We all face them. Difficult, gut-wrenching realities. Someone we love is diagnosed with a terrible illness. Our aging parents need financial and emotional support to live with dignity. Our spending has spun out of control, and if we continue, we could run out of money.

It is tempting – oh, so tempting – to look away from these difficult realities. Tempting, and ultimately disastrous. We lose the chance to spend time with an ill friend or family member. Our parents struggle with daily life. Our precarious financial situation grows ever more insecure.

Accepting and dealing with reality is hard, often heart-breaking. We feel scared, anxious and overwhelmed. To navigate through these turbulent waters, we need the support of a compassionate friend who will listen to us without judgment and encourage us with a caring heart. A friend who will not tell us what to do, but who will let us express all our thoughts and feelings about our difficult reality. A friend who will help us connect with our own inner wisdom about the next right step for us to take.

Many of us don’t have enough friends like these. Our lives are so busy we neglect these crucial relationships. We miss opportunities to create, cultivate and enjoy close friendships. When the personal crisis erupts (and life has a way of making sure that they do), we may find we lack the support we need.

Are there enough people in your life who will listen to you with compassion and without judgment? Are you spending enough time building and nurturing these relationships?

Has the stock market gone a little bonkers lately?  During the week of October 7th, the Dow Jones Industrial Average plummeted 272 points on Tuesday, rocketed back 274 points Wednesday and tanked more than 330 points on Thursday.

Since 1928, the S&P 500 has averaged 19 separate 2% moves in a single day. There were 35 such moves in 2011, 56 in 2009, and 72 in 2008 during the worst of the financial crisis. A record 140 moves greater than 2% took place in 1932. To put those numbers in perspective, so far in 2014, we have had just four 2% moves. Source: Wall Street Journal.  If it is any consolation, the wide market swings in 1997, 2008, and 2011 led to market surges within six months, so an increase in volatility does not necessarily mean that the market is poised on a precipice. Source: Navellier and Associates.

Still, what is causing October to be so spooky and crazy?  Even if we eliminate the possibility that the markets could be haunted, there are various reasons being touted for the volatility, such as the Fed “taking away the punch bowl” by ending its bond buying program, falling oil prices, global slowdown particularly in Europe, rising dollar, or the Ebola outbreak, just to name a few. Whatever the reason for the selloff, the market goes down if there are more people wanting to sell than those wanting to buy.

So what should you do?  Probably nothing. Professional traders would love to see you panic into dumping stocks from your portfolio. Don’t be that person. If you have constructed a well-diversified portfolio, remember that your portfolio – by design – has assets that historically do well when other assets decline. And if you have alternative funds in your portfolio, they should help sustain your portfolio during this volatility. As most of you know, when markets get emotional, hitting highs and lows on a daily basis, we at GV get back to fundamentals. Our opportunistic rebalancing process uses market dips as buying opportunities. In this environment dominated by high-frequency robots and complex algorithms, the rule tends to be sell first and ask questions later. Panic and program selling could lead to overreaction on the downside, but markets are often irrational over the short term.

So where do we go from here?  Today’s virtually nonexistent inflation pressures, decent corporate earnings, continued share buybacks, and massive financial liquidity could all propel stocks much higher in a flash. The recent news of a drop in September retail sales seems to have sparked a sudden panic in the markets about the outlook for domestic demand in the U.S. But that decline needs to be put in its proper context. Yes, auto sales declined in September, but only after spiking to a nine-year high in August. The trend in underlying sales growth remains strong as well. Remember, too, that this is an economy that created nearly 250,000 jobs in September. Source: Bloomberg.

As Burton G. Malkeil, said in his recent WSJ op-ed, “Are Stock Prices Headed for a Fall?”, Don’t think you can time the market and sell your stocks now, hoping to get back in later after there is a correction. No one can consistently time the market, and you are more likely to get it wrong than right.”  We couldn’t agree more.

Those who try to exit the market’s scary roller coaster are more likely to discover it’s a trick not a treat.

As Americans, we cherish freedom. Our culture values each individual’s right to live their life as they choose.  Freedom, however, is always tied to capabilities.  You are not free to do what you are incapable of doing.  For example, you can’t save a drowning child in the middle of a lake if you don’t know how to swim.

The good news is that we each have the capacity to learn and grow in almost any area we desire, but growth takes focused effort.  We can improve our capacity to do almost anything we want, but we can’t improve our capacity to do everything we want.

So, where should you focus your efforts?

Each of us must answer that question for ourselves. I have decided I would rather spend my time learning how to be a better cook than learning how to paint.  Why?  Because I enjoy cooking with my wife, Heidi, and I enjoy having friends over for dinner. For me, painting is a more solitary engagement and I already love to take long walks by myself.

Cooking is certainly not better than painting.  Both can be lots of fun.  Cooking is just a better choice for me.

Where do you want to expand your freedom? How do you want to expand your capabilities?

We cherish our freedom, our ability to live our life on our own terms.  We resent being told what to do.  As Billy Joel said, “This is my life.”

Yet, we unconsciously forfeit our precious freedom.  To be free, we also must be aware.  We are not free to connect with someone we don’t see or to capture an opportunity we haven’t noticed.

We pride ourselves on being busy.  We are often so busy doing that we fail to notice the world around us.  We don’t notice that our child is unusually quiet when we come home from work, and we lose the chance to connect with her.  We want to be there for our best friend, yet we are working so hard we don’t realize he is struggling at work and at home.

Freedom is valuable because it allows us to focus our time, attention, and spirit on what is really important to us.  But without building time into our hectic lives to pause and notice – really notice – the world around us, it is impossible to focus our resources on what matters most.

If we are constantly busy, are we really free?

I was on my porch one morning this summer, and I noticed a cardinal a few feet away.  He looked right at me, but didn’t fly away.  I watched him for several minutes, and felt very lucky about the rare opportunity to see the cardinal in my back yard.

And then it hit me.  The cardinal is probably a regular visitor to my yard.  What made the moment exceptional was not the cardinal, but the fact that I had paused long enough to notice him.

A few years back I took a trip to Hawaii.  I spent most of the time either thinking about work, or focused on making sure the trip went smoothly for the family.  What I didn’t do enough of was to stop, look around, and appreciate the amazing beauty around me.

My body was in Hawaii, but I wasn’t really there.

Life is lived in the moment.  We live in a world that offers us infinite opportunities to distract ourselves from living in the moment and focusing our attention on what matters most to us. Don’t take the bait.

Take a moment to pause, open your eyes, and appreciate life.

Last Monday, the largest U.S. public pension plan, known by the abbreviation Calpers, announced its decision to exit hedge funds, saying they are too expensive and complex.  The pension fund disclosed it paid $135 million in hedge fund fees in the fiscal year ending June 30. Calpers’ investment return goal is 7.5 percent, yet over the last ten years, the average annualized rate of return on its hedge fund investments was just 4.8 percent.

The Wall Street Journal reported other pension funds were debating whether to follow Calpers’ lead and avoid hedge funds altogether. Last week, the San Francisco City & County Employees Retirement System delayed for another 90 days a decision on whether to allocate 15% of its money to hedge funds. It is the second such delay this year.

Could this decision be the start of a trend? Has the magic gone out of hedge funds?

We don’t think hedge funds do anything different than normal investment funds, except that they are not subject to any constraints on their investment activities. The mystique surrounding hedge funds may stem in part from their secrecy, as many are reluctant to share their investment formulas. The typical hedge fund fee structure – 2% of assets plus 20% of any profits – also may contribute to the misconception that hedge fund moguls are magicians.

We don’t believe in fairy tales.  Last year, GV’s Investment Committee researched extensively looking for hedge funds, hedge funds platforms that could add value to the client portfolios. We decided against investing in them given their complex structures, lack of liquidity, and most importantly, their high cost structures.

Hedge funds are certainly a viable strategy for some. Obviously, not all hedge funds are created equal, and some are actually generating some excess returns. However, we also hear about hedge fund clients plagued by high fees, complex legal structures, poor disclosure, and potentially meager investment returns. We think it seems virtually impossible to identify which hedge funds will be winners and which ones will be losers in advance. Our decision to avoid hedge funds has nothing to do with ego or emotion. We always go back to the maxim: only invest in what you understand and if the potential reward is worth the risk.

One of my favorite people at GV left to take another job.  I feel sad.  I worked with her for 15 years, and watched her mature and grow.  She is a bright, impeccably honest, passionate person.  The type of person who doesn’t wait to be told what to do.  She looks for challenges that are holding the company back, and applies her immense talents to devising and implementing a solution to make things better.

There is a piece of me that wanted to have a little temper tantrum.  How could you leave to work for a competitor after all we have done for you?  Don’t you appreciate us?  Don’t you love us?

The truth, however, is that she does love and appreciate us, just as we love and appreciate her.  She is not leaving us; she is moving ahead to the next challenge on her life journey.  She is walking her own path, as each of us must do.

Each of us must say goodbye to people we love as they move ahead with their lives.  We don’t get to decide whether people in our lives stay or go, but we do get to choose how we say goodbye.  We can have a temper tantrum and wrap ourselves in righteous indignation or self-centered sorrow. Or we can choose to be grateful for our time together, wish them well with all our heart, and say goodbye with love.

Annie is right.  The sun will come out tomorrow.

Yet all too often, fear and pessimism paralyze us. We want to take a chance, make a change, do what we want, but we hold back.  What if it doesn’t work out?  What if I fail? What if ….

And time marches on, day by day.  Each day we spend not doing what we are called to is a lost day we can never recover.

How do we summon the courage to move ahead?

We remember Annie’s optimism, the sun will come out tomorrow.

Optimism is the key to unlocking your courage. Optimism helps us realize that the future may not turn out as we hope, but we can handle whatever adversity comes our way and be okay.

Optimism helps us realize that adversity is temporary, and today’s challenges often lead to tomorrow’s achievements.

Optimism helps us relax, unleashing our creativity and energizing us.

If you are feeling stuck, consider taking the chance and moving ahead.

And remember, the sun will come out tomorrow.

My wife and I just spent three weeks in a 500-square-foot apartment in Paris. I am grateful for our time together and the wonder we shared over one of the world’s most amazing cities.

At first, the apartment seemed quite small, maybe too small.  But then we visited one of my wife’s friend in Lyon who lives with her husband and two young children in a three bedroom, one bath,1300-square-foot apartment.

Magically, our 500-square-foot Paris apartment went from feeling cramped to feeling spacious.

Is the apartment small or spacious?  It depends on your perspective, just like our definition of rich or poor.

We feel poorer when we compare ourselves to our richest friends. We feel richer when we compare ourselves to friends who have less than we do.

Our natural inclination is to compare ourselves to those with more. We often feel like we are falling behind and we become fearful.  We may hoard our money, spend less, and give less.

But when we compare ourselves to those with less, we often feel more confident.  We feel empowered to use our money to enhance the quality of our lives and the lives of others as well.

You can help move yourself from fear to confidence. For the next week, challenge yourself to compare your wealth to the vast majority of humanity who have less, not the few who have more.  Does the simple act of shifting your perspective change how you feel or act?  Feel free to share your experience in the comments or email me directly.

Are you working in a job that is okay, nothing great, but it pays the bills?  Do you put in your time at work, so you can live your life on the weekends?  Are you settling because you figure the devil you know is better than the devil you don’t know?

Are you aware you might be slowly killing yourself?

In his recent book, Leaders Eat Last, Simon Sinek cites several studies linking unhappy work environments to depression, anxiety, stress, heart disease, and early death rates.

Why do we stay at these unfulfilling jobs?

We often feel trapped.  We lament, I can’t quit.  I need the money.  Yet, if we examine our expenses carefully, there are often opportunities to save money.  If it gave us the opportunity to do what we love and live longer, might we be willing to eat out less often, buy fewer clothes, keep our cars longer, and even downsize our home?

Better still, we might not have to cut back.  When we use our network of relationships to explore new opportunities, we often find a job that is better suited to our talents and pays even more than our current gig.

We know this, yet we find it difficult to take that first step towards a more fulfilling job.  Why? We struggle because we are afraid of the unknown, of what might happen if we leave.

How do we move from fear to confidence?

First, we acknowledge that we never know what tomorrow will bring.  That “safe” job you don’t like could very well disappear tomorrow.

Second, we reflect on what has gotten us through prior difficult times.  Maybe it was our persistence, integrity, and determination, or the quality of our closest relationships, or our faith in God.  Maybe it was something else.  Whatever helped you before, perhaps you can call upon it again to help you pursue job opportunities you love.

When we focus on our ability to survive and even thrive in difficult times, we can start to move from fear to confidence and feel empowered to take that all important first step.


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