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Two Principles to Prolong Sanity

Over the past few weeks I’ve been thinking about and processing two interesting principles: Dunbar’s Number and Parkinson’s Law. Taken together, I think they might give us a glimpse of personal sanity by prescribing predefined constraints. 

Dunbar’s Number is a suggested cognitive limit to the number of people that one person can maintain stable social relationships with. Robin Dunbar, the original researcher, suggests this number for humans is around 150. Any more than that and we just can’t deal with the cognitive load of maintaining or even caring about others. 

Parkinson’s Law is the old saying that “work expands so as to fill the time available for its completion.” Pragmatically, we’ll have more work to do the longer we give ourselves to do it - contrasted to giving ourselves a deadline and realizing we become more efficient getting the same amount of work done. 

These two principles sit on the foundational truth that we all have limited resources - time, money, energy, and skill, specifically. And when we try to take on relationships or challenges or responsibilities that exceed them, we burn out and end up doing a poor job with the things within our controllable realm. 

With all - or really any - of the issues going on this year so far, it’s easy to get paralyzed with so many inputs, intensified by an unknowing of what we should personally do. And as I mentioned at the end of Fident Friday last week, I personally realized that the bigger of a focus area I tried to maintain, the worse I was doing at loving those within my proximity. And also, I may transparently add, the worse I did with the tasks in front of me - professionally and personally. 

So armed with the understanding of Dunbar’s number - I can only truly care for a finite amount of people - and the implementation of Parkinson’s Law - my work will expand to the time I make available - I set up some constraints:
  • I have a defined end of each work day, with time bands for specific tasks within it. 
     
  • I’ll only read the news (print edition of WSJ) for 20 minutes, typically read The Flip Side for multiple perspectives on an issue, and then turn off the news the rest of the time.
     
  • When I have a thought, question, or photo I’d have usually posted online, I’ll send it to varying small groups of friends or family. Rather than increasing the diameter of my social circle, I’m attempting to strengthen the existing ring. 
     
  • I eliminated about a quarter of Fident Friday’s email list from subscribers who weren’t clients and weren’t engaged over the past few months. 

As with anything in life - there are tradeoffs. 
  • Having defined time constraints means - well, actually I haven’t seen any downsides here. 
     
  • Only reading a finite amount of news means I miss out on breaking news. Until someone texts me about it. 
     
  • Not being online socially limits my reach to new people, my personal brand, and the dopamine hits from relative strangers applauding my work. 
     
  • Dropping people off Fident Friday’s list could have eliminated a prospective new client in the future.

But I am okay with each of them, largely because I feel a good bit more sane. Full disclosure: I don’t practice this perfectly, but the times that I do cheat, I feel it. Almost instantaneously. 

This isn’t - I don’t believe - an entreaty to stick our heads in the sand regarding legitimate issues happening around us. It is, however, an encouragement to (1) realize our limitations, (2) focus on the things we can control, and (3) love the people in our lives really well. 

And perhaps paradoxically, if each of us were to do this, we’d literally impact the entire world without any single one of us shouldering the weight. 
 

Interesting Resources


What I'm Watching
Alone: The Arctic (Netflix) 
In what seems like a former lifetime, I did a fair amount of hiking and backpacking. I’d like to ignorantly think I could survive for some non-embarrassing amount of time alone in the woods. Well, I think I’d have lasted less than 24 hours on this show. The series (Netflix only has season 6 currently) places 10 people alone in a harsh environment - in this case, near the Arctic circle in Northern Canada. Each participant is entirely alone with 10 items they can choose ahead of time, in addition to lots of camera gear since they self record their journey. The objective is to stay alive, without tapping out, longer than anyone else, with a twist being that they don’t know when others have tapped out. It’s pretty intense, and I stayed up too late multiple nights watching it. 
 
Quote
Quantative Momentum - Dr. Wes Gray 
“Human beings suffer from an inability to properly weigh their chances of success for low-probability events.” 


Your 5-Step Guide to Navigating a Scary Stock Market
6 min read | New York Times (Carl Richards) 
A total confirmation bias move here on my end citing work from a mentor and hero of mine, but Carl does a great job outlining what to do in scary stock market situations. 1. Give yourself a break. 2. Remember why you invested in the first place. 3. Revisit the investment process. 4. Stay in the lifeboat. 5. Do something else. 

My favorite line is when he talks about the weighty evidence of history: The pattern I notice is that each and every time we thought that things might change for good and disrupt investing forever, they didn’t. That’s what I mean when I say “the weighty evidence of history.” It’s true, this time may be different. But probably, it’s the same.


How I Explain Crappy Returns
8 min read | Alpha Architect 
Simply holding the S&P 500 index - which is mostly owning large and growth-oriented US companies - has not only been cheap, but it’s also been a really great recent performer. Fident typically suggests tilting portfolios into various “factors” such as smaller companies, value companies, and momentum companies. While momentum has done well, small and value have not when compared to their counterparts. So why use them? Well, to borrow from Carl Richards’ quote from above - there’s a weighty evidence of history to rely on. These are conversations I’ve addressed before in these letters and in person, but I feel this article does a really good job providing some context. And I love this final line: It’s always been my belief that when it comes to investing, discipline – which is the key to investing success – comes through understanding.
Two last things:

1- Just a friendly reminder that next week is the cut off for IRA contributions for the 2019 tax year for Traditional, Roth, and SEP IRAs. It’s also the tax filing deadline for most states and federal returns. 

2- I’d love to hear from you: does Dunbar’s Number or Parkinson’s Law ring true to you? Are there ways you currently are implementing that into your life, or ways that you’d like to in the future? Hit reply and let me know.



Gratefully,
Jeremy
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Fident Financial, LLC (FFL) is a registered investment advisor offering services in the state of PA and in other jurisdictions where exempted.  Opinions expressed in this email are solely those of FFL, unless otherwise specifically cited.  Material presented is believed to be from reliable sources but no representations are made by FFL as to another parties' information accuracy or completeness.






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