“Live long and prosper” is a traditional Jewish blessing made famous by Mr. Spock of Star Trek fame. This simple greeting is grounded in the basic premise of productive human life – purpose and motion. While uncontrollable factors such as heredity and violence may get in the way, thinking and action are volitional human traits. Because of that, the human organism can actually transform itself physically, spiritually, and financially.
The Healthy Energy Zone
The physical adaptations people can train include strength, stamina, flexibility and elite athletic performance. However, most people simply prefer to feel good and look better. That’s big, and it’s about achieving small, regular milestones.
A marvelous compass to guide people is the heart rate monitor. It provides instant feedback regarding physical effort, calories burned; and with some knowledge of metabolism, the energy source being utilized.
According to the book Slow Burn by exercise physiologist Stu Mittleman, the healthiest energy producing states are found in three heart rate zones. They are the “mostly aerobic pace,” the “speedy aerobic pace,” and the “most efficient pace.” All three utilize fat as the primary fuel source. For everyone, a fat burning focus improves metabolism, body composition, immune systems, and vitality.
Using the heart rate monitor to maintain a mostly comfortable energy zone will help you live the one life you have with purpose driven motion.
The Economic Way
The same thinking applies to achieving lifestyle goals that require money. The variables include age and life expectancy, saving habits, financial resources, and spending goals. In other words, balance the things we can control against the uncertainty of the future. The plan must be flexible because circumstances and priorities will change, and investment returns can be volatile.
In the world of personal fitness, a no pain no gain mindset, or high intensity interval training, are probably bad decisions for most people. In the world of personal finance, bad decisions come from maximum risk tolerance, market forecasts, constant return projections, beating the market, and staying the course. The economic way for both would answer the following questions.
Does it meet your needs? Is it easy to use and understand? Is it reliable? High-stress workout systems or beating the market may sound good, but whose goals do they serve?
The Financial Comfort Zone
Poetic Justice economics is rooted in the spontaneous order of free markets – they can’t be predicted or managed. We also respect the efficient market hypothesis – all relevant information is contained in prices. Because the future is uncertain, investment strategy decisions must be flexible. In fact, the timing of cash flows and sequence of returns have a greater impact on success or failure than any asset allocation strategy.
At Poetic Justice Capital, our guiding principle is for investors to live with confidence, and in their comfort zone. We do this by avoiding unnecessary sacrifice and risk. By applying reason to the reality of markets, and anticipating the possibility of extreme events, we objectively measure success toward dollars of future cash flow. This matters because money is the investors productive lifeblood.
The heart rate monitor is a reliable tool for measuring workout efficiency, and a reliable Monte Carlo engine is the tool for measuring an efficient investment strategy. Our financial performance benchmark is the investor’s life of motion and purpose.