It’s hard to believe that I have been sharing my Thoughts On Money for over 7 years now – it truly does feel like it all passed by in the blink of an eye. Reflecting on this journey, one of the most enjoyable parts has been discussing these articles with my colleagues on the Thoughts On Money podcast. Over 250 recorded podcasts recorded, full of laughs, bloopers, curiosity, and reflection.
As I sat down to write this week’s Thoughts On Money, I recalled one of the highlights that Blaine Carver shared on last week’s podcast. Blaine drew attention to one of the descriptions I used in the article, “Although they may have found themselves once intellectually convinced… their convictions were shallow…” Blaine went on to explain the importance of convictions and stick-to-itiveness.
My comment in the article was inspired by a recent leadership training I attended. The speaker talked about the importance of conviction over conformity. He said that if folks just simply conform to a movement, it will be short-lived and easily shaken, but if borne in conviction, the movement would stand the test of time. I wrote down in my notes, “Conviction > Conformity.”
With this topic in mind, I want to begin our discussion by comparing how two different movements addressed the concern of alcoholism in the early 20th century. With the benefit of hindsight, we will easily conclude which approach was built to last.
Rum-Runners
On January 16, 1919, the 18th Amendment was ratified, officially banning the manufacturing, transporting, and sale of alcohol.
The backstory here is quite interesting. The country had seen the negative impacts of excessive alcohol consumption and began to connect the dots of alcoholism to the uptick of domestic violence and a list of other societal consequences. This coincided with the momentum of the temperance movement, which was born more than a century earlier on the back of publications like Benjamin Rush’s An Inquiry into the Effects of Ardent Spirits Upon the Human Body and Mind.
Prohibition also gave rise to a new vocabulary, including rum-running, bootlegging, moonshine, and speakeasies. One group’s push for eradication led to another group’s drive for production.
Conformity may have shown an initial impact on the stated cause, as seen below, but the rebound or response swiftly erased any progress made.
Per Capita Consumption of Alcoholic Beverages (Gallons of Pure Alcohol) 1910–1929
Source: Clark Warburton, The Economic Results of Prohibition (New York: Columbia University Press, 1932), pp. 23–26, 72.
Eventually, prior to turning 15 years old, prohibition ended, making it the only constitutional amendment in our nation’s history to be repealed.
AA
Less than two years following this repeal, William “Bill” Wilson penned Alcoholics Anonymous: The Story of How More Than One Hundred Men and Women Have Recovered from Alcoholism. As I am sure you well know, this coincided with the founding of Alcoholics Anonymous (AA), which is said to now have over 2 million members across 180 countries.
Whether you have battled with addiction yourself or know a loved one who has, I am sure most of us know someone who has been meaningfully impacted by the AA program.
Same Goal, Different Approach
I chose to use these two historical reference points because they were born in the same era, loosely held the same goal in mind, but went about the solution with radically different approaches. One (prohibition) died as a young teenager, while the other (AA) is still flourishing as it approaches its 91st birthday.
So, what’s the difference? One (prohibition) called for conformity, while the other (AA) was fueled by its members’ convictions. Conformity depends on compliance; it relies on the what and ignores the why. Conviction depends on truth; it relies on the why that fuels the what.
The Why?
For investors, conviction is paramount. The finance industry is not lacking in literature, strategies, or salesmen. You can easily find yourself drowning in options and overwhelmed by differing approaches. This leads most investors to mimic strategies of their favorite financial heroes or jump on the bandwagon of the most enticing product pitch.
One of the most viewed TED Talks of all time, with nearly 70 million views, is Simon Sinek’s, How Great Leaders Inspire Action. It’s in this talk that Sinek shares his famous Golden Circles, which focus on the importance of starting with the why rather than the what. Sinek would later go on to write a bestseller titled just that: Start with Why.
Again, conviction depends on, thrives on, and lives on the why. Many investors can tell me what they are doing, but most lack the explanation of why. I might make an inquiry like, “I see that you own this investment in that account type, but why?” and I receive a response like, “I am not sure why, but I read somewhere that this was the right way to do it, and it looked like a good approach.”
A funny anecdote about this topic is the parable of Grandma’s ham. As it’s been told, the curious husband asks his wife why she cuts off the ends of her ham before she places it in the oven. She replies, “This is how my mother always did it.” That evening, the wife was hosting her mother and grandmother for dinner. The husband, unsatisfied with the earlier answer, asks his mother-in-law the same question and receives the same response: “This is how my mother always did it.” Overhearing the answer, the grandmother chuckled and revealed that she never had a big enough pan, so she was forced to trim the ham to accommodate.
Most investors simply conform, and when troubles arise – which they inevitably will – the lack of rooted convictions leaves the investor tossed to and fro.
Convictions Run Deep
I realize that it is easy to relate this subject of convictions > conformity to simply investment strategies and/or philosophies, but this truth runs much deeper. The broader topic of financial planning is incredibly susceptible to conformity – from blind participation in 401(k) plans to thoughtless estate plans.
As one would assume, my opinions and thoughts on financial planning have evolved and matured over time. I feel very settled in my convictions across an array of planning topics, but if I am being honest, the subject of legacy planning is still quite unsettled for me. Estate Planning is a broad topic, an incredibly personal topic, and one that carries heavy responsibility based on its multi-generational impact. All of this on top of the laws, vocabulary, tactics and strategies that families can deploy – it’s a weighty topic. So, currently this topic – legacy planning – captures a lot of my thought life; some intense intellectual/philosophical wrestling as I wade through my own convictions on the subject.
Be Fully Convinced
I will wrap up today’s topic with one of my favorite Bible verses, Romans 4:21. The Apostle Paul is describing Abraham’s faith, and he uses two very simple yet powerful words: “fully convinced.”
Personally, I want to wrestle with every financial product, theory, strategy, and tactic to land where I am fully convinced. I don’t desire to be stubborn, ignorant, or prideful, but rather open, studied, and humble, landing on grounded conclusions.
Investing and financial planning are funny things; they’re areas of study and practice that deal with an incredible amount of uncertainty. You place yourself in an environment that you can’t control, and in one sense, you are forced to acclimate and endure in order to survive and thrive. Markets and life will be full of hurricanes, and we should all aspire to be palm trees – bent but never broken, pushed but never uprooted.
Conformity leads to wavering; conviction leads to resilience. Conviction > Conformity.
