Blog - Page 7 of 37 - Financial Literacy

Hedge fund detonates client money

December 23, 2018 admin Investing Comments Off

James Cordier and his partner Michael Gross trade commodity options for clients at OptionSellers.com.

They were so good at attracting clients that their minimum deposit to join ramped up to $1 million and accredited investor status (an SEC rule that you must earn $200K/year salary, or have $1 million in investments to put money into risky investments). Cordier had been interviewed several times on TV as an options expert, and wrote a best seller on Amazon, The Complete Guide to Option Selling.

A few weeks ago in mid-November, natural gas futures went against Cordier’s position and he not only lost every penny of their investment, but they had to write an additional check to the clearing exchange, creating an even larger loss for investors. Around 300 clients lost an estimated $150 million in a few hours on a market move that wasn’t that big. What in the world happened? Cordier sold options on commodities without any hedge or risk minimization strategies. When the natural gas market moved upward against his short calls (plus a losing position in crude oil), he was trading such large positions for the account size that he vaporized the entire fund, and then some, before his clearing house threw in the towel and closed his positions to stop the bleeding. One former investor Tweeted that he had lost 130% of his original investment with Cordier.

Cordier then sent out an apology video to his clients. Sadly, he mostly rambled about how losing everyone else’s money will affect him personally (and his opulent lifestyle), nothing about his clients’ situation. His analogy, “There was a rogue wave and I wasn’t able to steer clear of it and it capsized our boat.” This is untrue. It would be more accurate to say, “I steered the boat directly toward a minor wave (to sell high-implied volatility in the options) and then I loaded down our boat with so many positions that the first drop of water that might spill on the deck would have sunk any battleship. Sorry that I made every single beginner-mistake in the book with your hard-earned money.”

Was it really a “rogue wave?” It couldn’t be – 5 months earlier, James Cordier wrote a magazine article about natural gas’s high volatility. The financial industry all know that naked short selling on natural gas a “widow-maker.” Cordier’s apology video is so cringe-worthy that there are a few parody videos on YouTube about it. Exactly like the Chairman of Enron was busy with the interior carpet color of his new jet while investors were being decimated, Cordier was busy on building out a new opulent office building while his investors were losing their future.

A couple years ago, a friend of mine gave me a copy of OptionSellers’ monthly newsletter. It was several months old. In it, Cordier talked about his naked options trading method. Plus, I glanced through several of his commodity forecasts and they were horrifically wrong. I immediately threw it in the trash where this ultra-high risk gambling belonged. I have no problem with naked option selling for a speck of your account value – if you manage the position delta. But Cordier did the opposite of those two prudent actions and then borrowed money to amplify trading gains and losses.

The only question now is if Cordier acted contrary to his operating agreement or as a fiduciary that constitutes criminal behavior. Needless to say, law firms have already begun rounding up his former clients claiming: exorbitant fees, inappropriate strategies, negligence, plus (even more insane) trading with leveraged margin. It is hard to believe the firm lasted as long as it did.

Maybe Cordier could pull a “Jon Corzine.” Former NJ Governor, Jon Corzine, stole $1.2 billion of clients’ money to avoid margin calls on his failed trades and illegal accounting. He avoided any prosecution, let alone well-deserved decades in prison, by hiring Eric Holder’s law firm, while Holder was the U.S. Attorney General. And then magically, all of the federal investigations into his criminal wrongdoing and theft were terminated.

In my opinion, Cordier’s fund detonation reinforces a hard-won investing alert:

Does the investment fund manager, investing newsletter, trading course, signal service, or investing whatever – market mostly or solely to beginners?

That is a 3-alarm red alert in my view! There is a reason that very few or no professional investors placed money with Bernie Madoff, James Cordier, or any of the other big blowouts. This is because they examined the investing method, or the manager, and gave a “hard no” on placing a penny with them.

You can’t be skeptical enough before you hand money to someone else to manage; particularly if they are making promises that no one else can. If you don’t understand their method, find someone who does or skip this one. If you can’t get any details about their track record or method, skip this one. A colleague told me last night, “I have a high-traffic bank and the manager told me they still turn away 1 person/day who believes the scam that a Nigerian Prince is going to give them $20 million if they would send him $1,500 in cash up front.”

Hurray, Chicago is saved!

December 16, 2018 admin Government Finance Comments Off

The city of Chicago has a $36 billion shortfall for their city employee pensions. Basically, Chicago’s 4 pensions are in a death spiral to insolvency. But not to worry, Mayor Rahm Emanuel and his crack team are on the case. His latest solution is: a city-owned gambling casino and legalizing recreational marijuana. This is even sillier that his prior pension solution ideas. So instead of dealing with financial reality in city budgeting, he wants to roll the dice on two tactics that won’t add up to anything of note.

1. Let’s see… a city that has never been able to manage its own budget is going to successfully manage a casino without breaking its budget as well? Chicago is one of the epicenters of government corruption, and he wants to introduce an additional trough of casino cash under the control of politicians? First consider that no city owns and runs businesses. Aside from legal reasons; they are not qualified or capable of neither running it; nor managing the company that does operate it on the city’s behalf. Already, they can’t successfully manage simple towing companies. Chicago city officials are already trying to find a loophole to get out of paying any state taxes on their new fictional casino, which would be an illegal advantage over other casinos in the area. Local casinos have already been experiencing a softening of the gambling market – so Chicago might be jumping in as the industry languishes. A new casino is planned just across the border in Wisconsin and Indiana is considering one too.

Presuming Chicago builds out and manages the greatest casino in the Midwest, it would earn $27 million per year. That is just 0.0135% of their annual pension bill, and not nearly large enough to slow the shortfall that continues to grow exponentially large reach year. So Chicago would need the profits from 92 casinos to make a tiniest dent in the pension problem. An average large casino costs $1-7 billion to build out. Let’s take the low end of $1 billion, times 92 casinos and so how is Chicago going to come up with an additional $92 billion when they cannot come close to making a $2 billion pension payment? They have no credit to borrow at a reasonable rate. To provide an idea of how many casinos 92 are, the entire city of Las Vegas has around 122 casinos.

2. How about that marijuana legalization? Well, what has Colorado’s experience been?

Tax revenue is up but there are plenty of deductions that have to be made:

Colorado had to double their car insurance rates because of increased accidents from marijuana-impaired drivers.
The Mexican drug cartels moved in, taking over the black market and growers for export to other states. So law enforcement is busier with illegal activity from more dangerous outlaws than when all marijuana was illegal.
Emergency room visits from drug overdoses are up 300%, too many of these are children or teenagers that accidentally ate edible marijuana products like cookies and chocolates.

Presuming Chicago expertly rolls out the perfect balance of laws and regulations over legalized recreational marijuana, it could take in additional taxes of roughly $10-40 million per year in the first few years. Let’s be overly optimistic and say Chicago will take in $150 million a year in taxes. Chicago’s annual pension obligation requires an annual payment of $2 billion. So drowning the city in marijuana will only contribute a tiny 10% of the annual pension payment, and do absolutely nothing to catch-up with the escalating shortfall.

My 3-minute back-of-the-napkin analysis = Mayor Emanuel needs $2.00 per year just to slow pension solvency and his brilliant solution is to: start a casino that will earn 3 cents per year and new tax revenue from legalizing marijuana that may produce 4 cents. Reducing your $2.00 pension bill by 7 cents isn’t an idea worth the napkin it was written upon.

Stock-market timing update

December 10, 2018 admin Investing Comments Off

Last October, I pointed out that the U.S. Federal Reserve had announced their schedule of selling off assets every month going forward. This draws money out of the economy and the stock and bond markets would have an adverse response going forward. I advised at that time to consider reducing your exposure to stocks and bonds from rising interest rates by March 2018.

Since that post, the stock market moved up for 2 months,and then began a sideways channel with high volatility. The stock market is still in that volatile channel while interest-rate sensitive bonds have dropped some in value.

I’m no oracle; I simply followed the largest player manipulating the economy and their announcements. With the recent unfavorable stock market volatility, the Federal Reserve has hinted that their plan of raising interest rates any further will be paused for the next quarter.

For stock market timing, a reference point that I always track is: the stock market making a 15% fall from its most recent high. If you examine stock market volatility and following its price trends, then the general timing rule is to:

A) Exit or reduce stocks if the stock market falls 15% from its most recent major price high point.

B) Enter or add more when the stock market rises 15% from its most recent major price low point.

If you are timing the stock market yourself with a method similar to this, using a percentage less than 15% will have you trading too often and getting whip-sawed from normal volatility. If you use a percentage much more than 15%, then you’re taking on too much risk and riding a downturn longer than was prudent. When you exit stocks at a 15% drop, you are minimizing your losses on what could grow into a 25%-50% loss – which would be devastating to your investment goals. (Note that this 15% rule is only for a general stock market index – a particular stock or commodity may need a percentage far above or below this amount.)

Today, the most recent price high point for the S&P 500 is 2,941 on October 1st and is currently trading at 2,650 this is just a -9.4%price drop. So for right now, it is not signaling to exit all of your stock positions yet. That signal price is if the S&P 500 drops to 2,117. Of course, you are free to sell off a portion to reduce your risk in this time of volatility or anytime you’re uncomfortable with the economic outlook.

On having no savings

December 2, 2018 admin Personal Finance Comments Off

If there is no money in your wallet, it isn’t because there is a hole there – it is because there is a hole in your mind. Unless there were an exogenous financial setback, then the hole represents your missing discipline to delay immediate gratification. Since your ability to wait or deny yourself is absent, your long-term plans requiring some savings take a permanent back seat to immediate spending and — voila’ – no money in your wallet.

Recently, this came up when I attended a gathering where there were two couples in their early sixties and none of them had a penny to their name. One couple has two very-high income earners with advanced degrees. But they built a spectacular-custom home they cannot afford, borrowed for furnishings, continually borrow for cars, vacations, and even going out to eat. I expect that within 3 years, they will lose everything they have and still owe an insurmountable amount of money. They know that they can never retire and just hope their day of financial reckoning never arrives. The other couple includes a retired nurse and a husband that supervises a construction crew. They routinely spend so much money at a casino that they’ve needed to call a friend to bring a can of gasoline so they could drive their car back home. The wife also supports her mother’s out-of-control spending. Between money being vacuumed up by the mother-in-law and the casino, they have never had an extra penny for saving or investing, let alone maintenance and repairs of what little they do have.

Both couples earn more than the average family, and yet, they have zero in savings. Their lack of savings has nothing to do with:

The Economy – they can get all the work they want
Salary – they earn more than average American family
Children – one couple has no children and the other couple’s children are long out of the home

So structurally, there is nothing preventing them from saving money, it is only psychological. At least 2 of the 4 people admitted great regret and ongoing stress over their current financial situation; plus the financial struggle that they’ll be facing in their future. (Note: 61% of workers are forced to retire before they want to from health issues or being laid off). No matter what your level of income, a similar booby prize awaits anyone that refuses to make savings a priority and maintain that saving habit. Living below your means is not an Olde Timey concept, it is financial reality and those that fail to do this face a predictable and painful future. Whether you are 16 or 56, a portion of any earnings must be set aside into savings and investments for future spending.

Early retirement FIRE blogs

November 26, 2018 admin Personal Finance Comments Off

Who doesn’t want to retire early? Or at least have the option to do so? There are claims that if you save most of your salary, live a bare bones lifestyle, then in a dozen years you will be able to live off your investment income for life. You can begin travelling, volunteering, and enjoying newfound time and freedom. There are many online communities for early-retirement seekers sharing tips, strategies, and stories on how they reduce their cost of living. One such group uses the acronym FIRE for Financial Independence Retire Early. Unfortunately, there are also bloggers trying to cash in, hype their story, and provide false hopes and bad advice to get clicks to boost their blog ad revenue.

I looked into several of these bloggers a while ago and found that the “success” stories include gaping financial holes:

Having no insurance for health, dental, vision, apartment, etc.
No home reserves for new roof, maintenance, repairs, flooring, next vehicle, etc.
Live cheaply abroad for now and not paying into social security that will shrink any retirement income
Live off the grid with no utilities – not doable around most cities or for most families for long
Omit that their “retirement” success depends upon the $5,000 per month they earn from their blog while pretending they live on investments alone and not an active business
Their version of “retirement” is not relaxing or traveling. To make their retirement feasible, they are swapping a paying job for working on DIY projects. Some appear to be nearly full-time when you include: making your own soap and detergent; doing your own home and car repairs; grow and can your own food; walk and bike to eliminate your vehicle; make your own furnishings; making your own clothing; harvest and chop firewood for your home stove; etc.

When there are some egregious finance errors on these blogs, sometimes I would post a comment. Nearly all of my comments were suspiciously deleted by the administrator. For example, if I mention that the blogger:

Is relying upon investment returns that are extremely unlikely to occur, not recognizing stock market peak-to-peak can take 20 years
Brags about their recent early retirement, and I use arithmetic and their own budget to point out that they will have to go back to work within 4 years
Many misuses of William Bengen’s retirement account spending rate of 4.5%, and unknowingly increase their risk-of-ruin when they are least able to earn money. (Bengen’s calculations are only statistically valid for less than 30 years)
Ignoring the retirement tax-torpedo for withdrawing large amounts from a 401(k) or IRA, triggering the maximum tax on social security income
Their Medicare budget isn’t nearly large enough and they did not purchase a supplemental plan
Taking giant financial risks with stock options that cannot end well

Financial literacy is always important, but it is critical when making major life decisions – like ending your career and truncating your earnings. The soundest plans are based upon increasing your financial literacy. In my opinion, beware that some of the most popular posts and Youtube channels about retiring early are frequently riddled with errors, omissions, unlikely assumptions, serious risks, and fatal errors that may doom your financial goals.

Zombie Investments

November 18, 2018 admin Economics Comments Off

While some companies slowly march toward obvious bankruptcy (Blockbuster Video, Kodak, Sears, etc.), others are technically insolvent but still able to lope along for years. Let’s examine three current large ones that, in my opinion, are The Walking Dead still loping along.

General Electric

GE has been a manufacturing powerhouse for over 100 years, and at one point was the 4^th largest company in the world. GE once had a AAA credit rating and today their bonds sell at junk-rated levels (GE Capital will need a $20 billion cash infusion to last the next 2 years alone). While their jet engines and power generation turbines are great, the company leadership ran it off the cliff with moronic forays into lending businesses. For example, instead of selling a jet engine, and perhaps lending the money to purchase most of that engine – GE would lend the money for the entire plane, many multiples of the value of their engine. So if there is an industry downturn, loan losses would subsume all profit and then some. GE also made mistakes in commercial real estate loans and even poor-credit consumer loans in Europe. The result of all these loans going bad during 2007-2009 is GE became a zombie company. In 2000, the stock price peaked at $60.50 in 2000 and as I write this the price is under $9, a capital loss of 85%. If GE survives enough decades to take profits from their manufacturing operations to shovel at their loan losses, perhaps it could survive without going through bankruptcy.

Deutsche Bank

Deutsche Bank (DB), is another company that is over 100 years old, a German bank that grew to become one of the top 20 banks in the world. Unfortunately, they made 2 critical errors. First, they loaded up on U.S. subprime mortgages before the U.S. real estate bust in 2008. Second, they went really big into all kinds of derivative contracts that created several financially unfeasible risks that it did not understand. These mistakes resulted in losses so large that the European Union had to bail them out, and their risk exposure is still many multiples larger than the entire European economy. The next recession may force Deutsche Bank into bankruptcy because it still fails “stress tests.” Deutsche Bank’s liabilities are so enormous (tens of trillions of dollars) that if it declares bankruptcy, the European Union itself may collapse just like the U.S.S.R. did in 1991.

Adding to these risks are fines and penalties. Like nearly every big bank, Deutsche Bank also periodically gets caught engaging in systemic fraud: rigging the gold market, rigging Libor interest rates, rigging foreign exchange rates, tax evasion, suspicious trading in Russia, violating UN economic sanctions to half a dozen countries, and money laundering for criminal cartels.

While Deutsche Bank’s stock price peaked in 2007 at $159.76, as I write this it is under $10 per share, a capital loss of 94%.

The Japanese Yen

If GE went through bankruptcy, the failure would be negligible to the world’s economy. DB’s failure would be a storm across all of Europe. But the big zombie nearing collapse is the Japanese Yen which would impact the whole world.

The Bank of Japan (their Central Bank) has been propping up the Japanese economy since the late 1990s. By suppressing the value of their currency for cheap exports, combined with propping up insolvent banks still wasn’t enough to help their economy. So the Bank of Japan continued printing more and more money to: pay unaffordable public pensions; prop up their bond market; and finally, propping up their stock market. The Bank of Japan just hit a new record on November 10^th. The Bank of Japan has a balance sheet as large as the country’s annual GDP, 552.8 trillion yen. This means Japan’s central bank has printed so much extra money it has been able to purchase a year of the country’s output. The Japanese central bank’s debt to GDP ratio is an unheard of 253% (as a comparison, the U.S. is 20%). The central bank has been taking this extra money printing and not only buying bonds with it (to reduce interest rates), but buying Japanese Stocks (through exchange-traded funds). The Bank of Japan has bought so much stock that it now owns 55% of the outstanding shares of Japanese public companies!

Some call this a Ponzi scheme or counterfeiting money to confiscate assets. No matter, because the Japanese money-printing game will end once it hits some type of insolvency event. This event may be needing to borrow foreign money or the Japanese Yen falling in value so far that the Bank of Japan cannot provide it any support. Then Japanese inflation would explode, foreign debts could no longer be paid back, and the Central Banker’s money printing scheme will have run its course.

Impact of the 2018 Schedule-A changes

November 11, 2018 admin Taxes Comments Off

The Trump tax-law change taking effect for your 2018 income taxes will double the old standard deduction. (Filing single will go from $5,650 to $12,000, Filing Jointly will go from $11,300 to $24,000). You can either itemize your deductions on Schedule-A or use the standard deduction, whichever is higher to reduce your taxes. Previously, 30% of filers benefited from using the higher deductions offered by Schedule-A. Most of those filers will now find that the standard deduction is larger and forego using Schedule-A in the future. This means that all of the things people used to do to increase their Schedule A deductions may not reduce their taxes anymore.

For example, just to increase deductions, many people would: make charitable contributions, get a larger mortgage and home equity line of credit for the interest, make purchases to get un-reimbursed employee expense deduction, and more. If you no longer benefit from Schedule-A, then none of these activities will be a financial benefit.

Some Implications include:

Your mortgage and home equity line of credit interest benefit may be gone, so there is more incentive to extinguish these debts.
Instead of making small annual donations and getting no financial benefit, hold them back to stack all of them into a single year, every few years – in order to breach the new Schedule-A threshold. For example, you may be able to stack: charitable donations, expensive medical or dental tests and procedures, sales tax on a new car or large purchases, investment information, etc.
Reduce or eliminate your un-reimbursed employee expenses.
Determine if your state’s property and income taxes are so high that you will be over the $10,000 cap for deductibility; so your income taxes may go up.

Many charities fear that donations will decrease since there is no longer a financial incentive for many people, but if you have assets to donate (like stocks or property), you can still use a donor-advised fund. However, too many people are doing this ($23 billion in 2016 alone), so Washington may shut down this mechanism.

In your tax planning, be aware that the 2018 Schedule-A may prompt you to make changes and it is best to do what you can to adjust before year end.

What exactly is fintech?

November 5, 2018 admin Personal Finance Comments Off

Financial technology, nicknamed “FinTech,” is a buzzword term that was all the rage and in vogue for several years, but is now beginning to slow. Fintech refers to software for financial services. While it previously referred to back-end banking and brokerage services, fintech now includes consumer-side applications for online loans, mobile apps, cryptocurrencies and blockchain, online shopping, fundraising, investment robo-advisers, personal money management, and more. Fintech can also include behavioral analytics, artificial intelligence, data mining, and adaptive learning to make decisions.

Many fintech tools allow people to manage their personal finances easier and possibly create disruptive business models. Fintech platforms and tools attempt to add convenience, speed, and agility in the marketplace. Unfortunately, like any growing fad, there is a downside.

Breaches of personal information:

For the last few years, hundreds of millions of financial records were leaked
Financial firms are most attacked by hackers
In spite of security protocols, half of financial leaks are from human error
Last week, the Obamacare website leaked the personal date of 75,000 people

Lowering lending standards:

A new FICO score called Ultra-FICO (coming out in 2019) reduces the formula weighting from your past history of missed payments, increasing your probability of getting a loan
Online lenders offering tiny loans at high rates
Lending platforms for people and businesses unable to get standard bank loans

Regular companies adding “fintech” to their name:

One self-proclaimed “thought-leader in fintech” just has a regular equipment leasing company
Fintech stock broker, Robinhood offes “free” stock trades,” but they simply hide their real cost
One scammer took control of a tiny biotech public company. He fraudulently renamed it to “Riot Blockchain,” and the stock price exploded. The SEC is investigating him for running a “Pump & Dump” scam and illegal insider trading.

Zillions of failed startups trying to catch the tidal wave of investment money flooding into fintech

$15 billion may be invested in fintech this year, and many are trying to grab a piece of it. There are all manner of ridiculous ideas that are already in the graveyard: trying to match social networking with your money; offering tiny credits to use a loan platform; pre-revenue business ideas; not understanding compliance (banking and finance are two of the most regulated industries); no prospectus – just a 2-minute animation video; and dozens of new brokerages that were going to “turn the industry on their head,” that ended up being sold for pennies to the big players.

Stock chart of the day

October 28, 2018 admin Investing Comments Off

The stock market lost 10% of its value this month and a few investors are asking me, in a panic, what they should do. These are investors without a short-term or a long-term plan. If your stock portfolio is money that you won’t touch for 30 years, this 10% fall is likely to be an insignificant blip over that time horizon. However, if you’re counting on using this money within the next 20 years, then you need a proactive plan.

As a stock-market investor, one of the most important questions to evaluate is: Is the stock market under valued or over valued? To answer this question, investors and researches have come up with countless reference points to consider:

Historical price/earnings ratio
Is the Federal Reserve raising or lowering interest rates
Price moving averages up or down
Creating a price ratio against real estate, gold, crude oil, or commodity index
The historical dividend ratio
And many more

The S&P 500 stock index chart with this post includes is a 20-year linear regression line in red. A linear regression line is an average of the data points. In this case, when the stock market is below the linear-regression red line would be considered under-valued for the last 20 years while above the red line would be over-valued. On Friday, this stock market average closed at 265 which is 25% above the linear regression line. This means that the stock market could fall an additional 25% to order to return to its 20-year price average. If you knew the stock market may fall an additional 25% – what would you do? The farther the stock market moves above or below the regression line increases the likelihood that it will return to the average.

Just because an asset or investment class is over-valued does not mean that it cannot become 3 times more over-valued from its current price. For example, I believed the U.S. stock market was way too over-valued in late 1996 and sold everything. Only to watch the market sprint higher for 3 more years before it collapsed. In the case of the stock market, there are people that study the major price tops to determine what is unique about them so they can predict the next one. Again, there are many reference points for a top: a lowering of the stock market advance/decline line; people with minimum-wage jobs day trading on the side and offering stock tips; a “blow-off top” of rapid upward price acceleration and volatility; large increases in interest rates, etc.

It is true that the stock market is high and the Federal Reserve is raising short-term interest rates. This alone should make anyone cautious about their stock portfolio, and consider selling off some of their stocks. However, there hasn’t yet been the classic “topping behavior” of a major stock market high. I recommend that you consider reducing your exposure to stocks, and yet maintain some, because the stock market could still continue upward for another 1-3 years and you may want to capture those gains.

Each market top is unique and today’s economic environment includes something very different as well:

The U.S. Federal Reserve is reducing their balance sheet by selling off $50 billion a month in bonds.
The U.S. Federal Reserve is requiring the U.S. Treasury to pay them back the money they borrowed for 2009’s Quantitative Easing, payments of $30 billion a month. This is money that the Treasury has to borrow by issuing more bonds.
The growing federal deficit now requires issuing $80-90 billion per month in Treasury bonds.

These three chronic factors flooding the bond market are becoming more difficult for the market to purchase. This is soaking up capital that had been flowing into the stock and bond market for the last 9 years. So the largest players in the financial markets are creating a rocky foundation that is adding to market volatility, perhaps ending this bull stock market of the last 9 years.

Attitude for a successful career

October 22, 2018 admin Career Comments Off

Nothing is easier than criticism. This is true whether the subject matter is food, politics, the weather, or a movie. It takes no talent, no insight, is subjective, and doesn’t actually do anything valuable, productive, or helpful. Indulging this type of thinking on a routine basis can be caustic in the workplace with colleagues, clients, and supervisors. Another type of thinking is to discover and focus upon the positive elements of every situation. This is more likely to be nourishing to work colleagues, clients, and supervisors. Which type of routine thinking do you think boosts your career or tarnishes your career? One of my favorite quotes about avoiding negative thinking and complaining is by Henry Beecher, “When people ask me how I can accomplish so much more than other men, I reply that I do less than other people. They do their work three times over; once in anticipation, once in actuality, and once in rumination. I do mine in actuality alone, doing it once instead of three times.”

The whiniest complainers attempt to justify it with comments such as, “I’m just a realist,” or, “I just tell it like it is,” or tag the end of their dig at something with, “…, I’m just say’in.” I know a highly-competent woman in Chicago that has been unable to keep a job more than 2.5 years because of her negative thinking. She’s really good the first year when everything is new, but then her negative and critical thinking begin to fester. Instead of being pro-active about opportunities, her fake victim-mentality thinking prevents her from solving problems that are easily addressable and within her authority. These problems begin to chafe and then she sours on the job; either getting fired or quitting around year 2. This cycle repeats over and over, and yet, she has been unable to make the insight that she, alone, is the problem. As I write this, she was fired yet again, and this is occurring during her critical peak earning years.

No matter what your job may be, it will involve at least one of these three work categories:

Physically performing a task
Mentally solving problems
Conceptually setting strategy

You may choose to scan for, focus upon, and talk about things to criticize about performing them, or you can notice the positive elements of the situation and simply get it done. You can have a negative viewpoint habit and create a toxic work environment (even if you work alone), or a positive viewpoint habit and possibly foster an uplifting work environment. There is a lot of neuroscience around thinking negatively and how it physically shuts down your brain’s neocortex to discover and make better decisions.The best way to do this is find something interesting, challenging, fun, about what you’re doing or what that will accomplish.

Both of these basic attitudes are mostly simple habits. Changing your way of thinking may be difficult, but it is not impossible with repeated practice. I had one great mentor that trained my mind. One of the things he taught me is that whenever a problem arose, he’d say, “This is good because…” And offer a potential solution (either through or around the obstacle) that would leave us better off than before. After listening to him consistently reframe problems over a few months, I found myself automatically saying it to myself and others, and it forces you to come up with better options. Our solutions did not work all the time. However, this little reframe of the issue places your focus on the path of solutions, making progress, and maintaining the momentum that leads to successful problem solving.

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Financial Literacy

Timeless concepts to turn financial chaos into clarity