Episode 14: What are Complicated and Complex Systems?

ABOUT THIS EPISODE

On this episode of the Build Your Life Podcast with Financial Expert John Browning, we're discussing how to understand complex adaptive systems.

Listen in as John gives some insight into the often complicated world of complex adaptive systems and how multiple inputs can adapt to one another when it comes to finances. If this sounds like a difficult topic, John helps make sense of it all on this episode. Tune in for more!

For more information, visit www.GuardianRockWealth.com to learn more about what John can do for you.

Welcome to the building your life podcast with John Browning. Building your life is a relaxed and unedited conversation with financial expert John Browning. John's the founder of Guardian Rock Wealth in Lake Forest, Illinois. He's also the author of the Book Build Your Life, not a portfolio, a guide to your financial future based on your personal values. Now you can purchase John's book on Amazon, or you can stay around to the end of today show and I'll tell you how to get a free copy milk right to your door. I'm Michael to lawn, your host for the next few minutes as we chat with financial expert, business owner and author John Brownie. Hi John, how are you, buddy? Doing Great? How about self? Good, Hey, I couldn't be better. I used to run around with a guy and say I couldn't be better if I were twins or something like that. Thank I have to stop ago. What do you mean by that? But anyway, that's how I'm doing today. It's a wonderful day and we are still in the midst of Covid nineteen and all of that. I believe it's getting ready to get...

...past behind us. It's been a very complex issue worldwide pandemic and people have had to adapt to different situations, different work environments, different living environments, in all kinds of you've had to adapt of living in Hawaii for a few weeks versus the Chicago land. Are so a lot of complexities and today I want to talk about some complexities in the financial the world. So we want to talk about a phrase that you use a lot. You wrote about it in your book and I want to I want to understand it here. You talk about dissecting the complex adaptive system. Help me understand that well, for I think first it's better to talk about what's a complicated system, because people get these two mixed up a little bit. So if you're talking about a complicated system, just to give you an example of what that might be,...

...is maybe call that a car. So the the engine of your car, is a complicated system. If there's a problem with your car, if it's not running right, there's an answer that can eventually be determined based on a limited number of inputs into that system. There's a lot of inputs. So it does get complicated, but you know what those inputs are and they don't necessarily really change all that much. So it's complicated and many, including myself, when I was younger not so much now, enjoyed the challenge of fixing and enhancing. I like to make them faster. Right when I was a kid, this complicated system. We love to work on them, and there was a logical answer. I just need to figure out what it was. So I was a doe Myselfer and and I did okay. But even then I would call in an expert every once in a while, typically my father...

...in law, because he is an engineer and just seems to get everything about that kind of stuff. But even then, as a doittyourself, or I would call in a professional just because I couldn't quite figure it out. A complex system is a little bit different and he has a lot more, lot more inputs to it and because of that it's exponentially more difficult to understand, predicts solve an issue with that system. Then you add the third thing, which is adaptive. So a complex adaptive system is one in which there's essentially an infinite number of inputs that adapt or integrate one with another, and because of that, they can do so in unpredictable ways. So an example of this would be nature, just nature in general and of course, as you know, I believe that the world economy is a complex adaptive system and that's...

...the reason mainly for that is there's over seven billion people in the world. We're global system now, as we have, is illustrated by the pandemic. We all interact with each other. All of those different people have different emotions, different experiences, and everything impacts all the little decisions that they make, which then impact the mark. Okay, so does that kind of get yeah, I like the car analogy because I used to be mechanics. I get that and I really like your world analogy of multiple inputs, but they all in a sense work together, they adapt to one another and unlike a car, because the car has lots of computers, but they don't necessarily adapt to each other. Sometimes they do. That makes that makes a lot, a lot of sense. So that totally makes sense. Why I've had so much...

...trouble with finances, John's, because I'm going to do it myself or for so long that there's no way I could understand this complex ADAPTI system. A A understand what it is, but be understand. How do you function in that? So help us understand. How do you you're an expert of those. How do you get your head and head and hands around this complex adaptive system to help your clients? Well, as as we've talked about that, I've made this my life's work because I'm fascinated by it and I enjoy trying to figure it out. But even even as much experience as I have had and and my study and seeing how things interact with one another, I can't predict with consistent accuracy exactly what's going to happen in the marketplace. What you can do is get you a general idea of how things normally happen and how...

...things are changing. Understanding how things are changing right now is another important part of better understanding what could happen and the course of the trick to all this and investing within in this and managing portfolios within this is to be ready for anything that might occur, because anything can and often does occur, as exampled in this for most recent pandemic. Yeah, well, it takes obviously years, and I think that's one thing. You know, one cool thing that you just said. There's is you can't predict the future. You don't have this crystal ball, but you you've been able to look at trends. You've been able to look at inputs and and in a sense, when certain inputs come in, traditionally they've had this kind of result. I imagine you can look at things like that to kind of get a handle on some things to...

...go well, okay, if oil prices are going down, typically that means something over here is going to happen. So that you've got a broader perspective of a lot of these inputs that just a guy like me or many of our listeners, we just don't have. We don't have access for privy to that. Number one, to the information. Number two, how do I assimilate that information to make sense for my portfolio? Right, that's right. In the key is understanding and knowing. The things that you can know are history and how what things happened in the past. But the key to making it work in today's market place is understanding how it's different, and that's always the question that we ask ourselves. This happened when all prices dropped back in nineteen eighty or nineteen seventy or whenever, whenever we want to look at the example. What's different now, based on innovation, technology, general human behavior that wasn't true back then, and how might that impact what we're likely to...

...see going forward? So things like that. Understanding, you know, where we are currently, along with melding in that historical perspective, is key to being able to do this. Well. Yeah, and and that's all part of understand that we are living, if I can get this, in a complex adaptive system and that we know we don't just live there, we invest there, whether we're investing in companies or stocks, or whether we're investing in in, you know, the business down the street. It's all part of this system, this ecosystem, that we're part of. And you know, your example of the world really resonated with me, and I don't know if this is true or not, John, but somebody said that you know when a butterfly flaps its wings and Africa and you know the wind blows in North Dakote or some I don't know, but it brings an idea of a complex adaptive society to my mind. You know a lot of people say that when...

I don't know that I necessarily subscribe to the butterfly theory, but the concept of it is very much what I'm talking about. Within the economy. Yeah, you get the collective of again, seven billion emotional. Frankly, and I talked about this in my book as well, how as I tend to think of myself as a very rational individual, but the truth is, when I look back at some of the decisions that I made and still make today, I make them emotionally. As much as I kicked myself and don't want to believe it, it's just true. I like green and I like read. So when I'm picking out a car, when I picked up my motorcycle, like I said in the book, bottom line is, as rational as I tried to be, I really just wanted the red. So we make all those people making those someone irrational and emotional decisions, seven billion people. It's going to impact the market in sometimes strange ways. It is and the...

I guess that's the other reason why it's helpful to have somebody like you on our team, because you can look at all those different decisions and, with an outside perspective, guide and direct our portfolios to where we really want them to be in order to have the life that we really desire. That that's why the can the conversations you have with your clients are so important. That's where you begin. Everything is a conversation to understand. What are you trying to build, what kind of life are you wanting to have, and how do we build a portfolio around you so that that can be a reality as much as we can adapt to this complex system? Right, that's right. And of course, the allimportant question that follows the how and what do you want to build is why exactly do you feel that way? Because at the at the core of everything, at the core of us as people, there's...

...an emotional reason that we want something a few and why is that? And so many people don't spend the appropriate amount of time understanding why they want something that when they obtained that elusive goal, whatever it might be very disappointed and it's that's a sad thing, you know, you work for years to accomplish something and then like I don't know why I'm here, that dad didn't bring me the happiness. Right, right. Yeah, some of the most content happy people I know are the people who are get free and they may not make a ton of money according to the world standards, but they seem to have everything they want. I'm at a retired truck driver one time and he was driving a shuttle for a auto repair shop and he just shuttle people all around town. We had a great discussion. He drove semis. All of his live was ut. was at home raising his kids every night because of...

...his right. He was just the happiest dude in the world. From the world's perspective. He didn't have much, but he had everything that most people really want. And so it's that why behind? Why are you? Why are you doing that? And those are the types of questions that John and his team asked. When when you begin a relationship with them? And that's the cool thing about Guardian rock wealth and John and just I just really encourage you to go to the website Guardian Rock wealthcom, pick up the phone, call him, email him and just have a conversation, see how he operates very differently than what you might think, and begin a conversation about why, why are why are you going the direction you're going? How do you want to build your life and how can he help you adapt to this very complex adaptive system that we're all part of in a way that's going to be helpful to you and your family and John Will, you'll find, is not only an expert in finances and retirement planning and just all kinds of things financial.

He's an all around good guy. So, John, I always appreciate just hanging out with you for a few minutes on your podcast. Thanks for our being here again and hope you have a great way brother. All Right, thanks, will see you next week, all right, but bye, yea. So thanks for listening to the building your life podcast was, John Browning. Be Sure to subscribe to this podcast so each new episode will be sent to you automatically when it is released. Have a terrific day.

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