Believing in the Impossible

I’m intrigued by people’s ability to believe in the impossible. And I take it as a warning to myself, for if others can believe in the impossible, then there’s every reason to think I can too. Which gives me pause.

In my lifetime, I suppose there have been many examples of this phenomenon playing out in real life. But lately my focus is the investment world. That’s where I spend a considerable amount of time and energy.

In the late 1990s, people who bought stocks believed in the impossible. They drove prices up to astronomical levels — far behind anything that could be supported by reasonable assumptions or objective data. I remember at the time thinking, this is crazy. Yet it continued, far longer than some people thought possible. Until it stopped. And the inevitable bursting of the bubble.

Some stocks still aren’t back to their highs from that era, eighteen years later. And quite a few companies that were highly valued in 2000 aren’t even in existence today. A lot of money was lost. Many household balance sheets and retirements were gutted.

Less than ten years later, we saw it unfold again. It was hard to believe. Hadn’t we learned anything? Apparently not.

Real estate values went through the roof. People were getting mortgages far beyond their ability to repay. Speculators were flipping properties like pancakes. Until it stopped. Until the bubble burst.

Bankruptcies ensued. Evictions spiked. Many homeowners and investors lost a lot of money. Some homeowners are still underwater (i.e., no equity in their homes). Banks had to be rescued.

And now, a decade later, we’re at it again, only this time it’s broader. It’s not only real estate. Or stocks.

We’re already seeing the worm turn in commercial real estate in certain areas and, to a lesser extent, residential real estate in certain markets. I suspect we’ll see much broader reversals before it’s all said and done.

In the stock market, some equities are priced at levels that could never be justified by expected returns. It’s only a matter of time before the correction wipes out massive amounts of paper gains, except, for some, they aren’t merely paper gains.

Many people have borrowed money to buy stocks. They’ll be on the hook for those debts irrespective of what the market does.

Others bought into the market late, paying high prices that they may not see again for a very long time, if ever. Paper losses have a way of becoming real losses.

Meanwhile, the latest fad, crypto currencies, quickly morphed into the mania phase last year. It’s hard to know exactly how this will play out, but it’s easy to see that quite a few people will lose a lot of money — mainly, people who believe in the impossible.

Belief in the impossible isn’t restricted to investment decisions of course. It plays out in every area of life, from health and work to politics and religion.

I suppose it’s sometimes easier to believe in the impossible than to face the reality. At the very least, it can sometimes put off the day of reckoning. It also can interject excitement into otherwise mundane and boring lives.

Some people say it’s good we have the capacity to believe in the impossible. The hope of miracles is beneficial, they say. I’m not so sure. It seems to leave a lot of carnage in its wake.

I like to delve into the reasons for our motivations. What causes us to believe in the impossible? What’s our motivations? What propels us to take risks that, from an objective standpoint, seem ridiculous?

More importantly, how and when am I susceptible to the same motivations? How can I avoid falling prey to the forces that prop up the world of make-believe?

From an investment standpoint, how can I profit from the mistakes of others? There are always two sides to every transaction. How can I ensure I’m on the right side of the trade?

There’s a lot to consider. The answers aren’t always easy to spot. Yet the temptations are always alluring, especially when the masses follow.

It’s in our nature to find security in the herd. Being strong enough to leave the herd when the herd has gone mad isn’t as easy as it sounds.

Yet that’s what we have to do at certain times, Vera. We have to be strong enough, and smart enough, to recognize the madness. To remain grounded in reality and not allow ourselves to be swept up by the false promises of the impossible. To be able to distinguish between hard challenges and the unobtainable. To be able to tell the difference between the impossible and the unknown.

The differences aren’t always apparent. And therein lies the challenge.

I Must Get to Know Him Better

My inclination is to avoid people I don’t like. The reasons should be obvious.

Sometimes I haven’t had a choice, though. Sometimes, the person was a boss. Or a merchant or contractor with whom I had to interact. Sometimes, they were classmates or teachers. Or neighbors. Or clients. In other words, sometimes I was compelled to deal with people I didn’t like, whether I liked it or not.

Usually, I tried to make the best of a bad situation. Sometimes, I didn’t do a very good job of that.

It’s easy to be passive-aggressive in such situations. It’s also usually self-destructive.

Recently I came across a statement of Abraham Lincoln that cast the situation in a new light. Lincoln had this to say about unlikable people:

I don’t like that man. I must get to know him better.

“I must get to know him better.”

I’m thinking that’s probably pretty good advice.

Fanning the Flames of Destruction

The president of the United States thinks some countries are “shitholes.” And, to no one’s surprise, they happen to be populated by people with dark skin.

In yesterday’s post, I debated whether America was burning, much like Rome — whether its best days were ahead of it, or behind it. Today the debate seems silly.

Leaders of great nations don’t talk the way America’s president talks.

It’s unfortunate, but it is what it is. There is more to life than the status or standards (of living and morality) of one’s country of residence. Things like family and friends matter more. Far more.

I suspect America was never as great as some people believe and isn’t nearly as bad today as some people believe. As is often the case, truth is probably hiding somewhere in the middle, out of sight.

We do know that such condescension is not new. “Those places are filled with barbarians.” “Savages.” “Illiterates.” So-called great nations have never had any trouble coming up with pejorative terms to describe people of less powerful and less wealthy places. Just add “shithole” to the list.

The danger inherent in condescension is that it always comes back to bite you in the ass. Ironic, isn’t it?

Even Rome Wasn’t Burnt In a Day

Conservative author and pundit Jonah Goldberg recently reminded us that “even Rome wasn’t burnt in a day.” He was talking about the United States. And what he sees as our country’s decline.

Sven Henrich was even more pointed:

If you ever wanted to understand how the all powerful Roman empire ended up destroying itself, just watch the news in 2017.

More recently, James Traub authored an article in Foreign Policy titled “The United States of America Is Decadent and Depraved,” wherein he observed that:

Decadence is usually understood as an irreversible condition — the last stage before collapse. … But as American decadence is distinctive, perhaps America’s fate may be, too.

At the close of the year, in an interview with Pulitzer Prize winning journalist Chris Hedges, Ralph Nader delivered a stinging critique of the current state of America, in a column titled The Visionless Society.

I don’t know if America is in decline. But I have to admit: it feels like Messrs. Goldberg, Henrich, Traub and Nader could be right.

Mainly, I feel this way because of 11 specific factors.  Continue reading

Just the Facts

When I was a kid, I used to watch a show called Dragnet. It was a police show starring Jack Webb as Sergeant Joe Friday, who coined the phrase “just the facts ma’am” when interrogating female informants. I think Sergeant Friday’s admonition could benefit us today.

We live in an era of spin and propaganda. I think there is so much of it because it works so well. I like to believe, notwithstanding all the evidence to the contrary, that humans are rational beings. Yet despite what I like to believe, I know we’re highly susceptible to manipulation. I know that propaganda can be highly effective. I know we believe certain things not because the facts (the evidence) suggest them to be true, but merely because we want them to be true.

I’m constantly reminded of this reality by our president. I doubt a week goes by — indeed, possibly not even a day — in which he doesn’t say something that isn’t true. Some people and organizations chronicle all his lies. I have no interest in doing so. My concern is broader because it’s clear that the president isn’t the only purveyor of propaganda out there in the world today.

All I’m suggesting is we would be better served by heeding Joe Friday’s admonition and focus ourselves on the facts, if for no other reason than we’d learn more, become better informed and be able to make smarter decisions. And, in the process, avoid a lot of mistakes and bad consequences, not only for ourselves but also for our nation.

Here is just one example of what we’d learn. The president gloats from time to time about the performance of the stock market during his tenure as president. The message is clear: the performance of the stock market has been extraordinary and it’s all because of him. I suspect some people believe it. Not because it’s true, but because they want to believe it.

When one looks at the actual facts versus the propaganda, one learns a couple of things. First, one learns the increase last year wasn’t remarkable. In fact, it was average for a bull market (and, of course, as even the president knows, the bull market began long before he was elected).

Second, we’d learn that the performance of the U.S. stock market last year was pretty mediocre (at best) on relative terms. In fact, the S&P 500 (the standard measure of U.S. stock market performance) came in 33rd. In other words, an American would have made more money by investing in any one of 32 other stock markets last year than if they’d left their money in the U.S. stock market.

You would have made more money by investing in Poland. Argentina. Hong Kong. China. India. Emerging markets generally. (Interestingly, one of the few markets that did worse (Russia and Saudi Arabia) are led by autocrats who apparently have a special place in our president’s heart.)

This is but one example of the false messages that are being peddled day in and day out. And most of them are coming from places other than the White House.

It would be nice to be able to rely on what people in positions of power or authority tell us. But to do so, at least in these times, would be foolish.

Just the facts.

I’ll reach my own conclusions, if you don’t mind. And form my own beliefs. Based on the evidence (facts), not on someone else’s self-serving claims.

The Day the Heart of God Was Revealed

This is what follows Christmas. According to the Gospel story, Herod sought to kill the baby Jesus. He thought Jesus would be a threat to the empire — to the systems of power that underpinned the privilege and wealth of the few. So Herod ordered all newborn male babies to be slain. And the blood of the innocents flowed.

To avoid Herod’s threat, Joseph and Mary fled with the child to Egypt. It was the day Jesus became a refugee. (Interestingly, if they had tried to seek refuge in the U.S. today, they would have been turned away.)

But it’s more than a story about a refugee. Far more. At least to anyone who believes in a god — more specifically, in a god whose nature and purpose were revealed in the being and life of Jesus.

To such people, Jesus the refugee reveals much. He reveals the very heart of God. Continue reading

The Odds of Losing My Mind May Have Gone Up, But So What?

The fear of losing one’s mind wears on a lot of people. And for good reason. Alzheimer’s is a hideous disease.

No one wants to suffer from dementia. But quite a few of us will. That’s one of those stark realities of life we like to ignore. And for good reason.

Recently, I learned my odds of developing Alzheimer’s may have worsened. It seems people with severe or moderate head injuries that knock them out for a significant period of time, or who suffer amnesia as a result of the injury, are at significantly higher risk. No one seems to know why, but the correlation is clear and statistically significant.

A few months ago I was knocked unconscious for a considerable period of time when my head slammed into my steering wheel and back (I was wearing my seat belt, but the front airbag did not deploy). I can’t be sure how long I was out; however, from the EMS report I know it took the ambulance 16 minutes to arrive. I also know that, when I regained consciousness, emergency personnel were already on the scene. Moreover, I suffer from amnesia. So, based on the medical research, it seems my odds of contracting Alzheimer’s just went up.

My reaction to that possibility (if not probability) is, So what? I have more pressing concerns.

I don’t mean to be flippant about it, but such data really don’t alter my outlook. Not in the slightest. And here’s why.

I assume each and every day could be my last. So my focus isn’t on the long term. I don’t worry whether I’ll live to 70. Or 80. Or 90. Or lose my mind in 10 years. I am much more concerned with living now. More fully. Better. Really live and not just put in the time.

Putting in the time is a present risk, not a future potentiality. And it’s a risk that too often is realized, especially when I lose sight of the fact of the contingency of life, which I’m apt to do. Frankly, I waste too much of my time.

If I needed a reminder of the contingency of life, the accident was it. I know it could have gone differently — much worse. But what nearly happened to me was no different than what could happen to any of us, any day of the week. Life is contingent.

Which is fine. What’s not fine, however, is the way I squander my time — now, when I have my wits about me and am not suffering from any form of dementia.

I’m constantly amazed — and disappointed — by the amount of time I squander. To me, this represents a far greater threat than any increased risk of contracting a particular form of dementia in the future.

And it’s not related to my semi-retirement status either. The fact of the matter is, many people with full-time jobs fritter their time away, too. Many are just putting in the time. In fact, the distraction of full-time employment may make it easier to fritter one’s time away. Busyness easily can create the illusion of materiality and significance.

We all have specific risks of contracting particular diseases — conditions that may undermine the quality or duration of our lives. Sometimes they are passed onto us by our ancestors (genetic predispositions). Sometimes they are the consequences of our own actions (tobacco, alcohol and drugs). Or trauma (accidents). Or the environment. But no matter the specific risks or causes, it’s clear and obvious the end game is the same for each of us. It’s clear that each of our moments is equally valuable.

I may lose my mind, but, in the here and now, I’m much more concerned about losing a significant portion of my life: by squandering my time, by being a fritterer.

Ensuring that doesn’t happen requires thoughtful intentionality. And an awareness of what matters — what adds, what negates.

Unfortunately, merely putting in one’s time is a risk I’m not always adept at handling. Yet I’m keenly aware it represents a real and present danger. No one should have to be knocked unconscious to get that point.