Index
A
actuarial perspective, 4–9. See also Present Value
example of, 5
importance of, 160
most important part of, 9
and “once in a lifetime” opportunities, 27–31
in summary, 5
value of, 149–162
actuarial science, roots of, 80–81
American Council of Gift Annuities, 144
Asimov, Isaac, 66
astrology, 90. See also fooled by randomness
AT&T, 84
attachment to a particular scenario, 76
B
Baby Bells, 84
big decisions, 39–49
“Black Swan,” 92, 118. See also fooled by randomness; Taleb, Nassim Nicholas
Bossi, Bill, 103
C
changing jobs, 41–44. See also big decisions
chaos, 66–70
a deterministic but unpredictable process, 67
Charitable Gift Annuity, 142–148
choices. See also decision making
clarification of, 59–64
clutch hitters, 78
cognitive errors, 100
Connecticut General Life Insurance, 15, 101
D
decision making, 2–6
based on experience, 2
based on faith or intuition, 3
in day-to-day world, 23–37
the “here and now” and, 2–3
intentions and aspirations in, 3
in life-and-death situations, 130–138
long-term, and Present Value, 139–148
non-financial, 129–138
organizations and communities long-term, 127
projection of future events, and, 3
improving, with Present Value, 4
defined benefit plan, 121–122
DeWeese, Charlie, 111–116
disability benefits, 104. See also Bossi, Bill; Disability Insurance Specialists Inc.; Verney (Arthur), Tad
Disability Insurance Specialists Inc., 103
discounted cash flow method, 117–118
inadequate for organizations, 128
discount rate(s), 11
definition of, 51–57
example of, 26
Don’t Work Forever (Vernon), 158
E
education, investing in, 45–49
expanding funnel of doubt, 80–83, 98
F
financial crisis of 2008–9, 155
financial engineers, 93
financial planning, 157–160
5-step process, 7–13
in day-to-day decisions, 24–37
discount rate and, 11
evaluating impacts of what might happen, 9
non-attachment to a specific scenario and, 9
only calculation in, 8
fooled by randomness, 83–96
Fooled by Randomness (Taleb), 87–88
Foundation Trilogy (Asimov), 66
Frohlich, Rob, 130–138
future. See also “Black Swan”; Taleb, Nassim Nicholas
and Big Data, 66
considering all possible, 5
doesn’t really exist, 2–3
imagining the, 65–76
impossibility of predicting the, 95–96, 118
nature of the, 66–70
non-attachment to any particular, 69
and objectivity evaluating likelihood of scenarios, 69
predicting the, 3
thinking about the, 68–70
unlikely scenarios, 125–126
G
General Equilibrium Model, 91
H
hedge funds, 94
Heinlein, Robert, 65
hot steaks, 78
I
induction, principle of, 90. See also “Black Swan”; fooled by randomness; Taleb, Nassim Nicholas
information age, 1
Internet, 92
Ippolitto, Dean, 99
K
L
Leiber, Fritz, 65–66
licensed actuary, 3. See also actuarial exams
liquidity premium, 54
Live Long and Prosper (Vernon), 158–159
Long Term Capital Management, 94
M
McLeish, David, 80–83. See also expanding funnel of doubt
medical tests and Present Value, 135–138
modeling, 83. See also Big Data
Money for Life (Vernon), 157
N
Newtonian physics, 90
non-financial decision, 40
now and the later, weigh the, 97–108
Oregon Public Employees Retirement System. See OPERS
organizations and communities, present value for, 117–128
P
pension plan, 156–157. See also Present Value, improving the world and; Wickes, Gene
Pirsig, Robert, 68–69
possibilities, evaluation of, 77–96
and baseball, 78–80
Present Value(s), 2. See also actuarial perspective
applicability of, 4
balance between present and future and, 4
better decision making with, 23
in complicated situations, 62–64
and compound interest, 52
and consideration of all possible futures, 5
in day-to-day world, 23–37
vs. discounted cash flow method, 117–118
in evaluating time shares, 31–37
failure to properly utilize, 120–128
5-step process for comparing, 7–13
implied rate of discount by, 119
importance of proper use of, 82, 124–125
improving decision making with, 4
improving society and, 4
improving the world and, 150–157
in life-and-death decisions, 130–138
lifestyle choices and, 135–138
and liquidity premium, 54
in long-term decisions, 139–148
mischaracterization of, 59–60
mechanics of, 51–57
in medical tests, 135–138
not-for-profit organizations and, 142
in a nutshell, 4
and “once in a lifetime” opportunities, 27–31
for organizations and communities, 117–128
and personal rate of discount, 54–57
question answered by, 55
and real estate, 60–62
and rental properties, 60–62
relative weights, importance of, 108, 110
and risk, 54
and risk-free return, 53
in saving and investing strategies, 37
rental properties and, 60–62
risk-free return and, 53
and value of time, 30
Present Value thinking
in big decisions, 39–49
importance of taking your time, 35–36
taking responsibility for owning process of, 48
problems, simplification of, 116
public employees retirement programs, 120–128
pure randomness, 80
R
rate(s) of discount, 11
example of, 26
extraordinarily high, in companies, 119
implied in present values, 119
infinite, 98
math behind, 56–57
for organizations vs. individuals, 104–118, 120
personal, 54–57, 98–100, 101–108
variation in, 99–100
real estate, 60–62
Relativity, Theory of, 90
relaxed playful attitude, 116
Rest of Life Communications, 159
retirement plan, private vs. public sector, 124
risk, 54
risk-free return, 53
risk management, 93
RPA, 116
S
saving and investing strategies, 37
Schwartz, Mordecai, 15–21
signal in the noise, 80
Skype, 84–85
Stanford’s Center for Longevity, 160
statistical significance, 77, 79–80, 89, 89
T
Taleb, Nassim Nicholas, 87–88, 92, 94, 118
The Power of Now (Tolle), 2
The Wall Street Journal, 86, 91
Thinking, Fast and Slow (Kahneman), 10
and elections, 127
for organizations, 120
time preference, 54
time, risk, and money, 104
time shares, 31–37
time, value of, 30
Tolle Eckhart, 2
Towers Watson, 153
Tversky, Amos, 77
U
University of Pennsylvania, 86
US Social Security, 153–154
V
Verney, Arthur (Tad), 99,101–108
Vernon, Steve, 157–160
Vonnegut, Kurt, 65
W
Walter, Bob
Watson Wyatt, 159
Wickes, Gene, 150–157
Z
Zen and the Art of Motorcycle Maintenance (Pirsig), 68–69