Planning and Being Hard

This week, I will shift gears from property investing and discuss two topics that preoccupy the minds of athletes -- The Plan and Being Hard. My thoughts will be slated towards athletics but the concepts apply just as strongly in our daily lives.

Before we roll into the letter, I was back in the Grand Canyon last Tuesday. This time I was running solo and applying the lessons from my first trip. It is amazing how quickly the body can adapt to stress. While I wasn't much faster on the round trip -- the damage that the run did to my body was a fraction of the first time. This time four weeks ago, I could barely walk and my legs were absolutely trashed. With respect to Ironman marathoning, durability is an essential fitness component that is near impossible to measure quantitatively. My average heart rate for the "run" was 117 bpm and it is one of the toughest sessions that I will do all year.

Alan's latest blog piece provides a window into my lab-fitness and a discussion of performance limiters. Something that JD pointed out at the April camp was that each of the Endurance Corner coaches has a different take on the same topic. That is part of what makes us a good team, and also a source of creative friction.

When I test myself I remember the following:

***Testing is three dimensional, performance is four dimensional. The test measures my ability to perform a specific task over a period of time. Performance, in sport and life, requires the ability to execute over multiple years. Life is about coping with the unexpected. By definition, our capacity to manage change cannot be measured in a controlled environment

***X-Factor // At our April camp, Robbie Ventura gave an excellent talk on fast time-trialling. The bottom line of his talk (for me) is some athletes go fast on race day for a range of "little things" that they are able to put together. Robbie calls these little things the X-Factors of racing. Successful people have the capacity to execute a series of little things, consistently, over time. For me, this skill is habit based. Our X-Factor capacity cannot be measured in the lab.

If you review my bike chart over on AC's blog then remember that it is the result of more than 20,000 hours of endurance exercise. We get a lot of question about how athletes can make changes to improve their charts in 6-8 weeks.

In your training do not be in a hurry, for it takes a minimum of ten years to master the basics and advance to the first rung. Never think of yourself as an all-knowing, perfected master; you must continue to train daily with your friends and students and progress together in the Art of Peace.
-- Morihei Ueshiba

I have been fortunate to study under a few masters of triathlon -- even they admit that their main skill is guessing better than average.

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Planning
I play a good "long game" -- by that, I mean my performance over multi-year time horizon is strong. As a result, people are interested in the specifics of my plan.

The power of my plan lies in the general, not the specific. Here's what I mean -- when I get it right (and I make a ton of mistakes)...

***A simple plan that I can remember and execute every day

***Periods of specific overload that address key limiters

***Scheduled recovery, and downtime, before I need it

***No one session, day, week, month compromises the period that follows

***Finish strong

***Enjoyable, relaxing and satisfying

The above factors lead to outstanding execution over the long term. That, in turn, leads to performance.

99% of the noise in our heads (mine is no different) is a distraction from the above, makes very little positive impact on performance and reduces energy available for recovery.

Which brings me to...

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Being Hard
Most people are surprised when I tell them that I am (nearly) completely soft. My close friends laugh when I say that I am 99% negotiable and 1% firm. I accept that the world could appear differently looking out, than looking in!

Given the impossible task of seeking to control the world around us AND our limited willpower, influence, energy... I tend to focus my true efforts on a very, very, very limited set of circumstances. I figure that I can be "hard" for a couple of hours per week, MAX. If I am "hard" more often then my overall performance will, ultimately, be compromised.

One of my past mentors taught me that we live with a six-shooter and no extra ammo. If we are thinking of using a "bullet" then we'd better make sure that it is a key point. That analogy has stuck with me and 95% (or more) of my training builds me up (mentally, physically). I only do a little bit that breaks me down.

I could be a little soft from a sport performance point-of-view // and // that is likely why HTFU gets my attention. However, after thinking about it for over a month, I don't know a single long term high achiever that is "hard".

In racking my brain, I only considered people that I knew. There are hard personalities that we hear about but I suspect that they are fabrications.

The toughest competitors that I know are soft in real life (though they try to hide it in public). Our fears and emotional weak points are powerful motivators when channeled towards performance.

When you reach a point where you can't handle any more... relax and soften up.

RASU -- maybe I'll get some hats printed up...

Cheers from New Mexico,
gordo

US Property, May 2008

This week I will share some thoughts on US Property.

I'm enjoying my last afternoon in Southern Arizona. Tomorrow, Ben (from the February Snow Farm camp in NZ -- in photo above) and I will head north to Phoenix. Then on to Flagstaff and a repeat of the Canyon run. Monica warned me not to be a hero and JD's advice was to PB by "one second" so... I think my pals are telling me not to fry myself when we head to Phantom Ranch on Tuesday.

Next week, we follow the same route back to Boulder with one modification -- inserting a ride from Cuba, NM to Los Alamos, NM (the long way via Jemez). We drove that road to end our April trip and the climbing is too good to miss. Back-to-back centuries from Farmington to Los Alamos will put the final touch on my preparations for Epic Italy.

Dr. J was trying to figure out why the camps are so much fun and decided that the best aspect is the fact that we offer every camper an opportunity to challenge themselves on each day. You don't have to take the offer but it is there. Sharing those sorts of experiences with people is a lot of fun for us. We'll be running the Tucson camp again next spring as well as adding a mid-summer camp in Boulder. The camps tire us out but it is a "good tired" and provide me with a role to play as I age.

Come along next year and you can benchmark yourself against my Mount Lemmon time -- I do well on anything uphill over 20-miles...

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US Property
I told Monica that I was thinking about giving myself the week off from the blog and she suggested that I write about property. Perhaps, she was hoping that if I write my thoughts down then I might not have to act on them.

Here's a summary of the key articles that made it through my media filter this past week. Given that I was training an average of five-hours-per-day with the campers... you probably heard even more than me...

***Declines in median prices of over 20% in Sunbelt and Southern Californian locales.
***Pundits talking about further declines over the next six years.
***Unsold inventories double normal levels (Nationally).
***Continued write-offs and rights issues in the financial services sector.

Looks to me that both Mood and Money are heading down. Financial historians note that the property market is like a giant aircraft carrier... slow to turn but, when it does, tending to overshoot fair value.

I suspect that everyone in America knows someone that has had their house repossessed in the last year -- that is going to color all of our judgment as we hear more of these stories.

Towards the end of last year, I recommended that aspiring homeowners get their Net Asset Statements and Revenue/Expense budgets in order. Have you done this? In order to position yourself to take advantage of potential buying opportunities you need to have your financing, and finances, in order.

We are thinking about buying an investment property (not second home). Here are my criteria:

***Climate opposite to Boulder, CO
***Would enjoy using during vacant periods
***Less than 1% annual holding costs
***Forecast net yield (after all expenses) 10% over treasuries
***50% capital upside over a ten-year view
***Entry price less than $200 per sq foot
***Superior location in a prime destination
***No leverage purchase -- don't reach financially

Sound like a good deal? It does to me -- perhaps a bit "too good" for this stage of the cycle. To hit those numbers I would need a vendor to accept 15-40% less than their current asking prices. However, having done my homework, my bid price is 10% less than the most recent deal that actually completed and therein lies a tip...

Figure out what an asset is worth to you, prior to anchoring with the price expectations of the vendor

This is important all the time but even more essential in a declining market with constant negative information. By figuring out a price at which you are "unlikely to be wrong" -- you have a much better shot at being right over the medium- to long-term.

What are the signs that a target market might be poised for a large correction?

In this environment, I would look at the mortgage service cost relative to the cost to rent. Even with the recent corrections, many markets have rental costs that are fractions of the cost to own. Given large inventories of unsold homes, rental increases are unlikely. Given weak mortgage markets, mortgage costs are unlikely to fall. That leaves the most likely adjustment mechanism to be capital depreciation.

Potential buyers are building in expected price declines -- no one in the nation is expecting prices to rise. Most owners are holding depreciating assets -- we all HATE holding depreciating assets. At some stage, vendors will sell to remove the pain of a thousand paper cuts.

If you rent with a view to buying then negotiate strongly on early termination provisions -- the more Blue Chip your profile, the more aggressive you should be on all terms.

The ability to complete quickly will be seen as highly attractive by sellers. Vendors are going to get increasingly keen.

On the corporate lending side, I have not yet seen credit contraction in line with the capital that has been written off by the financial sector. I suspect that the front line banks are current preparing strategies for how they will deploy, preserve and recover capital over the next 12-18 months. When we start to hear about rising corporate bankruptcies then we will know that we've moved into that phase of the credit crisis.

Here are three things that I keep hammering into myself when I'm thinking about making an investment:

#1 -- I don't "need" to do deals (doing nothing is OK)
#2 -- I desire to make good investments
#3 -- Above all else preserve capital (for me, the time for "betting big" was 10-20 years ago)

Be prepared, attractive buying opportunities will present themselves to educated investors.

Until next week,
gordo