“Spend each day trying to be a little wiser than you were when you woke up.” - Charlie Munger

Not enough people know of Charlie Munger. Even fewer have heard of his method of critical thinking. Still fewer follow it.

A year ago this month, The Intrepid Life’s first article introduced the idea of mental models as tools for better critical thinking. That first article mentioned two models: 1) understand the incentives at play, and 2) find solutions by inverting your problems. Charlie Munger is famous for his thought process based on mental models and it’s what he credits for much of his success in life and as Warren Buffett’s business partner and friend.

To learn about Munger and the mental model process he preaches, there’s no better place to begin than Poor Charlie’s Almanac. This book is a compilation of short quotes and long speeches, mimics and Munger’s own life as it’s full of wit and wisdom with a splash of the eccentric.

Munger’s speech on How to Guarantee a Miserable Life is one of my favorites. He gave it to a the 1986 graduation class from the Harvard School. The speech is classic Munger and full of advice worth your time.

So let’s dive in and hear what Munger wanted to teach us. Munger had this to say:

“Now that Headmaster Berrisford has selected one of the oldest and longest-serving trustees to make a commencement speech, it behooves the speaker to address two questions in every mind:

1) Why was such a selection made? and,

2) How long is the speech going to last?

I will answer the first question from long experience alongside Berrisford. He is seeking enhanced reputation for our school in the manner of the man who proudly displays his horse which can count to seven. The man knows that counting to seven is not much of a mathematical feat but he expects approval because doing so is creditable, considering that the performer is a horse.

The second question, regarding length of speech, I am not going to answer in advance. It would deprive your upturned faces of lively curiosity and obvious keen anticipation, which I prefer to retain, regardless of source.

But I will tell you how my consideration of speech length created the subject matter of the speech itself. I was puffed up when invited to speak. While not having significant public-speaking experience, I do hold a black belt in chutzpah, and, I immediately considered Demosthenes and Cicero as role models and anticipated trying to earn a compliment like Cicero gave when asked which was his favorite among the orations of Demosthenes. Cicero replied: ‘The longest one.”

However, fortunately for this audience, I also thought of Samuel Johnson’s famous comment when he addressed Milton’s poem, Paradise Lost, and correctly said: “No one ever wished it longer.” And that made me consider which of all the twenty Harvard School graduation speeches I had heard that I wished longer. There was only one such speech, that given by Johnny Carson, specifying Carson’s prescriptions for guaranteed misery in life. I therefore decided to repeat Carson’s speech but in expanded form with some added prescriptions of my own.

After all, I am much older than Carson was when he spoke and have failed and been miserable more often and in more ways than was possible for a charming humorist speaking at younger age. I am plainly well-qualified to expand on Carson’s theme.

What Carson said was that he couldn’t tell the graduating class how to be happy, but he could tell them from personal experience how to guarantee misery. Carson’s prescriptions for sure misery included:

1) Ingesting chemicals in an effort to alter mood or perception;

2) Envy; and

3) Resentment.

I can still recall Carson’s absolute conviction as he told how he had tried these things on occasion after occasion and had become miserable every time. It is easy to understand Carson’s first prescription for misery — ingesting chemicals. I add my voice. The four closest friends of my youth were highly intelligent, ethical, humorous types, favoured in person and background. Two are long dead, with alcohol a contributing factor, and a third is a living alcoholic -if you call that living. While susceptibility varies, addiction can happen to any of us, through a subtle process where the bonds of degradation are too light to be felt until they are too strong to be broken. And I have yet to meet anyone, in over six decades of life, whose life was worsened by over-fear and over-avoidance of such a deceptive pathway to destruction.

Envy, of course, joins chemicals in winning some sort of quantity price for causing misery. It was wreaking havoc long before it got a bad press in the laws of Moses. If you wish to retain the contribution of envy to misery, I recommend that you never read any of the biographies of that good Christian, Samuel Johnson, because his life demonstrates in an enticing way the possibility and advantage of transcending envy.

Resentment has always worked for me exactly as it worked for Carson. I cannot recommend it highly enough to you if you desire misery. Johnson spoke well when he said that life is hard enough to swallow without squeezing in the bitter rind of resentment.

For those of you who want misery, I also recommend refraining from practice of the Disraeli compromise, designed for people who find it impossible to quit resentment cold turkey. Disraeli, as he rose to become one of the greatest Prime Ministers, learned to give up vengeance as a motivation for action, but he did retain some outlet for resentment by putting the names of people who wronged him on pieces of paper in a drawer. Then, from time to time, he reviewed these names and took pleasure in noting the way the world had taken his enemies down without his assistance.

Well, so much for Carson’s three prescriptions. Here are four more prescriptions from Munger:

First, be unreliable. Do not faithfully do what you have engaged to do. If you will only master this one habit you will more than counterbalance the combined effect of all your virtues, howsoever great. If you like being distrusted and excluded from the best human contribution and company, this prescription is for you. Master this one habit and you can always play the role of the hare in the fable, except that instead of being outrun by one fine turtle you will be outrun by hordes and hordes of mediocre turtles and even by some mediocre turtles on crutches.

I must warn you that if you don’t follow my first prescription it may be hard to end up miserable, even if you start disadvantaged. I had a roommate in college who was and is severely dyslexic. But he is perhaps the most reliable man I have ever known. He has had a wonderful life so far, outstanding wife and children, chief executive of a multibillion dollar corporation.

If you want to avoid a conventional, main-culture, establishment result of this kind, you simply can’t count on your other handicaps to hold you back if you persist in being reliable.

I cannot here pass by a reference to a life described as “wonderful so far,” without reinforcing the “so far” aspects of the human condition by repeating the remark of Croesus, once the richest king in the world. Later, in ignominious captivity, as he prepared to be burned alive, he said: “Well now do I remember the words of the historian Solon: “No man’s life should be accounted a happy one until it is over.”

My second prescription for misery is to learn everything you possibly can from your own personal experience, minimizing what you learn vicariously from the good and bad experience of others, living and dead. This prescription is a sure-shot producer of misery and second-rate achievement.

You can see the results of not learning from others’ mistakes by simply looking about you. How little originality there is in the common disasters of mankind -drunk driving deaths, reckless driving maimings, incurable venereal diseases, conversion of bright college students into brainwashed zombies as members of destructive cults, business failures through repetition of obvious mistakes made by predecessors, various forms of crowd folly, and so on. I recommend as a memory clue to finding the way to real trouble from heedless, unoriginal error the modern saying: “If at first you don’t succeed, well, so much for hang gliding.”

The other aspect of avoiding vicarious wisdom is the rule for not learning from the best work done before yours. The prescription is to become as non-educated as you reasonable can.

Perhaps you will better see the type of non-miserable result you can thus avoid if I render a short historical account. There once was a man who assiduously mastered the work of his best predecessors, despite a poor start and very tough time in analytic geometry. Eventually his own original work attracted wide attention and he said of that work:

“If I have seen a little farther than other men it is because I stood on the shoulders of giants.”

The bones of that man lie buried now, in Westminster Abbey, under an unusual inscription:

“Here lie the remains of all that was mortal in Sir Isaac Newton.”

My third prescription for misery is to go down and stay down when you get your first, second, third severe reverse in the battle of life. Because there is so much adversity out there, even for the lucky and wise, this will guarantee that, in due course, you will be permanently mired in misery. Ignore at all cost the lesson contained in the accurate epitaph written for himself by Epictetus: “Here lies Epictetus, a slave, maimed in body, the ultimate in poverty, and favoured by Gods.”

My final prescription to you for a life of fuzzy thinking and infelicity is to ignore a story they told me when I was very young about a rustic who said: “I wish I knew where I was going to die, and then I’d never go there.” Most people smile (as you did) at the rustic’s ignorance and ignore his basic wisdom. If my experience is any guide, the rustic’s approach is to be avoided at all cost by someone bent on misery. To help fail you should discount as mere quirk, with no useful message, the method of the rustic, which is the same one used in Carson’s speech.

What Carson did was to approach the study of how to create X by turning the question backward, that is, by studying how to create non-X. The great algebraist, Jacobi, had exactly the same approach as Carson and was known for his constant repetition of one phrase: “Invert, always invert.” It is in the nature of things, as Jacobi knew, that many hard problems are best solved only when they are addressed backward. For instance, when almost everyone else was trying to revise the electromagnetic laws of Maxwell to be consistent with the motion laws of Newton, Einstein discovered special relativity as he made a 180 degree turn and revised Newton’s laws to fit Maxwell’s. It is my opinion, as a certified biography nut, that Charles Robert Darwin would have ranked near the middle of the Harvard School graduating class of 1986. Yet he is now famous in the history of science. This is precisely the type of example you should learn nothing from if bent on minimizing your results from your own endowment. Darwin’s result was due in large measure to his working method, which violated all my rules for misery and particularly emphasized a backward twist in that he always gave priority attention to evidence tending to disconfirm whatever cherished and hard-won theory he already had. In contrast, most people early achieve and later intensify a tendency to process new and disconfirming information so that any original conclusion remains intact. They become people of whom Philip Wylie observed: ” You couldn’t squeeze a dime between what they already know and what they will never learn.”

The life of Darwin demonstrates how a turtle may outrun the hares, aided by extreme objectivity, which helps the objective person end up like the only player without blindfold in a game of pin-the-donkey. If you minimize objectivity, you ignore not only a lesson from Darwin but also one from Einstein. Einstein said that his successful theories came from: “Curiosity, concentration, perseverance and self-criticism. And by self-criticism he meant the testing and destruction of his own well-loved ideas.

Finally, minimizing objectivity will help you lessen the compromises and burdens of owning worldly goods, because objectivity does not work only for great physicists and biologists. It also adds power to the work of a plumbing contractor in Bemidji. Therefore, if you interpret being true to yourself as requiring that you retain every notion of your youth you will be safely underway, not only toward maximizing ignorance, but also toward whatever misery can be obtained through unpleasant experiences in business.

It is fitting now that a backward sort of speech end with a backward sort of toast, inspired by Elihu Root’s repeated accounts of how the dog went to Dover, “leg over leg.” To the class of 1986:

Gentlemen, may each of you rise high by spending each day of a long life aiming low.”

In summary, Munger’s ingredients for a miserable life are:

* Ingesting chemicals

* Envy

* Resentment

* Be unreliable

* Learn everything you possibly can from your own personal experience

Munger’s final ingredient is perhaps the most important. Like the rustic who said, “I wish I knew where I was going to die, and then I’d never go there,” Munger, through this speech, shows that one of the best ways to succeed is to recognize how to fail and then avoid it.

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Note: This article was first released on 12 July as an episode on the Special Situation Investing Podcast. The SSI Podcast is a collaboration between myself and a friend where we share summaries of our research into companies that interest us and provide potential investment opportunities. This topic of oil was a deviation from our normal podcast, but the information shared helps explain our bullish view on one of the companies that we discuss. The information is broad enough, and consequential enough (and I find it fascinating enough) that I wanted to share it on The Intrepid Life as well. I hope you find it thought-provoking.

“Welcome to Episode 31 of Special Situation Investing.

Back in episode sixteen and again in our latest episode, we discussed Texas Pacific Land Corporation (TPL). In those episodes we explained TPL’s business model and why and how it forms a strong moat around the company, and also laid out arguments for why TPL is a major holding within our portfolios.

If you haven’t listened to those episodes, I highly recommend you do.

But, one unavoidable fact about TPL is that the bulk of its revenue is derived from oil and gas royalties that it collects off of its acres in western Texas. Given our culture’s trend toward renewable energy and the current distain for anything oil, gas, or hydrocarbon-related, one might wonder how we can have so much confidence in a company within a supposedly declining sector. Every day, headlines remind us that although oil built the past, renewables will build the future.

Well for one, as discussed in our last episode, TPL does much more than simply rake in millions from oil and gas royalties. It has a very profitable business selling water to oil operators. It also receives payments for roads, pipelines, solar and wind farms, and other infrastructure built on its property. And most recently, it is exploring ventures within the crypto and carbon sequestration sectors. But in addition to all that, we have a far less gloomy view on the future of oil and gas than our mainstream media friends. We believe the data predicts a healthy demand for oil and gas for many decades into the future. Today’s episode is about some of our observations on the long-term, macro prospects of oil and gas that support our bullish thesis on TPL.

Let’s begin by jumping into the macro data by considering global energy consumption. (And by the way, in this podcast I will be referencing multiple graphs. If you’d like to view the data yourself, or follow links to their sources, you can do so by visiting our Substack page where we have begun to post the transcripts to our episodes. The link is: [email protected] Alright, back to our first data point, global energy consumption.

Ourworldindata.org has some amazing interactive graphs on a host of economic topics. One of their charts, depicts total global energy consumption from the year 1800 all the way up to 2019. The graph shows how humanity transitioned from primarily relying on traditional biomass, i.e. wood and animal dung, to now using coal, oil, gas, nuclear, hydropower, wind, solar, other renewables and modern biofuels. What’s interesting is, even though we tapped into newer and better sources of fuel over the centuries, we still use more traditional biomass globally today than we did back in 1800. The same goes for coal and every other fuel source as well. In fact that’s the trend: even as humanity taps into new sources of fuel, the demand for older fuel sources generally remains constant or continues growing.

So those who argue that renewable energy sources will replace hydrocarbon fuels, instead of being used in conjunction with, are arguing contrary to the multi-century trend. It could happen, anything could happen. But it would require a break in a very long historical trend.

This trend makes sense in light of, and is closely related to, humanity’s population growth. As the population has grown, more energy has been required. Or seen another way, you could say that humans tapping into more diverse and more efficient sources of energy has allowed the population to grow. More energy made it possible for the globe to support more people.

Okay, so even as vast resources are invested into renewable energy, this historical trend could lead us to conclude that the amount of oil and gas used globally can be expected to increase, not decrease. And you don’t have to take my or history’s word for it. In its Annual Energy Outlook for 2022, the U.S. Energy Information Administration states this: “petroleum and natural gas remain the most-consumed sources of energy in the United States through 2050, [and they add on] but renewable energy is the fastest growing.” Further, a graph in that same report shows that not only do oil and gas remain the most consumed sources of energy, but the total amount used in the US continues to rise through 2050. Their chart shows an increase from approximately 37 to 40 quadrillion BTUs for oil and a rise from 32 to 35 quadrillion BTUs for natural gas.

Consuming more oil and gas is a trend unlikely to be limited to the US, but instead a global phenomenon. And most dramatic in developing countries. Our World In Data provides another fascinating chart that tracks access to clean fuels for cooking in countries around the world. (Clean cooking fuels being natural gas, ethanol, and electricity technologies as opposed to unclean cooking fuels such as wood, animal dung, and other biomass.) Their data spans the years 2000 through 2016, and over that time period the trend is clear: countries are transitioning to clean cooking fuels.

The chart tracks dozens of countries, but I highlighted three in my screenshot shown below; the US, China, and India. While 100% of the US population had access to clean cooking fuel for the entire period, that’s not the case for the majority for the world. India and China are two examples. Important examples though because, together, the two countries contain approximately 40% of the world’s population. The percentage of China’s population with access to clean cooking fuel increased from approximately 48% to 60%, and in India the increase was from approximately 22% to 42%.

This trend illustrates how many countries are maturing from less developed to more developed, and as they do so, are transitioning from biomass to cleaner, more efficient fuels. This means that the percentage of the global population using these fuels, particularly natural gas, is likely to continue to rise even as more developed countries have turned their focus to renewable energy sources.

But even in developed countries such as the US and Europe, our base case is that the transition to renewable energy sources will take longer, and prove less of a panacea, than its current hype suggests. This is for a litany of reasons. One is the lack of investment into mining the metals and materials that are required for solar panels and wind turbines over the last decade. This could make those materials prohibitively expensive.

Another reason is that hydrocarbons are actually required at nearly every stage of producing, maintaining, and disposing of, renewable energy infrastructure.

A third reason, and one of the most interesting, is that in seeking to transition economies from fossil fuels to renewable energy sources, countries are fighting against that multi-century long trend we mentioned at the beginning of this podcast in yet another way.

In addition to showing us that humanity continues using the same amount or more of every fuel source it taps into, the global energy consumption graph shows humanity has always developed and transitioned to using more energy-dense fuel sources. More energy dense simply means you get more bang for your buck. Coal, for example, is more energy dense than traditional biomass. Oil and natural gas are more energy dense than coal. And so on, you get the point. That trend is broken with renewable energy. In particular, with energy from wind turbines and solar panels, you get less bang for your buck.

This trend and fact is supported by a chart provided by transportgeography.org. It depicts the energy density of a list of common combustibles including a wood, coal, crude oil, natural gas, and hydrogen. The density is listed in megajoules per kg, which for most of us means…nothing. So, I scoured the internet in order to make mega joules pet kilogram relatable for an average dude like me.

I found that one mega joule is approximately the energy it takes to run a large TV for one hour. I was once again reminded that one kg is roughly equal to two pounds. And I also learned that the average episode of the infamous television series, The Office, was 30 minutes long. With some fancy math that I dusted of from my high school days, I came up with the rough estimate that this chart is actually telling us how many episodes of The Office we can watch given one pound of each energy source. Your welcome.

Now that it’s relatable, what does the chart tell us? Well, with one unit of wood you could watch 17 episodes of Michael and his friends. Next, with one unit of coal, you could watch 31 episodes. That’s better. With crude oil it jumps up to 42 episodes and natural gas gives you 47. Pretty good, definitely beats wood’s 17 episodes. This comparison illustrates how over human history there’s been a progression from each primary fuel source to one that’s more energy dense. This has allowed humans to work and live more efficiently, driving up standards of living across the globe.

Now where does renewable energy place on this chart? The only renewable energy related fuel source the chart lists is a lithium battery. Clearly lithium batteries are not the only aspect to renewables, so although its not a perfect comparison, the sheer magnitude of the difference gets the point across. With one comparable unit of a lithium battery you could watch half of an episode of The Office. You probably wouldn’t even be able to get to the good part of the show.

This reduction in energy density will force humanity to make trade offs.

Exxon Mobile’s website front page states that one of the three drivers of energy demand is consumer preferences. So far, many citizens and policy leaders of developed countries are supportive of renewable sources. But the verdict is still out on how those preferences may change if standards of living are negatively affected. Perhaps Europe will be the vanguard on this issue as it doubles down on it’s renewable energy goals.

To wrap it up, these are just a few big picture reasons we believe that, like it or not, the world is going to want and need a lot more oil and gas than many people are projecting. If oil and gas demand increases, stays constant, or even slightly declines, we believe TPL is well positioned to capitalize on the energy trends of the future.

Well, that concludes Episode 31 of Special Situation Investing, we hope you enjoyed it and found at least some part of it insightful. We look forward to bringing you another episode next week.”

I hope enjoyed yet another lesson reminiscent of Econ 101. If you’re into living free and thinking for yourself, stay tuned for more The Intrepid Life articles and podcasts. If you’re a stock investor type, or perhaps would like to be, check out the Special Situation Investing Podcast wherever you like to listen.

“Every happening, great and small, is a parable whereby God speaks to us, and the art of life is to get the message.” - Malcom Muggeridge

Some moments in time are extraordinarily impactful. One such moment in my life forever convinced me of the importance of physical fitness.

It transpired while I was out of town for the holidays and attending an unfamiliar church on Christmas Eve. While the evening service was beautiful, it was a scene from among the congregation involving a man and a bottle cap that was unforgettable.

The man appeared to be in his mid to late sixties. Inconspicuous among the other worshipers, he sat in the rightmost seat of a row near the front of the sanctuary. I observed how those around him went out of their way to greet him and shake his hand. It was clear by the reference displayed that he was a highly respected member of the congregation.

The bottle cap appeared from under the man’s chair mid service, having been dropped by a woman sitting in the row behind. It was of the small, clear, plastic variety that causes environmentalists no end of angst. Hitting the floor, the cap rolled to a stop in front of the man, catching his attention.

A Good Samaritan, the man bent down to return the cap to its blushing owner. After three unsuccessful attempts, he gave up. He was unable to pick up the cap. It was clearly his beer belly that prevented him from completing his intended act of service. All he returned to the woman was a shrug of his shoulders and a sheepish grin.

The picture for me was stark. Here was a man who, because of a lack of physical fitness, was limited in his ability to serve, and by extension, to protect and provide. Certainly, fitness isn’t everything (the Apostle Paul in fact says it profits comparatively little), but I was reminded that my body is a gift to be built up, strengthened and maintained for as long as possible in order to serve God and others.

Although we all have various physical limitations and our bodies naturally lose effectiveness with age, what we should seek to avoid are poor choices and unhealthy habits that cause us to become physically incapable. And instead practice daily habits that make us more effective human beings.

Like many of us, I have my parents to thank for any healthy habits I possess. My mom introduced me to healthy dieting and my dad got me into exercising. From the age of ten, I’ve been hooked on healthy living, but even today it’s a learning process and sometimes a battle. As I’ve aged and entered and exited various stages of life one motivation remained constant - to be useful.

Whether it’s carrying a load for a stranger, or being able to protect family, or living long enough to pass on wisdom to grandchildren, being useful means using our bodies to serve others, complete tasks, and conquer challenges.

Like one of Jesus’ parables, the Christmas Eve scene between a man and a bottle cap was short, simple and powerful. May it also be motivational.

Now get out there and courageously live an unsafe but good life.

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“Control the food supply and you control the people.”- Henry Kissinger

In May of 1969, then-President Richard Nixon, gave a special address to the US Congress where he introduced his war to end hunger in America.

Later that year, Nixon convened the first ever White House Conference on Food, Nutrition and Health. The conference participants totaled over 2,500 and included educators, scientists, medical and health professionals, as well as representatives from state and local governments, religious denominations, and social-action groups. The conference delivered a report to Nixon’s desk with over 1,400 recommendations and resulted in many government programs still familiar today, e.g. Supplemental Nutrition Assistance Program (SNAP or Food Stamps), National School Lunch Program, and Special Supplemental Nutrition Program for Women, Infants and Children (WIC). The goal was, as Nixon said during the conference’s opening address, “to put an end to hunger in America for all time.”

Considering there’s been no follow-up conference over the last fifty-two years, one might assume that Nixon was successful and hunger in America was eradicated. That is until this week when the White House posted a YouTube video of President Biden announcing a second Conference on Hunger, Nutrition, and Health. The President said the conference will convene in September and:

“will bring together anti-hunger and nutrition advocates, food companies and states governments, tribal and territory communities, to lay out a plan to combat hunger, and improve nutrition for every American.”

Apparently, these types of meetings are only scheduled on a bi-century basis. Jokes aside, this announcement suggests Nixon failed, hunger still haunts America, and Biden hopes to succeed where Nixon did not.

But why now? Well, for one thing, September of a midterm election year is a convenient time for politicians to appear busy solving constituents’ problems. Additionally, it could be Biden is reading the same news headlines as every other American. The incessant coverage of case-counts of 2020 and 2021 is now replaced by a barrage of the Ukraine war and predictions of upcoming food shortages and global famine. The headlines below are a sampling from just the past couple days.

It’s wise to take catchy headlines such as those above with a grain of salt. Unlike many American’s (present company excluded, of course), I don’t take mainstream or social media at face value, and instead question the incentives and motivation behind all their programing. But unfortunately it’s not just the media sounding the alarm. My mentors, top economists, renown and trust-worthy investors, and also my own research suggests serious food shortages are highly probable. Let’s drill down into a trio of the most compelling causal factors, and discuss what we can do in response.

To get the obvious out of the way, in case you hadn’t heard, there’s a war occurring between Russia and Ukraine…you’re welcome. As you also probably know, both Russia and Ukraine are massive exporters of wheat. The chart below shows that together the two countries accounted for 28.5% of global wheat exports in 2020:

But it’s not just wheat. Combined, the two countries contribute a hearty portion of the world’s food. This includes sunflower oil, barely, corn and countless other hard and soft commodities.

With these countries too preoccupied fighting to plant crops (Ukraine) or simply refusing to export their commodities (Russia), the rest of the world will be forced to cope with a lot less food. Cope is putting it nicely.

In the wake of Russia’s invasion in February, global wheat prices quickly rocketed up more than fifty percent. The prices have stabilized at levels seen only once before, back in 2008. Those elevated prices fourteen years ago, were a leading factor to the Arab Spring - the political uprisings, protests, and rebellions that violently rocked the Middle East in 2010. Today, with African countries relying on Russia for approximately thirty percent of their wheat supply (Egypt is close to 80%) it’s clear this current situation could lead to massive starvation and erupt out of control if food becomes expensive or scarce.

Doomberg, a newsletter written by an anonymous investment firm, is my favorite newsletter on Substack. In a recent article titled Farmers On The Brink, the author enumerated reasons that are creating a perfect storm for global famine. The entire article is worth a read, but here are the main points.

Doomberg’s list begins with the rising price of fertilizer. All three critical ingredients in fertilizer - nitrogen, potassium, and phosphorus - have dramatically increased in price. Most nitrogen is produced from natural gas which itself is at record prices (particularly outside of the US). To get potassium, you need potash, and the two largest producers are Russia and its ally, Belarus. Both have stopped exporting this critical ingredient. And to top it off, last year China ended its phosphorus exports to preserve it’s own strategic supplies. All together, this has caused the price of fertilizer to skyrocket. With pricy fertilizer, less will be used on crops this year, reducing the output this fall.

With closely related underlying factors, the increased costs of weed killer, diesel, and propane are also on Doomberg’s list. Less weed killer means more weeds and less produce. Higher diesel costs equate to higher costs of operating farm equipment. Higher propane costs increase the price tag for drying wheat, oats, sorghum, and every other grain.

And finally with shortages of labor and essential equipment parts, not only will prices of everything increase, but things will not even be available.

I’m not claiming the world is ending, just the world as we know it. For a litany of economic reasons, we’ve lived our entire lives in an abnormally advantageous time.

For one, it’s been a period of consistently lower interest rates. Lower rates makes money cheaper to borrow. This incentivizes more borrowing, and as a consequence, increases productivity.

The American government and citizens alike have taken full advantage of this cheap money. Today, the US public debt stands at around $30,000,000,000,000 (that’s trillion). American private citizen debt rings in at another $15 trillion or so. It’s easy for life to be good if you just keep borrowing more money.

Not only has money been cheap, but because of increasing globalization, countries the world over can access cheap markets for goods, labor and resources. In his first three books (his forth comes out in June!), geopolitical expert Peter Zeihan makes the case that since 1945, America has agreed to protect all trade for every nation. In the annals of history, that’s unheard of. The US system produced an explosion of international trade leading to increases in efficiency and lower prices on a global scale.

The reasons for the United States’ generous global insurance policy were: 1) construct an economic coalition to counter the rise of the Soviet Union, and 2) ensure energy security (and thus economic and national security) which for years meant securing access to the Middle East. Now with the Soviet threat gone and the US able to produce all of its own oil (thanks to shale oil and fracking technology), will America keep protecting the trade of the entire globe for free? The chart below shows a leveling off and perhaps a decreasing of global trade over the past decade.

Not only have prices decreased because of globalization, but also for other reasons unique to America. Since 1983 corporate taxes have decreased by 25%. Since taxes are an expense, lower taxes led to more productivity and lower prices for the end consumer - you and I. With the current national debt burden and the present political environment, I wouldn’t bet on that trend continuing.

If we are indeed at an inflection point in these price-reducing trends, and they either stagnate or change direction, that will lead to higher prices and ultimately to fewer goods. Even the goods at the bottom of Maslow’s hierarchy of needs such as food will take a hit.

So why do I take precious time out of my day to think about such gloomy probabilities? One, I find macro economics and the geopolitics of natural resources fascinating. And two, I want to do my best to prepare myself and my family to thrive in the future.

I don’t claim to know the future…but I do think the probability of greater food insecurity around the globe is rising. An outright famine in the United States is unlikely. Americans are blessed with a continent and climate that consistently produces food in quantities and varieties unimaginable for other countries. I think what Americans can expect is higher food prices, and possibly shortages. Our standard of living may decrease. Much of the globe is not so fortunate.

The chaos of worldwide famine would produce ripple affects even in countries not directly involved. Like every crisis, it would be used by entities and leaders to consolidate power. History is replete with examples of people trading freedoms, property, and rights simply to stave off starvation. As Kissinger’s quote that kicked off this article so aptly states:

“control the food supply and you control the people.”

In challenging times, it’s those who live resilient lifestyles who preserve the most freedom.

If a resilient life is your goal, as it is mine, you must live and think differently than average Americans. And specifically, you must approach your food supply totally differently.

To be resilient you must grow your own food. Lack of space is no excuse. There are people who grow bushels of produce on small apartment patios. You must search out local food organizations, farmers and ranchers, and build working relationships with those people. If your weekly groceries depend on the fragile global supply chain, you are vulnerable. And if nothing else, you need a supply of a few months worth of all nonperishable items that you eat regularly. The best way to accomplish this is to simply buy two of each item every time you shop until you store up the necessary amount. Each little step is a step closer to a more resilient life.

As September rolls around I’m certain all Americans will pause their current Netflix binge and wait with bated breath on the recommendations of the second White House Conference on Food, Nutrition and Health. We can only hope that Biden can pull off what Nixon could not. And of course we all hope and pray that Russia and Ukraine end their turf war, that farming costs decrease, and all the advantageous trends of the last seventy years maintain full steam ahead. But just in cases they don’t, perhaps you should grow a garden. Rain or shine, you’ll be better off.

Now get out there and courageously live an unsafe, but good life.

“If I have seen further it is by standing on the shoulders of giants.” - Isaac Newton

One of the greatest regrets of my life was failing to give an impromptu eulogy at Henry Sundeen’s funeral. I wish I had the gumption at the time to tell his friends and family how he was one of my greatest mentors.

Henry was my next-door neighbor, and although greater than two decades have passed, I still vividly remember the day I met him. It was an early spring day in Massachusetts with the ground still slick from the melting snow. Henry was out in his backyard splitting logs with a maul and I meandered my way over and shyly asked if I could help with the chore. Smiling good-naturedly at me (a ten-year-old), he agreed and began teaching me the safety and skill of splitting wood.

Over the next eleven years, I spent countless days helping Henry on his property and I become very familiar with his generosity. We did everything together, and as he liked to put it, “we talked about everything under the sun.” He taught me how to build and maintain a garden, how to fell a tree precisely where you wanted it to fall, how to stack firewood so that it wouldn’t fall, and how to tap maple trees and make syrup. He taught me about forestry and the mechanics of a car. He told me stories of his adventures as a mechanic and truck driver in the Korean War, and about the decades he spent as a machinist at a local steel company. Having volunteered as a Boy Scout master for decades, one of the paramount lessons Henry taught me was to always “be prepared.”

Although the 1970’s edition of the Boy Scout Handbook that Henry gave me is one of the most prized books in my library, his most important gifts weren’t physical objects. Of far more importance were the life experiences he shared with me. He gifted me his time. And he gifted me timeless knowledge and wisdom. That’s what a mentor does.

The Marriam-Webster dictionary defines a mentor as a trusted counselor or guide. A mentor must have a good relationship with their mentee that establishes trust. A mentor must possess wisdom and life experience in order to provide timely and timeless and insightful counsel. And a mentor must be willing to act as a guide, often with words of advice, other times by walking along side.

I have observed in my life and in the lives of others, that mentors are an essential ingredient to living wisely and living well. The book of Proverbs states: “for by wise guidance you can wage your war, and in an abundance of counselors is victory.” We’re not all waging wars, but each of us should be motivated to reach the end of our lives having lived well. I hope this article encourages you to seek to be mentored and simultaneously mentor others.

In searching for mentors, begin with those who have more life behind them than yourself. This endows them with insights that are simply impossible for you to possess because you weren’t alive or were too young to be impacted at the time. They’ve lived through different trials and different times and can thus provide an outside, often more balanced, perspective.

Perhaps it’s because I believe we’re in for a couple decades unlike what we’ve experienced thus far, that this quote of Ray Dalio’s keeps coming to mind. I’ve mentioned this quote in two previous articles and I think it’s pertinent to this topic as well. He said:

“What I found in my life is that most of the things that surprise me were things that never happened in my life before”

Older mentors can help prepare us for things that haven’t yet happened in our lives, but most likely will. Because of the cyclicality of human life, certain challenges we face have been experienced time and time again by every generation. You want a mentor who has enough time between their stage in life and your own to have the ability to observe the results of their decisions, and can guide you accordingly.

In addition to helping you make wise decisions, mentors can also save you time and headaches. When struggling with a decision, or muddling through a problem, or braving the unknown of a new stage in life, consider learning from someone who’s already been there and done that. Unlike in school, in real life, it’s advisable to use a cheat sheet. Mentors are a cheat sheet for life. Why not ask someone who’s further along in the test of life and who’s found out some of the answers. To excel in life, like Sir Isaac Newton, strive to stand on the shoulders of the giants who are ahead of you.

If you don’t trust me, and don’t trust Isaac Newton, maybe you’ll follow the lead of Mahatma Gandi. A blog post by universities.com that I read while writing this article, said this about Gandhi:

“There are few people who have had a more profound effect on the world than Mahatma Gandhi…he was an inspiration for Dr. Martin Luther King, Jr., as well as for Nelson Mandela and so many others.

Gandhi also learned from someone, Dadabhai Naoroji, an Indian leader who helped to start the Indian Independence Movement in 1857. Upon learning of Naoroji’s intentions, Gandhi…wrote Naoroji a letter, which read…you will, therefore oblige me greatly if you will kindly direct and guide me and make necessary suggestions which shall be received as from a father to his child.’”

Even if you are convinced being mentored would be great, you may be wondering how to fit time with a mentor into your already slammed schedule. The first step is to un-slam your schedule and to simplify your life. And don’t waste your life frivolously (Recently, Netflix revealed that Americans spend the equivalent of 11 billion days each year on digital media). After that, schedule time for meaningful pursuits, such as mentoring.

It’s also helpful to find mentors and mentees already in proximity to your everyday life. This could be at your church, or at your work, or at your gym. And don’t wait for someone to ask you. Take the initiative, ask to be mentored, and ask to mentor.

And don’t forget that some of the greatest mentors are long since dead. Many of these greats have left us volumes of wisdom between the covers of books. There are few better ways to educate yourself than by learning from the lives of historical figures. Consider what the philosopher Rene Descartes said five hundred years ago:

“The reading of all good books is like a conversation with the finest minds of past centuries.”

A common trait among the people I have learned the most from is that they are voracious readers. For those with little time to devote to reading, you aren’t off the hook. It’s never been easier to absorb wisdom from current and past giants than it is today with audio books. Listen while working out, or are cleaning dishes, or are on the commute to work. Take advantage of the abundant opportunities available today, start reading, and get mentored.

Henry Sundeen was the first of a half dozen or so influential mentors in my life. I’m thankful for everything he taught me, not the least of which was the extreme value of mentoring. The fact of the matter is, no one is too old or too young to be mentored. And the older you get the more you should pour into the lives of those younger than yourself. Today is the day to find a mentor or mentee, or to pick up a new book. Do yourself a favor and seek out mentors, both dead and alive.

Now get out there and courageously live an unsafe, but good life.

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“Krupp and Stinnes get rid of their debts, we of our savings.” - Klaus Mann (1923)

Hugo Stinnes earned the nickname “Inflation King” when he became the richest man in Germany in the 1920’s. How Hugo rose to that position is a tale both fascinating and educational.

Born in Germany in 1870, Hugo inherited and ran his family’s coal business during WWI and the hard times that followed it. Although well-off because of his successful business, it was the massive inflation during the years following the war that vaulted Hugo to the position that earned him his nickname.

After WWI, as a result of the Treaty of Versailles, Germany was burdened with massive debts that forced it to pay back the costs of the war to the other affected nations. Unable to pay the debts in any other way, the German government resorted to printing their national currency, the reichsmark, to make their payments. This led to massive inflation of the currency supply and a shocking reduction in the currency’s purchasing power against other currencies, gold, commodities, hard assets and goods.

Either by chance or exceptional foresight, Hugo took advantage of this catastrophe by borrowing huge loans in the German paper currency prior to its hyperinflation. With these loans Hugo bought ships and coal mines and made other investments into hard assets for his business. He borrowed so much, in fact, that it seemed ludicrous at the time. But when inflation of the reichsmark skyrocketed in 1921-1923, Hugo was able to pay back those loans with nearly worthless currency and he was left owning all those hard assets.

A simple example may help us understand how this process worked. Let’s say you take out a mortgage for $1 million and with it you buy a rental apartment. To keep it simple, your hypothetical monthly payment is $2,000 and your tenant initially pays you $2,000 per month in rent. Pretty cool so far…your tenant is paying your mortgage. At that rate, after thirty years you’ll fully own an apartment that someone else paid for. That’s a pretty sweet deal. Now let’s see what happens when inflation comes into the picture.

Say the government prints trillions of dollars in a couple year span and the amount of goods and services doesn’t increase. In this case, prices will adjust higher. In our example, you are providing a service - shelter - and what you charge for monthly rent will necessarily increase. This is because, although you still provide the same service, it takes more dollars to compensate you because each dollar is worth less than before. Keeping it simple, let’s say the price increases one hundred percent so you now charge $4,000 per month. With a fixed rate mortgage, your monthly payment will remain approximately $2,000. And because you still only have to repay $1 million you can pay it off in half the time - in fifteen years.

While paying off a mortgage in half the time simply because of inflation may sound dramatic, it pales in comparison to what actually happened in Weimar Germany. The graph above shows the dramatic decrease in purchasing power of the German paper Mark compared to gold. What cost one paper Mark in 1918, cost one trillion paper Marks by the end of 1923.

The book, “When Money Dies,” by Adam Furgusson, provides some numbers that illustrate the mind-blowing increase in prices during Weimar Germany’s hyperinflation. The price of one egg increased 180-fold between 1914 and mid 1922. To put that in perspective, since the average price of a dozen eggs today is $1.79, it would be similar if in 2030 the same dozen eggs costs $322. Another example is that a liter of milk increased from seven Marks to twenty-six Marks over a six-month period in 1922. That’s the type of inflation Hugo and all his countrymen experienced.

Now let’s apply Weimar-Germany-style hyperinflation to our simple example to get a better feel for what Hugo experienced. If the rent you charge simply kept up with the rate that a liter of milk increased in 1922, after one year, instead of charging $2,000 rent, you would be charging $15,000 rent per month. At that rate, you would be able to pay off your $1 million mortgage in five and a half years. That’s how Hugo leveraged his way to owning massive amounts of real assets and becoming the richest man in Germany.

The opposite side of the coin is just as instructive. For every Hugo in Weimar Germany there were thousands of people who suffered tremendously. Imagine what happened to people who’s income didn’t keep pace with the rise of the cost of goods and services. As the price of milk increased 7.5 times in a single year, the average Joe and Jane probably had to spend all their income and savings just to survive.

Let’s put it in today’s terms. Imagine, you have savings of $1 million. Today that can buy you 250,000 gallons of whole milk at the national average price of $4.00 per gallon. How would your life change if next year the same gallon of milk cost $30? Your savings of $1 million could then only buy you 33,000 gallons of milk. That’s how inflation destroys purchasing power and reduces the standard of living. As we can see, Weimar Germany’s inflation impacted people very differently depending on how they were financially positioned. This explains what Klaus Mann’s quote at the beginning of the article spoke of - “Krupp and Stinnes get rid of their debts, we of our savings.” Apparently Mr. Mann wasn’t positioned to thrive off of inflation.

Although it’s less obvious, the same dynamics are currently at play now. The only difference today is that inflation is destroying our purchasing power and lowering our standard of living at a slower rate.

I wrote about today’s inflation back in January in the article “Inflation is Stealing Your Time.” I talked about possible consequences of high inflation and how if your income doesn’t keep up with the increase of inflation you will become increasingly poorer. I tried to show how inflation is a tax on your time and on your purchasing power.

Much like the government of Weimar Germany, today’s governments around the globe are burdened with massive debt obligations. The options for paying off the debt (or at this point just making payments) include increasing taxes, or decreasing spending, or defaulting. Or they can print money and inflate the debts away. What path do you think they’ll choose?

I believe the path of least resistance is to pay those debts with increasingly worthless currency. With a façade of benevolence, governments can print money and hand out stimulus checks while at the same time destroying purchasing power. They can appear to be helping while actually making the situation far worse. To those unaware of inflation’s true destructive nature it appears great to just get a couple extra grand in the mail. The fact of the matter is, with purchasing power destruction everyone loses, except for those who get to buy votes to maintain their position of power.

To be fair, no one can know if inflation is here to stay, or if it will get worse than it is right now. But I believe the odds and incentives are in inflation’s favor. If that’s the case, what do we do? For us Joes and Janes, I don’t suggest you take out massive loans like Hugo Stinnes, but I do suggest you educate yourself on how to defend your purchasing power against the ravages of inflation. Gone are the days where life savings are safe in bonds or a simple savings account. Like Stinnes, a good place to start is owning real assets that can’t be printed or manipulated and that can increase in value at or above the rate of inflation. The goal shouldn’t be to become the next king of inflation, is simply to remain a freethinking, sovereign individuals.

As always, the only financial advice The Intrepid Life will ever give is: don’t fall in love with money. Instead know how to use it effectively as a tool to protect and provide for those you love.

Now get out there and courageously live an unsafe, but good life.

If you found this article educational, please do me a HUGE favor by simply clicking the LIKE button. That one second investment of your time can pay dividends to the work I’m to doing with The Intrepid Life!

Announcement!

Early in my journey of writing The Intrepid Life, I listened to a podcast, about podcasting, where the host cited a statistic to the effect that if as a podcaster you make it to your twenty-first podcast you would be in the top five percent of podcasters. Well, I know The Intrepid Life didn’t start out as a podcast, but that number twenty-one stuck in my brain and right then I committed to writing at least twenty-one newsletter articles.

Friends, this is article twenty-one! It really feels great to have reached this milestone. Even if its an arbitrary milestone that I set for myself.

At the same time, I've used this milestone as a point of reflection and I’ve concluded that I will transition to sending out only 2 articles per month, one every other Saturday.

I am making this change for two reasons: 1) so I have extra time for some investment business ventures I am working on, and also 2) so I have the needed time to take each The Intrepid Life article to a higher level. I’m really excited about the road ahead. Thank you all for your continued support!

“What I found in my life is that most of the things that surprise me were things that never happened in my life before.” - Ray Dalio

Surrounded by a group of friends, I listened as they expressed their thoughts and shared mainstream news snippets on the Russia and Ukraine conflict. The conversation turned to how the Russian advance on Kyiv had stalled and the Russian army appeared to be floundering. During a pause in the conversation, I asked, “Do you think Putin even wants to take Kyiv?” They all laughed in my face and dismissed my question.

That experience, rather than embarrass me, encouraged me because it confirmed I was operating outside of the mainstream media blackhole. It motivated me to dig deeper into the geopolitical and economic history that led to where we are today.

My subsequent reading, listening, and research over the last five weeks focused on the American-led, dollar-centric, world system in place (in one form or another) since the end of WWII. I wanted to learn if the chaos printed in today’s headlines could indicate a change in the global economic system or simply another bump along the same road. My understanding is still rudimentary. I now have more questions than before. But what I learned is fascinating and it makes me more committed to building a resilient life now more than ever.

(Alright! Grab a seat and a drink of choice because you’re about to get flashbacks to Economics 101 class!)

In his phenomenal three books, The Accidental Super Power, The Absent Super Power, and Dis United Nations, the geopolitical analyst, Peter Zeihan, argues that the world has enjoyed seven decades of uncommon peace and economic prosperity due to the United States maintaining a unique world order.

The order was birthed in Brenton Woods, New Hampshire, in 1944, when representatives from forty-four countries met to discuss what the world would look like when the Allies finalized their victory over the Axis powers. The decision was largely dictated by the United States because it was the sole super power, with the most gold reserves, the largest navy, an economy larger than all others combined, and a homeland untouched by war. America held all the cards. But America saw the Cold War on the horizon and even with all of its strength, it realized it needed a system to contain the Soviet Union without deploying millions of troops around the globe. That was the goal of the order America designed.

Compared to the European empires of the past (whose modus operandi was to militarily occupy their empires), the United States set up a different type of system. The American system had four tenets:

Firstly, all the partnering nations were given unlimited access to the American consumer market (the only market at the time untouched by the war). This was an unexpected lifeline to all the war-torn nations whose recovery would have been much harder without access to America’s robust economy.

Secondly, America committed its Navy to protect all trade throughout the globe. The benefits of this to the partnering nations cannot be overstated as it granted them access to any global market they desired without the normal expense of protecting their trade routes.

Thirdly, the US dollar would be accepted as the reserve currency of the world, pegged to gold at a fixed rate, and all other currencies would be pegged to the dollar.

And finally (and the main reason for this plan), the United States would dictate the security policy of the order with the goal of organizing the free world into a united front to contain the Soviet Union. The system in many respects was a smashing success. Zeihan writes:

“Soon after the war, the dual American poles of economic and military alliance were extended to the defeated Axis powers, the counties that would in time become know as the Asian tigers, and the bulk of the developing world up to and including China.

The American-dominated free trade system ushered in the greatest era of peace and prosperity in human history. Global GDP expanded by a factor of ten. The global population tripled. The massive, civilization-threatening wars of the past (whether they be Franco-German, Russian-Turkish, Japanese-Chinese or imperial predation) all simply stopped, held in abeyance by smothering security and wealth of the American network. The Soviet Union never had a chance.'“

What remains of this system today affects our lives in drastic ways; two in particular I want to highlight. The first is the historic amount of economic prosperity still enjoyed across the globe. Yes, America bribed nations to keep them out of the Soviets’ sphere of influence and to contain the Soviets (which it did), but a secondary consequence was a massive boom in prosperity and global peace. (At least relative to the historical average.) At what other time in history did the most powerful nation on earth protect all trade routes for all nations? This protection has allowed global economies of scale as each nation was able to focus on their economic strengths and safely access their most advantageous markets. Historically, this was a privilege enjoyed by only the most powerful nations or empires. Instead of wars being normal, trade became normal. And the currency in which those trades are transacted is the second drastic way our modern lives are still affected by the order America designed.

Since the beginning of the Brenton Woods system, the US dollar has been the global reserve currency; which means other nations hold their reserves (aka savings accounts, and rainy-day funds) in US dollars instead of gold or another currency. So just like you save in dollars, so do the governments of England, and France, and Japan; among many others. To maintain this status, originally, the US dollar was stabilized by backing it with, and fixing its value to, a set amount of gold. That agreement was broken when President Nixon “took the US off the gold standard” in 1972. Even with that break of faith, the US dollar is considered the most stable fiat currency and still is held as reserves by many countries.

In addition to this, dollar is the currency of choice, and in some cases the only option, for the majority of global trade transactions. For example, in 1974, Saudi Arabia agreed to price all their oil sales in dollars, and the rest of OPEC, and the world followed suit.

(You guys still with me?! Perhaps you should get up, shake out your legs and grab another drink…of water, of course!)

These two functions of the US dollar (reserve currency and currency of global trade) have created a system where other nations need US dollars to operate in the economic order. This in turn has created what’s been termed the United State’s “exorbitant privilege.” That is, that the United States is able to print dollars to fund its wars, social programs and projects, with little consequence because other nations have willingly filled their reserves with those printed dollars. Other countries produce goods and resources and sell them to the United States and in return receive dollars. America’s greatest export for many decades now has been the dollar.

Although we may not realize it, we and our parents have existed within a historical anomaly. For more than seventy years, the world, and particularly the United States, has prospered within a system that was designed to contain the Soviet Union. But many years have passed since the Berlin Wall fell. This begs the question, how long can a system outlast it’s original goal?

Because of recency bias, it’s hard for us to comprehend a world where each nation must defend its trade against competing or belligerent nations, or one where the dollar isn’t the global reserve currency. With a bit of thought, a few challenges come to mind.

Without American-guaranteed global trade, globalization would decline and many of the goods and services Americans use wouldn’t be available or would be vastly more expensive. In short, the standard of living would decrease. Consider a few examples of how this global system reaches into daily American life: Each major part of every iPhone is made in a different manufacturing plant scattered throughout nearly a dozen different countries. Much of the food eaten throughout the US is produced and shipped from Central and South America. Twenty percent of American electricity is produced via nuclear plants which use uranium, half of which comes from Russia, Uzbekistan, and Kazakhstan. Unfortunately, the “just-in-time” supply chains and next-day delivery may not be the most consequential casualty of a global economic change.

The consequences if the US dollar were to lose its global reserve status could be felt on a personal level as well. If the dollar were not the reserve currency of choice, the world would require fewer dollars. If the rest of the world absorbs fewer dollars, the United States couldn’t print billions (as it did in 2008) or trillions (as it did in 2020-2021) in response to crises. That is unless massive inflation is the goal. The loss of reserve status could create inflation of a whole new magnitude. There was a saying in Weimar Germany during its massive inflation, “don’t leave your wheel barrow that full of money outside, someone might steal the wheel barrow.”

Through these weeks of in-depth study, I was reminded of Ray Dalio’s research that we talked about in an article back in February. In particular the image below came to mind:

The graph attempts to illustrate that America’s relative standing on the global stage could be waning. Dalio argues this is largely due to the waning dominance of the US dollar (this was also a leading factor for the other empires charted). The graph also clearly shows the unusually long break since the world has experienced a major war. This prompts many questions: Is the US about to lose its position of dominance? Is the world going to cycle into a new global order, or anti-order? Is the US dollar about to be replaced? Are we due for a major war? Answers to these questions can’t be known, and certainly can’t be accurately graphed. But I think it’s important for all of us to have a basic understanding of the precarious economic position we are living through because it can have deep impacts on our lives. I don’t want any of us caught off guard and unprepared.

My response to this uncertainty is summed up in what I wrote back in February:

“Even if America bucks the trend and retains its prominent position, it’s unlikely to do so without a challenge. So if history repeats, or at least rhymes, those of us in the United States (and the world) could be in for a turbulent couple decades; far different than what we or our parents have experienced.

Because we’ve lived peacefully in the dominate world power, luxury and ease are the norm. As a result, the average American leads a life very dependent on others and the government - a very non-resilient life. A surprise in just one area of their lives - the loss of a job, bare grocery shelves, an extended electrical outage, a breakdown in global trade - is enough to create total chaos.”

As I said at the beginning of this article, what I’m learning and what I know of current happenings, motivate to me to build a resilient life for my family. I’d be a fool to assume that the uncommon prosperity and peace will continue unabated. And with a multigenerational mindset, not only do I want to live free and resiliently, I want the same for my kids and their kids. If times and systems are ready for a change and reboot, my goal is to prepare my family to be able to handle the change and to thrive.

Now get out there are courageously live an unsafe, but good life.

If you found this article educational, please do me a HUGE favor by simply clicking the LIKE button. A one second investment of your time can pay dividends to the work I’m to doing with The Intrepid Life!

“There are no solutions, there are only trade-offs; and whatever you do to deal with one of man’s flaws leads to another problem. You try to get the best trade-off you can get, and that's all you can hope for.” - Thomas Sowell

Three days ago I watched a profound, eighty-two second long video. I immediately scrapped the article I was writing and pivoted to a new topic. In the video, the famous economist Thomas Sowell alludes to a skill I find extremely rare in our society - the ability to perform a cost-benefit analysis. If YouTube is still around in a decade (the Lindy Effect predicts it should be), I’m going to have my son watch this video. Take a look:

Okay, if you were expecting a video worthy of TikTok, you were probably underwhelmed. Or perhaps because the words “liberal” and “conservative” were uttered you got distracted or lost interest. Forget about all that! Intrepid Lifers aren’t concerned with what’s trendy or politics, we’re interested in substance and how to live well. And on that subject, Mr. Sowell has much to teach us.

Cultivating the ability to think critically is a cornerstone of The Intrepid Life. I’m convinced that a mind equipped to think critically is necessary for living courageously, resiliently and free. In a day and age with few wise men, Thomas Sowell stands out (I highly suggest his book, Basic Economics). And in that snapshot of a video, like a sage investor sharing a “hot stock,” Sowell shares with us a critical thinking mental model - there are no solutions, there are only trade-offs.

This simple concept is likely not surprising. We live in a less-than-perfect world, with less-than-perfect people, so it goes without saying that there’s nothing perfect. When Sowell says there are no solutions, he means there are no perfect solutions; no magic potions, no silver bullets. But instead, every potential solution has its own consequences and knock-on effects.

Faced with this reality, when making decisions and solving life’s problems, we are forced to chose between options. Sometimes we choose between good options, other times between bad options. Regardless of the cards we’re dealt, we must be able to work through that decision-making process and to do that we need a skill that’s not taught in our culture.

The skill is what some people call “weighing the pros and cons.” I prefer to call the process a “cost-benefit analysis,” because that name highlights more clearly the reality that actions always have both…you know…costs and benefits. There is no way to get only the benefits and no costs.

I bet all of us have been advised to weigh the pros and cons when faced with a decision at some point in our life. But how many of us have been instructed on how to work through that processes? Not many of us. If any. Seeing how decisions are a part of our everyday lives, it’s probably something we should put effort into learning. Because I think it’s important, I’ve put some thought into it, and here’s five steps that I‘ve learned:

* Ground yourself in reality - perfect solutions don’t exist.

* Ask quality questions to identify costs and benefits.

* Figure out the second and third order consequences of each solution.

* Weigh the probabilities of each option.

* Act.

First, we must ground ourselves in reality and accept the fact that everything has costs, even the most beneficial things. Consider that even Jesus says his free gift of salvation comes with costs. As people tend to say, “there’s no free lunch,” “there’s no perpetual motion machine,” and “money doesn’t grow on trees.” Only then can we take the next step and honestly breakdown and identify those costs and benefits.

Often benefits are obvious and hard to miss. While humans often have a habit of missing or ignoring the costs. This bent is unfortunate because an unforeseen cost can be vastly more consequential than an unforeseen benefit. Thus we must become acutely skilled at rooting out costs.

The key to identifying the costs of a potential solution is asking good questions. This will help us pick apart a problem and see it from multiple angles. The classic “5 W’s - who, what, where, when, and why - are a good starting place. Some less mainstream questions you can ask are: “what are the incentives at play?” and “does this or that option have a proven track record?” One question I find particularly helpful (and that Sowell actually mentioned in the short video) is “compared to what?” To prompt more questions, it’s helpful to step back and consider your situation from other people’s perspective.

After laying as many of the costs and benefits out on the table, take the thought process a couple steps deeper by fleshing out the second and third order affects. This skill is often considered a mental model all on its own and is an invaluable. Like Newton’s first law instructs us - for every action there is an equal and opposite reaction - nothing we do transpires within a vacuum. All of our decisions and actions will have cascading affects and our job in this step of the process is to predict as many of them as possible.

Having shown light onto as many potential costs and benefits and their consequences, it’s time to attach probabilities to each possibility. Over the past four years, in my quest to grow as an investor, I’ve tried to find and learn from the best in the field. One common trait I’ve observed in the top investors such as Jim Rogers and Doug Casey is the ability to think in probabilities. This trait has come in handy as I’ve applied it in and out of financial decisions. For example, a solution with a high cost but low probability is far different than a similar cost with a low probability. Having analyzed the possible solutions through the first four steps, the last step is the most important.

Taking action is the last step of the process. Because there are “no solutions only tradeoffs,” without a deliberate decision-making process it’s easy to be paralyzed. One common saying that helps overcome this paralysis is “an eighty percent solution is better than no solution.” Any decision process worth its salt must lead to action. (Stay to the end of the article to learn about an Intrepid Lifer who’s taking action!)

Our culture promotes solutions without discussing their costs. From topics as far ranging as fossil fuel use and responses to pandemics, socially accepted solutions are pushed and discussion of potential costs are censored. This is lunacy and will have dire consequences. Our culture will only change if us as individuals begin to think and act differently. When we’re faced with problems, and are looking for solutions, we should remember Thomas Sowell’s words, “there are no solutions, only trade-offs.” Don’t fall for solutions that purportedly have no costs. Do your own research. Make your own deliberate decisions. And change the culture one individual at a time.

Now get out there and courageously live an unsafe, but good life.

If you enjoyed learning how to use a mental model to think critically, please do me a HUGE favor by simply clicking the LIKE button. A one second investment of your time can pay dividends to the work I’m to doing with The Intrepid Life!

Intrepid Lifer Shoutout:

Speaking of living courageously…I want to give a big shoutout to a friend, and fellow Intrepid Lifer who’s taking action. This bud of mine was a inspiration when I began writing The Intrepid Life and he helped me get through the “just get started” stage. The list of men I have utmost respect for is short…and this man is on it. Because of that, I’m stoked to introduce his new YouTube channel where he is chronicling his journey learning a disparate array of cool skills. Give his first video below a watch to get inspired to get out there, take action, and get it done.

“Reactive people are driven by feelings, by circumstances, by conditions, by their environment. Proactive people are driven by values - carefully thought about, selected and internalized values.” - Stephen Covey

Last night I received a call from a friend. She goes by Libby, and although I only visited her home in NYC twice, we’ve been friends for as long as I can remember. Right when I picked up the phone, it was obvious it was going to be a tough call.

During our conversation, Libby chronicled how she and her fellow New Yorkers had been put through the ringer over the past two years because of COVID-19. Now, on top of that, her family seems to be falling apart. The past two months had been a particular mess. Her cousin JT in Canada froze the bank accounts of protestors he disliked. Her estranged uncle VP from Russia trespassed and destroyed his neighbor’s property. And as the clincher, her uncle JB retaliated against her uncle VP by confiscating the property of VP’s friends. Her family seemed to be throwing out the principles Libby holds most dear.

If Lady Liberty was human, and a literal close friend of mine, that phone call could have really occurred. But unfortunately, the chaos and worldwide assault on liberty that hypothetical conversation described are all too real.

As I watched global events transpire over the past two months, I was reminded of two previous The Intrepid Life articles. The first, A Worldwide Game of Jenga, describes Ray Dalio’s research on the rise and fall of empires over the last five hundred years. His work suggests that the relative world peace experienced since the end of WWII, may be about to shatter. The article concluded saying:

So if history repeats, or at least rhymes, those of us in the United States (and the world) could be in for a turbulent couple decades; far different than what we or our parents have experienced.

That article was sent out on February 5th. Nineteen days later, on February 24th, Russia invaded Ukraine. As uncanny as that timing may seem, the timing of the second article, was even more so.

The subject of Two Doses of Freedom is that human societies cycle between extremes of personal freedom and centralized control. This cycle played out consistently during America’s two hundred and fifty year history. I closed the article arguing that another face-off likely looms in the near future:

We seem to be headed into, are in, or are perhaps on our way out of, a time of increased control and less freedom. Only time will truly tell where exactly we currently sit in the cycle.

That was sent out three days before Canadian Prime Minister Justin Trudeau enacted emergency powers and froze the bank accounts of the Freedom Convoy truckers and their supporters. A pretty epic display of centralized control trampling personal freedom.

The picture these events are drawing is one where bulwarks of the global system that provided relative peace are decaying, as well as, one where every crisis, from COVID-19 to Ukraine, is a battle between freedom and control. The times are changing and the world is along for a rocky ride.

So here we sit, pawns on a chaotic, global chess board. Headlines of wars and power-grabs can be worrying, and even paralyzing. Perhaps you find yourself swept along in the emotion and hysteria of the day. Perhaps you’re asking: How do I plan for the future with such uncertainty? How can I bring children into this threatening world? Or what can an individual do against the agendas of global organizations?

Any approach to answering such questions and avoiding fear-driven paralysis must incorporate two characteristics - faith and wisdom.

We are pawns. The world is a chess board. But I believe God is the grand chess master. Self-reliance and the good old American belief that we can solve our own problems, is a fool’s errand. Any approach that disregards our Creator results in a humiliating face-plant, every time. (Trust me.) When faced with the worries of this world, true peace is impossible without faith in the God who’s got the whole world in his hands.

But faith doesn’t alleviate us of our responsibility to act wisely. In fact, within the Bible, the book of Proverbs is dedicated to teaching the pursuit of wisdom. I believe one aspect of wisdom, necessary to navigating today’s world, is being proactive rather than reactive.

Being proactive is a habit covered in the book, The 7 Habits of Highly Successful People. Its author, Stephen Covey, defines being proactive as taking responsibility for your life. This concept was one of two major take-aways from his book that have stuck with me for years. (I wrote about the other - personal mission statements - in a previous article.) Particularly ingrained in my mind is the visual shown below:

The simple diagram consists of two concentric circles. Everything that falls outside of both circles is of no concern to us, e.g. definitely everything the Kardashians are up to. The larger circle encompasses all the things in our lives that do concern us, e.g. the actions of a Russian dictator. The smaller circle, represents the things in our lives over which we have influence, e.g. everything with which we interact. It’s probably safe to assume this diagram is accurate for most people alive today - that most things in the world are of no concern to us, and we’re concerned with more things than we can influence.

Covey suggests using this visual tool to help identify those areas in your life over which you have no influence, and those which you do. By doing so, it can help you develop a proactive mindset and proactive habits.

If you fill your days obsessing over things out of your influence, you will live your life tossed to-and-fro and spinning your wheels. This category ranges from the personal, such as how tall you are or your heritage, to the global, such as the actions of global institutions or the movements of stock markets. These things may be very important, and everyone on TikTok may be talking about them, but if you give them your time, energy, and emotions, and by extension your life, you will sadly be a puppet manipulated by things outside of your control. The very definition of a reactive life.

Over the years, even as I found Covey’s visual extremely helpful, I also came to find its circle of influence slightly too broad. I now add another smaller circle - the circle of control.

I find the circle of control instructive because, while focusing on what we can influence is good, focusing on what we can control is better. We can influence our kids, our neighbors, our friends, and our acquaintances, but we can control ourselves. It’s when we live our life focused on what we are responsible for, and are able to control, that we live proactively and impactfully. I’m reminded of a poem by an unknown monk from 1100 A.D.:

When I was a young man, I wanted to change the world.

The key to living proactively begins with us. It begins with daily habits. It begins with the commitment to live differently than the majority of those around you. You must turn down the noise and tune out the static of our distracted society. Television, social media, movies, politics, and the never ending sensational news programs are all powerful distractions. In his quote that began this article, Covey says:

“Reactive people are driven by feelings, by circumstances, by conditions, by their environment. Proactive people are driven by values - carefully thought about, selected and internalized values.”

Are you driven by values? Have you carefully thought about and selected the habits that can produce the life you desire to live? Are you committed to doing the hard work of critical thinking, and continually educating yourself so that you can decipher truth from propaganda? And it takes courage, conviction, and strength, because being the lone fish swimming up stream is hard.

The world will always be chaotic. There will always be conflicts and liberty will always be under attack. That’s the world and environment in which we live. Without a commitment to living a proactive life, the only other path is a reactive one - as a slave to your circumstances. But with faith and wisdom you can live a proactive and impactful life. You can take the road less traveled. As an Intrepid Lifer, you wouldn't travel it alone.

Now get out there and courageously live an unsafe, but good life.

If you found this article helpful, please do me a HUGE favor by simply clicking the LIKE button. A one second investment of your time can pay dividends to the work I’m to doing with The Intrepid Life!

“Good and evil increase at compound interest. That's why the little decisions we make every day are of infinite importance.” - C. S. Lewis

I once dated a super hot girl. On one of our outings, we discussed our interests, likes and dislikes, and…apparently…our favorite books, and we discovered a shared love for Darren Hardy’s book, The Compound Effect. Its message (that success results from the compounding of small, smart choices) resonated with both of us. Obviously I couldn’t let such a hot and wise chick get away! Thankfully she stayed and a year later became my beautiful wife.

When most of us think of compounding, we think of it in the context of financial savings and investments. In reality, it’s a powerful force with an infinite array of applications. In fact, Albert Einstein is purported to have said, “compound interest is the eighth wonder of the world.” In this article, I hope to show that the compound effect is an effective mental model in decision making and a powerful friend (or foe) in habit forming. If Einstein is correct, and compounding is such a powerful force, I think its necessary for all of us to better understand it…and its applications.

Since the majority of people are familiar with compounding within a financial context, let’s begin our discussion there. As with many things in finance, compounding is best explained through an example and graphs. Therefore, lets imagine you invest $100 in your favorite company’s stock. If the stock market has average years, your stocks’ value will increase at a rate of eight percent each year. In this case, your $100 investment grows to $108 after the first year, $116.64 after the second year, and $125.97 after the third year, etc. Because each year’s growth builds upon the growth from the previous year, the growth accelerates annually. That’s the power of compounding.

The graph below visualizes our example. It shows that one hundred dollars, compounded at a rate of eight percent per year, for twenty years, would grow into more than four hundred dollars ($466.10 to be exact). The green line depicts this increase:

To better understand the mechanics of how compounding works, it’s helpful to break it down into it’s three critical components: starting amount, rate of increase, and time. An increase in any of these three components will increase the end balance. That said, each component does not effect the compounding equally. Take a look at the following graphs to discover how an increase in each component separately affects the end results to greater and lesser degrees.

By doubling the starting amount ($200 instead of $100) the end balance is $932.19:

By doubling the rate of return (16% instead of 8%) the end balance is $1946.08:

And by doubling the number of years of investment (40 years instead of 20 years) the end balance is $2172.45:

Although all three components had a positive impact on the end balance, you can notice that time has the largest impact. In addition, while it’s possible to increase the end balance by starting with more money, or a larger annual rate of increase, those two components are often out of our control. We may not have more money to invest, and it’s definitely not easy to increase the rate of your return (to do that with regularity requires years of dedicated learning and skill). But all of us can begin early (or now). Time, in conjunction with the compound effect, is the investor’s best friend. But as I hinted at earlier, it’s not just investors and financial gurus who can capture the power of compounding.

One of the goals of The Intrepid Life is to encourage and enable critical thinking. It’s something we’re hardly ever taught but are expected to perform. This newsletter advocates using mental models (simple expressions of fundamental truths) as tools to develop better critical thinking skills. The compound effect is one such mental model everyone can employ.

It may not appear obvious at first, but the compound effect is at play behind much of the wisdom of our parents and mentors. Consider the following common advice: “invest early,” and “put the work in while you’re young,” and “build good habits at an early age.” Or think of how many times you’ve heard: “patience is a virtue,” or “delayed gratification is better than instant gratification,” or “there’s no better time than the present.” Personally, I’ve heard all these things a lot. But it took me reading Darrin Hardy’s book, The Compound Effect, to realize that compounding was at the core of this sound advice. In his book, Hardy defines the compound effect as:

“the principle of reaping huge rewards from a series of small, smart choices.”

Internalizing this concept will help us make better decisions by reminding us that most good things take time to grow.

We need reminders because we live in a culture of fast food, microwaveable-everything, same-day delivery, and flagrant instant gratification. Living a life that takes advantage of the compound is hard. But it’s worth it. So when you’re next tempted to sow your wild oats while young, or to buy now and pay later, or to take a shortcut, take a pause and give it some time. Perhaps more than in any other area of life, it’s in the creation of habits where compounding is most impactful and its rewards most plentiful.

When I first read The Compound Effect I was young, fresh out of college and at the start of an exciting career. I wanted to be successful. Hardy laid out a path to success that was achievable to a guy like me (never the smartest guy in any group). And when I reread the book this past week, I still felt the same way I did years ago - I felt that implementing the compound effect is both doable and challenging.

The compound effect is an operating system that requires making small, smart choices, consistently. Small…that’s easy. Smart…that’s doable with a lot of learning, advice from others, and the Bible. Consistent…now that’s challenging.

I’m probably not alone in thinking that constancy is the Achilles heel of practicing good habits. We have so many distractions in our lives. So many responsibilities. Our lives are so hectic and irregular. And Netflix is so addicting! And all too often good habits slip to the wayside.

I believe an actionable fix to this problem is building a quality morning routine. John Maxwell, himself an author of excellent personal development books, had this to say about daily routines:

“You will never change your life until you change something you do daily. The secret of your success is found in your daily routines.”

So why is a morning routine the magic fix? Well, I didn’t say it’s magic, or easy, but it’s very effective. The number one reason it’s effective is because, for those of us with busy lives and nine-to-five jobs, the morning is the only time of the day we have even a chance of controlling. Although it may suck, you can always get up earlier to execute your morning routine. Remember, not easy, but effective.

And because you can control that time, you can use it to do the things that are most important to you and most impactful for your growth. Things like meditation, prayer, exercise, reading, stretching, and cold showers. Maybe those don’t make it on your list (they’re on mine), but make your own list, stick to it, and you’ll find this one change can alter the rest of you day, and the rest of your life.

Be aware that habits are funny things. Some can make you successful and others can bankrupt you. Some can make you healthy and others can kill you. Some can build strong relationships and others can destroy every relationship you have. And unfortunately the compound effect works both on good and bad habits. It can take you from one level of success to the next, or from one level of bondage to the next one down. It’s important to build healthy, helpful, good habits.

In The Compound Effect, Hardy illustrates this point with a hypothetical story of three friends. The first friend implements small (at first unnoticeable) good habits in his life. Those changes after much consistency, produce massive outperformance and positive repercussions. The second friend makes no changes to his life and remains stagnant. The third friend picks up small (at first unnoticeable) bad habits which negatively affects the rest of his life. This instructive illustration is represented below:

But the exciting thing about habits is that in combination with the compound effect a single, small positive change can have massive impacts that spread to the rest of your life. Hardy says:

“The slightest adjustments in your daily routines can dramatically alter the outcomes of your life. Again, I’m not talking about quantum leaps of change or a complete overhaul of your personality, character, and life. Super small seemingly inconsequential adjustments can, and will change everything.”

As I mentioned in the last newsletter, I’m learning and growing through what I write about as much as I hope you are. This month my challenge for myself is to add a habit of daily, one minute long, cold showers. I’ve done a 100 day cold shower challenge before and I loved it. My goal this time around is to make it part of my daily morning routine going forward.

How about you? Do you have a morning routine? If not, I challenge you to make one. Start small by choosing one easy activity that you can and will do consistently every day and make it a habit.

How else can you apply this concept in your life? Are there habits that you’ve regrettably picked up over the years? How do you spend your time? Habits will be formed whether you are intentional about it or not. Has your life slipped into grooves you wish it hadn’t? Don’t read this article and move on with your day without thinking about how the compound effect, and particularly habits, are helping or hurting your life.

If nothing else, I hope you now better understand what compounding is and how it works. More importantly, I hope you have a higher appreciation for the power of the compound effect and how it can dramatically change your life; for better or worse. Remember what Aristotle said, “we are what we repeatedly do.” We are not what we think. We are not what we hope to do. We are what we do.

Now get out there and courageously live an unsafe, but good life.

If you found this article helpful, please do me a HUGE favor by simply clicking the LIKE button. A one second investment of your time can pay big dividends to the work I’m trying to do with The Intrepid Life!