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 podcastwith John Browning. Building your life is a relaxed and unedited conversation with financialexpert 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 aportfolio, a guide to your financial future based on your personal values. Nowyou can purchase John's book on Amazon, or you can stay around to theend of today show and I'll tell you how to get a free copy milkright to your door. I'm Michael to lawn, your host for the nextfew minutes as we chat with financial expert, business owner and author John Brownie.Hi John, how are you, buddy? Doing Great? How aboutself? Good, Hey, I couldn't be better. I used to runaround with a guy and say I couldn't be better if I were twins orsomething like that. Thank I have to stop ago. What do you meanby that? But anyway, that's how I'm doing today. It's a wonderfulday 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 avery 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 toadapt of living in Hawaii for a few weeks versus the Chicago land. Areso a lot of complexities and today I want to talk about some complexities inthe financial the world. So we want to talk about a phrase that youuse a lot. You wrote about it in your book and I want toI 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 talkabout what's a complicated system, because people get these two mixed up a littlebit. So if you're talking about a complicated system, just to give youan 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'sa problem with your car, if it's not running right, there's an answerthat 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 youknow 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 muchnow, enjoyed the challenge of fixing and enhancing. I like to makethem faster. Right when I was a kid, this complicated system. Welove to work on them, and there was a logical answer. I justneed to figure out what it was. So I was a doe Myselfer andand I did okay. But even then I would call in an expert everyonce in a while, typically my father...

...in law, because he is anengineer and just seems to get everything about that kind of stuff. But eventhen, as a doittyourself, or I would call in a professional just becauseI couldn't quite figure it out. A complex system is a little bit differentand he has a lot more, lot more inputs to it and because ofthat 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 complexadaptive system is one in which there's essentially an infinite number of inputs that adaptor integrate one with another, and because of that, they can do soin unpredictable ways. So an example of this would be nature, just naturein general and of course, as you know, I believe that the worldeconomy is a complex adaptive system and that's...

...the reason mainly for that is there'sover seven billion people in the world. We're global system now, as wehave, is illustrated by the pandemic. We all interact with each other.All of those different people have different emotions, different experiences, and everything impacts allthe little decisions that they make, which then impact the mark. Okay, so does that kind of get yeah, I like the car analogy because Iused to be mechanics. I get that and I really like your worldanalogy of multiple inputs, but they all in a sense work together, theyadapt 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 totallymakes sense. Why I've had so much...

...trouble with finances, John's, becauseI'm going to do it myself or for so long that there's no way Icould understand this complex ADAPTI system. A A understand what it is, butbe 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 andhead 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 becauseI'm fascinated by it and I enjoy trying to figure it out. But eveneven as much experience as I have had and and my study and seeing howthings interact with one another, I can't predict with consistent accuracy exactly what's goingto happen in the marketplace. What you can do is get you a generalidea of how things normally happen and how...

...things are changing. Understanding how thingsare changing right now is another important part of better understanding what could happen andthe course of the trick to all this and investing within in this and managingportfolios within this is to be ready for anything that might occur, because anythingcan 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 youcan't predict the future. You don't have this crystal ball, but you you'vebeen able to look at trends. You've been able to look at inputs andand in a sense, when certain inputs come in, traditionally they've had thiskind of result. I imagine you can look at things like that to kindof get a handle on some things to...

...go well, okay, if oilprices 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 thatjust 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 theinformation. Number two, how do I assimilate that information to make sense formy 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 inthe past. But the key to making it work in today's market place isunderstanding 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, basedon innovation, technology, general human behavior that wasn't true back then, andhow might that impact what we're likely to...

...see going forward? So things likethat. Understanding, you know, where we are currently, along with meldingin 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 knowwe don't just live there, we invest there, whether we're investing in companiesor stocks, or whether we're investing in in, you know, the businessdown the street. It's all part of this system, this ecosystem, thatwe're part of. And you know, your example of the world really resonatedwith 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 Africaand 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. Youknow a lot of people say that when...

I don't know that I necessarily subscribeto the butterfly theory, but the concept of it is very much what I'mtalking about. Within the economy. Yeah, you get the collective of again,seven billion emotional. Frankly, and I talked about this in my bookas well, how as I tend to think of myself as a very rationalindividual, but the truth is, when I look back at some of thedecisions that I made and still make today, I make them emotionally. As muchas 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 reallyjust wanted the red. So we make all those people making those someone irrationaland emotional decisions, seven billion people. It's going to impact the market insometimes strange ways. It is and the...

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

...an emotional reason that we want somethinga few and why is that? And so many people don't spend the appropriateamount 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, youknow, you work for years to accomplish something and then like I don't knowwhy 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 peoplewho are get free and they may not make a ton of money according tothe world standards, but they seem to have everything they want. I'm ata retired truck driver one time and he was driving a shuttle for a autorepair shop and he just shuttle people all around town. We had a greatdiscussion. He drove semis. All of his live was ut. was athome raising his kids every night because of...

...his right. He was just thehappiest 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 thatwhy behind? Why are you? Why are you doing that? And thoseare the types of questions that John and his team asked. When when youbegin a relationship with them? And that's the cool thing about Guardian rock wealthand John and just I just really encourage you to go to the website GuardianRock wealthcom, pick up the phone, call him, email him and justhave 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 thedirection you're going? How do you want to build your life and how canhe help you adapt to this very complex adaptive system that we're all part ofin a way that's going to be helpful to you and your family and JohnWill, you'll find, is not only an expert in finances and retirement planningand 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 fewminutes on your podcast. Thanks for our being here again and hope you havea great way brother. All Right, thanks, will see you next week, all right, but bye, yea. So thanks for listening to the buildingyour life podcast was, John Browning. Be Sure to subscribe to this podcastso each new episode will be sent to you automatically when it is released. Have a terrific day.

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