My Dad’s Teeth

September 11, 2024 / / 0 Comments

My Dad is the dream dental patient. He role models superb oral hygiene. I remember, as a kid, our dentist saying, “Your Dad is the best patient we’ve had. He’s a poster child, an all-star for orthodontal self-care.” Growing up, I watched him floss, brush, and then rinse his mouth with witch hazel (yes, you can do that).

That said, Dad does not boast a full set of pearly whites. He also has a gold tooth, thanks to losing a wave and then a tooth after taking a surfboard in the mouth as a teenager in California.

Oddly related if we don’t overthink it, Mom played pirate-like games with her teeth. Mom and her sister chewed Black Jack, a weird licoricey tasting gum that you can still find at places like Cracker Barrel. It was also black in color, so they would put it on their teeth to pretend that they’d had a tooth knocked out, or that they were pirates.

A few years ago, Dad confessed, “I’m a little anal about my teeth.” Currently, his daily routine includes:

  • Three toothbrushes: a regular toothbrush from his dentist, a Sonicare electric brush, and a Waterpik water flosser, “which gets out all the little bits and chunks in your teeth. Shoots them right out!”
  • Stim-U-Dent toothpicks in the morning and at night. “I order them online by the case,” he told me when I said that the drugstores in my town don’t carry them anymore.
  • ACT mouthwash. 
  • Prescription fluoride toothpaste. “I only use that once per day.”

I picked up several oral hygiene habits from Dad, including an appreciation for toothpicks. I have two types of flossers in my desk and find that a business card works well in a pinch. There’s a pizza joint near my office where I occasionally grab a slice and salad for lunch. Near the door, they have toothpicks in a holder by the cashier, and I’ll grab a few each visit, using one on the way back to the office, and leaving it in the cup holder of my car to use for a few days.

“People say you should throw out toothpicks after a single use, but I’ll use the same one all week.” Me, too, Dad. Me, too.

Dad is a veteran of Vietnam, so when I meet others who served there, I listen closely to their stories. Jim, a friend and veteran who served three tours in the infantry, told me about flossing with nylon wire from hand grenades. They didn’t have enough clean water to brush their teeth. “Besides, who worried about carrying a toothbrush? We had other things on our mind,” he said. “Sarge taught us the flossing trick. Still got my teeth today thanks to him.”

In my case, I have my teeth, and many other things, thanks to my Dad.

Happy Birthday, Dad! Love, B

Appreciation for Practical Skills and Keeping Your Word

August 25, 2024 / / 0 Comments

My parents gave me a sport coat earlier this year. The sleeves were too long, so I looked for an experienced tailor near my home. Multiple calls later, I found a helping hand at the local Men’s Wearhouse, where the staff didn’t require me to have bought the coat in their store. I immediately drove over, where they took measurements and pinned the sleeves. A week later, I picked up my coat, tailored to fit at a reasonable cost and with professional service. I was a happy customer.

It feels as if we only, truly appreciate the plumber, tailor, electrician, teacher, nurse, or mechanic when we really, really need the plumber, tailor, electrician, teacher, nurse or mechanic. The news is full of stories on AI and cryptocurrency and the barbarians at the gate, and yet our daily lives depend on practical skills and human relationships with those in our own towns. 

My wife and I know and work with Michael Faust, an experienced handyman (if that’s the right word for someone who knows how to do just about everything). Michael runs a successful contracting business with his wife. Among other projects, they helped renovate our new office at Forisk in late 2023, and, like he told me, “I try to stay on schedule.” We work with Michael because he’s responsive, talented, and delivers quality work on time. He listens and takes ownership for the performance of his team. He is highly skilled. He’s a professional and he’s a friend.

I get tired of people saying one thing and doing another, even if it’s accidental or unintentional. The road to hell is paved with good intentions. I don’t get as frustrated as I used to, but I do move on and then do my best to work with and take care of those who do what they say they are going to do when they say they are going to do it.

My Dad is one of the most honorable people I know. He’s the kind of guy you may sit next to on an airplane and talk about a book and he’ll say, “hey, I’ll mail you a copy.” Then, if you give him your business card, he will.

I am highly appreciative of the people in my life who can “do things,” whether growing food, mending fences, raising goats, speaking Spanish, or hanging drywall. I admire the person with the experience and intuition to look at a situation and figure out a workable approach, regardless the field. And I am thankful for the people in my life who consistently keep their word and live by example. 

Process, Routine, and the Power of Caring Less

July 30, 2024 / / 0 Comments

In college, my friend and mentor Mark Lundstrom taught me that “earning good grades gives you more freedom.” I had struggled as a freshman, and Mark, an actual rocket scientist, talked to me about how getting straight on study habits and academic performance translates into more options later, enhancing sovereignty over your own life. It’s that simple, and that hard. Put the processes in place to get better results, and those results will deliver more opportunities and independence. In my case, following and implementing better study habits led to better grades, postgraduate scholarships, and my first job in forestry.

Years later, after working in forest operations in Aberdeen, Washington and as a procurement forester at a sawmill in Barnesville, Georgia, I sold my Jeep Wrangler for $4,500 and bought a laptop computer for graduate school and a month of Spanish classes in Alajuela, Costa Rica. In Costa Rica, I lived with a family who had never hosted a “Spanish student” before. The family of five spoke no English, while I spoke minimal Spanish. However, the mother of the house had firm routines for her family and for me, which I quickly learned and followed. The family had daily routines for eating breakfast and dinner, for washing hands before meals, and for ironing clothes each morning before leaving the house for school and work. 

During that that first week, while language remained a barrier, we spoke little at the table during meals. However, the clear routines provided structure and comfort as we learned to communicate with body language and the new words I was learning each day. By the second week, the father and younger son had me out on their farm and the mother accepted my help washing dishes. By the third week, the kids were trying to teach me the Spanish phrases I’d never learn in a classroom.

The French novelist Gustave Flaubert said, “Be regular and orderly in your life, so that you may be violent and original in your work.” His call to process and routine speaks to the power of structure as an enabler of getting things done. Without processes and routines, we expose ourselves to nettlesome and distracting worries. We are human. The mind wanders. Our attention gets lassoed.

A commitment to process is a commitment to controlling what you can. Routines help us control our attention and how we invest our time. This takes effort. It requires caring less about results and what other people think, and more about the planning of our days. Nobody, except perhaps for our parents, will care as much about our own lives and goals as we do. That’s because everyone else is too occupied and ensnared with their own lives and worries.

Marcus Aurelius wrote, “If the cucumber is bitter, throw it out. If there are brambles in the path, go around.” Care less about the inconveniences, the fear of missing out, the opinions of others. Process and routine help us deal with things as they are, and powerfully support any effort towards being productive, proactive, and goal achieving. 

Financial Liquidity: Providing Context for Investors

June 5, 2024 /

Liquidity – the ability to convert assets into cash – generally worries investors.[1] In talking with clients and in my forestry investment research, I find that the issue of liquidity varies significantly by investor and over time, and that we are quick to generalize about the advantages and disadvantages of liquidity. How can we frame liquidity in a way that provides context for planning and decision-making?

Issues Related to Liquidity

In finance, liquidity is a construct that affects certain folks in certain situations; it does not affect everyone always. Liquidity, a problem when you need it and don’t have it, covers issues that may relate or overlap. For example, consider the use of debt (leverage) and the valuation of assets.

Debt differentiates during market crashes. While leverage has its role in finance, investors without debt will be less compelled to liquidate during tough markets. For highly leveraged organizations, debt compresses time and reduces options.

If we view liquidity as a balance of buyers and sellers at any time, then in the absence of buyers or sellers, how do we value an asset? When traders scramble to pay debts and meet margin calls, they don’t sell what they should, they sell what they can. Investors in comparable situations act surprised when markets tank and buyers are nowhere to be found. 

Plan Ahead to Manage Liquidity

At times, investors need cash. In forestry, for example, due to irregular harvest revenues on smaller timberland ownerships, an investor may need supplementary funds through a partial sale, an advance, or a loan. While situations require balancing time with flexibility, it helps to plan how one might unload a timberland tract in a crisis. Investors get part-way there by breaking down the forest into its salable components, including timber, hunting rights, and choice parcels. 

At the Federal Reserve Bank’s 2005 Jackson Hole Economic Policy Symposium in Wyoming, economist Raghuram G. Rajan, then working with the IMF, noted how actual and perceived time pressure from excessive debt, unusual financial structures, or other obligations can essentially manifest losses through illiquidity. He observed[2]:

Liquidity allows holders of financial claims to be patient… and allows the value of the net financial claim to more fully reflect fundamental real value. Not only does illiquidity perpetuate the overhang of financial claims as well as uncertainty about their final resolution, a perception of too little aggregate liquidity in the system can trigger off additional demands for liquidity.

Raghuram G. Rajan

Putting Liquidity in Context

Liquidity is largely a function of time horizon. Timber is a long-term play for long-term buyers and liquidity matters more for short-term sellers or investors reliant on significant leverage. 

In addition, investors may hold positions that are ‘effectively’ illiquid if they are too large or too small or too marginal in quality or location. When prices crash, it’s easy to blame an absence of buyers on liquidity. From this view, liquidity is a problem for poor planners.

Conclusion

The relevance of liquidity to risk, returns, or cash flow varies across investors and over time. Liquidity thrives during periods of stability and of growth. Crashes, panics, recessions, and blackouts dry up liquidity. Sizable investment assets, whether timberland or car dealerships, often comprise a diversified portfolio of smaller assets, inventories, and cash flows. The issue of liquidity is rarely all or nothing.

[1] This post includes content from the Q2 2024 Forisk Research Quarterly (FRQ) feature article, “Topics on Forest Finance: Investment Criteria and Timberland Liquidity” and from the forthcoming 7th edition of Forest Finance Simplified. 

[2] “Has Financial Development Made the World Riskier?” 2005 NBER Working Paper available at: https://www.nber.org/system/files/working_papers/w11728/w11728.pdf

Context Appropriate Communication: Comparing Investment Performance to Forest Sustainability

May 8, 2024 /

The growth of ESG investing – which screens investments and firms based on environmental, social, and governance criteria – and markets for forest carbon and other environmental “services” highlight the importance of clear communication skills and the value of those who possess them.

Consider the situation for professionals in the timberland investment sector, a part of our research portfolio at Forisk. Timberland professionals grapple with the most effective and “context appropriate” ways to report investment performance and forest sustainability. How do we answer questions ranging from cash flows to wood flows to rates of return? Finance, investing, and forestry, come down to math.

Example: The Math of Finance and Forestry

Consider measures of forest sustainability versus investment performance. Investment returns often focus on percentages, which simplify comparisons across investments. However, percentages communicate differently than dollar amounts. Saying “you earned 5% last year” differs than saying “you earned $5,000 on your $100,000 investment.” They mean the same thing, but hearing dollar amounts clarifies the implications of how much wealth you gained.

The math of investments can, when reported as percentages, camouflage the dollar impact of fees, as well. Consider two descriptions of investment management fees:

“You will pay a 1% annual fee on this $1 million investment.”

“You will pay a $10,000 annual fee on this $1 million.”

The phrases describe identical fee structures differently. Do they sound or feel identical? The Securities and Exchange Commission (SEC) has, since 2004, accounted for this issue in shareholder reports and quarterly portfolio disclosures by requiring the reporting of fees in both percentage terms and in dollars per $1,000 invested. 

The math of relative (percentage) measures versus absolute numbers applies to tree health and forest sustainability, which affects the reporting and communication of forest carbon investments and wood bioenergy projects. Saying that a timber market “has a growth-to-drain ratio of 1.1”, meaning growth exceeded removals by 10%, differs from saying “this market grows 1 million more tons than are harvested each year.” 

Conclusion

A percentage, while informative, provides incomplete information. We can always estimate performance in percentage terms, while absolute values, whether in dollars or tons or board feet, communicate the cash, wood, or forests available today.