90th Edition – October 25, 2020
Every job looks easy when you’re not the one doing it.Jeff Immelt – former CEO of GE
1. Wealth is What You Don’t See
After finishing The Psychology of Money this week, I’m comfortable ranking it as my second-favorite personal finance book. Curious what number one is? It’s the book mentioned in the show notes of my interview with private equity expert Adam Coffey.
Back to Housel’s book which focuses on behaviors, not tactics. He mentioned three universal truths about wealth that we all know. Yet, I still found each point refreshing:
- The way to be rich is to spend money you have, and to not spend money you don’t have.
- Wealth is hidden. It’s income not spent.
- It’s easy to find rich role models. It’s harder to find wealthy ones because by definition their success is more hidden.
Ronald Read was more than a janitor. He amassed more than $8 million. If you have time, check out the second page of the Wikipedia article about Mr. Read.
Is Ronald’s way of living too boring? Consider Richard Fuscone who is a Harvard alum. He was once listed on Crain’s 40 under 40 list for business savvy, leadership skills, and sound judgment. After bankruptcy in 2008, he lost everything failing to understand the basic tenants of wealth taught by Housel.
May Ronald Read become a financial role model for all of us.
2. Empowerment Revisited
Ask any CEO in the country what their biggest frustration is internally, and many will say communication is still an ongoing issue. That reminds me of an excellent list from a project management expert who has had a meaningful influence on the former Ford CEO, Alan Mulally:
- Each team member has a clear understanding of what needs to be done and why.
- Each team member then needs a plan for how to do the work.
- Each team member must have the skills and resources to perform the work that is required.
- Each team member needs a feedback system which reveals his or performance against the plan.
- Each team member should know the authority they possess to take corrective action as necessary.
The above is inspired by a short essay by James P. Lewis entitled Why Managers Can’t Manage and What to Do About It.
3. Three Applicable Quotes from Benjamin Graham
Warren Buffett probably owes his investing success to Benjamin Graham, his former teacher and one-time boss. There were three quotes I read this week from Graham which seem particularly relevant to the pandemic and economic woes many businesses and individuals have endured:
- “Abnormally good or abnormally bad conditions do not last forever.”
- “The function of the margin of safety is, in essence, that of rendering unnecessary an accurate estimate of the future.”
- “The investor’s chief problem – and even his worst enemy – is likely to be himself.”
4. HSR – Rawlings – Easton
In my W-2 days, I got to work on some fascinating merger and acquisition deals – big enough requiring approval from either the Department of Justice or FTC.
When I saw earlier this week that Rawlings was acquiring Easton, my HSR antennae immediately shot up.
So here’s a short homework assignment. Do some basic research on the Hart-Scott-Rodino Act and find a case or two where a merger or acquisition was blocked. Gain extra points for yourself if you do this exercise with an attorney who practices commercial law.
5. The Private Equity Expert Who Says We Should Always be Learning
Adam Coffey is the author of The Private Equity Playbook and over the next couple of years, he’ll be creating more than $2 billion dollars in new wealth for his investors. His advice for entrepreneurs? Always be learning. Never stop.
Have you ever noticed that some CEOs seem to read the same books when they mention their favorites? When I interviewed Adam for this week’s podcast, I was impressed when he mentioned Sandy Ogg’s name. Sandy who? Yes, I had to look him up. He’s an operations expert with a deep HR background with a phenomenal track record at The Blackstone Group and Unilever.
If his work intrigues you, take a look at Grow: The CEO’s Master Playbook for Coaching Value into Existence. Most of his primary frameworks are found in that book. Or, you can learn more about this 5-step Talent to Value conceptual model at his firm’s website.
The End Zone (aka, Bonus Bookmarks)
I confess that I’m one of 60 million (foolish) souls who play (U.S.) fantasy football. And for those of us who play, most of us know the name, Matthew Berry. He’s the guy who helped pave the way into making this a $7 billion industry.
I always look forward to his love-hate columns over at ESPN as Matthew is a great writer. This week, he provided 10 tips for getting the career you want. Whoever wrote What Color Is Your Parachute could not have crafted a better list.
By the way, Matthew has agreed to be a guest on the podcast. We hope to have a date nailed down by January.
Thank You For Reading. Thank you for making this a successful newsletter.
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Always be learning.