Time To Say Goodbye

I had a very good week in the third grade when my friends and I discovered that John Travolta said the word “shit” in the song “Grease Lightning”. Every day we had twenty minutes of free time between math and reading. Us boys plugged our headphones into a port and played “Grease Lightning” over and over and over again. We held our breath in anticipation until Travolta said shit and we giggled hysterically, because when you’re eight, nothing is funnier than hearing the word shit while you’re in the classroom.

Side note - kids today with their iPods, DVDs, and Internet are completely spoiled. The amount of effort and teamwork required just to hear a “swear word” in the classroom helped shape our character as men. Today’s youth are probably too busy streaming porn to be bothered with hearing bad words. Kids today have it so damn easy, but I digress...

All good things come to an end and Mrs. Mason figured out why we were listening to the soundtrack. We were forbidden to play “Grease Lightning” again and lost the privilege of listening to records for a full week. I had nothing better to do, so I started playing with a globe in the classroom. I spun the globe around lazily and let my index finger gently touch it as it spun. The globe stopped and I became aware of a large land mass off the coast of Asia called “Australia”. My right index finger landed on the west coast of the continent in a strange city named “Perth”.

Fast forward thirty years and I am a humble middle aged man from Phoenix, Arizona trying to make my way Down Under. I pride myself in speaking perfect American and here, everyone seems to think I have a thick accent. To be clear, my American is flawless. The people of Boston have the worst American accent. Followed by New York and all southerners. People of Chicago - I love you, I’ve lived with you, but your accent is pretty bad. Nope, my American is the same as the American spoken on the bulk of the television shows consumed by the good people of Australia. Yet, when I meet Aussies for the first time, they seem to struggle to understand me.

On my very first day, I was inspired by my self taught geography lesson and came up with my favorite ice breaker joke. Aussies obviously know I am not one of them, but seem somewhat hesitant to ask where I am from. I try to goad them into it by saying things like, “I’m fresh off the plane.”

I can usually get them to ask where I am from. I pause, look them in the eye, and say (deadly serious), “Perth.”

I laugh and laugh as it’s obviously complete bullshit. My timing and delivery are flawless and yet I feel like a stand up comedian tapping the microphone and saying, “Is this thing on?”

Worse yet, Julie hates the joke. The more I laugh at my own material, the more annoying it gets. I have to admit, Julie has a great sense of humor and is a fantastic judge of comedy. She’s been listening to my act for fifteen years and must find some of it funny as she puts up with me. If it’s not landing with her, it might not be as funny as I think it is. I try and console myself by saying that the joke is ahead of its time. I tell myself in ten years, we’ll all be making jokes about Perth. Yet typing the proceeding sentence, I somehow doubt its truth.

The only other possibility, aside from the joke just not being funny, is that Australians are too shocked by an American knowing of the city Perth (it’s the fourth largest city in the country) to laugh. Although, as of this writing, my joke has officially been retired, it will be reincarnated at some point in the future. My mate has promised me the next time he visits the States and someone asks him, “Are you British?” he’s going to answer back, “I’m from Kansas.” I hope to be vindicated in a few years as Mick is far funnier than I am. Until then, I’m no longer the man from Perth.

Everything I Needed to Know About Australia, I Learned in Half an Hour

I took a train to Moorabbin on Saturday and I think I learned more about Australia and Australians in half an hour than I have in the weeks proceeding that fateful ride. It was about 1:30PM when I left Moorabbin to return to Port Melbourne and it didn’t occur to me that the train would be packed with fans going to “the footy”.

Australia as a country is more secular than any other first world country. In the 2001 census, 30% of the participants stated they were atheists or refused to answer the question. 70,000 Aussie smart asses replied that they were “Jedis”. Of the majority that did state their denomination, only 25% attended a religious service on a weekly basis. I, however, witnessed the true Australian religion on my journey as my train was filled with followers of the Richmond Tigers.

Prior to visiting Australia, I had assumed that Aussies were passionate about rugby and cricket. While that might hold true in New South Wales, here in Victoria, the AFL is king. The train was filled with men, women, children, and the elderly all dressed in the black and gold of the Tigers. I spent over half an hour with my face six inches away from a father taking his two sons to the game. One foot to my left was an older gentlemen who proudly told me that he had personally attended six Grand Finals (the equivalent of the Super Bowl in the NFL).

If I were asked prior to arriving, which footy team I would follow, I would have said Melbourne. I didn’t understand that the AFL actually has teams for each suburb. Although the larger markets such as New York and Los Angeles may have two professional sports teams, Melbourne is not much bigger than Seattle. It would be like having teams such as the Redmond Tech Geeks, the Bellevue Yuppies, the Seattle Hipsters, and the Tacoma Stinkypants (yes, Tacoma, I’m talking to you - your entire city stinks. Own it!). After much careful deliberation, I decided that I barrack for the Saint Kilda Saints. I might have made the decision lightly as now that I have committed to it, there is no turning back. Australians do not tolerate fair weather fans. After I made my declaration of loyalty, I found out that the Saints are having a bad season, in the prior two seasons they had been to the Grand Final twice without winning a championship, and they have the worst overall record (going back over a hundred years) of any team in the AFL. Perfect! I need a team that will disappoint me, as a retired Jew and a Phoenix Suns fan I couldn’t ask for a better choice.

While Qwest Field in Seattle is considered to be one of the loudest and most raucous stadiums in the NFL, it holds about 55,000 people. Melbourne Cricket Ground (MCG), where most AFL matches are held, holds DOUBLE the number of people. The appeal of the game transcends gender and age and truly unites entire groups of people.

My first observation on the train was that Australians are tough. That train was packed so full that I could barely move, yet there wasn’t a single complain uttered. In fact, the Aussies were downright happy. In the States, someone would have filed a lawsuit and sued for millions of dollars due to the emotional distress caused by their claustrophobia. After the law suit there would be federal regulators dictating that each person needs at least 3 feet of personal space. Helmets would be mandatory - not because anyone got a head injury, but because it would be the next logical law suit.

I realized watching TV in Oz that there are no commercials for drugs. It seems like back home, network television is more or less subsidized by Big Pharma. I have seen advertisements for depression, erectile dysfunction, constant urination, high cholesterol, anxiety disorder - you name the “disease” and there is a pill for it. The American attitude seems to be that if there is a problem, a magical pill exists that will fix it. While the same drugs may very well exist here, I have never seen them advertised. I am somewhat certain that if one were to visit an Australian psychologist, on the first visit they would be told, “Get over it!”

If the person went back for a second visit, the psychiatrist would say, “Walk it off!” There assuredly would not be a third visit.

Australia benefits from the same relative geographic isolation that the United States does. Although Aussies have fought valiantly in many of the major conflicts over the course of the last hundred years, Australian soil has only been attacked once. Although considerably smaller, the Australian special forces are elite. In fact, those crazy bastards invented the “Aussie style” of repelling. It’s true, Australian special forces are trained to repel from helicopters; face down, one hand controls their descent, and the other hand is used to fire their weapons as they land. I have first hand experience with repelling and there’s no way I would even try “Aussie style”, let alone do it into a hot landing zone.

Now having praised their toughness, there is one aspect that all Australians are complete and utter sissies about - if the temperature drops below 60 degrees Fahrenheit (or 10 Celsius) they go into an absolute panic. If one ever needed to interrogate an Australian; I would recommend tricking them into a car, child locking the door, and turning the air conditioning all the way down. Within a minute the most toughened, hardened Aussie would be spilling their guts as they can’t handle the cold. Australians set their thermostats to 78 degrees during this exceedingly mild winter.

I have also noticed that Australian dads are probably better than their US counterparts. Back home, I proudly took my kids plenty of places without adult supervision. Everywhere I went, people acted like I was father of the year for doing something with my kids while my wife got a much needed break. Here, it’s perfectly normal to see men taking their children places and spending time with them. Recently, I had the privilege of watching a father carry his infant son in a bjorn on the tram while he was wearing a suit. Without the least bit of self-consciousness he smiled at his son and kept him entertained. There was no one he was trying to impress. This wasn’t for show, he genuinely loved the little child perched on his stomach and it showed. It made me miss my kids all the more, but I will be happy to bring them to a place this family friendly.

The Australians on the train were warm and friendly, all out for a day of fun with friends and family <sarcasm> in spite of the bitter 60 degree weather </sarcasm>. Their love of sport is passionate without being stupid. Young children enjoy the footy as much as the adults and are quite safe at MCG. It’s a great country and I feel blessed to have the opportunity to live amongst the Aussies in their native habitat. When I start complaining about the cold when it is well above freezing, it will be time for me to go.

867-5309, Jenny!

I meant to keep writing about expected value and how it applies in the workplace. I am just a few days away from going back to the states to pick up Julie and the kids. I can’t wait to have my family with me, but there is one family member who will not be coming with us... She is one of the most +EV people I know and I will miss her. Instead of expected value in the workplace, I’d rather spend some time thanking Jenny Brown for the impact she has made on me and my family.

Four years ago, we made the decision to pull Carson out of daycare. He was always sick and never seemed to be getting better. An ear infection would turn into a sinus infection and it would go on for months. Julie was pregnant with Zoe when we decided to hire a nanny. I wanted Carson used to having a nanny before his sister arrived so his entire world didn’t change at once. Julie contacted an agency and did some of the pre-screening.

Jenny didn’t know it, but I decided she was perfect for us in the first five minutes of interviewing her. What can I say? I have a good poker face. Her dedication to children, warmth, and positive attitude won me over quickly. Carson loved her too and within a week she had him learning new signs daily which he showed us with great pride.

Before Jenny, I used to struggle on a daily basis to take care of Carson and keep our house livable. I was stumped at how Jenny managed to watch Carson and keep the house spotless. I literally sat and watched her to learn her time management skills. It worked - somewhat, as I’ll never be as clean as Jenny.

Jenny quickly moved from being a nanny to a trusted advisor, psychologist, and mentor. She has more experience with raising infants to five year olds than just about anyone on the planet. Jenny has always respected my rights as a parent, but has offered up great advice on how to handle the kids when asked. Her patience and compassion for my kids will always be cherished by me along with her warmth and kindness and fantastic sense of humor.

Over the years, I have looked forward to weekday mornings when Jenny would come in and the house would be quiet. We would drink our morning coffees together. Her with her grande latte from Starbucks which she would drink slowly over the course of three to four hours. Me with my iced latte made in my kitchen which I would drink over the course of three to four minutes. We would talk about all kinds of things from the kids to life in general. She was there for so many ups and downs in my personal life, but I don’t think I’ve ever seen her have a bad day. No matter what was going on in her life, she always stayed positive.

Jenny’s console was sought for more than childcare advice. I will treasure the memory when Julie and I got in a dispute and decided to let Jenny be the arbitrator... It was a Saturday and Julie and I were going to a friend’s daughter’s birthday party in the evening. I took Carson to soccer and had a bunch of errands to run with him. Julie and I agreed to meet at home and go to the party together.

Carson enjoyed soccer and we afterwards, we went to McDonald’s. I grabbed a pair of jeans and a t-shirt and asked him to take his soccer uniform off after lunch. He insisted he wanted to keep his uniform on. Being the parent, I believe it is my role to set the rules and establish boundaries. However, I thought about it as Carson protested. If he took pride in playing soccer and liked wearing his soccer uniform, what was the harm? So we went and got our hair cut together and did the rest of our errands with Carson in his soccer uniform.

When we got home, Julie was a blur of motion. Zoe was almost ready to go and we were running a little bit late. Julie asked me to change Carson out of his soccer uniform. I said no.

“What do you mean, no?”

“I mean I asked him to change earlier and he didn’t want to. I thought about it and decided that he rarely asks to wear anything and that if he likes wearing his soccer uniform, then he should wear his soccer uniform. He really likes soccer and I think that’s cool.”

“We’re not going to this birthday party with him wearing a soccer uniform.”

“Why not?”

“Because... we’re not. It’s not appropriate attire.”

“May I remind you that this is a birthday party for three year olds?”

“Evan, he’s not going in his soccer uniform.”

“I wish I could take you to ‘Marriage Court’.”

Marriage Court was Jerry Seinfeld’s short-lived series about couples who had a dispute and could have it arbitrated in front of an audience. The show sucked, but the premise was great.

Julie paused. “Call Jenny. She is fair and impartial.”

I called Jenny and Jenny sided with me. Julie was flummoxed as she was sure that she was going to win the argument. Although she abided by Jenny’s decision, it led me to the conclusion that to Julie, the definition of fair and impartial means the person agrees with her.

Jenny has been there as Carson learned how to walk, talk, and started going to school. She was there minutes after Zoe was born. To this day, Zoe refers to Jenny as “My Jenny” as in “My Jenny and I went to the aquarium today.”

I will miss you Jenny. You have been far more than a nanny. You are my role model in calmness and patience. My hero when it comes to staying positive. You have been a great friend and member of the family. Please don’t hesitate to Skype us as I am sure the kids will miss you as much as we do. Thank you. Thank you for everything.

More Expected Value, People Don't Change, and In Bizarro World - I'm the Douchebag

This anecdote is not about public shaming. That’s just a nice side effect. The point of this story is that people don’t change. Knowing that people don’t change, all one can do is change the way you react to people. I would also like to introduce the question - is it better to be principled or to be effective?

It all started with a series of mistakes. In November of 2010, Julie received two coveted free tickets to a Seahawks game. The face value of the tickets was $350 each. They were great tickets. I was excited as the Seahawks were playing my hometown Cardinals. However, the weather was looking worse and worse by the day.

Mistake #1. Knowing the weather could possibly be bad, I didn’t want to go to the game with Julie, a casual fan. I could envision a scenario where we got there, watched a little of the game, and she would say, “Let’s go home.”

Somehow, I managed to talk her into giving me HER tickets. It was selfish and stupid. I acknowledge this. I should have gone to the game with her and appreciated the alone time regardless of the venue. Instead, I called a few guys and left a voicemail saying the first one to call me back could go to the game.

The first guy to call me back was, well, let’s call him “Lance”. “Lance” was also from Arizona and when he called to claim the ticket, I said, “I dare you to wear my Larry Fitzgerald Cardinal’s jersey to the game.”

“Lance” said he wouldn’t have any other way. Mistake #2 was letting “Lance” borrow anything. On my theme of people don’t change, “Lance” is of the opinion that he has no obligation whatsoever to return anything that he has borrowed. It is his sincere belief that if the person he borrowed something from wants the item he borrowed back, they can come over and get it. I had been warned of this opinion multiple times by numerous people and planned to get the jersey back from him immediately after the game.

Mistake #3. I got really, really drunk at the game. I forgot all about asking for the jersey back and “Lance” went home with it. A few days later, he said thanks for the game and by the way I still have your jersey, I’ll give it back to you. I didn’t hold my breath and knew that if I wanted it back, I’d have to go get it.

A few months went by and I decided enough was enough and I would go get it. I called “Lance”. He told me I could swing by his house and pick it up on the way home from work. I went at the time we agreed on, but he wasn’t there. I was sitting, in the rain, waiting. Finally, I called him.

“Dude, I’m so sorry. I’ve got both kids. The wife is out of town. I’ll be there in an hour if you want to wait.”

“I really don’t want to sit in my car and wait, in the rain, for an hour. I’ve got to get home to my family.”

“Dude, I’m sorry. I’ll bring it by your house.”

Again, I wasn’t going to hold my breath. It’s at this point in the story that I would like to point out that “Lance” lived about a five minute’s drive away. Multiple times, he even promised to bike up my hill to return the jersey and get a workout in.

Mistake #4. I continued to allow Lance to dictate the terms of returning said jersey. After several promises to return it, I ran into him at work. He said he would put the jersey in his car and give it back to me when I saw him. A few weeks went by and I ran into him randomly and he still did not have the jersey. I was getting increasingly annoyed.

Out of the blue, “Lance” im’ed me to say he had my jersey and if I came by the cafeteria where he was sitting, he would give it back to me. I literally dropped everything, rushed over, and he was gone. I tried calling “Lance”, but he didn’t answer the phone. Strike 2 for “Lance”.

Strike 3 was exactly the same as strike 2. I get a random IM, I dropped everything, rushed over, and “Lance” had decided that he would rather go mountain biking on a sunny day than wait an extra ten minutes to return my jersey (I should mention that he usually only works about two hours a day).

Strike 4 was just like Strikes 2 and 3. I show up, he’s not there, I call, he doesn’t answer. Only this time, after being stood up four times and in the process of packing all of my earthly possessions, I lost it. At that exact moment, it wasn’t about getting the jersey back any more. It was about the principle of the thing. I took “Lance” to a football game with a great seat, he took my jersey, and stood me up four times in my attempts to retrieve it and felt absolutely no shame for his behavior. It was a perfect storm of narcissism, apathy, laziness, entitlement, passive aggressive behavior, and general bad manners.

Mistake #5. I should have taken a deep breath. I should have called and left a message saying, “Hey, this timing thing isn’t working out. Why don’t you leave the jersey on your porch and give me a call? I’ll swing by and pick it up as soon as I know it’s there.”

Instead, the message went more like this, “‘Lance’, I’m in the cafeteria and you’re not here. I’m tired of this. You get off your fucking ass NOW and bring that jersey to my house you worthless sack of shit.”

Again “Lance” could have answered the phone. He chose not to. Instead, he texted back, “Why is your pussy all sore?”

I proceeded down this path pathetically texting (because “Lance” wouldn’t answer the phone) that he ought to be ashamed of himself that he had my jersey and had stood me up multiple times when I went out of my way to get back MY jersey.

People don’t change. “Lance” immediately got defensive. He said I wasn’t a “real” fan. Apparently, in “Lance’s” world, if you don’t pass the “real” fan test then he is under no obligation to return the item at all.

I continued. “Lance” then proceeded to call me “materialistic”. If only I were as enlightened as “Lance” I would not be bothered by the fact that I had now wasted four hours of my life trying to retrieve my damn jersey!

When I finally got home, the jersey was, miraculously, on my porch. However, “Lance” did the mature thing and immediately unfriended me on FaceBook. I guarantee, if you were to ask “Lance” about this incident his response would be, “Evan is a total dick. He got bent out of shape over nothing.”

I have not yelled at anyone in six or seven years. I find it extremely ineffective. I had simply lost all patience with “Lance” and my yelling accomplished absolutely nothing. In his mind, “Lance” did nothing wrong and my screaming, if anything, convinced him that I was the one at fault. Again, the point of this story is not public shaming, the point is that “Lance” has not changed his viewpoint at all after being exposed to my righteous anger. Since I was powerless to change “Lance” I should have changed my approach. I understood it then, I simply succumbed to my emotion. I let the principle of the issue get in the way of getting the result that I wanted.

In personal relationships and friendships, it’s better to stick with people that are +EV. So “Lance” unfriended me, it’s not the first time it’s happened. It probably won’t be the last. Good riddance. However, how do you handle -EV people at work? What do you do if you love your job, but you find your co-worker annoying? What if you’re the boss and your employee lets you down? What if you hate your boss? Do you agree that you cannot change people?

Casinos, Expected Value, and Relationships

I hate casino gambling. It seems strange to say this considering how much time I spend talking about gambling in general, but it’s absolutely true. I have walked by Melbourne’s Crown Casino on a near daily basis and am still confused by what would make someone go in there and place a bet. It is a mathematically certain losing proposition.

Over the short term, anything is possible. However, ALL table games are negative expected value bets. For example, a player who knows how to play perfect blackjack is giving up a 1% edge to the house with every wager. For every dollar bet, in the long run, he or she is essentially giving the casino two cents. The math is simple, a gambler places a $1 bet and has a 49% chance of receiving $2 from the house and a 51% chance of losing the initial $1 altogether. Multiplying 49% times $2 results in $.98 - the expected value of this theoretical wager. Since the gambler is receiving less than their initial bet, this is considered a negative expected value (-EV) wager. Any good gambler eschews -EV bets and tries to find situations to get their money in with positive expected value (+EV). Not all +EV bets will win, but in the long term, focusing on +EV wagers is what makes money - it’s this logic that ensures casino profitability.

Expecting to make money playing the house at table games plays purely to emotion. Any table game player is quite literally saying, “The laws of probability have been suspended for me and me alone.” Take a look at any nice casino and the amount of money that is put in to constructing and maintaining it. That kind of cash flow is not generated by giving money away, it’s made by fools giving money to the casino by believing they can beat the house at their own game. They can’t.

Now for one of my non sequitors. I was two years out of college when my ex-roommate, Jerry (names have been changed to protect the stupid), called me on the phone.

“What’s up, you stinky bitch?” That was Jerry’s way of saying he missed me and had been thinking about me.

I laughed, “Nothing, Jerry.” I looked over at my girlfriend, sitting on my couch trying to convey without saying anything, “Hey, Jerry’s on the phone and we rarely talk. I’m going to be a few minutes.”

Julie caught my look and shot me a look that said, “No worries, take your time.”

Jerry got down to business. “Guess where you’re going for Spring Break?”

“Dude, I’m not in school anymore.”

“I don’t want to hear it! You’re going to Cabo. All the guys are in.”

Julie, of course, could only hear one side of this conversation. I pulled the phone away from my mouth and looked at my girl. “Hey! We’re going to Cabo - all the guys are in.”
Julie looked up. “Cabo, sweet!” she said.

Jerry began screaming at me on the other end. “Whoa, whoa, whoa! I said all the GUYS are in. What the fuck do you think you’re doing?”

“I’m asking Julie if she wants to go. She’s in.”

“Why are you bringing a girl on this trip? It’s like bringing sand to the beach! She’s going to hold you back and you’re not going to be able to go out and party with us.”

“Are you even listening to yourself? First of all, you’ve met her. She’s way more social than I am. If anything, she’ll be dragging me out and keeping me out later than I would if I weren’t with her. She’s fun and she’s not going to ‘ruin’ anyone’s good time.”

“Bros before hoes, dude. Bros before hoes. This is so weak. Are you that whipped?”

“Again. I like her. She’s my girlfriend. There’s no one I would rather go to Cabo with and that includes all of you knuckleheads. I like you guys, but here’s the deal. Either she goes or I don’t go.”

“I’m going to have to talk to the guys about this.”

“Fine. I’m not going anywhere she’s not welcome.”

We hung up. Again, Julie only heard one side of the conversation and she was angry.

“That’s bullshit!”

“I understand that you’re upset. When Jerry was first going on about ‘bringing sand to the beach’, I was upset too. Now I’m not angry, I feel bad for him and all the guys.”

“Why would you feel sorry for those losers?”

“Their idea of a girlfriend is someone that brings you down and makes you stay at home and watch reruns on TV instead of going out and having fun. Their idea of a girlfriend is a wet blanket and that’s exactly what they’re going to wind up with if they don’t start dating people that are more compatible with them. I wasn’t putting on a show for you on the phone. If you weren’t the first person that popped in my mind when I thought of taking a week off of work and going someplace fun, then we shouldn’t be together. That’s how I feel and if those idiots don’t come around to the idea that there are cool women out there, then we can find something else to do.”

The guys eventually came around and decided Julie could come so long as we got separate rooms - not much of a deterrent. That’s how she got to spend one week in Cabo with myself and four of my idiot friends from Northwestern as the lone girl. For as much bellyaching and grief I got for insisting she come with, by the second day, the guys were happy to have her there. By the middle of the week, she had become the standard for what those guys were looking for in a girl.

Towards the end of the week; Julie, the guys, and I were walking back from the beach in the afternoon. For the life of me, I can’t remember why Julie and I started fighting. Julie stormed off and the local construction workers started heckling me. I redirected my anger at them and let out a torrent of Spanish swear words. My friends were taken aback by both my proficiency in swearing in Spanish and Julie’s exit. They went back to their room to clean up.

A few hours later, I was sitting in front of a fire. Julie was sitting in my lap with her arms around my neck. The last time Jerry had seen us, we were fighting. He approached us gingerly and motioned for me to come over to him. I gently pushed Julie off of me and walked over.

“Dude, are you alright?”

“I could use a beer, but other than that, I’m great.”

“I mean, what’s going on with you and Julie. I thought you guys were done.”

I laughed. I had already forgotten about the last time they saw us together. “Look, I did or said something stupid, she was a little over sensitive. I was not sensitive enough. It was a stupid fight. Common sense kicked in and we realized we could spend the next couple of days fighting or having a good time. I said I was sorry. She said she was sorry and we’re going to enjoy the rest of the trip.”

Jerry looked at me as if I were speaking in tongues. “Just like that, everything is back to normal?”

“If you want, I could ask her to be super bitchy and make life hell for me and uncomfortable for all of you, but I prefer it this way.”

Again, I was completely shocked by Jerry’s interpretation of relationships. Julie and I are two different people. We have a lot in common and we are a good couple, but that doesn’t mean that we always agree about everything. Back to my earlier example, I feel like our relationship is +EV. Every moment isn’t perfect, but over the long run it provides more happiness, fulfillment, and fun than the bad times. Every minute spent with Julie is far more likely to be a good memory than a bad one.

Surprisingly, not many people use the concept of expected value in their interpersonal relationships. I have seen couples that are absolutely miserable together that seem determined to not get therapy and change their relationship or even get divorced and find a more suitable partner. They except that they make each other miserable and proceed to make each other miserable in every way possible every day. It makes about as much sense as expecting to win in blackjack.

I have had a lot of conversations over the last couple of weeks regarding the ability for people to change. I don’t expect anyone to change and am rather cynical about people’s ability to change. Most people certainly will not change to make me happy. I simply have to accept people for who they are and understand that, for the most part, knowing them will be a +EV relationship, or sever ties with the person as I expect the odds of them changing are about the same as a casino changing the rules of blackjack to make it more favorable for the player than the house.

Bubble Goes Pop

It was June and Julie and I were in Phoenix. It was fucking hot, but then again, it’s always fucking hot in Phoenix in June. I was sitting in the back of the car, staring out the window, lost in my own world for several minutes.

“This is going to end badly,” I said to no one in particular.

“What’s going to end badly?” Julie asked.

“This,” I said, waving my arm in the general direction of everything outside the car.

“Could you be more specific?”

“All of these new constructions. Homes going for several hundred thousand dollars. All the new homes being built. This is going to end very, very badly.”

“Why would you say that? The housing market is booming here.”

“That’s the problem. There are a limited number of businesses in this area. In Seattle, there’s Microsoft, Boeing, Amazon, and Starbucks that hire people in white collar jobs. The jobs are relatively stable and it has a trickle down effect on the rest of the area. The housing supply is limited geographically and politically. There are lakes and forest preserves that can’t be built on. Getting a permit is difficult as everyone wants an impact study before anything is built. But Phoenix... Phoenix is different. There are huge tracts of desert, all more or less the same as the other tracts of desert in every direction for hundreds of miles. If a developer buys a piece of land that used to be five miles from Scottsdale, it’s pretty easy to get a permit and start building homes on it. No one is going to stop him. With unlimited land in every direction and pretty loose zoning laws, supply is going to outstrip demand. When that happens, it causes prices to go in the other direction. With a limited number of white collar jobs, the top price is going to reach some kind of asymptotic limit and prices won’t be able to go any higher. That’s when the really bad things are going to happen.”

“What happens when prices start going down?”

“People can start walking away. Homes are not liquid. They can take weeks or months to sell. There’s no real way to value a home, so if a home near your home gets foreclosed on, it has a huge impact on the perceived value of your home pushing down prices further. Do you know what a home is worth?”

“I have a feeling you’re going to tell me.”

“Like in any market, a house is worth exactly what someone is willing to pay for it. No more, no less. You could say the same about stocks of publicly traded companies, but it’s not even close to the same. Companies have earnings and the stock trades at some kind of multiple based on those earnings and the prospects of growth for the company. Since no one can accurately predict what the future will hold for a given company, stocks fluctuate quite a bit as buyers and sellers swap their shares. The buyer believes the company will go up in price while the seller believes the company is fully valued or needs the money. I’ve never had a stock trade that took more than a few seconds to complete as my shares are exactly the same as the other shares being traded. I don’t walk around thinking my shares have a granite counter top or a special, unique view and are therefore worth more than the other guy’s shares. I can check to see what shares of my stock are trading for. I can continue to hold them or sell them based on what the market thinks they are worth. I can look at trailing earnings, management, and growth prospects and try to determine how much they ‘should’ theoretically be selling for. Houses are not commodities. A house that is 2,000 square feet in Scottsdale will sell for more than a similar sized house in Tempe, but there is no accurate way to determine what that price difference should be. Homes sell more based on the homes that sold around them plus some kind of emotional attachment to what the home ‘should’ be. Appraisers are about as useful as astrologists.”

“Plenty of people have been making lots of money buying homes and then selling them a few years later for 50% or more than they paid.”

“That’s the problem, it’s not sustainable. People are making a classic extrapolation error. Taking a few points of data and connecting them with a line and assuming that the line is going to extend forever - up and to the right. This is exactly the same thing that happened in the Internet stock bubble just a few years ago. The thought of not getting in on this boom is driving the prices higher and higher until we reach that asymptote. Of course, no one is going to know what that asymptote is, so builders are going to keep building and there is going to be a huge amount of supply out there. Combine that with the foreclosures that are going to start happening, the housing boom is going to turn into a housing bust and it’s going to get very ugly very fast.”

“So you’re right and everyone else is wrong?”

“Yes!” I said it relieved and enthusiastically. Finally, after all these years of being together, my wife understood me. It’s funny, as someone who uses sarcasm quite frequently, I have absolutely no ability to detect it when other people are being sarcastic to me. The moment I finished saying that one simple word, I realized it. Julie was mocking me, challenging my assessment of the housing market in Phoenix and was no longer interested in hearing my blatherings about markets, economics, bubbles, and the coming apocalypse.

The year was 2004 and I was absolutely convinced that the housing market in Phoenix was unsustainable. I was wrong about a few things, but my overall assessment was right. I was convinced the market correction was imminent, but it went on for several more years. I was convinced that the correction would be painful, but I was not nearly pessimistic enough in how the overall economy would be effected. I thought the housing correction would be more local in nature and not effect my home in the Seattle area.
At the time, I knew nothing about derivatives, credit default swaps, mortgage backed bond securities, the games played by the ratings agencies, subprime loans, and other things that added fuel to the economic fire. It is easy and popular to be angry with Goldman Sachs, the government, “predatory” lenders, banks, Wall Street in general, and others. There is plenty of blame to go around to each of these institutions, but in reality, we as a society need to be honest with ourselves and accept our share of the responsibility.

Every person who took a “liar’s loan” for more equity than they could afford shares in the mess. Anyone who took an ARM, interest only, or negative amortization loan was not “buying a home”, they were gambling. All of us who took out home equity loans to put in granite countertops to “invest” in our homes helped to create this mess.

As pessimistic and conservative as I tend to be financially, I participated in this mass delusion. I bought a home in 2004 and knew better. I thought my local market was special, unique. It was not. I let emotion and the vision of raising my children in my home cloud my judgement. I long felt that homes were not “investments” but were consumer consumption that marginally kept up with inflation. I stopped listening to that voice and bought on emotion. I poured my money and my time into “fixing up” my house only to find the market and ability to purchase in my home’s price range gone.

As a country, twenty years ago, we had it all... We vanquished the threat of the Soviet Union. We had huge budget surpluses. An economy that had more jobs than people. We had it all and we fucked it up by creating massive government entitlement programs engaging in two wars and cutting taxes at the same time. We believed the perfect conditions of the nineties would go on forever and that we were all entitled to homes that would be featured on “Cribs” and high paying jobs.

I have no antidote or solution to the current economic problems in the United States. All I know is that as a culture we need to expect less, consume less, and want less. Americans work hard, but we need to work smart, focus on results and show leadership instead of having faith in our companies or our political leaders. The aftermath of the last decade is going to take a long time to fix, the only way to start is by changing out expectations...

Confessions of a Recovering Meat Head

I started lifting weights when I was fourteen years old. Not that it made much difference. My dad was happy to support my new found hobby and we had a bench and some weights we kept in the backyard. Doggedly, I used the weight set at least three times a week. If it were instant gratification I was after, I would have stopped. I talked about my hobby with my friends and they looked perplexed and shrugged their shoulders as there was nothing different about me in the first few months.

I was about 5’11” (6’4” with affro) and 135 pounds dripping wet. In the course of a year I went from being too fat to too skinny. However, the slow and steady drip of testosterone that had been coursing through my veins began to turn into a flood. Overnight, muscle was growing and I packed on eighty pounds and five inches in the course of three years.

I owe a lot to the hours I spent lifting weights. It taught me discipline. It instilled in me confidence. I made lots of friends in the hours resting between sets. I spent my childhood being as unathletic as possible. I was the guy no one wanted on their team in elementary school. By the time I entered the Air Force Academy, I was able to make it through the grueling physical ordeal of Basic Cadet Training and built a reputation based on toughness and ability to push myself hard. None of this would have been possible had I not spent several hours every week competing against myself in the gym.

In my twenties, I continued to hang out in gyms. I took creatine supplements. I challenged myself to bench press 405 pounds. I didn’t know it yet, but all of this effort served no discernible purpose. The Law of Diminishing Returns had kicked in and there was no incremental benefit to these hours I spent working out. On the positive side, even though I didn’t know it yet, I had plenty of free time to spend however I wanted.

Now, in my late thirties, the river of testosterone has subsided somewhat. I no longer feel compelled to compete with myself or the next alpha male who walks in the door. I have new priorities in my life and a whole lot less time. Fitness is still important to me. After all, I am a role model to my children and I need to lead by example, but that doesn’t mean I need to disappear for hours at a time to go to the gym and “lift things up and put them down”.

I tell people all the time to stop focusing on what they are doing and instead ask, “What are you trying to do?” I could continue to go to the gym, but it no longer serves my purposes. My goals have changed. Where once I wanted to be the biggest and the strongest; now I want to stay healthy and in decent aerobic shape. I want to prevent the pec muscles that once bench pressed four plates on each side of the bar from turning into male breasts. I’ve taken to running outside and doing push ups to accomplish these goals. Ten minutes or less on push ups three times a week. and up to forty minutes jogging (building up my endurance again). It takes minimal time away from my family and it accomplishes my new goals for myself.

I took to posting on FaceBook whenever I finish my push up routines or a jog. I like the accountability it creates for me. I’m sure the vast majority of the people who read these posts think, “Who gives a shit?” and I understand that. I still do it because I’ll run into people who ask me how the runs are going or encourage me to keep it up. Ironically, these posts led to this little rant.

When I met Nick Rubie, during our freshman year of high school, he was bigger, stronger, and way more athletic than me. We used to skateboard together all the time after school and Nick had some serious skating Kung Fu. I started skating less and less and working out more and more and I introduced Nick to lifting weights. Nick always had strength, but his build was more wirery than muscular. After college, Nick started competing in natural bodybuilding and achieved size I never dreamed of. And now... Nick is calling me out as a girly man. I’m at peace with this and feel that my current regime is more than enough to meet my goals. Maybe one day your priorities will change too, old friend. Until then keep on pumping the iron, but I’ll be dedicating my next batch of push ups to you.