Human capital


What’s human capital?
To start, we need a definition. Here’s what Wikipedia has to say: “Human capital is the stock of habits, knowledge, social and personality attributes (including creativity) embodied in the ability to perform labour so as to produce economic value.” A little tricky, but basically human capital is the economic value of a person based on their skills and ability in the workplace.

So who gets paid for human capital?
In a free-market economy, everyone gets paid based on their own human capital. We each own our own skills and abilities and we collect income based on our ability and value when we work. Regardless of whether we work for a company or ourselves, we’re compensated for the value we’re able to provide.

So far so good. Now let’s tie this into investing. Without some understanding of the market, people tend to believe that they can beat the market by picking the right stocks. Consistent success (beating the market) in stock picking is actually impossible, but let’s pretend for a moment that’s not. If the market was beatable, there would naturally be people who were especially endowed with the skills and/or training to beat it. Those people would often become money managers and they would be highly sought after by the general public looking for great returns in their portfolios. But who would collect the premiums for additional returns achieved above-market returns? Stock picking would be a human capitalist skill! The brilliantly skilled money manager would collect some serious fees for his valuable ability, fees almost exactly in line with the amount of return he was able to achieve above the market. The additional return of the portfolio wouldn’t end up in the pockets of investors, it would go to the brilliant manager with the impressive human capital skills.

So here’s the point: the stock market is efficient and so it’s not consistently beatable, but even if it was, investors would not be the beneficiaries. The super-skilled money managers would rightly collect large fees, highly correlated to the additional value they were able to provide based on their human capital skills.

The ‘wicked’ world

I’ve begun reading Range by David Epstein, I’m two chapters in and already suspect that it may be the best business type book I read this year. Epstein distinguishes between two types of domains: the kind, and the wicked. That sounds weird, but it’s a very helpful distinction.
A kind domain is like a game. There are constant, understandable rules and boundaries. Chess is a helpful example Epstein uses, it’s confined to the chessboard, there are unchanging rules, the game is always between two opponents, it’s a super structured and narrow environment. A person can develop superior aptness within a kind domain like chess by lots and lots of practice. Practice helps because the arena doesn’t change, you can rely on the rules and systems involved and learn to excel within them. Ideas like the 10,000 hour rule (which says a person will become an expert or reach mastery after 10,000 hours of practice) stem from this idea. Epstein argues that line of reasoning only applies within kind domains (golf, chess, music, etc.), but actually isn’t that helpful for most of us because the world isn’t kind, it’s wicked.
Wicked is the opposite of kind. Where kind domains are constant, confined, structured, wicked means that the rules are constantly changing, the boundaries are always moving, the terms are rarely the same. It means that hours of specialized practice is actually unhelpful because it entrenches a specific unattached way of thinking about the world. People who thrive in the wicked (real) world are adaptable, curious, able to bring ideas together, to look at the big picture, to think strategically. They try lots of different things, they have hobbies, they embrace varying inputs. Even most sports, while including some kind aspects, are mostly wicked. Children tend to do better by experimenting among many different sports instead of specializing in one early on because of the additional benefit of learning varying movements and strategies. The early specializers who find success (eg: Tiger Woods who excelled in golf, a more kind sport) are the exception, not the rule, and probably aren’t the people we should be emulating.
Today, the world is more wicked than ever. Specialized tasks are more and more handled by machines and computers. The ability to think widely has become more and more important. We all must specialize to some degree, we’ve got specific responsibilities, and specific things we need to get done. But don’t be afraid to experiment, detour, adapt, create, and read Range!

iPad Pro Work: Setup


I’ve wrestled with this before, to use an iPad or to not use an iPad as a primary productivity machine. I work in financial services, specifically as an investment advisor. I don’t run any heavy-duty programs, I use Microsft’s office suite, a few communication apps, and a lot of web-based programs, so it’s not untenable. But in previous years the compromise has proved too great and my MacBook Pro too trusty.

iPadOS seems to have solved most of the most egregious of those compromises. The addition of the desktop-class browser (almost, Safari extensions are not yet available, but websites do render as desktop sites) is specifically a game-changer for my work. The improved multi-tasking abilities help too, and mouse support opens up a whole new world of possibilities (think, I could connect the iPad to the conference room display for a client meeting and run it from a Bluetooth keyboard and mouse on the table).
So I’m back, I’m giving it another honest try.

Here’s the setup:

• I bought the 12.9 inch variant over the 11 inch. The larger screen offers so much more utility. On top of simply having way more space to work with, it will also give two full-sized apps when running them in split-view instead of the phone versions of those apps. Subjectively, it’s the difference between working on a computer and an oversized phone.

• I chose silver over space gray. Space gray looks awesome, but as soon as it suffers one little nick or dent you see silver underneath. I’d rather the whole device stay one color. Also, silver looks awesome too.

• I chose the WiFi-only model over the addition of cellular. One great benefit of iPads over MacBooks is their ability to connect to cellular data and be always on and always connected. The thing is, I don’t want to be always on and always connected. I like to close my work machine and stop thinking about it for a while. Plus, I still have an iPhone, so on the rare occasion that I’m working and out of range from WiFi, hotspot is still available. The WiFi-only model is also a way to save some money, the iPad itself is cheaper and it won’t incur the extra monthly data cost. This is the one decision I can see myself waffling on in the future, but for now, I’m content.

• I went with 256gb of storage. For people who do a lot with photos and video, the higher storage tiers make sense. For me, 256gb is probably overkill. The only thing that will take up any noticeable amount of space for me is the occasional Netflix or Amazon Prime movie download for watching on the plane.

• Along with the iPad Pro, I purchased an Apple Smart Keyboard, 2nd Generation Apple Pencil, and an Apple Magic Mouse 2. I’ll comment on each of these accessories in the future.

Here goes!

Open options


It’s 2019. The industrial revolution began over 200 years ago. Political democracy was ratified almost 250 years ago. Capitalism began its ascent somewhere around 500 years ago. In 2019 the world is a much different place and changing at a much more rapid pace than ever before. The rise of technology, the commitment to political freedom, and the resilience of free markets have resulted in remarkable life improvements. We have more free time, we understand the concept of a vacation, we even live longer. But maybe the most impressive change in the last 500 years is the incredible increase in the number of options we have. We’ve got multiples of ketchup options at the grocery store, we’ve got multiples of grocery store options within driving distance, we’ve got endless options for entertainment built right into our TVs, we’ve got so many bars and restaurant options we can’t keep track of where we’ve been and where we’d still like to visit (just me?), we’ve got innumerable product options staring at us from our phone screens, we’ve got travel options, vacation options, gym options, school options, cell phone options, clothes options, housing options, the list goes on. The sheer volume of options seems a little crazy when you think about it, but we love all our options. Options are great, they’re an essential part of freedom, they give us the ability to direct our lives to a degree. For most of history people didn’t have many options. As far as work went, the option was to essentially do what your parents did (which was probably farm). Now we’ve got thousands of career options, and that’s a wonderful thing.
The flipside of all these options is the requirement to make lots of choices. Options are great, choices are work. They’re work because you have to sift through all of the options, but more so because you eventually have to make a decision. The word ‘decision’ comes from the Latin root ‘decidere’ which literally means ‘to cut off from.’ Making a decision involves choosing one option instead of a bunch of other options, it means cutting off the other options, it means giving up the other options. So that’s a problem, what if we really liked having all those options? Options equal freedom!
The real problem with our abundance of options is that it gives us the illusion of freedom but it’s often crippling. We begin to idolize our options to the exclusion of making decisions, to the exclusion of making progress. We become content to maintain the beautiful platter of options without ever making a commitment to any. I suspect that this is especially true in our work. I love to vacillate on different strategies for my business, different side-hustles I could start, different events I could host. I love to ‘keep my options open’ so to speak. But in the end, that’s just wasted time. You could spend your entire life keeping your options open and never accomplish anything. The fear is that once you commit something you’ve got to be all in and you’ve got to say ‘no’ to the other options, but the alternative is to live a life of waffling waste filled with eternally open options. That’s definitely worse. So make a decision!

Motion vs Action

I read Atomic Habits by James Clear a little while back. The book is packed with helpful insights, a highly recommended read. One that stuck out to me is Clear’s distinction between what he calls motion and action.
Motion is like busywork or planning work. It’s often preparatory, and it rarely moves you forward. The great thing about motion is that it feels productive, but you don’t really have to do any real work. I love motion, and I’m really good at it. I’ve got my checklists and my idea notes, my daily planning routine, all of it.
We’ve all heard the phrase (well, maybe not all of us, it’s popular jargon in the business motivation world from Jim Collins) “good is the enemy of great.” Clear has a better one, a quote from Voltair, “the best is the enemy of good.” In our most impassioned moments when we’re moved to improve ourselves or situations, we tend to immediately get mired in thought about which direction to take. If you’re anything like me you’re obsessed with the theoretical best option. This applies to all sorts of things, like crippling indecision when facing a plethora of product options on Amazon, but especially when thinking about how to improve myself or my career or whatever else needs improving. What’s the best way to do it, or the best route to take? In my mind that’s the right question and it deserves a lot of attention. But the time I devote to that question is motion, and at this point, it’s close to 100% wasted. I might as well be tuning in to the financial news (gasp!).
In beautiful contrast stands action. We’ve got all sorts of nice pithy quotes for this one, “Well done is better than well said” (Benjamin Franklin), “Do you want to know who you are? Don’t ask. Act! Action will delineate and define you” (Thomas Jefferson), “Small deeds done are better than great deeds planned (Peter Marshal), you get the picture. These are a little soupy but they’re actually pretty close to the truth. We need action! Think about writing your grocery list. The list is great, especially if your handwriting is nice, but writing the list isn’t going to put groceries in your pantry. It can help guide your shopping trip which is valuable, but you’ll still be hungry until you actually go shopping. And if you had to choose, wouldn’t it be better to go shopping without a list than to have the nicest, cleanest, most thorough list without ever shopping? Think about sales calls. You could spend a lot of time formulating a call list and writing up the perfect script, but until you actually pick up the phone you haven’t accomplished anything. Lists and scripts are motion, shopping and calling are action, you get it. Motion isn’t worthless, but only action can create an outcome.
So that’s the point, as fun and busy feeling as planning and emails and lists are, those things are motion, and motion can’t move the needle, motion won’t ever create an outcome. Act!