I am 61 years old and I have been doing paid work since I was 16. I’ve been a grocery clerk, camp counselor, film projectionist, sound man, light man, cameraman, freight loader, computer programmer, teacher, operations research analyst, manager, salesman, writer, consultant, and for the last 30 years I’ve been a securities trader and hedge fund manager.
Yet I have only once gotten work by answering an ad. Even then I was turned down at first, but it led to a different job six months later after I established a relationship with the hiring manager who had first said no. And I’ve never been asked for a resume until after I received an offer, and then only because HR always needs something to put in their files. I haven’t needed a resume to get work because my resume doesn’t reveal my work. I am my work, and to know my work you need to know me.
Here are some things I’ve discovered about finding worthwhile work that have helped me, and that might help you.
Lead a thoughtful life
The secret of a well-written cover letter is to learn to write well. The secret of an interesting resume is to have done interesting things. So do interesting things and learn to write about them. Ben Franklin said, “Either write something worth reading or do something worth writing.” You might do one or the other but it is better to do both; that’s what Franklin did.
Learn to think. Reading On Writing Wellby William Zinsser is a good place to start. He says, “Writing is thinking on paper.” In order to think deep mathematical thoughts you must write formulas, and similarly you cannot think deeply about much else without writing words. Learn to think mathematically because otherwise you cannot say you know how to think any more than you can say you can drive a car but can’t turn left. Likewise, saying you can think without knowing how to write is like saying you can’t turn right. If you live long enough and you only go straight ahead, then eventually you’ll drive off a cliff.
Get your story straight
Resumes are your life in bullet-point form. The story of your life is more interesting than can possibly be expressed with a list of sentence fragments. Skip the resume and write the story.
I am a securities trader with a business degree, and I wonder if we are like normal people.
Let’s find out.
Imagine $10 has to be split between two people who will never meet each other. The first person can propose how the money will be split and if the second person accepts the proposal then that is how it is distributed. But if the second person refuses then neither gets anything.
The InterContinental Hotel Group (NYSE Ticker: IHG) is the largest hotel group in the world with seven brands (Intercontinental Hotels, Crowne Plaza, Hotel Indigo, Holiday Inn, Holiday Inn Express, Staybridge, and Candlewood Suites). They claim more than 645,000 rooms in over 100 countries.
If I take the time to join their “Priority Club Rewards” program, I get exclusive benefits like a free newspaper once a week. After I accumulate 20,000 points I get additional goodies such as Priority Check-In and a special phone number so I can wait less time on hold. Points are easy to accumulate because many of their rooms cost more for one night than I spent for an entire semester’s college tuition.
As a Club member, they would begin collecting information about me and my preferences so they can tailor an experience just for me. They promise not to release that information to anyone – not even me.
I never bothered joining. Unlike many, I can afford their rooms without going into debt to the credit card company. The issue is time, not money – my life is too short, and I don’t want to spend my time with them.
Instead, I belong to a different club, one with more space than InterContinental in more than twice as many countries. And my club is adding 14,000 members and 4,000 rooms a week.
And every one of those rooms is free.
My club is run by the Couch Surfing Collective. Although membership is free, four years ago I chose to donate about $20 and they verified that I was who I said I was, and I lived where I said I lived.
Couch Surfing members don’t have membership cards but rather online profiles that can be seen by all 1.8 million members. Other members write references, which can be positive, neutral, or negative – and all references appear on your profile, whether you like it or not.
My friend asked me when his mutual funds would rebound, and I asked him why he cares. He said, “Because if they are not going to rebound, I am going to sell.”
I asked him what he would do if he found a fly in his soup. “I’d want to talk to the waiter.” And if the waiter said it wasn’t his problem? “Then I would want to speak to the chef.” And if the chef said he couldn’t do anything about it? “I’d demand to speak to the manager.” And if the manager did nothing? “I’d want to speak to the owner.”
My friend would want to talk to the owner about the fly, but I would want to talk to the owner about what it means to be an owner.
Over the decades, as a trader and market maker, I’ve been the shareholder of record for billions of shares of common stock, and I have started a few corporations under my own name. While legally, the two forms of ownership are the same, there is a world of difference.
As owner, I know that the customer is a king who can fire me for any reason or no reason, yet my creditors and vendors must still be paid and the taxman must get his due. My employees must keep the customers happy, and my managers must keep the employees happy. I must not only keep an eye on the till, I must save for the rainy day. And when it pours, I will need to dip into those savings to keep the operation running while the customers stay at home. If I want everyone to be loyal to me during good times, I must be loyal to them all the time. I had better believe in my product, or I shall find all this hard to do and sleep soundly, too.
As owner, I must put the interests of all those with claims senior to mine ahead of my own, and only afterward will I receive what is left over. I must bear risk when it needs to be borne, and I can’t bail just because I don’t like watching my net worth decline. I must be responsible and not self-centered. (And, if I have deep pockets, I can afford to be.) After all this, a sane market might reward me for being responsible, fearless, and not greedy, but only if I actually am. Still, there are no guarantees, for time and chance happeneth to us all.
I asked my friend why he owns stocks, and he said, “Because, in the long run, stocks perform best so that is where I keep my retirement savings.” I’ve been to business school too, and I’ve heard this claim before, but for the life of me, I can’t think of a reason it must be true. Besides, stocks represent ownership, and an investment in ownership is different from saving. Savings are what the owner liquidates to keep the company going during hard times. If the owner liquidates his firm to protect his savings, the business is in trouble.
I asked my friend if he is an owner of General Motors and, upon reflection, he realized that he is through his various funds. I asked if he drives a GM car, and he said he thought their products were terrible.
Imagine my friend complains about the fly to the restaurant manager, who researches the situation, and announces that, in fact, my friend is one of the owners; apparently my friend’s broker had purchased stock in the restaurant. When asked what he will do, my friend says, “I will sell my ownership immediately.” If my friend, who only cares about return on his investment, sells to someone with a passion for good food, and a respect for the customer, then that restaurant may one day be a place where you and I would like to eat. Until then, we best stay away. Likewise, we best avoid GM cars until its owners care more about their products (and us) than their portfolio.
You might want to test the thesis that a diversified portfolio of common shares does, in fact, perform well in the long run, in which case you should buy, hold, and see what happens. But, be aware that market prices are determined by the fear and greed of your fellow shareholders, and little else.
But, if you want to be rewarded for being an owner in more than name only, you must be in a position to act like one: be fearless and put the interests of the customers above your own.
Don’t assume I’m talking about others. If you have money in the stock market, I’m talking about you, my friend.
It is important not to buy stuff you cannot afford.
I attended a presentation by a professor who talked about how, as a child, his Dad drove their cars into the ground even though their less successful neighbors purchased new ones every few years. His father said they could not afford new cars. The young man did not understand – they had enough money. His Dad said, “people afford what they want.” His father wanted him to go to college and that meant he could not afford new cars. His dad’s statement led to a career – Lowell Catlett is now Dean of the Agricultural Economics Department at New Mexico State University.
There is an infinite amount of stuff out there and even the wealthiest person cannot afford it all. To lust after things you cannot afford will make you unhappy. To buy stuff you cannot afford will make you broke.
There are different levels of how well you can afford what you want:
Level 0 – There is no way you can buy what you want.
Level 1 – Someone will lend you the money to buy what you want.
Level 2 – Your cash flow from what you are currently doing is sufficient to buy what you want.
Level 3 – The cash flow from the next best thing you could be doing is sufficient to buy what you want.
Level 4 – The interest on your savings is sufficient to buy what you want.
When I was a college student in 1970, nobody in their right mind should have lent me any money, and given that bankers then were in their right minds, they didn’t. Today, there is a huge industry devoted to getting people hooked on living at Level 1. These people think you should care about your Credit Rating, which is a mathematical score lenders use to determine if you can stay at Level 1 long enough to repay them. If you can’t cover your debts, you will discover that you have dropped to Level 0, even for things you have already bought, like a house or a car.
My parents started at Level 2, and they suggested that I want to be at Level 2 as well. They gave me $500 to start me out. My college lent me $1,000, but living at Level 1 was so scary that I paid that money back on my second installment. I’ve stayed at Level 2, or above, the rest of my life. Living at Level 2 used to be called “living within your means” before marketers convinced people that the ability to borrow money was a “means.”
A friend sends his son to private school. He makes enough money to do this without borrowing. I asked him if he would consider leaving his current job for another that pays less. He said he could not because then he could not afford the school. So, he can afford what he wants at Level 2, but he cannot afford it at Level 3 since he cannot afford to lose his job.
There are two ways to advance from Level 2 to Level 3. 1) Lower what you want enough so that if you lose your current job you can still afford what you want with the next best job available to you, 2) Advance to a higher paying job without increasing your wants.
Living at Level 3 allows you to accumulate wealth. This comes from saving the difference between the money you are receiving and what you are spending. At this point, you will view Credit Ratings in a different light – from the point of view of a lender.
You might even accumulate enough wealth so that you can live your life entirely from the money generated by your wealth. Then, you will be free to do anything you want as long as you do not start wanting things you cannot afford at Level 4. People who get to Level 4 live well in retirement.
Charlie Munger, Warren Buffett’s partner, was asked how he became so successful.[1] He spent his money to meet his needs, not his desires. He also worked very hard on increasing the value of his second best option (known to economists as “opportunity cost”). Charlie was 60 years old, and a multi-millionaire, before he bought his first new car. He lived at Level 4 before deciding that a new car smell was worth wanting.
Many of us have been living at Level 1 far too long, and are now in the process of dropping to Level 0. This is sad, particularly at a time when the second best option is also declining, in many cases to zero (unemployment).
There is a bright side.
We will learn how little we really need.
We will learn how much we need each other.
Before you want a thing, determine how much you really need it.
My parents and the silver Jaguar they were about to sell because my mother was pregnant with me and they needed the money
My father told me two things about money that had a profound effect on my life. They were:
“Money should buy freedom, not chains.”
and,
“It is easier to make money doing what makes you happy than to buy happiness with the money you are paid for doing what makes you miserable.”
Even though I can remember my father’s explanations, at the time (age 17) I thought he was off his rocker.
He explained that if you had a certain amount of money, and then someone gave you more money, you should have more options open to you.
This seemed self-evident, but I didn’t buy the part about chains.
Imagine someone who always wanted to be a school teacher who, in order to make more money, became a principal, then moved to the private sector as a salesman, manager, and finally a senior vice-president earning ten times his potential salary as a school teacher.
Since our hypothetical teacher had given up teaching for more money, you would expect that finally, as a highly paid executive, she (or he) should have plenty of money to finally fulfill an ambition of being a teacher without the money worries that plague most teachers.
But for nearly all, such a person sees their options dwindle rather than expand. They measure their success in how much money they make and the prestige that comes with position. From Senior Vice President, they only want to become President.
Worse yet, this person often borrows against an expectation of a rosier future and finds themselves a slave to home payments, credit card debt, private school bills, college tuition, and the economic cycle.
I recently had lunch with a friend who has started a financial consulting firm. His distinguishing feature is that he will tell his clients the truth rather than what they want to hear.
He said, “Ninety-percent of Americans live beyond their means — no matter what their means.” He gave an example of a client in mid-life who was worth $15 million from which he earns $650,000 a year. However, he spends $1.2 million a year and he wants my friend to find him a safe investment to support his lifestyle. This is a mathematical impossibility. My friend could calculate how quickly the client will find himself on welfare.
I wonder how much misery must this client need to overcome when $650,000 a year doesn’t do the trick.
I like to end these pieces with succinct words of wisdom. I can do no better than to repeat what my dad said to me during my Senior year in High School, just before he gave up a career in the business world to return to sculpture full-time.
Money should buy freedom, not chains.
It is easier to make money doing what makes you happy than to buy happiness with the money you are paid for doing what makes you miserable.
In 1977, American Airlines offered me a job in Manhattan in their Operations Research group and I took it.
One of our projects was to build a mathematical model to determine how much we should overbook each flight so as to maximize profit. You could generate happy clients when there isn’t enough room in coach by bumping them up to first class. But if you throw them off the plane entirely you might lose them forever.
On the other hand, since a full-fare customer could use their ticket on any airline at any time without penalty, if you kept a seat open for everyone who said they would fly with you then your planes would fly half-empty. It was an economic necessity to overbook, and every airline did it, but I was not about to tell my friends about this part of my job. Nobody really thought an airline should promise something and then not deliver. Nobody. Including me.
Fifteen years later, we found ourselves living in Tokyo and planning a visit to relatives in England. I made a reservation on Japan Airlines but, after we realized that the flight landed at a very inconvenient time, we made a second booking on British Airways.
Upon return, as we walked through the door to our home in Tokyo, the phone was ringing.
“Hello, is this Mister Allen?”
“Speaking.”
“Are you OK?”
“I’m fine.”
“And your family; is everyone all right?”
“Sure. Who is this?”
“This is Japan Airlines. A week ago you had a reservation on our flight from Tokyo bound for London’s Heathrow airport. You didn’t show up. We held the plane for 15 minutes and you still didn’t come so we took off without you. We can make up fifteen minutes in the air but eventually we had to go because it would be inconsiderate of our other passengers to wait any longer. We just want to make sure you are all well.”
“We’re fine. We flew on British Airways instead.”
“You flew on British Airways?”
“That’s right. We had full-fare tickets and they are good on any airline.”
“That’s true. But you didn’t tell us.”
“We don’t need to tell you. We can use our tickets on any airline at any time.”
“That’s true too. But, by not telling us, you were being inconsiderate.
Just because you are a customer does not make you always right.
The graph depicts four indices for six years on either side of a peak. They are: BLUE : Dow Jones Industrial Average (center: September, 1929), YELLOW: Japanese Nikkei 225 Stock Index (Center: December, 1989), GREEN: Nasdaq 100 Stock Index (Center: March, 2000), and RED: S&P/Case-Shiller Home Price index for Miami (center: May, 2006… ending November, 2007)
Experience has convinced me that there are three phases to the economic cycle:
Phase I – A period when it seems that everything you do succeeds
Phase II – A period when it seems that nothing you do succeeds
Phase III – A period when success depends on what you do
If you’ve studied the Roaring Twenties, Japan in the 1980s, the Dot.com bubble of the ’90s, our current housing market[1] – or even a gravity propelled roller coaster – then you know the slow climb of Phase I deserves to be the scariest for the worst is yet to be.
If what you are doing is working well you then you might convince yourself that you don’t need to learn anything new or do anything differently. You might be seduced into believing that it is wise to mortgage your future for an even more wonderful present. Fact is; these are the best times to save for bad times.
Eventually a hill will be crested that leaves nothing but a cliff in sight and if there is another hill in the distance the fog will be too thick too make it out. Phase II has begun.
During these times people have no trouble feeling fear and remorse but those feelings do them no good. If you’ve lost a job, you might conclude that no equivalent one exists to replace it, and you might be correct. People will switch from mortgaging their future to scrimping to make ends meet. Since no investment seems to pay a return, they stop investing and since nothing they do seems to work, they stop doing anything. These are symptoms of depression, both economic and emotional.
Eventually there comes a time when your investments do begin to pay off and success does depend on what you do. This is the beginning of Phase III.
How well your investments perform in Phase III depends on what you invested in during Phase II. You might object that during Phase II many people no longer have resources to invest. But, they have clear title to a brain and they own their own time. If nothing you do pays a current dividend then there is no opportunity cost to investing effort and time honing old skills and learning new ones.
The degree to which your efforts pay off depends on what you are capable of doing. What you are capable of doing in Phase III depends on what you were doing during Phase II.
Out of necessity, my grandmother had become a real estate agent in the early 1930’s during a bad time to be one. Homes didn’t begin moving until the economy turned around, but when it did, she had mastered her craft, she had the prospects and she was on the job. Within seven years they owned a spectacular house of their own free-and-clear whereas had they used their meager savings to buy a house in 1928 then by 1937 they would be about 9 years into a 30 year mortgage and my grandmother would still be without a career — assuming, of course, they didn’t lose everything to the bank as did so many of their peers.
My grandfather kept his job at the United Press by volunteering for multiple pay cuts. Things didn’t open up for my Granddad until the environment improved, but when it did, he was there in the office with needed skills while others were still waiting things out.
If, during Phase I, you avoid having too high an opinion of yourself or too much confidence in the future but instead continue to evolve your skills and save for Phase II, then you will be better able to weather and adapt to hard times.
If, during Phase II, you continue to invest in yourself and work for the benefit of others even though your efforts are not immediately rewarded, then you will be in the best position to prosper when Phase III inevitably begins.
If you follow, believe in and espouse this Three Phase Theory, then:
During Phase I you will have been labeled a contrarian and a pessimist.
During Phase II you will have been thought a fool for working so hard without reward.
However, during Phase III, when prosperity seems to shine on you before others, you will be heralded as a genius and visionary.
It is what you do when it seems that nothing matters that determines your success later when you discover that it does.
[1] Note: The Yellow line (Japanese market) is the best illustration of my theory since Phase III doesn’t go down as far and is flatter after it stops rather than “bounces.”
I lived in Japan for Phase II and although the Japanese government tried to manipulate the market. I believe they succeeded in engineering a soft landing but they didn’t manipulate the market for a recovery, which I believe is wise.
In the 1920’s and 30’s (the Blue line) the market ran up just as much in the Roaring 1920’s as it did in Japan in the Roaring 1980’s. But the USA then fell more than Japan in the next few years and then government interventions helped with a recovery.
The Dot-Com bubble of the 1990’s was a bigger bubble than in the 1920’s and the collapse that started from the high in 2000 was more severe. While, in the lingo of so-called analysts, the collapse was a “correction” and the recovery from the low was due to “over-shooting” I believe the truth is that the so-called recovery is the beginning of another Phase I bubble rather than what some people call a “consolidation” and what I call Phase III.
If you want to experience the the the Red Line (Case Schiller Real Estate Index adusted for inflation) as a literal roller coaster ride then look at the Real Estate Roller Coaster video published in April, 2007. You can see it here: https://www.youtube.com/watch?v=kUldGc06S3U
This article was first published in May, 2008 in a publication called International Family Magazine that is now defunct. It is reproduced here with changes made over the years to correct typos and improve readability but the graph and the text describing the theory are unchanged from the original.
I formulated the theory in the 1980s and used it professionally and personally every since. At that time I was employed by Merrill Lynch in NY from 1986-87(Phase I) and kept my job through 1988-90 (Phase 2). Then I moved to Japan with Merrill and worked during Phase II there. I returned to the U. S. A. in 1993 during the depths of recession and bought a house for cash, which turned out to be perfect in retrospect since I timed Phase III within a few months of its beginning.
I was running a hedge fund during the dot-com bubble burst in 2000 and because of this theory we flourished when many peers went belly up. Like my grandparents we own two houses free-and-clear (one for weekday use near a good school and another in the country). There is no way we’d buy real estate during during what is obviously the beginning of Phase II.
Granddad Tom was sent to Havana to open an office for United Press International. He became El Presidente Local for the U. P. I. in Cuba.
When he returned near the end of the decade he was handed a 40% pay cut even though the cost of living was higher in New York City than in Cuba.
If that wasn’t bad enough, in October of 1929, the Stock Market crashed and the economy began a long slide into what became the Great Depression. Granddad survived multiple rounds of layoffs by accepting further pay cuts.
Grandmother Anne realized that they couldn’t afford rent on Granddad’s dwindling salary, so she took a job as a receptionist with a developer who was building houses on the farm next to their rented home in White Plains. Soon she was managing four salesmen. She received 2 ½ percent in commission on every home sold.
To help care for the children, she found a lovely couple at the unemployment office. The wife was a nurse trained in Canada but without a license to practice in New York. Her husband was a handyman. She exchanged room and board for childcare and yard work.
Grandmother convinced the developer to build (at cost) a model home for them with an extra room for their tenants. She became a stellar saleswoman in her own right. Before long, her commissions had completely covered the construction costs, and the home was theirs outright.
Granddad wrote to a friend that the Great Depression had been unbelievably good to them. Before the Crash they had had high hopes, but owning a house ‘free and clear’ in just a few years was inconceivable. Where could they have found a trained nurse and groundskeeper simply by letting them live in a spare bedroom and join them for meals? Freed of the burden of paying bills, the young couple soon saved enough money working odd-jobs to buy a gas station and start their own business. Because most of his coworkers had either been laid off (or quit rather than take a pay cut), Granddad had no competition as senior positions became available. His career took off.
In the 1920’s my grandparents had had Great Plans.
During the Great Depression they just tried to survive.
Sometimes just surviving is the winningest strategy of all.
Colleges have become marketing experts. They work very hard at convincing you to send them your child and your money. You have to do the work yourself to find out why you shouldn’t send them either.
“Admissions.”
“Hello, is this (name of a liberal arts college in the Midwest)?”[1]
“Yes it is.”
“Are you an admissions officer?”
“Yes I am.”
“I am calling regarding my son. He has been admitted to your institution and he’s trying to decide if he wants to go. He isn’t here now so do you mind if I record this conversation for him?”
“Not at all.”
“Great. My son is a very good student but he is not yet ready to narrow his interests. He feels that a liberal arts college might be just the thing for him, at least as an undergraduate.”
“We fit the bill.”
“Personally, there is only one thing that I’m hoping he gets out of college more than anything else.”
“What’s that?”
“I would love it if he learns how to think.”
“Excellent. We’re in agreement. More than anything else, that is what we’re all about.”
“I’d like him to learn how to tackle problems with insight and creativity.”
“We agree.”
“I’d like him to respect authority and yet feel comfortable questioning it.”
“Perfect.”
“I’d like him to develop his people skills and to become responsible.”
“Couldn’t agree more.”
“I’d like him to learn to make his own decisions without requiring the approval of his peers.”
“We teach independence and responsibility by example. The college puts a great deal of trust in its faculty, staff and students to make decisions on their own.”
“I’d hope that he’ll find a place that facilitates this process rather than gets in the way.”
“That describes us to a T.”
“Good. Now, I have a question. Do you require that freshmen live on campus?”
“Actually, we require all students to live on campus their first two years.”
“No exceptions.”
“Well, we do make rare exceptions for hardship.”
“Do you mean, as in a case where we live in town but we don’t have enough money to pay for tuition and room and board? However, we could swing it if he lives at home.”
“We feel very strongly about this. We’ve found it is important for freshmen to develop strong relationships with other freshmen and these relationships are solidified in their second year. So, in the case of financial need we’d give him enough aid so that he could live on campus.”
“Like a grant?”
“Or a loan.”
“Ok, so you feel it is so important you would have him to go into debt. Now, imagine that the fact is that he has inherited a house right in town. It has four bedrooms and it has a market value of $160,000. Your college costs $47,000 a year all in. Since he has clear title, I doubt he’d qualify for a grant based on financial need. Are you saying you’d force him to sell the house and still go into debt so he could give you the money and live on campus when he’d rather take roommates and live in his house?”
“No. That would certainly qualify for an exemption. He could have seven other roommates since the town zones houses that way for students. He could collect enough rent from his roommates to pay all his other expenses.”
“That’s what it seems like. Rather than liquidate the house and give you all his money he could graduate from college with an education and a house free and clear.”
“Correct. And managing a property like that will certainly teach him responsibility. I’m sure I could get an exemption for him.”
“And seven other students.”
“What do you mean?”
“Well, you want him to live with other freshmen. You said so yourself.”
“That could be a challenge, but I’m confident we could do it.”
“Excellent.”
“I’ll form a committee right away.”
“Great. We’ll call a realtor.”
“What!?”
“He doesn’t own the house yet, but there are some excellent properties just steps from your main gate.”
“Wait a minute. This is totally different. What are you trying to do?”
“I’m trying to teach him how to think.”
“What you’re teaching him boarders on the criminal.”
“No, I’m teaching him how to tackle problems with insight and creativity.”
“But we have rules for a reason.”
“Is the reason you have rules to avoid thinking? The only difference between my son and the boy you would exempt from the rules is that my mother has not yet bought my son the house.”
“You’re teaching him how to trick people. If he thinks like you do then he will not be welcome here.”
“That’s what it seems like.”
Some colleges don’t want you thinking the way they don’t.
[1]This conversation is completely fictional and any resemblance to any real conversations I might have had with small liberal arts colleges in the Midwest is purely coincidental.
by Brooke Allen 
If I take the time to join their “Priority Club Rewards” program, I get exclusive benefits like a free newspaper once a week. After I accumulate 20,000 points I get additional goodies such as Priority Check-In and a special phone number so I can wait less time on hold. Points are easy to accumulate because many of their rooms cost more for one night than I spent for an entire semester’s college tuition.
My club is run by the 
© 2009 Brooke Allen
Colleges have become marketing experts. They work very hard at convincing you to send them your child and your money. You have to do the work yourself to find out why you shouldn’t send them either.
Brooke Allen 