in particular, it is often possible to determine whether the likely nature of the distribution provides an opportunity for profiting from volatility

It is not at all obvious how to take advantage of item 2 from a theoretical perspective, but as a practical matter I believe that the concept of using a “barbell strategy” as I describe in Chapter 8 of Money Mountaineering is something to consider.

Beginning in early 2008 I started to model my financial strategy along these lines, first spreading my money among different banks eventually having significant percentages in 4 different major institutions. At the same time, I started to radically diversify my sources of retirement income, eventually obtaining Life Insurance and Annuities from 3 different major insurance companies as well as a Charitable Gift Annuity and a Charitable Remainder Trust from my old school which has an endowment of almost $500 million backstopping the life income that they will begin paying me when I turn 65. It goes without saying, that I also made sure that I had enough insurance to protect me against known contingencies like death, disability and other hazards that are more easily imagined (fire, theft, and being sued).

For the next few years, I didn’t worry too much about my long-term financial security. I had a secure and stable spot in the actuarial profession and was confident I would have enough income to meet my needs and then some until I had to stop working as a W-2 employee. That didn’t happen until 5 years ago, when in 2016, my company merged with another giant consulting/brokerage firm, and I decided to take early retirement.

As soon as I retired, I organized my financial life as two barbells. On the one hand I have a collection of diversified assets that will provide me with bullet-proof secure and steady income that will be enough for me to live on if I lose everything else. They include the annuities I described above, as well as cash value life insurance, the Pension benefits that I now receive from the companies I had worked for as an actuary and a an old 401(k) plan that is 100% invested in US TIPS (“Treasury Inflation Protected Securities”).

The above investments comprised a large percentage of my assets, so I don’t have a lot of extra cash to deploy to the other barbell, but what I did have, I deployed into highly speculative investments (mostly collectibles) whose payoff will likely follow “Pareto’s rule” –a form of fat tailed distribution where most of what you invest in earns nothing or less but every once in a while, you hit a “home run”. Since I didn’t have enough investable assets to construct a true second barbell (e.g., by becoming an “angel investor’ in multiple start-ups) I instead decided to invest my time in lots of different side ventures, most of which sill likely come to naught, but any one of which could substantially reward me if they are successful.  That is how I apply Holistic Financial Wellness Principle #5.

Get Ready for the Future

These days, Nassim Taleb continues to make his writing available to all who are curious to read about his ideas in real time. Specifically, if you go to academia.edu and follow him, you will be able to read many of his recent papers, both technical and not. Like many things in life, working through what Nassim Taleb has to offer the world is not easy, but for many of you it could represent a very smart investment of time and energy.

To provide one recent and particularly timely example, in June of this year, Dr. Taleb posted this paper about bitcoin:

https://www.academia.edu/49313911/Bitcoin_Currencies_and_Fragility

This one is not that difficult to read, but if you are not very “mathy” then the explanation of the paper posted by Michael Edesess on Advisor Perspectives in July explaining Dr. Taleb’s work should help. You can read it here:

https://www.advisorperspectives.com/articles/2021/07/18/why-nassim-taleb-says-bitcoin-is-worthless

In the last few years, many of my friends and colleagues have wondered why I speak about Nassim Taleb so frequently and with what is sometimes perceived as “missionary zeal”. I hope this essay has provided at least a partial answer.

The truth is that, if and when a true Apocalypse comes, none of what I or Dr. Taleb says will matter much, but until that day arrives, Dr. Taleb’s insights are well worth absorbing– particularly his understanding of the Fat Tailed Distributions in which we find ourselves embedded in. For me, the message is clear, and to paraphrase what I posted a while ago about risk management in a world governed by fat-tailed distributions:

“If you live your life believing that Life follows a Normal distribution, you will find that things almost never turn out as badly as you fear, except when they turn out much, much worse.”

But things can also turn out much, much better than you expect and that is where antifragility comes in.

Perhaps the best way I can explain my approach is to quote the advice my father used to give me throughout my childhood– “Hope for the best but prepare for the worst”. That and his advice to me shortly after I graduated college to “keep as many irons in the fire as you can” are two of the teachings that have allowed me to survive and thrive, in the world of money for over 40 years.

That, essentially is what Holistic Financial Wellness Principle #5 is all about.

Holistic Financial Wellness Principles: Principle #4 – Fear is the Enemy of Curiosity

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As I started to write about the 4th fundamental principle of Holistic Financial Wellness, I realized that while many of the 6 HFW principles I espouse are more and less applicable in our lives at different times, the need to be able to live comfortably with uncertainty as you make financial decisions that have  significant consequences for your future while also entailing painful costs in the present may be, for many, many people, the most important principle of all right now.

I considered lots of stories and lots of different aspects of making decisions under uncertainty to illustrate what I wrote in Section III of Money Mountaineering, but in the end I decided to address the “elephant in the room” and talk about the two parts of our human nature that can hijack our judgment and ability to make good financial decisions when the stakes are significant and the outcomes are multiple and highly uncertain.

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Hustling Chess, Overcoming Fear and Getting Curious

A few weeks ago, I went to New York City where I visited one of my favorite spots – the park at the south end of Union Square where the chess hustlers make their living charging nominal fees for lessons to those who appreciate their skills and winning money over the board from those who don’t. When I lived in Westchester and worked in NYC in the 1990’s I spent many hours getting to know these unusual characters and was able to learn a few traps and tactics that let me scare a few masters in the weekend tournaments I used to play in during my time in the City.

One of my favorite denizens of that world is a man named “Po” — a wise, funny and fast talking player of near International Master strength who never lets his customers know quite how strong he is. Po has beaten almost all of the current generation of young grandmasters, catching them as prodigies on the way up (e.g. Hikura Nakamura, Irina Krush and many others). To hear him tell it, his “lessons” helped a few future stars learn some practical tricks that fueled their rise to the top.

Like many great chess players, Po has a distinct world view and a well-articulated philosophy on how to survive on the chess board and in life. When I asked him what he thought of the current state of the world and what he suggested people do amidst all the confusion and chaos that seems to surround us, he paused and then gave me some wisdom that he passes on to both his friends and his customers. He said that the important thing was to not be afraid – not of your opponent or the all the unseen threats that might lurk on the board. He thought that most people are suffering now because “they opened their eyes and found that it is still too dark to see”.

For me, not only is that great advice, but it highlights perhaps the greatest challenge we face in living with “not knowing” and making good financial decisions despite all the uncertainty of the future and the incomplete information we have about the present.

Decisions over the chessboard are often not that different than the financial decisions I speak about in Money Mountaineering. Both entail making choices whose long term (and even short term) consequences are often impossible to predict and not even a grandmaster will be able to understand all of the aspects of a given position, let alone the plans and strategies hidden within the mind of the opponent sitting across the board. Curiosity and an ability to be openminded enough to consider many possible futures at one time is critical to becoming a good player.

For financial decisions this is even more important. Fear is the enemy of curiosity, and curiosity is what will allow you to identify the important things you can figure out and those that you can only make educated guesses about. It will help you identify the areas where a financial expert can explain aspects of your decision that you need to understand and will allow you to absorb the information that the expert provides. Overcoming fear and becoming curious will help you identify the aspects of your decision that can never be determined and allow you to make better choices.

As I learned from working with Annie Duke, whose expertise is poker not chess, the key is to make smart bets and then recognize that no bet on the future is a sure thing.

So, take it from Po. Even though you might be scared of the dark and can’t see what is down the road, that doesn’t mean you shouldn’t proceed forward, gathering the clues, getting help where you can and making the best financial decision you can with the information you have and the range of possible outcomes that the future presents.

Unfortunately, overcoming fear is not enough, and to truly be comfortable with “not knowing” you also need to overcome at least one other bit of psychological baggage that most of us carry, and for that I want to talk about what I learned from a different teacher.

Marilee Adams and the “Learner Mindset”

Marilee Adams is a writer friend who I got to know several years ago at a 3-day authors retreat sponsored by Berrett Kohler, the company that published my first book and several of Marilee’s. Marilee’s books have been hugely popular and despite our different statuses in the world of books and book sales, Marilee took an interest in my ideas and gave me a great deal of advice and support all throughout my process of writing Money Mountaineering.

In addition to having had the same publisher for our books, it seems that my suggested approach to the unknowability of the future is quite similar to aspects of Marilee’s advice on how to address uncertainty in general and how to gather enough information to make good decisions. As with many of my fellow authors, I had scanned Marilee’s book, but until this Spring I had never had the time to read it cover to cover.

That changed earlier this year when Marilee invited me to be a guest at one of her 4 week/8 session workshops on how to “Change Your Questions and Change your Life”. I didn’t have to think twice before accepting her generous offer because, in addition to the prospect of getting to watch how Marilee works her magic on large groups who flock to her usually sold-out workshops, I also sensed that her message to adopt a “Learner Mindset” when facing important life decisions might be very relevant to what is embodied in my 4th foundational principle of Holistic Financial Wellness. These two factors made it a very easy decision to devote the minimum 12-hour time investment to attending the workshop.

It turns out that adopting the Learner Mindset is not exactly the same as what I mean when I write about becoming comfortable with the uncertain future, but had I not gone to the workshop I would never have realized quite how important it is not to fall prey to anticipation, a state of mind that can lead you to make bad decisions – particularly financial ones.

Just like fear is the enemy of curiosity, I think anticipation is the enemy of open-mindedness. If you think you know what is going to happen (good or bad), then you can’t be open to the range of possible ways in which the future might unfold. And that is exactly what anticipation is — expecting something specific to happen while closing your mind to all the other possible paths the future might take.

This was not news to me, but during the workshop, Marilee went pretty deeply into what generates anticipation in us and what we should do to not let it bite us. And even though I have thought about uncertainty and how to deal with it for decades, I learned something important from Marilee and am grateful to her for reframing the problem of our tendency to think we know what will happen instead of what might happen in this way. She helped me understand in a deeper way one of the key things that cause us to sometimes lose our ability to think clearly and make good decisions in the face of an uncertain future.

That being said, my philosophy on the subject of uncertainty is, I believe, somewhat different than Marilee’s and in particular, I think we differ in our analysis of what allows us to overcome the fear and other obstacles that keep us from living comfortably in an uncertain world.

This is in no way a criticism of the value of what Marilee provides or the way she does it. For many people, Marilee’s approach to developing a “Learner Mind” is highly effective. The issue for me, however, is that in Marilee’s workshops (or at least the one I attended), there is a lot of homework, and I was asked to work harder than I was prepared to when I accepted her invitation.  For many, I realize that that, by itself, is a good thing, but in this case my personal idiosyncrasies prevented me from getting the full benefit of Marilee’s training.

My problem is that fundamentally I don’t like homework – I got away with not doing much in school and in many cases didn’t see the point of why it was assigned in the first place. My father and I had arguments about that, and like many things, he was more right than wrong in lecturing me for not doing my homework, but still, somehow, I came out ok.

Many believe that our minds can be trained to be curious, and maybe they can, but I think our ability to ask good questions can also come from a different source – specifically the wealth of natural curiosity that abounds within us, and just needs to be unlocked and allowed to emerge naturally.

For me, curiosity and disciplined practice/training just don’t mix, though just like Holistic Financial Wellness Principle #1 states, we are all unique individuals and different approaches to getting better at making good financial choices are appropriate for different people. Many of us welcome the discipline and skill development that Marilee imparts – and she is an extraordinarily good trainer in that regard, but I take a somewhat different approach to my own path to getting comfortable with “not knowing”.

Specifically, I believe that humans are at their best when they get in touch with that wild, playful, undisciplined adventurous side – a side that, if we were lucky, we enjoyed as a child and can still return to. For me at least, that’s where my curiosity lives.

So how do you get more curious and want to ask the questions you need to ask – about your job, your 401(k), your bank, or even cryptocurrency? I don’t believe there is a single answer to that question, but my approach is different than Marilee’s. Rather try to train myself to be curious, I simply listen to my own inner voice and pay attention to what I hear. Am I falling prey to anticipation when I think I know what is going to happen? Is it fear which keeps me from thinking about what might happen? Or is it a combination of both – throwing me off track as I hear myself say “I am afraid and don’t want to think about what I am sure will happen (in the market, the economy, my company, and even my family).”

It is also important to realize that being curious won’t necessarily help you to figure out what will happen next. Fundamentally, to make good financial decisions in an uncertain world, we need to remember that while the future is unpredictable it is not unimaginable. Being curious and open-minded is just the first necessary step towards financial wellness.

In the end, I believe that Marilee and I agree completely that to make better financial choices you need to be curious enough to ask the right questions and open-minded enough to listen to the answers.

That is what the Holistic Financial Wellness Principle #4 is all about.

Holistic Financial Wellness Principles: Principle #3 – Due Diligence

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In my essay earlier this month about Holistic Financial Wellness Principle #1 I talked about the need to adapt to changes in your own financial or life situation to make sure the financial decisions you make are consistent with who you are and how you are situated in the world around you. In that essay, I talked about how the wildfire that destroyed my home last year and changed the way I now look at the decisions I make around money and the things I buy with it.

Today I want to talk about a different kind of change that is happening in the world around us and how it impacts the application of Holistic Financial Wellness Principle #3. That principle continues to be valid, but I believe that the way it should be applied, as I describe in Money Mountaineering, needs be expanded somewhat to accommodate the way the Economic/Investment/Advisor environment has changed in the last few years. The changes I speak to are not directly related to the pandemic, but have been emerging over the last few years, and, in my opinion, have recently become too important to ignore.

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The importance of due diligence in an imperfect world

“ You know something is happening here but you don’t know what it is . Do you Mr. Jones?” – Bob Dylan  from “Ballad of a Thin Man

Like many others, my year of COVID isolation included getting to know (via Zoom) a lot of interesting people I would not have met otherwise, and Anthony was one of the more interesting. Anthony is a mortgage broker who makes his living from the commissions he collects on helping his clients obtain loans on the properties they own or are trying to purchase. On paper, he is exactly the kind of person, HFW#3 counsels being cautious of since it is pretty clear that his compensation is directly a function of the transactions he facilitates, and almost by definition his financial interests will not be completely congruent with those that he advises.

While that general advice is still valid, the significant and largely unseen changes that have occurred in the home loan market since the Financial Crisis and Housing crash a decade ago and a recent conversation with Anthony have caused me to reexamine and see that I need to expand on the last part of HFW#3 which says “…make sure those you hire are 100 percent on your side.”

Anthony is a member of what became a weekly discussion group consisting of myself and a group of mostly tech and finance-oriented individuals scattered across Northern California who a mutual friend organized during the pandemic when we all had time to think, converse, and think again. The topics we discussed each week were wide ranging and often quite personal. Throughout the Spring, Summer, and Fall of 2020 we got to know each other quite well, and though we no longer meet regularly, we have all come away with a better appreciation of the wider world of finance and technology that we each operate in.

The focus of our weekly discussions tended to move from person to person (there were 6 of us) and a few months after we started, I sent my new friends a near final draft of my book manuscript to help them to get to know me better and to collect their feedback which I knew would be both honest and helpful. I was not disappointed, as the feedback I received from all 5 helped make Money Mountaineering a better book. But while the others in the group validated and fully endorsed my 6 principles, Anthony told me that he thought HFW Principle #3 was wrong – at least when it comes to getting a mortgage for your home.

Not used to being told I was wrong, I got very curious. What exactly did I miss? He was happy to explain, and I wanted to very much know where he felt I’d made a mistake, but first I wanted to hear more of his professional story.

Anthony told me that in 1995, after a few false starts working for large commercial real estate firms he decided to sign up for a seminar given by Suze Orman, who was still personally conducting all the workshops on financial literacy that she designed and was beginning to write books about.

In Money Mountaineering, I tell Suze’s story, and it is a complicated one. While I believe that Ms. Orman’s books, and pronouncements today are likely to cause more harm than good, back in the mid 90s Suze Orman was teaching a lot of people how the world of money worked, and from everything I know about her, she was a good and caring person who truly wanted to help people do better with what they had. For Anthony, learning the fundamentals about how the world of money works by attending Suze’s seminar was a turning point in his career.

Shortly after completing the workshop, Anthony became a mortgage broker, and knowing too well the suffering that too much debt can cause, he steered his clients into loans that were responsible, prudent and designed to help his clients achieve their home ownership goals without putting their financial futures in peril.

From 1997 through the housing crash of 2008-9 and until today, Anthony has been guiding his clients on this path, never letting them get overleveraged, focusing on “education and trust” believing that a client who understands the debt he/she is assuming and can trust the expertise of the broker who is facilitating the loan, will make better decisions and will be happier for it.

What Anthony took issue with when he read my book was my contention that when it comes to mortgages, the compensation of the expert that we each must use to get our house financed is the most important factor for someone to consider. One of the recommendations I give in Money Mountaineering is that individuals should consider moving their retirement savings (IRA’s, etc.) to a big Bank that use a “relationship model” where they will have access to experts when they need them and in particular, can use loan officers who are paid a salary and do not receive commissions based on the loans they place.

Anthony pointed out that while that may have been true in the immediate aftermath of the Financial Crisis when Banks needed to restore trust in both their solvency and the people who provided financial services to their customers, it is not nearly as prevalent today as in the last several years. Many big banks have changed their business model and have become much more “transactional” in their approach to making loans and accumulating assets and liabilities for the firm’s balance sheet.

In addition, Anthony suggested that the “proprietary products” that the big banks offer their “premiere customers” (another recommendation in Money Mountaineering) are not necessarily that much better than the best loan that can be obtained from the wide array of lenders that a good independent mortgage broker like Anthony can find.

I think Anthony makes a very good point about the changing nature of how big banks do business, though at least in my experience, the best loans I have been able to attain for myself were still those given by my banks to their “premiere customers” and though that competitive advantage may disappear over time, it hasn’t yet.

On the other hand, I think Anthony’s experience and observations highlight a much more important aspect of how our world has changed. Specifically, in order to apply HFW#3 when it comes to finding an expert who will be compensated for the help they provide, you need to do your due diligence.

It’s Not Just Mortgages

One of the joys of being a writer is the opportunity to meet other writers and thinkers in your field who write good books. The first of my favorites is “A Capitalist’s Lament” by Leland Faust

and the second one is “The Big Investment Lie” by Michael Edesess

Leland is a top-notch tax lawyer and Michael is a serious mathematician, but both have worked behind the curtain for firms that provided investment advisory services. Then they both wrote books pulling the curtain back and letting their readers know exactly how Wall Street deals with the individual investor. They are not whistleblowers, but they are both truth tellers and that is something very valuable these days.

The truth about what goes on behind the scenes when we try to invest our money in a prudent way is sobering.

The sad fact is that the business models of almost all financial service firms seems to be getting opaquer and it is becoming increasingly more difficult for a consumer to understand what they are paying to whom and for what. Forget all the noise around Robin Hood, just consider the “zero commission” investment brokerage services that some giant well-established firms now use to lure investors to move their money. Here is a promise from Charles Schwab that you will be able to invest your money for “free” and yet still receive the benefits of the expertise and help a giant firm like Schwab can provide: schwab.com/pricing.

I have not taken the time to dig into exactly how Charles Schwab makes money on these “no fee” accounts, but I think it is almost a sure bet that Schwab is not doing this simply to provide the public with service that does not financially benefit them in some unseen way.

So, when you apply Holistic Financial Wellness Principe #3, make sure you do your due diligence.

It is not enough to just look at compensation structure of the experts from whom you seek help. These days it is too hard to “follow the money”. In the mortgage business the distinction between a commission and a “performance-based bonus” is getting too blurred for an outsider to discern without a great deal of analysis that almost no one has time for, and if you are dealing with an investment firm on the asset side of your balance sheet, following the money is exponentially more difficult.

On the other hand, the expert that you will need to turn to for help is, at least today, a human being and so, more important than the alignment of their compensation, it is the good will of the person(s) providing the help that you need to discern to know, not just whether an expert is 100% on your side, but to the extent they are not (and many times they are not), what of their interest you are competing with.

These days it is getting harder and harder to know what is happening behind the scenes in all areas of life, but at least transactions with money (and debt) are still executed by people, and therefore it is important to understand and learn as much as you can about the motivation, the expertise, and the good will of the people you will need to help you manage your financial life.

Many times, you will find that it is not all about the money, and as confusing and impenetrable as the wilderness is, it is still possible to find trail guides like Anthony who you can trust to guide you through the woods.

Before we ended our last conversation on the mortgage business, Anthony told me that he ascribes much of his success to the fact that he always took the time to get to know his clients as individuals– not just their financial situations, but who they were as people and what their goals, desires and fears were about the home they were about to purchase. He is not alone in wanting to get to know his clients as almost all financial services firms want to know as much as they can about the person who seeks their help, but I believe that due diligence works both ways and even if it wasn’t a part of HFW Principle #3, I think you will get better help and have fewer problems if you get to know the person who you have let into your financial life. 

Specifically, after you have determined that you actually need help, by all means try and find an expert whose financial interests align with yours and who you believe is on your side, but then try and go further. Get to know the person who you are going to for help, listen to their story of why they want to help you and try to understand what their real agenda is. Ask personal questions and make sure you listen carefully to the answers they give. In a perfect world we would be able to hire experts who are clearly and unequivocally on your side, but unfortunately the world is not perfect and getting less so every day.

Holistic Financial Wellness Principles: Principle #2 – Debts of Gratitude

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This is the second in a series of essays on the 6 Foundational Principles of Holistic Financial Wellness that I describe in my new book “Money Mountaineering”. In this one I want to talk about “Debt” in a more general sense. As we look at our personal financial balance sheets we have many obligations that might be satisfied by money, but many of those obligations were incurred through the receipt of goods, services that are often not measurable in dollars and that the terms of repayment are far from clear. How to view these debts and how they affect one’s financial well being is a very tricky issue and whole books could be written on the subject.

My goal here is to simply bring your attention to those liabilities and to both caution you against ignoring them, as default can lead to real financial problem, while at the same time recognizing that many of these liabilities can be satisfied using other assets at your disposal thereby contributing in a meaningful way to your overall financial well being.

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Keeping the lights on with home cooked meals.

My neighborhood in the old West End of Santa Rosa is filled with old houses in serious need of repair. Many of my neighbors rent these houses from landlords who take a “just in time” approach to the maintenance of their properties or in some cases live in houses that are owned by family members who live in different towns.

Many of these neighbors come to me for financial advice and among the more difficult questions that they ask me is what to do when the material things in their lives break and need to be fixed so that they continue to work and have the basics we all need to survive (shelter, light, heat and running water).

It turns out that my actuarial training and facility in financial analysis is of limited use in solving their problems. Instead, an expanded view of what they need and what they have to offer others is required.

My friend Linda lives down the block from me in a house that is well over 100 years old. While the foundation, plumbing, and electrical systems are not quite that old, the house is in sore need of renovation.

The house is owned by another family member – Grandpa Joe who lives 60 miles away and is, himself, getting on in years, relying on the already reduced rent that Linda pays him to supplement his small pension and Social Security.

It’s not that Joe and Linda don’t have material assets that theoretically could be used to make the house safe and livable again. After all Joe owns the house and has only a minimal mortgage outstanding while Linda has accumulated 50 years’ worth of antiques and collectibles that these days have considerable monetary value. The problem is that converting those “real” assets into dollars is easier said than done, and when I looked at their situation, the numbers simply didn’t work.

However,  both Joe and Linda have many other assets that can be brought to bear on the problem. In particular, they each have many relationships that are extremely valuable. Specifically, Joe has many close friends who are skilled tradesmen (plumbers, electricians, carpenters, etc.) who are always looking for “side jobs”, and while Joe does not have skills that can be used here (he is a locksmith by trade), with these contacts, he was able to very quickly arrange for the house to be fixed. Many of these tradesmen have had their businesses helped by Joe and as a result are only too happy to pay off their “debts of gratitude” by coming by and assessing what work is needed to be done.

For her part, Linda is a spectacular cook and her holiday dinners are legendary among those who have been lucky enough to have attended one. And good food is only part of the reason that an invitation to Linda’s house is so sought after. The history, art and relics that fill Linda’s house are just as nourishing and tasty as the food she serves. Neither Joe nor Linda have the financial wherewithal to pay the cost of what typical home repair companies charge, but between the lunches, dinners and stories that the two of them provide, the crews that come to work on the house always feel well compensated for the services they provide.

And so, having had to admit that some problems can’t be solved with  actuarial analysis, I watched with fascination as a succession of vans and trucks came and went to Linda’s house while small crews of electricians, plumbers and carpenters rewired the house, upgraded the kitchen and replaced doors and drywall throughout the house, while the din of power tools, late 60’s music, and happy voices emanated from the little green house down the block beginning early in the morning and lasting until well past sunset.

It’s one thing to look at a Gift Economy from a distance and consider it as a system that may or may not be a viable alternative to one based on a free market principles. It’s quite another to watch it in action. Many believe in the Gift Economy and are trying to design and implement one for communities and organizations. I applaud that effort and hope that such efforts succeed, but I also think that change like this happens from the ground up, and just needs to be recognized and encouraged to grow whenever it naturally arises.

The truth is that all of us already participate in a Gift Economy in our own lives, even if it only encompasses what we do for our own families and close circle of friends. We all give to those we care about and we all owe debts of gratitude to those who have given to us.

So how do we account for these “assets” and “liabilities” on the karmic balance sheet of life? I would suggest that we don’t even try to measure them, but instead that we simply recognize when such obligations exist and understand that evening the scales will take time, energy and even sometimes “real” money, and that “investing” in giving to others will often yield a return that is far greater than any financial analysis will reveal.  In my opinion, the sooner we recognize that such non-monetary  exchanges of value are taking place and consider the gifts we give and receive as part of our overall financial situation, the closer we will come to achieving true holistic financial wellness.

Holistic Financial Wellness Principles: Intro and Principle #1

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Introduction to Essay Series

In Money Mountaineering I describe 6 Foundational Principles that I believe everyone should keep in mind as we all strive for  financial well-being. This essay is the first of a series that explores each of these principles in greater depth.

Some of these principles may seem counterintuitive, and I hope that by reading my book you will become convinced that they are both sound and can be helpful. The first of these principles does run counter to conventional financial planning wisdom which is full of general rules and recommendations for what you should do with your money. I believe this is wrong, and that, to paraphrase the words of my good friend and brilliant actuary Charlie Commander –“if you have seen one financial plan, you have seen one financial plan” .

In this first essay, we talk not just about how individualized our circumstances and goals and plans should be but how important it is to stay aware of how all the factors that are relevant to your plan can change—either because you change or the world around you does.

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Holistic Financial Wellness Principle#1 – Adapting to Change

“Everything changes a little as it should. Good ain’t forever, and bad ain’t for good” –  Roger Miller from “Lou’s got the Flu”

I learned a lot from my mathematician father and as many lectures as he gave me growing up, there was almost always music playing in our house. Roger Miller’s songs formed the soundtrack to many of my childhood Sunday afternoons.

I always listened to the words of the songs and from the men and women who sang them I learned even more. As rigid and clear as my father’s views and teachings usually were,  he was always open and curious about the world around us and how it can change – in unpredictable ways that can render one’s normal survival strategies a recipe for suffering.

As a precocious child in the 1930s and 1940s, my dad watched as the world run by the grown-ups got turned inside out and upside down for reasons that people still argue over. Geography must have been a particular challenge for his elementary school teachers. World maps, only recently revised to reflect the geopolitical shifts caused by World War I, became a moving target.  Whole fields of study had to be modified on the fly to keep up with events, while only the oldest and most solid of academic subjects remained the same. And this not even considering the socio economic and geopolitical changes that were occurring in real time disrupting normal life outside of school.

The list of academic subjects unaffected by World War II was relatively short.  Astronomy and science where new discoveries come more slowly could be considered one. Ancient history and Classic literature were perhaps two others with the long lead time between the writing and the recognition of a work’s value, but the most unchanging of all fields was and  always has been mathematics.  That is a very good thing since it is through mathematics and mathematical thinking that we can understand the changes themselves.

We are not in a time of war, but whatever changes this country is going through now, they seem as dramatic to me as any I have seen in my 64 years on earth, and I feel grateful to my father for having passed on to me the wherewithal to use a mathematical lens to consider what is happening around us.

I am an actuary and not a mathematician and so, haven’t used the gifts he gave me in the same way as he did. Rather than attempt to climb the highest peaks of mathematical abstraction as he and his colleagues have, I chose to concern myself with the more mundane world of Money. It is an area where I can use the skills he taught me to separate the signal from the noise, and it is an area where I think some of my insights can help others.

In Money Mountaineering I lay out 6 Foundational Principles of Holistic Financial Wellness. The first is:

HFW Principle #1: Every person’s values, objectives, and financial situation are unique and multi-dimensional. Therefore, make every financial decision consistent with who you are, considering the totality of your own specific financial picture.

Putting aside whether “who you are” is changing as the world changes around you, to apply this principle effectively, it is critical to understand and be clear on your “values, objectives and financial situation”. Reading Money Mountaineering won’t help you determine whether and how your values have changed – but the tools I provide might help you better understand how your financial situation and its relationship to the financial world in general has changed, and by understanding that, you can, if warranted, take a fresh look at your objectives – where you want to hike, climb or camp in the financial wilderness.

In Money Mountaineering I described in some detail my own financial situation and the complicated set of investments and income generating ventures I was involved with, but things change – and sometimes, as Roger Miller says, “everything changes”.  In my case it was almost everything and the changes were far from “little”.

For me, losing my home and everything in it in a wildfire that raced through my part of the world 9 months ago was just the beginning. Now, instead of living on 8.5 acres in the relative solitude of backcountry Sonoma County,  I live near downtown Santa Rosa in a rented house that I have filled with a mix of new rental furniture (provided by my insurance company) and well made, used furniture that I purchased from local merchants or received as gifts from friends and neighbors. I have also begun to replace all the books and technology (phones, appliances, etc.) in my life so I can be more engaged with the larger world around me.

That process has been both transformative and educational as I have developed connections with dozens of local merchants and neighbors who are now an essential part of my new situation.  I am the same person I was before the fire, but my network of friends is different as well as the community that I am a part of. And those changes have had a large impact on not just my financial objectives but what my hopes, dreams and fears are about the future.

On top of that, I see the economic and the financial markets undergoing dramatic change as well. These kinds of changes are much more familiar to me as I have been watching markets evolve and change continuously for over 40 years. Not that the environment is exactly like anything I have seen before, but the forces at work are, at least to my eyes, the same as they’ve been for decades.

So what does that mean for the financial steps I plan to take in the near future? Well, the first thing I am doing is placing a higher value on real assets than I have in the past. Much of the furniture I purchased (or was given to me) is old and not only useful, but in many cases is better made and more durable than what I can get new. Not only that, but with inflation apparently increasing (perhaps as a result of the Fed’s heroic efforts to avert a financial collapse by flooding the economy with trillions of dollars) I believe that my new acquisitions are likely to increase in value rather than depreciate as most new things often do. In terms of my invested assets, I am therefore shifting some financial assets into collectibles that I like having around like comic books, coins and old books.

More generally, I am now recognizing that the relationships I have with my community in Santa Rosa are among the most precious components of my life that exist.  I am learning how to nurture and grow those relationships and one of the best ways I have discovered for doing that is through giving and receiving gifts. In Chapter 15 of my book I make a case for the “gift economy” and now for the first time in my life I am getting an opportunity to participate in one that is growing here in my new neighborhood in a way that may bear some surface similarities to the parking lot of a Grateful Dead concert (the gift economy I am most familiar with) but is on a larger scale and potentially more sustainable and permanent than a caravan of buses following a band from town to town. Whether a gift economy can take root and grow in something as large as a city or a county is a question that I don’t know the answer to, but right now I am simply adjusting my financial plan to the realities in my environment and the new financial situation I find myself in.

I hope this essay will give my readers a fuller understanding of HFW Principle #1. In particular, it is important to know that using this principle is not a “set it and forget about it” proposition, but rather a step that once undertaken must be reviewed periodically as you and the world around you change.  In future essays we will take a deeper look at the other 5 principles, but consider this as me sharing my first step back towards holistic financial wellness. I am glad to have you along for the journey.

Money Mountaineering

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Money Mountaineering is my new book where I explore the world of money and provide my views on its nature and the challenges we all face as we try to survive, even thrive, in this complex, uncertain, noisy and sometimes irrational wilderness.

So, is this another financial advice book? Not exactly, rather this is a book designed to help you understand what kind of advice you truly need. My goal is to help you gain a better understanding of the financial world you must live in and what you must do to make your way through it.

In particular, I want to help you determine:

  • What you can decide for yourself- almost certainly more than you’ve been led to believe.
  • Where you need help- probably in different areas than you think.
  • What trustworthy sources are out there- fewer than you might hope.

This book is not for those who are “too rich to care,” nor will you get much value from this book if you have no financial resources at all and worry about simply getting by from one day to the next. This book is for the vast numbers of people who are in the middle; those who struggle with the trade-offs between saving for retirement and saving for a down payment on a house. It is for those who can’t decide whether to pay off a student loan early or “double down” and borrow more to start a business. It is for those about to retire who need to figure out when to take Social Security, how much to withdraw from their 401(k) accounts, and whether to downsize their home or take out a reverse mortgage to supplement their retirement income. It is for anyone who has a complicated financial life in which it’s not only challenging to find answers but it also isn’t clear what questions to ask.

You won’t find any easy solutions to your financial problems in this book. You may find, however, that this book will give you the ability to ask the right questions, and as a result, begin to make better choices.

Think of the world of money as a dangerous and unknown mountain wilderness full of unseen perils, inhabited by wily predators of all sorts. You have found yourself stranded and lost, and in addition to simply surviving and figuring out where you are, you also want to make your situation as comfortable and stress-free as possible so you have the time, energy, and resources to make the best of the rest of your life.

You can read more about Money Mountaineering and its ideas at www.moneymountaineering.com.

COVID Mortality and the State of the Life Insurance Business

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Having been around the Insurance Industry for over 40 years, I have learned a few things about the business model that has kept large carriers alive and profitable for decades and sometimes centuries (several of the big ones have been around since the 19th century).

One of the key principles I have seen in operation is that hazards almost never turn out as bad as policyholders fear – except when they turn out much, much worse. As a result, insurance companies are able to charge premiums that will generate a profit but do need to attend to the possibility of a “black swan event” that could be truly catastrophic. Fundamentally much of insurance is based on the fact that even though we live in a “fat tailed” world where the mean is far greater than the median, most consumers, even the most sophisticated ones, operate as if risks follow a Normal distribution. In a sense this creates a win-win situation where policy holders feel they are getting risk protection at a reasonable price, while the carriers, with their huge cash reserves, underwriting protocols and re-insurance treaties to protect them from catastrophe, continue to make a good profit collecting premiums in excess of claims.

When it comes to this pandemic, we can see this principle at play in real time. COVID-19 is a quintessential black swan, and when it came ashore early last year, I along with many other actuaries, tried to figure out just how bad this scourge was and most importantly, how bad was it going to get. My particular focus was on COVID-19 mortality, in part because it seemed to be the one aspect of the pandemic that was more tractable than the others (i.e., people are either alive or dead) and partly because mortality risk is so central to the health of the Life Insurance Industry.

 It was tricky because data was hard to come by and the disease itself was poorly understood. Nevertheless, in June of last year, I put together an analysis of COVID mortality and published an article on how many people would ultimately die of the disease.  My conclusion was that by the time a vaccine was generally available 475,000 people would have died from COVID. The article is available here.

My conclusion, which I believe has proven correct, was that this disease is terrible, but not quite as terrible as people feared. Most pundits at the time were expecting deaths to be well over a million before the pandemic ended, and while my article was well received, there were many who thought I was being overly optimistic about the future course of the pandemic.

With the pandemic now easing its grip on us and vaccines beginning to be generally available, I thought it was time for a follow up analysis.

An updated analysis of COVID mortality

Late last summer, I had actually begun to look at how my projections were turning out and was somewhat disturbed to find that the CDC data I had relied on was becoming messy and difficult to parse. In particular, beginning with some County health departments in Texas, the definition of what constituted a “COVID-19 death” began to shift from “dying from COVID” to “dying with COVID” (i.e., even if you die from a stress induced heart attack after having contracted the disease you are included in the count). You can read about how and why the change was made here. I don’t doubt that this change was made with the best of intentions, but unfortunately when you change definitions like this, analysis becomes much more difficult.

The good news is that Life Insurance companies are primarily interested in the fact that a death occurred rather than the specific reason for the individual’s demise. As a result, when I took a fresh look at the data, I focused on the number of “extra deaths” that we have experienced as a result of living (and dying) with the disease. I also talked at length with my colleagues at various life insurance companies to find out how worried they were about any “underwriting apocalypse” that might befall the industry.

It turns out that the CDC continues to keep very good data on total deaths even though the number of “COVID deaths” for reasons noted above is pretty noisy, and in particular very difficult to use to compare the direct impact of the virus in the autumn to that experienced during the early part of the year. To address this challenge, I developed a baseline of “normal deaths” and compared that to what happened in 2020 which differed from prior years due to the presence of the virus in our midst. This effort was complicated because of various factors including population growth and the normal seasonality of mortality (November- March generally being the most lethal months), but in the end, I believe I was able to at least see the big picture of what is going on.

By comparing deaths in 2020 to those in 2017-2019 (adjusting for population changes in the last 4 years), I found that while the number of reported COVID deaths in 2020 was 374,121 (a mix of those dying “from” and those dying “with” the disease) there were 472,116 “excess deaths” relative to what we would actuarially expect during  2020.  The difference between these two numbers (97,995) is the number of people who died from the indirect effects of the pandemic. In my June article, I had looked at this and found that in the early days of the pandemic, there were actually less total people dying of non-COVID causes than expected, mostly due to reduced auto accidents and flu deaths. While this was good news, I speculated then that once the effects of deferred medical care and economic hardship began to affect mortality, we could see this trend reverse. It seems that this has happened, and the important question now is whether these secondary effects will persist or fade away when the pandemic ends. The chart below summarizes these numbers and notes where the data comes from.

374,121 COVID deaths and 472,116 excess deaths are both big numbers, but when we really look at the impact of this increased mortality risk on the Life Insurance industry, we find that the current financial impact is very mild and no one within the industry whose career depends on it seems particularly worried. I am not sure why this is the case, but my guess is that because those that died because of the pandemic had less life insurance than the average American.

That is not to say, that Life Insurance companies are ignoring COVID, but at least within the product lines that I am most familiar with, i.e., Corporate Owned Life Insurance (COLI) and Whole Life Insurance, what I am seeing is modest adjustments in underwriting standards and virtually no changes in the premiums that policyholders are being asked to pay.

I recently spoke with some of the executives at major carriers to get their view of COVID’s impact on their life insurance products. What they told me was that as a general rule, underwriting issues around COVID mortality are far less a concern than the continued low interest rate environment and the potential for Corporate income tax rates to increase substantially under the new Democratic administration. It seems that both of these macroeconomic factors pose greater challenges and opportunities for the industry than the prospect of many more COVID deaths. That being said, the industry is responding to all three of those aspects of the current environment.

With respect to the two economic issues, the folks I talked to are quite optimistic about the future of COLI. With higher tax rates, COLI will become a much more tax efficient corporate financing vehicle for numerous purposes, and while chronically low interest rates make “fixed” products perform worse, insurance companies are responding by shifting resources toward their “variable” products where recent stock market performance has made those products particularly attractive.

With respect to COVID specifically, it appears that claims have not materially increased during the pandemic, perhaps due to the sad fact that many of those who have died from the disease had limited or no life insurance. In any event, from a carrier perspective, the COLI business has not suffered at all, though at least some carriers are taking certain steps to guard against potential “antiselection” and other factors that may impact profitability if COVID surges again. Specifically, carriers are deemphasizing their corporate sponsored products (i.e., life insurance that employees choose to obtain with subsidies from the company) and focusing more on its corporate owned products (COLI, corporate owned annuities, and life insurance for groups of executives).

As I noted at the beginning, actuaries have a terrific record in evaluating and managing mortality risks, and Life Insurance companies continue to be some of the most solid and stable companies in the Financial Services sector of the economy. The clarity with which the industry has viewed the risks posed by COVID thus far gives me hope that the industry will continue to thrive. 

However, the number of people who have died as a result of the disruption of our economy and healthcare delivery system that COVID has caused as well as the possibility of a resurgence of the disease in future years does suggest that actuaries and underwriters need to continue their vigilance regarding this risk if Life Insurance is to continue to play the critical role it has in providing financial security and stability to both individuals and corporations in the future.

If history is any guide, they will, and Life Insurance will continue to provide the financial security and stability to consumers and corporations alike that it has for over a hundred years.

Reflections on the Glass Fire -One Month Later

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(original article here)

I walk a lot these days – not because I need to, but because it keeps me close to the land

You see, a month ago I lost my land along with my home and everything in it.

It was the eve of Yom Kippur and when I woke that morning there was the familiar smell of smoke in the air. Living in rural Sonoma County I’ve become accustomed to the environment we now live in – Threats to health and welfare lurking all around us — unseen but still palpable and very real.

I checked the source of the smoke and found that the fire was just outside of Calistoga town of 5000 about 20 miles due east of me. That was concerningly close, but the wind was blowing south and in between it and me lay the town itself as well as miles of forest and Hood Mountain ,  a 2700 ft peak at whose base my 8.5 acre homestead lay, nestled against a spring fed creek that runs all year and up which salmon still swim. 

Throughout the day I kept track of what was going on near Calistoga. Soon the fire had been named, and while that meant it had become a major problem, the news was still relatively encouraging in that Cal Fire was making this one a priority and was deploying an enormous amount of resources to containing it and limiting its impact on the people who lived in Napa county where the fire was centered. I had been through this too many times before, including in 2017 when the Nuns Fire came within a mile of my property and so I was concerned but not overly so. I was confident that I and my neighbors would not have a problem with the fire itself though there was always the possibility that PG&E would shut off our power to prevent it from spreading. I was half-expecting that soon I would be getting a “prepare to evacuate” or even an “evacuation warning” text, but my phone is filled almost to capacity with those messages received over the last few weeks since fire season began, so while I don’t ignore them, I had, unfortunately, gotten too used to false alarms and was therefore wholly unprepared for what came next

Some time in the middle of the afternoon, things took an ominous turn. A light dusting of ash started raining down on us and the quality of the air began to deteriorate badly. It took some time for us to figure out that the wind had shifted and that the fire was getting closer. This is when I made my next mistake. I assumed that since Calistoga was between me and the fire that if there was any danger, I would get plenty of warning because all those residents would need to evacuate first and that would give me plenty of time to get ready.  It never occurred to me that the fire might simply go around the town and head straight for Hood Mountain.

Feeling worried, but in need of some grounding I attended my temple’s online Kol Nidre service – in some ways the most important holy day of the Jewish year. The service ended at 7:30 and by then the evacuation warnings were creeping closer. 

I went to find my contractor Patrick, a brilliant and resourceful ex-football player from Georgia who was staying on my property while working on adding a bathroom and an outdoor kitchen to one of the out-buildings on my property. Having only been in Sonoma since June (he had come to visit my caretaker and find some work in the area), this was his first California fire season and even though I warned him that a wildfire was nothing to mess with, he seemed supremely calm and in control. I told him that the fire seemed to be headed our way and as he surveyed the property he said that he thought that we would be ok, but he was going to start cleaning up the job site “just in case”.

Then things began to both speed up and to move in slow motion. A little after 8:30 an evacuation warning came through and I knew it was time to act. And here is where I made my final and most costly mistake. Instead of gathering stuff and packing, I spent the next precious 20 minutes walking through my house trying to decide what I would take if and when an actual evacuation order came. I asked Patrick if we had any boxes so I could start packing and he said that he thought there were some around, and while I started poking around, my mind fruitlessly started evaluating and prioritizing, mentally packing and trying to estimate what would fit into my pick up truck and what I would have to leave behind because it was too bulky. 

Then suddenly I was out of time.

At 9pm the evacuation order came, and now there was no mistaking what was happening. The fire was climbing up the back side of Hood Mountain and if it came down the other side we were in real trouble — right in the fire’s path backed up against a thick forest so tangled and overgrown that even walking through it on a normal day is a struggle. I couldn’t imagine how Cal Fire could possibly stop it if it ever got that far.

I was freaked, but at least I was now moving and acting. I had frittered away all my margin, and now could only grab and go. I got my passport, birth certificate, my will and a few other documents laying loose on my desk. I grabbed as many pictures of my family I could throw into the one large suitcase I’d found and threw a few clothes into a gym bag that was lying on my bedroom floor. I made sure I got my laptops and some notebooks containing  notes for my unfinished book manuscript, and on the way out I was able to pick up a couple of pieces of memorabilia like an album of my 1960’s baseball cards and a couple of Grateful Dead relics, but that was it.

I texted a friend in Berkeley to make sure I had a place to go and then asked Patrick help me load the truck. At 9:15 I was driving down our private dirt road and eventually onto Los Alamos, then across 12 onto Melita road taking the back way to 101 to avoid the rush. I got onto the highway just in time to get a frighteningly urgent follow up call from Sonoma County telling  me to run for my life and as I headed south towards Berkeley I passed a huge line of fire trucks coming up from Marin to fight the fire.

Meanwhile, despite my pleas that he evacuate as well, Patrick stayed to try and save my house. Why he risked his life to save the home of someone he had only met a few weeks ago is still one of the great mysteries in my life, but stay he did.  For hours he fought desperately to save my house, hosing down the deck, digging fire breaks and moving equipment and lumber out of the way of the flames that were now on the land burning my stables and the redwood deck next to it. He worked side by side with the Cal Firefighters until after midnight when even he had to surrender to the overwhelming awesome power of nature’s fury. At the last minute he threw some tools into his little Mazda and drove through the flames right behind Cal Fire who themselves had just abandoned my home to fall back and fight the fire from Los Alamos a mile down the road.

It was only days later that I got the full story from Patrick. It seems that the fire came roaring down the mountain and then vacuumed through the little valley around the creek exploding into a firestorm that consumed everything along our dirt road only slowing down when it hit the pavement where Wildwood Trail becomes a public road. Patrick never had a chance, and yet some combination of courage, heroism and bull-headed stubbornness kept him fighting a hopeless battle against impossible odds until it was truly a question of living or dying. I am profoundly grateful he chose life, as otherwise I could never forgive myself for letting him stay and try to save my home.

Now three weeks later, I finally have a little space to call my own – a tiny studio apartment near downtown owned by Marta, the kind woman who runs a vintage clothes store in  Railroad Square. She and others like her are what makes this community what it is and why I call it home. There is Linda who is an old Deadhead like me and still sells antiques out of a barn near town and there is her boyfriend Leo who lost everything he had in the fire as well but somehow still smiles and offers help to anyone who needs it. They had me over for a hot meal in her backyard the other night and even though they have each suffered grievous losses this year, they opened their house and their hearts to me. There is something uniquely wonderful about this town and the people who live here. Probably it comes from the fact that most of these folks have deep roots in Sonoma County and the catastrophes that keep visiting this place simply bring us all closer and make us more committed to look out for each other. 

Wherever it comes from, Santa Rosa is a very special place and gives me hope for the future.

I walk a lot these days, not just because it keeps me close to the land, but also because it keeps me close to the people of this town and of this county. Even though COVID has made it dangerous to get too close, we are finding our way – to joy, to gratitude, to curiosity and to connection. Maybe we are even moving toward something a little lighter than the stormy darkness that surrounds us. Only time will tell.

I wanted my property to be a sanctuary – I’d even opened up a bank account to make it so. Valley Oak Sanctuary is the name I gave it in honor of the dozens of centuries old Oaks that lived on my land. Happily, many of them survived. My vision was for the property to become an island of peace and safety amidst the anger, conflict and danger that seems to surround us. That vision will now have to be deferred – at least for a while

And yet I know that Valley Oak Sanctuary will emerge once again, and while I don’t know when,  how, or in what form it will take,  I do know where it will be – at the end of a dirt road by a creek at the base of Hood Mountain. Hopefully it will happen soon, and while I can’t yet focus on rebuilding, when it happens, you will know.  I won’t keep it a secret.

Stewardship Rights and Two Unsung Heroes of the North Bay Fires

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The fires are out, most of the ash and soot is being washed away by the rains, and except for the unluckiest of us, life in Santa Rosa is getting back to normal.

But not for me. For me there were too many important lessons to be learned and the tuition too expensive for me not to pay attention. You see, even though my house survived, the fires have permanently destroyed many of the illusions I had about safety, “property rights” and even about the basic nature of who we are (and can be) as humans

On the Sunday afternoon before the fires I went for a walk with my friend Sheila and we had a fascinating, albeit highly theoretical, discussion about reframing “property rights” as “stewardship rights”. Her view was that the frighteningly fast descent of our species might be slowed down a bit if we could make that conceptual shift when it comes to the earth and all the resources we are in the process of wrecking and rendering useless for future generations. She was totally convincing and with that perspective in mind, I headed off to my men’s book club that evening where we, a group of well-intentioned late middle aged rich white guys, sat around discussing “Evicted”, a heartbreaking book about how impossibly difficult it is becoming for the bottom 10% of America to keep a roof over their heads. To varying degrees we shared our collective and individual shame about having so much, and even more importantly, about how we are contributing to the problem through our current and intended investments in rental real estate.

That night I went to bed with a feeling of deep unease about my contribution to the mess we are in and the even deeper feeling that a few “mea culpa’s” with fellow perpetrators sharing white wine in a comfortable house in San Francisco would not make the situation any better. Nevertheless I slept too well and got up ready to drive up north to take care of some maintenance on our property that is situated just outside of Santa Rosa on the way to Hood Mountain. It is both a second home and an investment, and despite all the talk of the night before, I wasn’t feeling the least bit guilty as I began to pack.

However, as soon as I turned on my computer to check the news, it was clear that I was going nowhere that day. For the next few hours I tried to get as much information as I could on what was going on. We have 8.5 acres and two houses there – a magical place with a year round creek, about 50 fruit trees and an acre of grapes. It’s a sanctuary in the truest sense of the word and to know that it might suddenly cease to exist (or at least be transformed beyond all recognition) hit me hard and in unexpected places. Around noon I got a text from the tenant of the house we rent out who said that he, his partner and their cat had evacuated and were in Sebastapol. This is a tenant with whom I had been fighting with for a while (over noise and boundaries between his space and ours). I hadn’t spoken to him in a month, but when I heard from him, I was truly glad he was safe, and he was glad that I was glad. For a moment, we were not landlord and tenant, but rather just two human beings caught in the chaos of life. It felt painful, but good.

The rest of the afternoon I spent obsessively tracking the progress of the flames and witnessing the horrifying destruction in north Santa Rosa where I used to go for supplies and groceries. Throughout the day I received many texts and e-mails from friends and colleagues who knew about our place and how in peril it was. It was wonderful to know how many people cared, but it was when I got the only phone call of the day that I really learned what I needed to learn. It came from Jorge, a man who until that phone call I would not have called either a friend or a colleague.

Jorge is a day laborer who has done a lot of work for me and my neighbors at the property. I got introduced to him a few years ago by the retired teamster (and Trump voter) who lives across the creek. He introduced him to me as “George, a helluva worker and a helluva good guy”. Since then Jorge has done a number of jobs for me and we have even worked together on some particularly dirty two man jobs where no other workers were available. I’m ashamed to say that in all that time, I’ve learned very little about Jorge’s life. I know he came here from Mexico almost 30 years ago and has worked on properties throughout the area for almost all of that time. I also know that he has a wife and a 7 year old son born here in the US and that in order to be close to his jobs and to make ends meet, Jorge rented a tiny place in North Santa Rosa, while his wife works with her cousins 6 months of the year picking strawberries in Watsonville; 12 hours a day 6 days a week. Through pure random luck (actually to celebrate his son’s birthday), Jorge had driven down on to Watsonville on Friday so the family could celebrate together. It was there that he learned about the fire that had consumed his neighborhood in Santa Rosa and was threatening the houses of many of the property owners that he had worked for over the years.

He called me because he wanted to know if I was ok and had escaped the fire. In fact he had spent the day calling everyone he knew to check on them. From him I learned about the 90 year old couple next door (ok as they were picked up by their son), and others who were not so lucky. The one person he couldn’t reach was our neighbor Mark who, we both speculated, was still at his property ready to fight the fire and defend his property all by himself. It would be almost 2 weeks before I found out the full story of what happened to him and some of my other neighbors during the event, but for the moment I was just completely absorbed in what Jorge was telling me. It almost brought tears to my eyes to listen to this man, who, even though he didn’t know me well and though he had likely lost most of the few possessions he had, was reaching out with open hearted compassion and interest to find out what was happening to me and my family, wanting to pass on any bits of information that he knew that might in some way help me deal with my problems. But beyond his selflessness, the thing that struck me right to the core was how much joy and gratitude he was exuding. He was with his family and they were safe. It was all he needed for himself, and now he was showing me the best of what we can be as human beings. He was a beam of bright light on a very dark day.

Over the next few days the news got worse, then better, and then much worse. Over 20 separate fires had broken out across the North Bay and two of the major ones (the Tubbs and Nuns Fires) began converging on our property, kept away only by the fickle wind and the almost superhuman efforts of the Cal Fire crews. The roads throughout the area were closed and rumors began circulating that looting of evacuated but still standing houses had begun. As my cell phone continuously beeped with emergency updates from the Sonoma County sheriff, I thought that maybe this really is our future; little pockets of hell springing up all around the country eventually converging and combining into one final conflagration, but against all reason, knowing there are people like Jorge and the firemen putting their lives on the line for the rest of us, I couldn’t help but feel some hope.

For over a week the battles raged with ground gained and lost, and unlike wars of the past, it was possible to follow the flames by satellite and internet. Just when it seemed that the worst was over, that Cal Fire was gaining the upper hand on the two main fires threatening our houses, a new fire broke out near the Oakmont retirement community just 2 miles down the road from our place. Things now looked very bad. The fires raced up the hills just to the south of us and Hood Mountain itself was on fire. The flames were now coming down the hillside toward the Creek where one of our houses is situated and on whose banks we have spent countless summer hours enjoying its coolness and winter nights listening to the roaring water just outside our bedroom window.

And then suddenly it was over. Just 500 yards from the properties on the other side of the creek, the fires were stopped. It took another day for Cal Fire to secure the line and two days of rain to douse the hotspots and cleanse the air sufficiently to allow property owners to return to their homes. And so on Saturday October 21, I prepared myself to drive up to Santa Rosa to see first hand what had become of our second home.

 

AFTERMATH

 

Almost exactly two weeks after the fires began, I returned to Santa Rosa to see what remained. As soon as I got off the highway and headed east toward our property, I got my first shock. The Sonoma County fairgrounds, a normally empty and expansive network of fields and barns had become a refugee camp, with wandering homeless, tents, medical stations as well as police and military vehicles strewn as far as the eye could see. All along the road back to my property were signs and flowers, mostly thanking the firefighters and other first responders, but also some expressing gratitude or grief – for what was lost and for what still remained.

At the corner of our street was this sign, typical of the sentiment welcoming me back home

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

My relief and gratitude were tempered somewhat, however, when I turned onto the road and saw that on the back of the sign was another message that had been left by my neighbors who had evacuated several days earlier.

 

 

 

 

 

 

 

 

 

 

 

 

I drove up the road and saw that while our houses had survived, they were not untouched. In fact Cal Fire had used our property as a back up staging area, prepared to fight the fire from the steps of our house if it had gotten as far as the creek running past the property. Even though the battle had been won, the firemen had clearly left in haste; leaving axes, firehoses and much debris as well as broken fences, gates and doors in their wake. As I surveyed the scene I was filled with an undigestible mix of deep gratitude for the brave men and women who saved our property, dread at how close the fires had come, discouragement at the amount of effort it was going to take to clean up the mess and just a tinge of survivor’s guilt when I compared my problems to the vast scale of the destruction throughout the City that will take years to recover from. It was a truly disorienting moment.

To ground myself, I walked across the creek to visit Mark who I found helping one of his tenants rewire another tenant’s pick-up truck. As I mentioned, Mark is the retired teamster Trump voter who is my closest neighbor. He has a similarly sized property to ours, only his is crowded with a motley collection of structures, vehicles, dogs and tenants inhabiting it. He himself lives with his wife in a small apartment attached to the back of a 2000 square foot Quonset Hut filled to the brim with tools (power and otherwise) used appliances, and semi-serious construction equipment. He is a unique individual in more ways than one and among other things is our resident historian having been married for 55 years to the granddaughter of one of the original residents who settled the area.

The history of Mark’s property as well as that of most of the neighbors up the hill towards Hood Mountain is full of intrigue, quirky characters and real Wild West drama. To this day Mark feels that he was cheated out of his fair share of the 500 acre plot up the hill that his wife’s grandfather owned and in whose house she lived as a child. It’s a story I’ve heard at least a dozen times, but one that seems to change in detail with each retelling. The only constant is that at some point there was a rigged property auction held by a crooked judge after the old man died and in the ensuing court battle Mark and his wife only came away with the 6 acres by the Creek that they still live on.

Knowing Mark, and having it now confirmed that he never evacuated when the fires came,  I was anxious to hear his story. I was fully expecting to hear a harrowing tale of what he witnessed punctuated by his justification for refusing to follow the order to evacuate and a rant about how no government authority could tell him to leave the property that he fought so hard to get and keep over so many years.

But instead I was surprised by what he had to tell me, and like Jorge, I realized that Mark was not at all the man I had thought he was.

It seems that Mark knew all too well the risk he was taking but he didn’t hesitate for a moment in deciding to stay. Because in addition to knowing the risk, he also knew that by staying he could make a real difference – not just in saving his own property, but in helping the firefighters  save his neighbors’ homes and to help them stay safe as possible while doing so. So he acted; immediately and with purpose. He first made sure that his wife, his tenants and all their pets were safely evacuated, shuttling some himself down to the local Safeway where buses were available to take them out of harm’s way. Then he went back to the property and welcomed Cal Fire equipment and volunteers (some of whom had come in from distant states and were completely unfamiliar with the geography) to his home and proceeded to serve as guide, host and advisor for the next few days.

When I listened to his account of what happened, I was immediately struck that the narrative did not have the usual bluster, humor or “us vs them” quality that I had come to expect from his stories. Rather it was a story of a band of warriors who had fought and defeated a fearsome and lethal enemy, of an army that he felt honored to be a part of. He had a quiet pride about the fact that his extensive knowledge of the terrain as well as the resources he had built on the property – the multiple outlets to his well and water storage tanks, the generator that provided electricity, the food supplies he had stocked for just such an eventuality all had proven invaluable. He was too old now to be on the frontlines, with the chainsaws and the hoses, but he had acted with the same selfless sense of duty and love for the land and its inhabitants, and now he was basking in the glow of having successfully defended the homefront.

So in the end, what are “property rights” and how do you get them? Is it a recorded deed in some County Clerk’s office? Is it something that you buy with money or obtain with power or blood? Or is it something more elemental, and something that you have to earn, defend, and then deserve? I really don’t know the answer anymore.

When I think about the love of the land and his neighbors that both Jorge and Mark showed me in the last month it makes me reexamine my own relationship to that beautiful 8.5 acres that I used to think of as “mine” and the community which it is a part of. My family feels that our place is “too much work”, that the area will never be the same, and what we should do is sell our property to someone else who will be a better “steward” of the land. I am not at all sure they are wrong, but whatever we do, we will do it with heart and a recognition that a place is much more than a spot on a map or a Title and a bank account.