Change becomes a crisis when you cannot adapt to it in the timeframe available.
The daily news and the daily personal experience of the View Across the Silos advisory approach to retirement income and planning suggest that we are living a period of change that exceeds the adaptability of many.
How can we tell when change becomes a crisis?
First, we can check what persons of authority say about the matter. What answers do the most visible spokespersons provide to the following questions: What is the unemployment rate? Is the economy growing? Is a rising stock market a business barometer?
On the other hand, we can seek our own, more anecdotal, instruments to measure what we see, hear and feel around us. What answers do our own eyes and ears provide to the following questions: Who is confident? Who is fearful? What is more expensive? What is less expensive? Where are the gains? Where are the losses?
Measurements in general, and personal measurement in particular, reveal truth that we can discover without recourse to authority. Authority creates boundaries that mask the horizon. Your own measurements help you see the data horizon beyond the boundaries.
This column presents personal measurements based on teaching a class in investment management. Each year, the incoming class answers the following question: "What is your own measure of impatience?"
As a quick and imperfect measurement tool, we use the question: "How much would you pay today for a $25 meal 10 years from now?" Paying a high price today translates into a low implicit discount rate and therefore a low level of impatience. Paying a low price translates into a high implicit discount rate and a high level of impatience.
