The Value of Vulnerability for Advisors
Recently, while walking home from school, one of my kids got sucker-punched by the stomach flu. It wasn’t great timing. No one wants to be sick in public, but it’s even worse when everyone watches you do something embarrassing. In an effort to comfort him, I told him about times when similar things had happened to me. It didn’t make his stomach feel any better or completely remove his mortification, but he smiled and thanked me.
Whenever someone is in a place where they feel exposed – whether it’s from getting sick in front of others, forgetting to do a task for a client, or making an unwise financial decision – we can either sit in judgement of that moment or we can step into the vulnerability and say “me too.” It’s a little easier for me to have that kind of compassion for my child who isn’t feeling well than for the coworker who blows a deadline. It’s for sure not the norm for advisors to talk with their clients about mistakes they’ve made when it comes to their personal finances. Why is that?
We tend to get caught up in the “what will other people think of me?” trap that tells us not to go easy on our employee for fear that they’ll not understand how important their mistake was, or to grow the facade that we have always been a financial guru. But these kinds of self-protecting behaviors keep us from experiencing relationships that have real depth, which increases employee and client retention.
The people we serve and work with need to know we’ve been where they are, especially when something goes wrong. You don’t have to turn into your grandfather and start telling stories every time something happens, and you don’t have to have had the same exact experience. You just need to see the thread of similarity in their face-down moment so you can mitigate your reaction and find compassion as quickly as possible.
Once you share an “I’ve been there too” moment with a person who’s done something regrettable, you’re all set to move onto the next step: helping them move from this moment to make it right.
Making it right involves a few steps. Here are the ones I recommend taking:
- Own what went wrong. Clearly identify the problem and its root cause. It might take a little bit of effort to track down exactly what happened and even more time to figure out why it occurred. Did an employee miss a deadline because they had too many other things on their plate or because they weren’t focused at all? Did your client loan a large sum to a relative out of guilt, or are they thinking clearly about treating it like a gift? Putting words to the actions and motivations allows everyone involved to understand the details.
- State the positive action you will take going forward. This isn’t just an “I won’t do it again” idea. Instead, it sounds like: “In the future, I will speak up when I know that my workload is beyond my capacity.” Or, “In the future, I will consider whether giving my relative money is helping or hurting them.”
- Ask for forgiveness. This is obviously really difficult. We don’t typically do this part as a society because it feels so awkward. You’ll have to apply some wisdom to each situation to decide if you want to walk through this part or not, but it’s certainly something you can put into practice when you mess something up in the office or at home. Hearing another adult say the words, “Will you please forgive me?” can be alarming, but every time I’ve used those words, the person on the other side has answered with “of course.” In my opinion, nothing builds trust and respect quite like it.
How do you tend to handle face-down moments with your team or your clients? I’d love to hear strategies you employ to create greater degrees of vulnerability and trust among your team and clients.
Here’s Why Bitcoin Won’t Replace Gold So Easily
What a week it was.
First and foremost, I’d like to acknowledge the horrific mass shooting that occurred in Las Vegas, the deadliest in modern American history. On behalf of everyone at U.S. Global Investors, I extend my sincerest and most heartfelt condolences to the victims and their families.
The memory of the shooting was still fresh in people’s minds during last Tuesday’s Hollywood premiere of Blade Runner 2049, which nixed the usual red carpet and other glitz in light of the tragedy. Before the film, producers shared poignant words, saying that in times such as these, the arts are crucial now more than ever.
I had the distinct privilege to attend the premiere. My good friend Frank Giustra, whose production company Thunderbird Entertainment owns a stake in the Blade Runner franchise, was kind enough to invite me along. Despite the somber mood—a pivotal scene in the film even takes place in an irradiated Las Vegas—I thought Blade Runner 2049 was spectacular. Even if you’re not a fan of the original 1982 film, it’s still worth experiencing in theaters. Hans Zimmer and Benjamin Wallfisch’s synth-heavy score is especially haunting.
CNET recently published an interesting piece examining the accuracy of future tech as depicted in the original Blade Runner, from androids to flying cars to off-world travel read the article here.
Still in the Early Innings of Cryptocurrencies
Speaking of the future, I spoke on the topic of the blockchain last week at the Subscriber Investment Summit in Vancouver. My presentation focused on the future of mining—not just of gold and precious metals but also cryptocurrencies.
Believe it or not, there are upwards of 2,100 digital currencies being traded in the world right now, with a combined market cap of nearly $150 billion, according to Coinranking.com.
Obviously not all of these cryptos will survive. We’re still in the early innings. Last month I compared this exciting new digital world to the earliest days of the dotcom era, and just as there were winners and losers then, so too will there be winners and losers today. Although bitcoin and Ethereum appear to be the frontrunners right now, recall that only 20 years ago AOL and Yahoo! were poised to dominate the internet. How times have changed!
It will be interesting to see which coins emerge as the “Amazon” and “Google” of cryptocurrencies.
For now, Ethereum has some huge backers. The Enterprise Ethereum Alliance (EEA), according to its website, seeks to “learn from and build upon the only smart contract supporting blockchain currently running in real-world production—Ethereum.” The EEA includes several big-name financial and tech firms such as Credit Suisse, Intel, Microsoft and JPMorgan Chase, whose own CEO, Jamie Dimon, knocked cryptos a couple of weeks ago.
To learn more about the blockchain and cryptocurrencies, watch this engaging two-minute video.
Will Bitcoin Replace Gold?
Lately I’ve been seeing more and more headlines asking whether cryptos are “killing” gold. Would the gold price be higher today if massive amounts of money weren’t flowing into bitcoin? Both assets, after all, are sometimes favored as safe havens. They’re decentralized and accepted all over the world, 24 hours a day. Transactions are anonymous. Supply is limited.
But I don’t think for a second that cryptocurrencies will ever replace gold, for a number of reasons. For one, cryptos are strictly forms of currency, whereas gold has many other time-tested applications, from jewelry to dentistry to electronics.
Unlike cryptos, gold doesn’t require electricity to trade. This makes it especially useful in situations such as hurricane-ravished Puerto Rico, where 95 percent of people are reportedly still without power. Right now the island’s economy is cash-only. If you have gold jewelry or coins, they can be converted into cash—all without electricity or WiFi.
Finally, gold remains one of the most liquid assets, traded daily in well-established exchanges all around the globe. Every day, some £13.8 billion, or $18 billion, worth of physical gold are traded in London alone, according to the London Bullion Market Association (LBMA). The cryptocurrency market, although expanding rapidly, is not quite there yet.
I will admit, though, that bitcoin is energizing some investors, especially millennials, in ways that gold might have a hard time doing. The proof is all over the internet. You can find a number of TED Talks on bitcoin, cryptocurrencies and the blockchain, but to my knowledge, none is available on gold investing. YouTube is likewise bursting at the seams with videos on cryptos.
Bitcoin is up 350 percent for the year, Ethereum an unbelievable 3,600 percent. Gold, meanwhile, is up around 10 percent. Producers, as measured by the NYSE Arca Gold Miners Index, have gained 11.5 percent in 2017, 23 percent since its 52-week low in December 2016.
Look Past the Negativity to Find the Good News
The news is filled with negative headlines, and sometimes it’s challenging to stay positive. Take Friday’s jobs report. It showed that the U.S. lost 33,000 jobs in September, the first month in seven years that this happened. A weak report was expected because of Hurricane Irma, but no one could have guessed the losses would be this deep.
The jobs report wasn’t all bad news, however. For one, the decline is very likely temporary. Beyond that, a record 4.88 million Americans who were previously sitting out of the labor force found work last month. This helped the unemployment rate fall to 4.2 percent, a 16-year low.
There’s more that supports a stronger U.S. economy. As I shared with you last week, the Manufacturing ISM Purchasing Managers’ Index (PMI) rose to a 13-year high in September, indicating rapid expansion in the manufacturing industry. Factory orders were up during the month. Auto sales were up. Oil has stayed in the relatively low $50-a-barrel range, which is good for transportation and industrials, especially airlines. Small-cap stocks, as measured by the Russell 2000 Index, continue to climb above their 50-day and 200-day moving averages as excitement over tax reform intensifies.
These are among the reasons why I remain bullish.
One final note: Speaking on tax reform, Warren Buffett told CNBC last week that he’s waiting to sell assets until he knows the plan will go through. “I would feel kind of silly if I realized $1 billion worth of gains and paid $350 million in tax on it if I just waited a few months and would have paid $250 million,” he said.
It’s a fair comment, and I imagine other like-minded, forward-thinking investors, buyers and sellers will also wait to make huge transactions if they can help it. Tax reform isn’t a done deal, but I think it has a much better chance of being signed into law than a health care overhaul.
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