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Messy Mangers and Complexity 


“Where there are no oxen, the manger is clean,
but abundant crops come by the strength of the ox.” - Proverbs 14:4

This week I was struck by this ancient and timeless proverb. To speak candidly, with Fident’s growth, there’s been no lack of growth pains. Instead of getting simpler, things seemingly become more complex. Old issues seem small, replaced by new and larger ones. 

I don’t believe I’m unique in experiencing this. Whether it’s our businesses, our jobs, or our personal finances - there’s an interesting parallel with growth and complexity. 

Unpacking this proverb - the ox is a means for abundant crops. But keeping oxen is a messy job. They poop. Evidently a lot. You need to provide food and water. You need to balance the amount of food with the amount you work them. 

No oxen would mean a clean manger. But it also means less ability for creating abundant crops. An empty manger may be clean, but it won’t produce any abundance. 

So rather than seeking to avoid messy complexity - I’m learning to embrace it. And as Carl Richards sketches out, have a goal of moving from Simplistic, into the chaos of Complexity, and arriving at Elegant Simplicity. We’ll reenter the next area of complexity soon enough, but realizing the pattern can help provide perspective. 
Interesting Resources 

1. James Clear - 4 Types of Wealth (Twitter)
“There are 4 types of wealth:

1. Financial wealth (money)
2. Social wealth (status)
3. Time wealth (freedom)
4. Physical wealth (health)

Be wary of jobs that lure you in with 1 and 2, but rob you of 3 and 4.”


I really like this - but would add 2 types. 
5. Spiritual wealth (wisdom)
6. Family wealth (relationships)

And I’d caveat the same warning: pursuing #1 and #2 without regard to the rest is a dangerous and probably foolish game to play. 



2. Dimensional Funds Perspectives - Perspectives on Premiums
Technical piece, but really good. The TL;DR is even when historical evidence-driven data doesn’t show up in certain time periods, it (most likely) eventually will. 

Premiums (or factors, or smart beta, or a host of other fancy sounding terms) are styles of investing that have historically done better than the market as a whole. For Dimensional, they identify Value (over Growth), Smaller (over larger), and high Profitability (over less profitable) companies. The most recent 10 years have shown 2 of these 3 show up - with Value being the missing component. This isn’t entirely unique, and measuring 10 year rolling returns since 1927 when it has happened, Value usually returns with outsized returns. The tricky part, of course, is we never know when that will happen precisely. But when it does - it has happened quickly in the past. 
*See disclosures at bottom of email
What’s in your messy manger right now? 

Gratefully,
Jeremy


PS - Speaking of elegant simplicity, I'm really excited to be announcing some big rollouts in the next few weeks after working through some messy complexities. Stay tuned!  
*Using monthly return data from June 1927 to December 2018, annualized premiums are calculated over the subsequent 10-year periods following a negative 10-year size, value, or profitability premium. The average, minimum, and maximum are calculated across all such 10-year periods for each premium. Excluded are 10-year periods that end after December 2018. Past performance is no guarantee of future results. Indices are not available for direct investment; therefore, their performance does not reflect the expenses associated with the management of an actual portfolio.
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