Tallying the Stores – Estimating Current and Future Expenditure

Posted on August 17, 2019February 14, 2021 by The FI Explorer

Annual income twenty pounds, annual expenditure nineteen pounds nineteen shillings and six pence, result happiness.

Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

Charles Dickens, David Copperfield

At the centre of most definitions of financial independence is the ability to meet current expenditure through income generated from a portfolio of assets. Earlier this year I started monthly reporting of how close the FI portfolio was to being able to meet an estimate of total annual expenses of $96 000 per annum.

This expenses figure was a rough estimate of total current spending, and resulted from adding some known fixed expenses to my total average credit card expenditure. Yet this figure has seemed higher than anticipated, so this analysis examines what my record of actual past spending suggests for a reasonable estimate of current and future spending.

Just as provisioning a ship for a voyage should take into account actual journey time, my own FI measures need to be as accurate as feasible to make sure plans are set based on realistic estimates. This article – it should be emphasised – is focused on reaching the right estimate for my personal circumstances. Its focus is not offering advice on the process of budgeting or achieving a high savings rate, subjects better covered by others.

Drawing up the manifest – reviewing the initial estimate

The process for estimating total expenditure at around $96 000 was simple in principle. It involved adding a number of known individual fixed expenses to the past twelve months of actual credit card spending. Examples of these fixed expenses include: utilities, local government rates and insurances. They also include some irregular items, such as contributions to housing repairs and a sinking cash fund for car replacement over time.

These fixed expenses are not typically paid by credit card, and so the logic was that the sum of these and the annual credit card total would reach a total overall spending estimate.

In doing this calculation, however, I overlooked that for some large annual expenses that I set aside money for regularly and which I had counted as fixed expenses, I have actually used my credit card for some or all of final payments. This applied to health insurance and some car related costs, for example.

This had the effect of double counting a couple of large expenses, because I was counting both the cash set aside monthly to meet the future cost as an expense, and also the actual expense as incurred through the credit card.

Re-estimating the level of current expenses

Over the past month I have removed the double-counted items and re-estimated all fixed expenses based on the latest actual bills. Indeed, I have allowed some small headroom across the board to allow for modest price increases in the year ahead.

The impact of this is quite significant.

The effect of removing the double-counting is to reduce the monthly fixed expenses estimate from $2 025 to $1 414. This means fixed expenses are around 30 per cent below initial estimates. In turn, this permits some revised estimate of total expenses to be made. Using thus adjusted and corrected data, expenditure appears to be:

$7 420 per month or $89 000 per year if based on average credit card expenses of around $6000 per month since 2013; or
$7 000 per month or $84 000 per year if based on average credit card expenses of around $5 800 per month over the past year

Both of these figures are below the original $96 000 (or $8 000 per month) total expenditure estimate.

The chart below compares the revised figures against monthly income and expenditure estimates, including the income targets that are contained in both of my FI objectives as well as a historical average of portfolio distributions.

Monthly bar - Expenditure

The revised total expenditure estimate also makes it possibly to present a more accurate and less inflated picture of month to month expenditure compared to portfolio distributions received. Adjusted to account for the new estimate, the monthly progress is set out in the revised chart below.

Monthly exp with new figures - Aug 19

Implications for measures of progress and required FI portfolio

The new estimates for total spending show that I have been materially overestimating current expenditure.

A benefit of recognising this is that it immediately brings forward the progress I have made against the “total expenses” benchmark reported each month. Using last months portfolio value and the $89 000 per year spending estimate, for example, it brings progress to meeting this benchmark from 74.9 per cent to 80.8 per cent.

This is a more than five percent advance in apparent progress simply from a more accurate estimate. The revised spending figure also makes the chart below – the proportion of monthly total expenses met by current distributions, look more encouraging still. Revised total expendit Aug 19

Viewed in a different way, the revised spending figure reduces the total FI portfolio required by around $167 000. This represents months and years of saving and investment now not needed, and potentially returned in the form of free time.

A further implication is that the second estimate above which uses the past 12 month of credit card expenses is within a small margin of my Objective #2 target income (of $83 000 per annum). This gives some confidence that this target is set approximately at the level of my current expenses. That is, reaching this target my current standard of living could be maintained in the absence of any employment income.

Summary

So far historical data from credit card and additional fixed costs have been drawn on to seek to answer the question: what level of provisioning for future spending is warranted?

The analysis shows that:

The total expenditure benchmark being targeted was set too high – When corrected for double counting and using history as a guide average total expenditure is closer to $89 000 rather than $96 000 per annum.
A new lower and more realistic benchmark is needed – Based on this, I intend to replace my total expenditure assumption from next month, reducing it from $96 000 to $89 000. This is a conservative figure which is based on the sum of the average credit card expenditure over more than five years and the more recent accurate individual fixed cost estimates.
The income target under Objective #2 is close to my current spending level – This lessens the chance that adjusting to the income it produces will be difficult when this this portfolio level is achieved.
The past years spending is significantly lower than the average since 2013 – with credit card expenses of around $67 000 annually or $5 800 per month.

Taking the time to carefully consider current and future expenses can be painstaking work. It will be critical, however, to ensure the avoidance of the second of Micawber’s income and expense scenarios, and the need to rest plans for the voyage on the hope that something will turn up.

On the Wind – Reviewing the Record of Distributions and Expenses

Posted on April 17, 2019February 14, 2021 by The FI Explorer

But no new findings will ever be made if we rest content with the findings of the past.

Seneca, Letters XXXVII

Measuring distributions and expenses

Over the last three years the investment portfolio has delivered substantial distributions, leading to a brief period in which it appeared that an accidental goal of ‘Credit card FI’ might have been met. Subsequently that prospect receded, due to a sharply lower set of distributions for the half year to December 2018.

Over six months ago Reviewing the Log examined the issue of how my current passive income from distributions compared against both my credit card expenditure and total spending.

This article seeks to update that previous analysis, but also to go further and reach a fuller and more robust picture of overall trends in how distributions and expenses compare over time.

In particular, this article seeks to identify the likely current ‘gap’ between distributions and monthly expenses. This represents a different and arguably more empirical way of viewing and measuring actual day-to-day progress to FI, compared to simply tracking progress to a numerical portfolio goal.

Even so, they are in some senses also different sides of the same coin. This is because the portfolio goals I am aiming for are reverse engineered from target FI income levels, which are translated into lump sum targets, using an assumed average return (currently 4.19 per cent). Each month I report a percentage progress towards these goals. Currently, by this simple lump sum measure, the portfolio is around 90 per cent of the way to Objective #1 and just under 75 per cent of the way to Objective #2.

Re-examining the logs and records

When the monthly record of credit card expenses, total expenses and distributions is examined it is clear that credit card expenditure is volatile, but has a comparatively stable average of around $6000 per month, or around $72 000 per annum. The distributions, on the other hand, have been either stable or growing for most of the past six years, with the exception of the large reduction in the half year to December 2018. During this last half year to December, distributions averaged at around $2 600 a month.

The chart below sets out a ‘credit card only’ (blue) and a ‘total expenses’ series against an averaged measure of monthly portfolio distributions (in red). The green line represents actual credit card expenses, added to an equal monthly contribution of other non-credit card expenses. Total expenses here just includes items such as rates, energy and utility costs, day to day cash, as well as contributions to irregular major expenses such as holidays, house and car repairs, as well as eventual car replacement. Fig 1 - monthly

Note that all segments of the red line reflect annual distributions, except the last period from July 2018 onwards. The red line from July 2018 to the present will need to be revised once the June 2019 half year distributions are known.

This revision is highly likely to lift the currently assumed average distribution for 2018-19 of about $2600 per month. This lift is likely because currently the red line from July 2018 onwards is based on a simple extrapolation or continuation of the traditionally lower December figures. The true underlying level of distributions this financial year may well be higher. In fact, June half year distributions have usually been well above the interim dividend amounts of the December half year.

Depending on the estimation method used, the June 2019 half year distribution could be in the range of $23 000 to $51 000, with an average estimate of around $42 000. This in turn could lead to total annual distributions for financial year 2018-19 being in the range of $39 000 to $66 000 (or between $3 250 to $5 500 per month respectively). For comparison, the five year average of distribution is around $45 000 (or $3 750 per month). The final figure will simply be an unknown factor until early July.

Off-course or temporary shallows?

The same considerations are relevant for examining a second measure of progress. The below figure charts the proportion of total expenses met by annual distributions. Fig 2 - Total Ex Dist Since the last update of this graph more than six months ago, the proportion of expenses met by portfolio distributions has fallen, and for the same reason – the low distributions in the half year to December 2018.

Even with this significant fall, from July 2018 to the present, these lower distributions have generally been sufficient to meet between 30 to 40 per cent of total expenses. In overall trend terms, it also suggests the true underlying distributions potential of the portfolio is likely to be sitting at around 60 to 70 per cent (see dotted trend line).

Looking through the weather – adjusting the view

These two ways of viewing progress each have their advantages, but suffer the same disadvantage of being volatile measures of progress. This volatility arises from both monthly variations in expenses, and large variations in distributions between and within years. These variations occur due to a range of factors, such as realisations of capital gains related to rebalancing within some pre-mixed Vanguard retail funds, as well as changes in bond yields or interest rates.

To address this the following chart seeks to account for these multiple sources of variation by adopting a three year moving average for both credit card expenses and distributions. The trade-offs in using this approach is that a three year moving average reduces the time period able to be covered, and can also mute broader emerging trends that should be of concern. Additionally, three years is not close to a complete economic cycle. Thus it is quite possible, for example, for distributions that are abnormally high for two consecutive years to impact this moving average measure.

The advantages of an averaged approach are obvious, however. By reducing the variations and monthly ‘noise’, and taking a relatively conservative assumption (in an increasing portfolio) that the last three years may provide an approximate guide to the true underlying level of distributions, a clearer and more stable picture of overall progress can be gained. Fig 3 no outline From this particular view, a few points emerge:

Credit card expenses have remained very stable at around $6 000 across the past three years with no systematic movements up or down
From January 2017 onwards distributions increased steadily until they reached around $5 000 per month in the middle of 2018
Since that time they have levelled off, and even slightly reduced, as the lower recent distributions form a greater part of the average

The data in the chart suggests a remaining gap of approximately $1 000 per month between distributions and credit card expenses, or distributions being sufficient to meet approximately 80 per cent of credit card expenses or 60 per cent of total expenses. In turn, this means that viewed as a multi-year average, ‘credit card FI’ has not been receding as sharply as volatile month to month figures suggest. It remains, in short, in view if not yet in range. The true average gap measured in these term is likely to continue to gently increase in the lead up to June 2019 distributions, but then potentially either level off or continue to close.

Overall this measure better reflects how the journey has felt so far. A beginning from a firm basis, constant steady progress over the time of the journey, but some significant distance to close yet.

Taking new bearings – an alternative approach

To reach the best view of where one is, it is sometimes useful to use cross-checks that relies on slightly different data.

An alternative approach to reaching a sound estimate which takes into account more stable annual data is to use tax assessment data. The chart below is based on assessed taxable investment income. It is taken from the tax return items of income from partnerships and trusts, foreign source income, and franking credits (i.e. items 13, 20 and 24, excluding capital gains) over the past ten years. This taxable income then given as a proportion of my portfolio objective #1, of $67 000 per year.

Fig 4 - Taxable From this chart some observations can be made:

For the past three years the equivalent of around 50 to 60 per cent of my first financial independence objective of $67 000 has been met by investment income
The past two years have been materially higher than other years – this could perhaps represent an anomaly, however, the overall portfolio that was producing distributions also grew by around 70 per cent since 2015-16, which would tend to support the higher later figures being sustainable
Annual variations do occur – with two out of 10 years registering some backward movement

The picture from taxable investment income then seems to support a gradual movement over the past three financial years materially closer to Objective #1, and some confidence that this is more likely than not to be maintained in the current financial year. Taking a three year average it suggests in investment income terms that around 55 to 60 per cent of Objective #1 income is likely to be covered by current distributions.

Summary – on the wind or a voyage becalmed?

Looking at the data highlights a few different points. Progress is not always linear, or exponential, even with compounding effects and well into the FI journey. Yet equally it shows it is possible over the course of several years to go from distributions making a small supporting contribution to ongoing expenses, to the equivalent of paying off the majority of a monthly credit card bill.

From reviewing the records and expanded data it is apparent that ‘credit card FI’ – not exactly a universally recognised stage of FI – is not yet achieved. Longer term progress on the goal will be clearer when June distributions are finalised in the next three months.

Depending on their final levels, between 55 and 90 per cent of annual credit card expenses will be covered by annual distributions. Reviewing past averages of card expenditures and distributions indicates that about 80 per cent of journey may be complete already, leaving a gap of only $1 000 per month.

Moving beyond credit card expenses – the lower distributions over the past six months have been equivalent to only 30 to 40 per cent of total expenses. Using independent tax assessment data indicates that the portfolio is currently generating between 50 and 60 per cent of the total yearly expenditure target under Portfolio Objective #1, with recent portfolio growth meaning the higher end of this range is a more probable guide than the lower.

In the first examination of these trends more than six months ago I observed the inevitable issue of volatility and noted that is was not impossible for future periods of higher expenditure to coincide with lower portfolio income. This could still occur, and clear precedents exist for it. Averages and forecasts have the power to mislead as well as guide.

Yet overall, looking back at the record puts some firm underpinnings to the progress already made – and leads me to strain forward for the next set of bearings.

Monthly Portfolio Update – February 2019

Posted on March 2, 2019March 24, 2022 by The FI Explorer

I have never thought, for my part, that man’s freedom consists in his being able to do whatever he wills, but that he should not, by any human power, be forced to do what is against his will.

Rousseau, Reveries of the Solitary Walker

This is my twenty-seventh portfolio update. I complete this update monthly to check my progress against my goals.

Portfolio goals

My recently revised objectives are to reach a portfolio of:

$1 598 000 by 31 December 2020. This should produce a real income of about $67 000 (Objective #1)
$1 980 000 by 31 July 2023, to produce a passive income equivalent to $83 000 (Objective #2)

Both of these are based on an expected average real return of 4.19%, or a nominal return of 7.19%, and are expressed in 2018 dollars.

Portfolio summary

Vanguard Lifestrategy High Growth Fund – $725 361
Vanguard Lifestrategy Growth Fund – $41 957
Vanguard Lifestrategy Balanced Fund – $75 692
Vanguard Diversified Bonds Fund – $102 924
Vanguard Australia Shares ETF (VAS) – $77 420
Betashares Australia 200 ETF (A200) – $188 899
Telstra shares (TLS) – $1 658
Insurance Australia Group shares (IAG) – $12 818
NIB Holdings shares (NHF) – $6 924
Gold ETF (GOLD.ASX) – $84 534
Secured physical gold – $13 659
Ratesetter (P2P lending) – $27 576
Bitcoin – $59 488
Raiz app (Aggressive portfolio) – $14 277
Spaceship Voyager app (Index portfolio) – $1 658
BrickX (P2P rental real estate) – $4 653

Total value: $1 439 608 (+$65 077)

Asset allocation

Australian shares – 40.6% (4.4% under)
Global shares – 24.1%
Emerging markets shares – 2.8%
International small companies – 3.6%
Total international shares – 30.5% (0.5% over)
Total shares – 71.0% (4.0% under)
Total property securities – 0.3% (0.3% over)
Australian bonds – 6.3%
International bonds – 11.4%
Total bonds – 17.7% (2.7% over)
Cash – 1.2%
Gold – 6.8%
Bitcoin – 4.1%
Gold and alternatives – 11.0% (1.0% over)

Presented visually, below is a high-level view of the current asset allocation of the portfolio. Feb 2019 - allocation

Comments

The past month has seen the largest single increase of the past year, and the third largest of the two year journey. This has been mostly caused by simultaneous increases in the value of equities, as well as gold and Bitcoin holdings. This synchronous performance is not what would be normally expected in a diversified portfolio, in which it is more usual to have portfolio components moving in different directions.

The result of this is that the portfolio is at the highest point in the journey so far, having regained levels not seen since September last year. This recovery from losses at the end of 2018 has occurred rapidly. As well as the largest single increase on a monthly basis in the past year, the past two month period has been the most significant period of growth experienced since the short-lived increase in Bitcoin in late 2017.

Port monthly chng Feb 2019

New contributions continue to be made through the Betashares A200 ETF, and there is still some way to go yet before the Australian shares component of the portfolio reaches its target. So contributions to the A200 ETF will likely continue, though this recent paper from Vanguard has raised the interesting possibility that the optimum level of international exposure to reduce portfolio volatility may actually be higher than my current target. This month the total share component of the portfolio reached just over $1 000 000. At about the same time last year, the total portfolio was just crossing this threshold. Port hist - Feb 2019

The coming month will see two significant milestones, the investment of an additional $15 900 from the reduction of my emergency fund to recognise the role of the growing stream of distributions, and the release of first quarter dividends from A200 and some Vanguard funds. Receiving significant sums to reinvest outside of the half-yearly Vanguard distributions cycle will be a relatively new and welcome experience.

In coming months I may increasingly be facing a need to invest beyond A200 to maintain my target allocations – most likely in global shares. Continuously purchasing exclusively Australian shares over the past nine months to meet a higher equity allocation has felt challenging at times, however, Australian share market valuations have at least generally been close to long-term averages through this time.

Though this is not primarily a spending or an unsparing frugality blog, below is an updated version of my somewhat winding path towards ‘credit card’ FI over the past six years, including the most recent months and factoring in the lower distributions in the last six months.

Credit card - Feb 2019 It’s apparent that the half year portfolio income to July 2019 will need to rise substantially if I am to re-close the gap that has emerged since the high distributions across 2017-18. Over the past six months, distributions have on average totalled just under 50 per cent of credit card expenditure. In a small step towards addressing this gap, I recently re-contracted my mobile phone plan to achieve around a $500 annual savings.

Progress

Progress against the objectives, and the additional measures I have reached is set out below.

Measure	Portfolio	All Assets
Objective #1 – $1 598 000 (or $67 000 pa)	90.1%	126.0%
Objective #2 – $1 980 000 (or $83 000 pa)	72.7%	101.7%
Credit card purchases – $73 000 pa	82.7%	115.6%
Total expenses – $96 000pa	62.9%	87.9%

Summary

The strong portfolio growth over the past month means that on an ‘All Assets’ basis, I have theoretically just met my portfolio objective #2. In a few short months I may actually pass my old original portfolio objective (of $1 476 000). Looking just at the ‘Portfolio only’ measures, six months or so of further progress could potentially see the new objective #1 in sight, having just reached the 90 per cent of the way this month.

Currently my conscious focus remains on the ‘Portfolio’ measures, where there is some distance to go. Nonetheless, the progress made this month has caused frequent reflection on the subtle psychological impacts of being at this advanced stage of the journey.

Independence is not yet secured in quite in the way I want, yet feels within tangible grasp. Whether this is correct or not will only be known in time, but it is a source of daily thought. The feeling of an accumulating power over one’s circumstances – particularly the shift to a position of a type of ‘quiet power’ in relation to future work – represents a remarkable calming change from a decade ago. That was a time in which, even though I had a substantial emergency fund, any period without employment income led to a restless and anxious search for a replacement income.

Putting such philosophical thoughts aside this month, and spurred by a reader comment, I have been re-reading (or rather listening to) The Big Short. This feels timely given current Australian real estate markets. What is striking from absorbing the book again is how much conviction, research and character it takes to take a different view from the crowd, and how difficult this is in current investment markets. It is a healthy warning to be wary of easy consensus, and that even that most elusive of beasts in markets – ‘being right’ – can be less satisfying than imagined in crisis conditions.

In the something of the same theme as breaking consensus, Early Retirement Now has also recently released an excellent post on ‘yield illusion’. This is interesting to think about in terms of frequent Australian FI Reddit discussions about dividend investment approaches, as well as the potential for some Australian companies and listed investment companies to shift dividend policies in response to any changes in franking credit refund arrangements.

This recent paper also discusses an interesting finding that investors need to firmly guard against what it terms the ‘free dividends fallacy’. It shows empirical evidence from real investors that failure to dispassionately appreciate total returns and the real impact of dividend payments on an assets value and price can result in poor decision-making harmful to long-term returns.

Finally, an article on Kitces recently highlighted a sometimes under-appreciated aspect of sequence of returns risks: the fact that in many cases positive market returns mean that the 4% rule and similar approaches can lead to significant unanticipated growth in the portfolio, even through the withdrawal phase. Following the past two months, considering these ‘upside risks’ too closely feels perilously close to tempting fate, and so I choose to look ahead only cautiously.

Reviewing the Log – Trends in Passive Income and Expenses

Posted on September 28, 2018February 20, 2020 by The FI Explorer

The world is too much with us; late and soon

Getting and spending, we lay waste our powers

Little we see in nature that is ours

Wordsworth The World is Too Much With Us

Reading the signal flags

As the journey progresses, some questions are increasingly pushing themselves forward. Questions such as: what does achieved financial independence look like in practical day-to-day terms? Will I recognise it when I see it? The answers to these questions will help recognise the length of the journey still to travel, and the signposts of arrival.

Over the last few years I have been recording my credit card expenditure, and more recently, have started comparing this against the income produced by the portfolio. This is on the theory that if my investment income matches or exceeds average credit card charges each month, then at one level some variant of FI has been achieved (is “credit card FI” copyrighted?). In July I mentioned this, and provided a snapshot. This post seeks to dig deeper into this data, to better understand where I am from a different perspective.

The portfolio goals I am working to are built from target incomes, which are then translated into lump sum targets, using an assumed average return (of 3.92%). Each month I report a percentage progress towards these goals. Currently I’m about 95 per cent of the way to Objective #1 and 70 per cent of the way to Objective #2.

There are some interesting subtleties to bear in mind in using a percentage based measure of progress, that are well discussed here. The goals also have a time frame based on progress to date, which means, for example, that I noticed the other day I was officially only around 100 days from Objective #1.

Each of these are useful measures for understanding progress, but at its most basic, financial independence is having a steady passive income sufficient to meet required daily expenses. There are different variants of this concept, with ‘leanFIRE’ and ‘FATfire’ referring respectively to a capacity to meet a modest, if not minimal lifestyle, or the capacity to live a relatively unconstrained, comfortable lifestyle from passive income.

Constant bearing, decreasing range

To better understand the answers to the questions above, I have stepped beyond credit card expenses records, to look at total expenditure from all sources. This includes items such as rates, energy and utility costs, day to day cash, as well as contributions to irregular major expenses such as holidays, house and car repairs, as well as eventual car replacement. It does not include income taxes.

This record has never focused on frugality of living expenses, or detailed expense analysis to a significant degree, and will not start doing so now. Rather, what I sought to understand was an estimated total cost of maintenance of my current lifestyle. Over the past few years my total credit card expenses have averaged around $72 600 per year. Adding all other expenses not paid by credit card ($24 300) gives a total current expenses of $96 972 (or around $8 081 per month). The figure below sets out a ‘credit card only’ and a ‘total expenses’ series against an averaged measure of monthly portfolio distributions. The green line effectively represents actual credit card expenses, added to an equal monthly contribution of other non-credit card expenses.

Total and credit 3 - Sept 18

This shows that while on average portfolio distributions have been around equal to credit card expenses since the middle of 2017, there is still some further progress before portfolio distribution can regularly meet total current expenses. As that is a quite busy graph, I have produced a simplification of the same data, expressing instead the proportion of total expenses being met by portfolio distributions over time.

Total expenses % of dist 2 - Sept 18

This data, and the trend line, shows steady progress through the last five years. Distributions have risen from meeting only around 20 per cent of expenses, to now meeting around 80 per cent. On current trends, it would appear that the next several months could see it passing the point at which annual distributions regularly fully meet my current lifestyle expenses.

Summary – Running before the wind

By definition, this log can only be a record of what has been. There are dangers in linear extrapolation on any course. For this moment, progress seems relatively steady and consistent beneath month to month market variations.

Yet there are a few cautionary points to observe:

Right target? My current estimated total expenses are above those assumed in my portfolio goals ($96 000 compared to $80 000 per annum), potentially implying the latter need to be revisited.
Irregular estimated expenses – The total expense estimate is influenced by some broad estimates of major but irregular spending requirements, which could turn out differently than expected.
Both income and expenses are variables – while portfolio income has been mostly stable over the long-term, there can be large variations in half-yearly totals. It is not impossible for future periods of higher expenditure to coincide with lower portfolio income.

The answer to the questions I posed may well be that I will not immediately recognise the cross-over point, that I will need to actively monitor for it. In the immediate term, it’s possible I will drift into a position in which notionally my entirely ordinary salary income is available to add to the portfolio, increasing portfolio growth strongly. This is an intriguing and motivating part of the mathematics of long-term portfolio investment.

As the portfolio reaches towards full expense replacement, there is a duality. Amongst steady but small changes and weekly habits it feels as if an inflection point, or some form of phase transition is creeping upon the stage. The task is to measure, notice, reflect and act on the result.