Wednesday, June 20, 2018

OPEC’s fake oil output increase

Well, ‘fake’ is not really the right word. But Donald made the word ‘fake’ fashionable; let’s use it. So Saudi Arabia claims to have close to 2 million per day in extra barrels ‘behind pipe’, other countries such as Russia may be able to add an aggregate of 1 to 1.5 million barrels per day. You must realize, those spigots cannot be turned open overnight. This is for mostly ‘marginal’ production not quite economic or in disrepair. U.S. shale production just like Canada’s Montney production is restricted due pipeline restraint and a lack of LNG processing capacity. The only place for slack, ironically, is that much hated Canadian heavy oil. But then economics are still too poor to start new projects and Notley compromised with the oil industry on a carbon output cap. Not that we are likely to be restrained by said cap in the immediate future.

This year alone, demand for oil is scheduled to increase by another 1.5 to 2 million barrels per day. Even if OPEC could get all that ‘excess’ production on line by year end (a lot to ask for), that ‘excess’ is gone a few months into 2019. Hence the ‘fake’ output increase. The Donald nearly begged OPEC to produce more so Americans don’t pay for gas $3 per gallon or more. It is easier to ask the Saudis than to admit to Canada with our ‘weak’ leadership needs to increase our heavy oil output. Especially with Line3 held up and Keystone is still not a fact. Thank the lord for ‘oil-by-rail’ but this time it may not be Canada that has to pay with a ‘discount’. NAFTA, here we come! We maybe Donald’s closest ‘friends’ not too long from now.  Canadians are after all ‘very, very nice people’. 😊

This maybe a bit too simple a picture but I think it is not that far from reality. $80 WTI probably is not as far off as many think.  Even one Middle East disturbance and you could see prices spikes to a $100. In the meantime, mergers such as Vermillion-Spartan or Baytex-Raging River will undoubtedly lead to improved corporate balance sheets. No wonder that I am so bullish on Calgary and its oil industry. We probably don’t even have to turn off oil-supply to B.C. for prices at their pumps to go through the roof. So, Horgan I wonder how long you and your hypocritic buddies will last. 
Well we all may dream a bit. But next year we may see how delusional the expectation is of replacing the combustion engine and the switch to E-vehicles. I don’t say the switch won’t come. But probably it will take a lot longer than most have been led to believe.  Remember how we dreamed of the hydrogen engine? Remember anyone? It looked so good on paper, but investors lost billions (I was one of them but I did not lose those billions all by myself 😊 – it was more in the tens of thousands for me but it still did hurt). TESLA, here we come.  Oh, Alberta don’t forget: ‘O Lord give us another oil boom. I promise this time I won’t piss it away”.  How many times have we said that? I can’t count that high.
We saw it in the 2008-2009 great recession, the most severe in nearly 100 years and the historically long bull market that we are still in. The oil & gas down turn is the most severe in my lifetime. So it is possible that the coming boom will last must longer than we can today dream of.
Currently we are close to peak oil or peak oil supply. We will need a lot healthier oil industry to break through that production level. With so much expertise gone that companies often don’t have staff experienced enough to know what they don’t know and experienced staff was driven into retirement, it may become a much more painful recovery than many suspect. Even worse, we may find out that the U.S. is not capable to drill enough wells to offset declining production (Oh… those oil-shale wells do decline, boy or boy do they ever). They will have to drill even more to increase supply. Similar in Canada’s Montney and how much land is left? Probably a lot less than many expect.

It is a big question as to whether we can even meet energy demand of the world with oil. Gas is not far behind and we will benefit from the LNG plant in Kitimat and scream for more. But temper your enthusiasm because the supply and demand game is much more complex than many of us suspect. I do not claim to know it all. Far from it, after being over 40 years in the oil patch there is still so much that I don’t know. If you think I am on the right track and want to invest in oil and gas, also hedge for risk and for me being wrong. Buy not more that 5% of your portfolio in a single stock. Don’t buy it all at once. Buy a couple of hundred shares in company A and see how it performs. If it does fine add some more until finally you max out at 5% of your portfolio. I suspect you have plenty of time. Do the same for companies B, C and whatever. Also invest in gas production. Invest in Canada and in the U.S. oil (and gas) patch.

In the end make sure that you are not overweight in oil & gas. In a booming market that happens easily and thus often rebalance your portfolio. Also, these commodities are very cyclical. Especially if you own real estate in an oil producing city or you work in the oil industry, do not go overweight! We just learned how devasting a drop in commodity pricing can be. That way when the unavoidable drop in pricing occurs you have already taken most of your profits and you are diversified away into safer investments (if there is such a thing).

Tuesday, June 19, 2018

Trade war portfolio

Trade wars are bad for all. And the guy in Washington seems to take on the entire world at once.  Remember what happened to Hitler when he opened multiple fronts.  It first looked like he might win; then it all collapsed. The trade wars also strengthen the U.S. dollar but what does that mean for U.S. corporate profits?  Yes, they will likely decline in spite of Trump’s tax reform. So, sell U.S. stocks but hold on to the cash in U.S. dollars. 
Even if oil doesn’t further rise in price, unlikely, our oil producers get paid in U.S. dollars and pay expenses in cheap Canadian dollars.  The same with any other exporters. High oil prices are like high interest rates, it will slow the economy.  Hampered by uncertainty and falling corporate earnings, I don’t think the Fed will raise interest rates further or at least not 4 times. This will put a cap on the U.S. dollar exchange rate. A weak stock market, weak corporate earnings and a rising or peaking U.S. dollar will weaken the U.S. economy.
China will suffer as well and with all the uncertainty and damage of the trade war to its economy, it’s stocks will decline from already cheap levels. A HUGE buying opportunity in the coming months! This maybe the best time to rein in China’s nasty trade policies.  And the U.S. is the country to lead us, whether we like it or not. In the earlier decades the world benefited in many ways from a prosperous China. We kind of ignored its nasty trade practices and its dictatorial leadership including human rights violations. Now that is has grown up to the world's 2nd largest economy that is no longer acceptable. 

I am not sure that a true democracy such as Trudeau, Friedland and many European countries tend to aspire will be the political system of the future. The recent pipeline spat illustrates where that leads to. Strangely enough, I think that a stronger central government with stronger party discipline may be better. As long as that government avoids interfering in our lives, which nearly sounds contradictionary. But a strong federal government that stays within a limited mandate and that better controls the undisciplined behavior of our provincial governments and the undermining tactics of many special interest groups is probably the best of both worlds.
Canada, amongst others, may pick up the slack caused by China’s import tariffs on U.S. agriculture. We also may be in a stronger position with the NAFTA negotiations than we think. Trump's harsh treatment of Canada and Mexico may have been a warning salvo because he has an exposed weak back. Ultimately, all this uncertainty is likely to strengthen Gold even if it is not initially obvious when expressed in U.S. dollars.  There is a good chance that Canada will actually benefit from the Trumpean adventures. Don’t panic, sell some of your weaker U.S. stocks before it is too late. Sell your U.S. ETFs and hold U.S. dollars until the overall situation is becoming clearer.
Next year, there is Canada’s Federal election and that of Alberta. B.C. is unstable and thus, as already started in Ontario, prepare for major political changes here in Canada. I am nearly sure that Alberta’s NDP is gone. There is a good chance that Trudeau will also be gone; but with the Andrew Scheer /Maxime Bernier rift matters are a lot less clear. Andrew Scheer is not a strong leader with even less Charisma. I am sure his latest political move, ousting Bernier will cost him dearly in donations and other support. His supplications towards a bunch of Quebec farmers is not viewed positively in the rest of Canada. Quebec will always behave like the enfant terrible; counting on its political support is a high risk game.  Let’s hope Scheer will see the error of his ways, makes peace with Bernier and boot the Quebec farmers (before they dump him).
Over the longer term, I am optimistic about Alberta with a 2001-2008 style of commodities boom and a relative weak Ontario that over the next few years will have to content with the fall out of its past real estate boom and the policy follies of the recently defeated Wynnie-government. Thus, sell U.S. stocks, hold on to Canadian stocks – in particular gold and oil producers but also agriculture. The banks will, like nearly always, do fine as most mortgage damage will be carried by CMCH. Of course, these are just speculations because I don’t really know the future. However, the above seems to me like a decent scenario. Like any self-respecting prognosticator, I will adjust my views many times, if not daily.

Sunday, June 17, 2018

Selling covered calls reduces overall portfolio risk and increases your cash flow

The previous post was for the more numerical challenged but writing it made my head go spin around. So lets look at the story in a spreadsheet. (I hope I did all the math consistent).
In the previous post, I use 1 single option which deals with 1 underlying share. In real life, options are traded in bundles: A bundle of 100 options is called a ‘contract’. Options are traded in contracts but the price (premium) is quoted for a single option. Say, the option premium is quoted at $2 then you buy a contract (100 options) for $200 (plus brokerage commissions). 

Brokerage commissions at a discount brokerage are typically around $10 for the first contract and if you buy or sell more then you pay around $1.25 for every additional contact.  Thus a commission for 3 contracts (300 options) is $10 plus 2 x $1.25 = $12.50.  If you trade options through full service brokerages you may end up paying 100s of dollars in commission which makes option trading often a very expensive game. Only trade options through discount brokerages.

Thus the spreadsheet is for 1 contract or 100 options with 100 shares as the underlying asset. When you sell call options you are taking on the obligation to sell the underlying shares for a fixed price (strike price) . In our example with TD Bank shares, when selling 1 call contract expiring over 6 months at a strike price of $75 then you make the commitment to the buyer to sell him or her 100 TD shares for $75 regardless what it trades for in the market during the next six months. 

Now, what would happen if you did not own those shares and they were trading in the market for say $80 per share?  Yes, you would be obligated to buy 100 TD shares for $80 each or for $8000 and sell them to your option buyer for $75 per share or a total of $7500. That would be an instant loss of $500. If the shares traded at $100 dollars instead, your instant loss would be $2500 dollars.  That could become very painful and that is the reason why you should only sell call options on shares you already own.  That turns the high risk ‘naked’ option trade into a conservative ‘covered’ call trade. 

With put options you take on the risk to buy 100 shares per contract for the strike price.  Now, since you don’t own these shares already, this is a ‘naked’ deal. When you write or sell a 'put option' took on the obligation of 1 put CONTRACT with a strike price of say $75. When the contract gets exercised, you’d better have the cash! That means you must have access to 100x $75 or $7500. So, although selling put options seems like making cash out of thin air, or if you were a central banker, it may feel like printing money… but you must have the means to buy the shares you committed to!  

Writing put options is ideal if you have a lot of cash, and you want to make a bit more than the interest your brokerage pays.  Only sell puts on shares of companies you’d love to own anyway and the strike price should be the price at which you are willing to buy those shares anyway! 

So here is the covered call spreadsheet with 4 scenarios. Each scenario compares holding 100 TD shares outright versus in combination with sold call options.  Note that each scenario has 2 six months periods and that the dividend yield is 4.6%

Scenario 1 shows a large upward price movement. The 2dn scenario shows break even prices.  Click on tables to magnify

In the tables below we show what happens when there is a small loss and when there is a large loss.
Scenario 3 shows a small price loss and the last scenario shows a large loss. Click on the tables to magnify.

When comparing the 4 scenarios (which covers most outcomes) then you may notice that when selling a call option to restrict your upside in terms of appreciation to the strike price. So with a large upwards jump in prices you make a maximum total profit of 9.9%  If the share price jumped even higher to say: $85 dollars, with outright share ownership you'd make 16.4% but the return on the call option scenario would be capped at 9.9%

So in return for capping the upside, when the share price doesn't move over the 12 months of the spreadsheet, you would make only 4.6% (the dividends) on outright ownership while with the call options do remain at 9.9% return!  If like in scenario 3, the share price drops to $75 then in the outright ownership case your return is reduced to 3.3% while with the options you'd still made 8.5% and if you drop to a share price of $70, a nearly 10% drop in price, then you would lose 3.3% but the options would buffer the loss and you'd turn a small profit of 2.0%.

Cool he? Now, if the stock price is temporarily down after six months, you can still hang on for the stock to recover. Just look at the price movements of TD and you can see that over the long term the price tends to go up. In the meantime you can keep on collecting option premiums thus nearly doubling your cash flow from the dividends. From a long term perspective, writing or selling covered call options increases your cash flow and it reduces your volatility. Something worth to try?


Saturday, June 16, 2018

Making money by selling call options

An option is a right to buy or sell shares of a company (underlying shares) for a fixed price (strike price) over the term of the option.  Say you would be willing to sell your house for $100,000.  Rather than putting the house up for sale right now, you give someone the right to buy your house for $100,000 anytime during the coming 6 months. If today is Jan 1 then the right to buy would expire 6 months from now on May 31. The call option or the right to buy the house expires on May 31. $100,000 is the strike price. The house is the underlying (asset).

You can do the same with shares. Say I own a share of TD Bank which currently trades at $76.  I sell you the right to buy my TD anywhere over the next 6 months for a strike price of $75.   Hé wait a minute! You sell me the right to buy a TD share over the next six month for $75 while it is already trading at $76?  Yes, we call that a call option that is IN the money. It is already worth $1 ($76-$75). That one dollar is called the option’s intrinsic value. If you own the option and six months from now TD is trading at $80 then the option’s intrinsic value has increased by that date to $5 ($80-75).

What? You sell me an option, a call option that gives me the right to buy your TD share for $75 when it is trading at $80?  Yes, how much do you want to pay me for that call option?  Eh… wait a minute, what if TD doesn’t go up to $80 but instead it falls to $70?  In that case the call option would be worth nothing right?  After all nobody in their right mind would buy a TD share from you for $75 if it only trades for $70!  If you, the call option buyer, pays me $2 (the option premium) to sell you a TD share that is worth today $76 for $75 anytime over the next six months then $1 goes towards the intrinsic value and the other $1 would be for what?  It would be for the value of the term or the time before the option expires!
After all, I own (in case of a ‘covered call’) 1 TD share worth $76. You pay me $1 intrinsic value plus $1 for the time value totalling $2 and if TD trades at $80 at the expiry of the option or when it is exercised prior to expiry you made $5 profit on a $2 dollar investment or 250%.  Now, if I kept the TD share I made $4 profit on my TD share for which I paid $76 or just over 5% plus two quarterly dividend payments. While, if I sold you a call option for $2 then I made $75-76 plus $2 plus the dividend, i.e. I made $1 more profit (plus dividends) than if I had sold it for $76! 

But if TD had fallen over those 6 months to say $74, I would not have gotten $76 and the option expired worthless. IN that case I would have owned a $74 share (which may appreciate over time) plus $2 premium plus dividends. I reduced the risk of a loss. By selling a call option I reduced my downside.

Let’s step back. I buy TD for $70 and a while later, it trades for $76.  If I sell it , my profit is $6 plus dividends. Rather than selling, I try to squeeze a bit more cash out of the deal by selling a call option. I am willing to sell TD for $75 plus I will collect the call option premium of $2 dollars plus 6 months of dividends. Yes, I limit my upside, but I was already happy with the $6 appreciation and now I get $1 more, i.e. $7 of profit (plus dividends). That is an extra 1/75 x 100% over 6 months or an extra 5.3% annualized. And if the share price falls, I just hold on to the stock a bit longer and have an extra $2 in cash. I increased my profit while reducing the risk of holding on longer. And, if the call option expires worthless, I can ‘write’ a new option. If I receive another $2 dollar premium for the next 6 months, even if TD stock doesn’t change, I made nearly a 9.9% return that year.  Writing covered call options is a very conservative way of earning cash flow and providing downside protection.
The buyer of my option has an extremely leveraged play where in six months he/she can make a 500% profit annualized (2 x 6 months) or… lose the entire $2 investment. High risk and high reward. But what if TD had fallen say from $76 to $70? The buyer of 1 TD share would have lost $6 on his purchase while by buying the call option he lost only the $2 premium! So maybe buying the call option was not as risky after all. 

Options are traded as ‘contracts’, a bundle of 100 options with 100 shares as underlying. You can sell call options as an income generating strategy. Say you want to buy 100 TD shares.  It pays say $3.50 dividends per year per share. Your investment is $76 x 100 = $7600 and you will earn $350 in dividends. Now write a call option contract for $2 for 6 months and with a strike price of $75. You collect $200 in premium and if the options expire worthless because TD shares fell below $75 then you made $350 plus $200. If you write a 2nd contract for the rest of the year (another 6 months) and the shares still ended up at $75 then you earned another $200. Now your cash flow is not $350 but rather $750.
Say, the shares were $77 after 6 months. You could have bought the call option back just before expiry for the intrinsic value of $2  (the time value declined to $0) and kept the profits on the shares now $77 (i.e. you broke even on the option but made a dollar on appreciation of the shares plus dividends). Then you sell for the next 6 months another call for $2 of $200 for the contract. Now you have $550 in cash flow plus $7700 in TD shares ($100 appreciation) for a total ‘profit of $650. 

If you’d bought an extra 100 TD shares when the shares were at $76 and had the call option exercised instead of sold, you would have made $350 plus $200 premium plus $200 appreciation- again $750 cash flow! But you had at least during part of the period nearly $1530 rather than $7600 in cash tied up in the TD deal. Either way, that year your income or cash flow would have been nearly double the regular dividends and… you’d have less downside risk compared to owning the TD shares outright.
Never sell calls on shares that you don’t own (selling a 'naked' call). That would be the same as ‘Shorting’ a stock and your losses could be infinite because you would be forced to buy the TD shares at expiry for possibly a much higher price so that you can sell them for the strike price of $75. Say TD went up to $100 you’d lose $25 per share.  Say TD traded at $200, then you’d lose $125 per share. What if the TD share price shot up to $1000?  Now you can see that selling a ‘naked call’ is a recipe for disaster and far from conservative prudent investing.  In the next post I will show you the story in a spreadsheet.

As, by now you may realize, when trading in covered calls and naked puts, a lot of 'what-if' has to be considered. A good workout for your grey power!

Friday, June 15, 2018

Chrystia Freeland’s speech disgusts me

Chrystia Freeland made a speech upon receiving the Foreign Policy’s Diplomat of the Year Award in New York. She was so proud of it that she edited and printed it in the Globe and Mail. Yet the speech showed nothing but typical Liberal arrogance and elitism; everything that makes me hate the Liberal Party of Canada. She stated that all good in this world was the work of the LIBERAL democracies of the free world. She claimed the success because of LIBERAL democracies and their nearly natural right to govern the world. That only liberals were standing up to fight skinheads and fascism.

In the simplistic view of Chrystia, everyone who is not a supporter of the Liberal Party of Canada is a bigot. Well if you think that elitist Chrystia, I am proud to be a bigot and an evil climate change skeptic and I hope that you and your Justin loving buddies are just a one term phenomenon. You are the elitists that divided the political spectrum in a left and a right with at the right the National Socialists and on the left the Communists. Funny that both are based on the totalitarian doctrines of Marx. Both thrive and dream of maximum government interference and telling others how to live. To top it of, you call yourself democratic, but we have seen with how little respect you treat people who don’t share your extremist attitudes.  I may not like the Donald, but I also despise the likes of you.

You claim all those benefits of the Western democracies stem from liberalism. I guess the entire libertarian movement or the Republicans or the Conservatives have nothing contributed.  That is your arrogance!  You prefer a government with everything regulated. A law for everything. One abuse and we MUST make rules to protect every citizen- adult and child from that evil. More power to the bureaucrats and everyone else is there to serve you.

Your view of the political spectrum is entirely wrong because what you call left and right is exactly the same. Let’s assume that most people in this world want what is good for the planet; what is good for general prosperity. There are not many people that can be perfectly happy while their neighbors starve at the gates of their estates. Where lies the difference is in the degree of bureaucratic interference. I want the government out of our lives as much as possible – there is a need for some rules and regulations. But government should stay out of my life as much as possible and it should be seen with great distrust. Power corrupts, Chrystia Freeland and in many ways your self entitlement is the shining example. This distrust of government and the freedom of individuals that is what made the U.S. so great. That is what made Canada so great! Rule of Law but up to a limit. 
We don’t want our neighbors to starve but we do want to be rewarded for our good works. We want personal accountability!  We want an incentive for people to do what is beneficial to society as expressed in wages and other perks. No, I don’t like the extremism in wealth distribution that we see in today’s U.S. and to a lesser degree in Canada. I personally think that it is not right to create financial power houses run by single families. It destroys the urge for newer generations to build their own lives. But this is not something that necessarily has to be legislated. I may not need my wealth transferred to my children but what about a farmer with a business that requires multigenerational commitment?   What about the child who would love to take-over the business of the parents?   I don’t see how one person should earn 200 times as much or more than the average employee in the same company. A lot of this depends not on laws but on the integrity and accountability of individuals. 
We should instill in our offspring the obligations we have to society, especially towards the less fortunate immediately around us. But we also should be proud of the rewards that our hard work brings. This has been an essential part of our evolution and of our society’s progress. Nobody ought to starve in our ever more powerful economies but those who only pursue their personal instant gratification should not be rewarded to the same degree as those who achieve goals beneficial to all around us and who save for later years. It is a pity how true art is often rewarded after its creator dies. Art is beneficial to our society; it is an example of something beneficial to us all.  So is the invention of the personal computer; the cell phone or other discoveries in science. Or the person who dedicates him or herself to the welfare of those around them by providing care – both physical and mental. But instead of only relying on legislation, as the liberals want, lets also rely, possibly even more so, on personal accountability and integrity. Having the good things in live is not a right it is a privilege.

Monday, June 11, 2018

Junior versus LoudMouth

He who is willing to destroy something controls it. That is Trump’s game (I wouldn’t call him Mister).  We probably have all played or at least experienced the act of indignation. Trump doesn’t care whether he tells things that are factual or not. It is all about bluster and threat. He is correctly labelled a ‘bully’. But if you have ever been in negotiations you can recognize this attitude which is not for those that see negotiations as win-win. There are times it works even if you have in fact nothing to offer or if there is nothing to feel offended about. In that case, each inch in your favor seems a win, but what about your long-term relations?

Trudeau’s response is correct. There is no other way. The markets may be shaky but that is not Trudeau’s fault. If he and the other G7 leaders give in, Trump will want more. That is the nature of this beast. The U.S. is a world power in trade and militarily. But it’s economy is smaller than the EU. It is only 25% of the world economy and shrinking in proportion. Look, S&P500 companies get 47% of their profits from outside the U.S.  A large portion of these profits are kept outside the U.S. The U.S. is one of the few countries that collects taxes from corporate earnings outside its borders and thus more dependent on trade than anyone else. Trump is trying to repatriate manufacturing which is a trend likely to happen anyway. With labor costs becoming less important in a robotizing manufacturing industry it are resources and energy costs as well as know-how that count. The U.S. education system is notorious. Canada’s is better but antiquated and politized. Gloating about U.S. healthcare and public schools is not that smart either.

This is a fight about where manufacturing occurs. It is just a matter of the costs of getting products to market. Is it cheaper to process raw resources in low populated areas, manufacture them there and then transport them to the population centers or vise versa?  Is recycling meaningful enough and can it be used as  a sufficient and cost-effective input for manufacturing rather than raw resources?  As I understand it, most extraction from recycling is again done away from the population centers.  Maybe driverless trucking is an advantage for less populated areas. Time will tell, but Trump is using his bluster against the existing manufacturing centers trying to bully them to move to near the U.S. consumer. Canada is a resource rich and low population country and as such we are at cross roads with the bully.
The U.S. claims to be an exporter of oil and gas again. Is that including Canada’s resources?  Simple arithmetic:  The U.S. produces 10 million barrels of oil and a lot of gas per day. It uses 25% of the world’s oil that is around 20 to 25 million barrels - nobody talks about the globe's natural gas production. The U.S. will need oil imports, no matter how deluded. The U.S. needs Canada’s resources and more. 

Nobody knows for sure, but I think the weak point of shale-oil is its high decline rate. The U.S. production needs ever-more wells just to keep its production steady. The abandonment costs and the number of wells no longer economic for production will be staggering and are usually not included in economic evaluations. In the past, wells had an economic life of decades and thus the future value of an abandonment is zero (until the day you must abandon the well, aka Alberta). Now with much shorter well life, abandonment costs are starting to bite. So, U.S. oil production may be more costly than presented. Also, much hated Canadian Heavy Oil is now produced close to $25 per barrel and its reserves are ‘long live’. Don’t consider our resources 'sunset' as a misguided Justin thinks/thought.
With 47% of the profits of U.S. large caps coming from outside it’s borders and a significant portion of its energy imported (also, close to 90% of U.S. uranium is imported from Kazakhstan and Canada) and... its growing need for water, the U.S. needs the rest of the world and especially Canada. We need each other. Trump maybe willing to hurt him-self so that he can hurt others but many Americans are happy with trading globally. See no further than Robert de Niro. I wait for the moment that Trump calls him 'weak and a traitor to his country'.  Yes, Trump is catering to his xenophobic voter base, those Americans brass and loudly proclaiming how the world is abusing them. But that is not real. It is a distraction; an excuse for not having to address their own huge internal problems and place blame on anyone but themselves.

I am not a fan of Junior but everyday I become less a fan (if I ever was) of Mr. LoudMouth. In this I am with Justin. Maybe he will become a true national prime-minister with backbone after-all. But then, next year will judge whether he will be replaced by a more down-to-earth Andrew Scheer.  In the meantime, Trump will have to face the music in November. 

Saturday, June 9, 2018

How to be successful – do what you say you will do!

What is being successful? Simple, you reach the goals you set for yourself in life. Done.

Well that was a short post. It is like: How to become rich?  You accumulate assets.  Easier said than done.
There are hundreds of excellent plans; many fail because they are not implemented. The idea that you need to invent something entirely new, like a Microsoft windows is bogus. Xerox invented the concept of windows and the mouse. But Bill Gates executed.  Steve Jobs executed but ‘lost’ from Bill. What a colossal failure! How could Steve be so stupid?
As we all know, Steve was far from stupid. Yes, Apple went nearly bankrupt, but Steve didn’t see that as a failure. He saw it as a learning experience. After being fired from Apple, his own company for crying out loud, he tried creating ‘Next’ another operating system and got no-where. Then Apple got into so much trouble, they asked Steve to come back and we know what happened thereafter. Ironically, Apple’s version of personal computers is very successful and… you can run Windows on Apple computers. But Steve’s real success was iPhone. The question is, would Steve have been that successful with iPhone if he hadn’t learned from his earlier adventures?
The lesson for all of us is, that there is no failure. Everything we do is a steppingstone, a learning experience to do it next time better and if that doesn’t work… keep on trying.
Everything starts with a plan, but it doesn’t have to be a completely novel discovery. It maybe as simple as improving on someone else’s ideas. I am not talking about stealing someone else’s work, like plagiarism or stealing someone’s computer code. Bill Gates saw the potential in DOS (disk operating system), one of the earliest generations of computer operating systems. He BOUGHT the project and then improved it and marketed it. His execution of the ‘DOS’ plan was brilliant and with luck, he became one of the richest people on this planet. But it wasn’t MS DOS that made Bill such a historic person. It was another idea that he saw at Xerox, he recognized the potential of what is now Microsoft Windows.
There is one very important lesson people may overlook. Neither Bill Gates nor Steve Jobs foresaw their largest successes. They didn’t set out with the idea of Windows or iPhone. They started with much simpler plans and one thing led to another. That is life: you set a goal, a personal ‘Belize’ and then you work towards it. It is not important that you reach that goal. It is the voyage towards that goal. The goal provides direction and once you are there or when you are getting close you may think that you reach something that is turning out different than you visualized. You adjust your goal or if you reach your goal you recognize an even more ambitious goal or a key improvement and then you go again merrily on the trip towards your new goal.  Life is not static – doing nothing with your life after you retire is a living hell! Reaching retirement is not a goal – a goal is doing something you think is worthwhile and then execute.
Regular readers know what I think about climate change. I think it is fake and not real science. Having said that, the concept of ‘climate change’ has motivated many to do something about our planet. To keep it clean. That is a great goal. But not to the point that we cannot use this world to reach our goals. Not to become entirely reactionary and oppose anything humanity does. This world and the universe around us is our sandbox; it is a tool to make our life worthwhile, to grow and to achieve goals. Are you careful with the tools you use in your daily life? Of course you are but, that won’t stop you from using those tools. Many people have chosen to use combatting climate chance as a goal, no matter how futile. This planet changes forever but if we do not take care of it, if we not keep it functioning and be there longer than our puny 3.5 million years of existence then we are at fault.  You may have bought this fabulous house, but if you don’t live in it, if you don’t dare to use it, it is no good to anyone.
Life is to be lived in a certain amount of discomfort. Discomfort because your latest project is a new challenge. That way you grow never old in your mind. It may even extend your physical limits. However, now in my sixties, I do see and hear everyday of people around me who died; people who became another aspect of this universe. And don’t ask me if that person’s individuality continuous or if he or she is just an unaware dust particle in the universe. It doesn’t matter. What matters is how that person lived the privilege of being a human with all its potential. Life is not about legacies, but it is about living it to its fullest potential. There is no failure, there only is the quality of the voyage to whatever you set out to accomplish and then on to your next goal. Legacies are for psychopaths who are afraid that they are forgotten over the billions of years this universe is likely to endure. Who will remember Bill Gates or Donald Trump or heaven forbid Justin? 😊  Do you really think that a billion years from now Bill Clinton looks down on earth and reminisces Monica and what happened under his desk?  Who really cares? Legacies are for fools.
You are successful based on your own goals and, especially, the voyage of reaching those goals – temporary traffic signs towards never ending goals. Goals give you direction, without goals you run around aimless like a chicken without a head. But those goals are just traffic signs for where-ever you are ending up. You can grow and learn, or you can go in circles (until your learn) the choice is yours. But realize that you as a human being are very special and privileged. It doesn’t do to hop around aimlessly, and it doesn’t matter what the world thinks of you. What matters is what you think of yourself and whether you achieve what you set out to do with this life.
That brings us to a cornerstone of success. It is not about what your goals are. You may have the most beautiful and the loftiest goals, nobody cares including you. It is about the voyage of achieving those goals or at least up to the point that you can see where to go next. You know whether you truly achieved and are on the way to something even better or whether you where not really executing well. There lies the real failure, if you couldn’t be bothered; if you were lazy and ended up drifting endlessly on your ocean of life never coming even close to the shore of your promised land.
So how do you execute? Your goal can not be set too low. You know what you can do and then you make sure that you have a bit of a challenge. A goal like: By 40 years I have my first million.  I want to publish this paper about this specific geological issue. Whatever you think is worthwhile and with some effort achievable. But never ever set a goal for someone else. Never tell someone else what they should do.
Execution! Most plans fail because they are not implemented. Even big plans need a first step, and then another and… another. You could use milestones if the final product seems dauntingly out of reach. Reaching milestones is very good for your self-esteem and your motivation to get the job done. Make sure, your milestones in themselves are goals to be proud of. How do you ensure that you will actually move towards your goals?
We humans are social beings and we want encouragement from those around us. If you have ‘friends’ who do not encourage you to move towards your goals, whether they think it is achievable or not, then get rid of them. Negative ‘friends’ are like vampires stopping you from reaching what YOU think is worthwhile doing. Very important.  Once you set your goal, even one that is a bit audacious, and you have  decided that your goal is worth the effort (which may be considerable) then you tell those around you. Even your enemies. You tell the world of your plans (except that portion that may be used against you. You don’t tell a potential buyer what the lowest price is that you are willing to accept).
Those around you may help you. They may point out some weakness in the itinerary of the voyage towards your goals.  Constructive criticism is fine; you even want it. Not stories about how unachievable your goals are, i.e. vampire ‘input’. You want to show those around you that you can get things done. It motivates you, just like it motivates athletes to have a cheering audience. An audience that wants you to achieve! This is the first step in your commitment towards the plan. Now that the world knows, now you can take another step. And with each step towards your goal your competence, commitment and self-confidence will grow.
That is also a bit about why this blog is so important to me. It let me tell the world some of the things I want to do. At the same time, I help others by showing them how certain things can be done. Do what you tell others that you want to do! It cements your commitment and commitment is a very important ingredient of success.