For Being So Little, You Give So Much

You’re small, Vera. I know you think you’re big. And you are, relative to what you were. But even though you think you’re big (as you’re quick to tell me), you’re really not.

Yet there is a lot packed into that small body of yours. You have the uncanny power to bring such joy to people. To make us laugh. To give us hope. Life seems to be so alive in that little body of yours. And intense. Usually in a good way. But not always.

When you visited Friday, you became upset when you parents and uncle left to go to a restaurant. That was a first; you’d never been upset in this situation before. You wanted to go along. After all, that’s what big girls do — they participate in all the adult activities. But, as I said, you’re really not as big as you think you are.

I assured you that your parents would return, but apparently I wasn’t persuasive. It’s hard to persuade a two and a half year old of such things. They know what they see and experience. And you knew they left without you. And you didn’t like it. Not one bit.

After reason failed, I immediately went into distraction mode, realizing what I just wrote is true: the present experience is what matters. I didn’t try to convince you of anything; rather, I sat down at my desk and started watching a Peppa Pig™ video on my computer.

Immediately, from across the room, where you were looking out the window of my office, half expecting your parents to return for you I suppose, you turned your attention away from your disappointment. I knew you really like Peppa Pig (who doesn’t?) so I wasn’t surprised. But I didn’t push you. I simply watched the video by myself, trying not to let you see that I was checking in on you with quick glances.

It wasn’t long before you appeared by my side and wanted up on my lap. All was well.

We then had dinner and everything was fine. Later, after your parents had returned (just as I promised), you put on your shoes and then came over and landed a big kiss right on my lips, accompanied by a Vera hug.

The power of hugs and kisses never cease to amaze me.

Your hug reminded me of another hug. Upon returning home this fall following the out-of-state auto accident that could easily have claimed my life, I was greeted by a big hug from your dad. I didn’t want to let go. I had tears in my eyes. The good kind. The power of hugs.

You will get big someday. Perhaps just as tall as your dad. You seem to be certain of that. But perhaps not. In any case, I hope you carry some of your current practices with you into adulthood. I hope you never forget the power of your hugs and kisses.

Don’t Let Your Emotions Get the Best of You

So much of life is driven by emotion. And emotion is fickle. It can change on a dime. By way of example only, here is what has happened in the investment world this week:

A mere month ago, the index registered 76: extreme greed. In other words, the world moved from extreme optimism (confidence) to extreme pessimism (worry) in a couple of weeks. Yet in the real world, not much has changed at all. Stocks are pretty much worth today what they were a month ago. Perhaps even more.

There is no rational reason for this dramatic shift in outlook. Yet it’s real. Very real.

These emotional swings aren’t restricted to financial matters. They can affect all areas of our lives. The good thing is, we know humans have this vulnerability — that we’re susceptible to having our emotions run roughshod over our reasoning abilities. Armed with this knowledge, we can fight back. We can resist the urges to lay reason to the side and allow our emotions to guide our decision making.

It sounds easy. But it’s actually harder than it sounds. It’s hard because the herd is highly susceptible to emotions. The herd isn’t particularly good at thinking. And there’s comfort in being part of the herd. It can be lonely and a bit scary to be standing outside the herd. The fear of being left behind. The fear of ostracism.

But that’s exactly where you need to be at times to avoid the mistakes herds are bound to make. Unless you’re prepared to suffer the consequences.

Handling Disappointment

Everyone experiences disappointment. Lots of it.

I started by jotting down some of mine. But it seemed too much like a list of grievances. Like whining. A pity party. So I’ll keep them to myself.

But that doesn’t make them go away. Or stop them from affecting me. To the contrary, disappointments cannot be so easily neutered; in fact, they tend to have quite a bit of power over us.

They skew our thinking. Affect our attitude and mood. Impact our outlook and plans. Define our relationships.

But should they?

Perhaps not. At least not if happiness is the objective. And why would it not be?

I suppose it helps to consider the source of our disappointments. Most if not all of them — at least in my case — stem from the failure of reality to match or exceed my expectations.

So perhaps that’s the root of the problem: my expectations. If I were to have none — expectations, that is — then perhaps I’d never have to experience the sting of disappointment.

But is that even possible? Is it possible to expect nothing of a situation? Or other people? Of ourselves?

I doubt it. Yet I do think it’s possible to manage my expectations better. And, in some cases, to resist the urge to have them in the first place.

Expectations of myself is one thing. Expectations of others is quite a different matter.

I control my own actions (in the main). I do not control others. I am at their mercy.

It’s probably unfair to impose expectations on other people. What gives me that right? As best I can tell, nothing.

And it’s not as if it’s a benign thing either. Expectations and disappointments tend to contaminate relationships. They tend to be the source of conflict. And negative emotions, not the least of which are anger and resentment. Frankly, I think we’d get along better — and be happier — if we had fewer expectations of each other.

But we have to be careful. Ridding ourselves of expectations is not the same as expecting less or expecting nothing, both of which can be toxic in their own right.

Take you for example, Vera. My aim is to expect nothing of you or our relationship. I don’t expect you to go to a particular school or college. Or to pursue a particular career. Or to marry or, even if you do, to marry a particular kind of person or to have kids. Or to visit me. Or even to care about me.

That’s my aim because I’ve come to believe that, in general, expectations get in the way of healthy relationships. And I desire for ours to be healthy. So my attention will be on being the best role model I can be and helping you learn some of the things you’ll need to navigate life successfully (to make wise decisions).

So what, if anything, will replace them — the expectations, that is? Desire. And unconditional love.

I desire nothing but the best for you, whatever that happens to be (which, likely, is beyond my discernment capabilities). And I desire to love you and to be loved. And to be there for you if and when you need me — as you choose.

It means I may have to bite my tongue on occasion. Or to suffer in silence. But it also means I will not contaminate our relationship with expectations I seek to impose on you, even if the motives are pure (or at least as pure as humanly possible, which may not be as pure as we like to think).

But it doesn’t begin or stop with you. My aim is to harness any urge I might otherwise have to impose expectations on any other person. And, perhaps most important of all, on myself.

Self-imposed expectations can be the deadliest of all. They can be the source of much unhappiness and despair. Feelings of failure can pull us into an abyss from which we may not return.

In my later years, I try to expect nothing of life or others. If I am the recipient of good fortune and good relationships (as I am), I want to feel gratitude and nothing more.

Most of all, I don’t want to feel entitled. When things don’t go well, or when things unfold in a way that seems unjust or unfair, I don’t want to feel victimized or self-pity. Or resentful. It’s easier to avoid those self-destructive reactions if I had no expectations in the first place.

But, again, the void created by jettisoning expectations is not filled with nothingness, cynicism or apathy; rather, it is filled with desire, hope and gratitude.

I desire and hope for a better world. I desire and hope to be an agent for good in the world and in the relationships I have with others. I desire and hope for good things to come in the lives of the people whom I love. I desire and hope for happiness. And a sense of gratitude.

Expectations are a hard thing to let go. They seem to want to cling to us like that cellophane that’s so hard to get off your fingers. Yet I’ve come to believe they do us no favors. And are the source of much strife and discontent.

My aim is to expect nothing of the world or its inhabitants. But to desire and hope for much. And, most of all, to be grateful for whatever comes my way.

The Absurdity of American Democracy In the Era of Big Money

I’ve just about had it with all the whining and complaining (which, I admit, is ironic considering the complaining I’m doing here). Events in Washington and in many of our state capitals prove, over and over again, just how corrupt and ineffectual the system is. And the degree to which money has coopted the system. And just how far we are from a functioning democracy.

And so we complain. And whine. And bitch. And point the finger at everyone. Except ourselves that is.

We seem oblivious to the connection between money and the output we receive. We tolerate a system of campaign finance that is certain to be a corrupting influence. And we keep electing people to offices despite their proven track record of ineptitude. And despite their venile behavior. And cruel words.

To make matters worse, many of us have allowed ourselves to be corrupted by a naive, self-destructive ideology. We willingly accept as true absurd claims made by people who are interested in nothing other than their own self-interest. We seem to have lost the traits of skepticism and discernment. We seem to have lost any sense of how a democracy is supposed to work.

And so we are where we are.

But this too shall pass, I believe. Eventually, we shall come to a more enlightened era, when people realize the inherent dangers of unconstrained greed and power. When people understand the work that’s necessary to build and sustain a society that yields the best quality of life for everyone. When people recognize the absurdity in calling people winners or losers. When people no longer react favorably to acts of cruelty.

I don’t know when that day will come. I may be gone from this earth by the time it comes. But it will come.

In the meantime, we should accept responsibility for that which we have created. And stop pointing the finger. The system we have is the system that is the predictable, inevitable product of that which we value. And are willing to tolerate.

Today, money rules. So stop feigning surprise.

What Goes Up, Can Go Down

Here we go again. Somehow, someway, we forget the maxim that has survived the test of time: What goes up, can go down.

In the first decade of this century, many of us thought, despite overwhelming historical evidence to the contrary, that real estate values could only go up. Millions of foreclosures and bankruptcies later, we discovered we were wrong. We had to relearn the lesson the hard way. But it seems we didn’t learn the lesson at all.

I read in this morning’s newspaper how people are spending more and even dipping into their savings because they feel wealthier due to rising stock and real estate prices. Indeed, the savings rate has fallen of late, just when interest rates are showing the urge to rise. Bad timing.

People are borrowing more money to buy stocks. And they’re taking expensive vacations beyond their means. And going deeper into debt to pay for colleges they can’t afford. And buying more house than they need.

An overwhelming majority of investors think the stock market will be higher in six months. They might be right. But they might be wrong. Are they prepared to be wrong? Many aren’t.

Reason would dictate you’d sock more money away during the good times — for rainy days, college, retirement, or simply to have a safety net. But by now it’s pretty obvious many of us live for today and aren’t all that concerned about tomorrow.

History tells us it’s highly likely, at some point, the stock market will fall quite a bit from its current lofty levels. It could be tomorrow. It could take longer. But it surely will fall.

There is a good chance real estate values, at least in certain areas, will fall, too.

If any of these inflated values are sustainable, it will be in only nominal terms, that is, without taking inflation or currency values into account. People are acting that neither is a significant risk. I fear they’ll be mistaken on one or both counts. Indeed, it’s hard to imagine any scenario that sees a stronger dollar in the long term. And we know inflation and interest rates are already below historical norms, suggesting the risk to the upside is not immaterial.

The timing and sequence of events are impossible to predict. A material decline, in real terms, in the value of equities and real estate is easy to predict.

But either way, it’s only a prediction. And that’s the point: the future is unknown. All we can know for sure is there will be bumps in the road. At some point, what went up will go down.

Warren Buffett, the most successful investor in the world in my lifetime, is famous for saying, “You only find out who is swimming naked when the tide goes out.”

When asset values fall, or inflation rises, or the dollar falls, or interest rates rise, as these things will most surely do at some point, we’ll discover who was swimming naked.

Save yourself the embarrassment, Vera. Act prudently. Never assume the sun will shine forever just because it’s shining today. And don’t forget life’s hard lessons, particularly this one: What goes up, can go down. And try not to be surprised or unprepared when it does.

P.S. 2/12/18 – This cartoon seemed appropriate.

Rethinking Hypocrisy

My earliest recollection of hypocrisy was in church. It was there I sat and listened to the pious prayers of my father. The distinction between the man who spoke those words and the man I knew as my father was striking in the mind of his son. The son never felt loved by this man. The son experienced the coldness, the harshness, the anger. It was not all bad, of course; there were good times. But it was nothing like the love and compassion preached in the church; spoken of in the prayers. I learned what hypocrisy felt like. And I didn’t like it, not one bit.

As I matured, I realized that hypocrisy had found a home among most if not all churchgoers. They claimed to believe one thing and then lived their lives as if they believed something else. There was so much pretending.

Along the way, I realized I, too, was a hypocrite. I always fell short of the values and principles I espoused. Walking the talk was so damn hard.

And so I was hard on myself. And on others. And found I longed for authenticity, both in myself and others. I think I even desired it more than goodness.

At the same time, I recognized that authenticity could be costly. I came to realize the strong incentives for hypocrisy in the world. And came to understand just how much incentives matter. It made me less judgmental, but I still loathed hypocrisy. I saw no redeeming virtue in it. In hindsight, it’s hard to believe how naive I was.

In time, I came to accept that hypocrisy was part of our nature. Ralph Waldo Emerson wrote, “Every man alone is sincere. At the entrance of a second person, hypocrisy begins.” Every man. Perhaps it’s no one’s fault.

Something I read recently, authored by Paul Craig Roberts, caused me to question further whether I had been too hard on hypocrisy — on myself and others. Mr. Roberts wrote:

There is a vast difference between proclaiming moral principles that one might fail to live up to and proclaiming immoral principles that are all too easy to keep.

We live in an era in which the proclamation of immoral principles is commonplace. Indeed, we even elected an immoral man to be our president. I’ve tried to find some redeeming virtue in the man. But I can’t.

But it’s not only him. It’s everywhere around us. In the corporate world, immorality thrives under cover of the principle of shareholder value, which supposedly cleanses all unclean deeds. But you find it in the nonprofit world, too. And among nations. And among religious folk. Especially religious folk.

President Trump makes my dad look really good. Yes, my father was a hypocrite. Probably no worse than me or most others, but a hypocrite nonetheless.

However, he was a man who proclaimed moral principles. And who lived up to most of them, most of the time. He didn’t love me well, but he taught me well. And probably did the best he could do.

I could have done worse. Much worse. I could have been reared by people who proclaimed immoral principles. By people whose sins dwarfed the sin of hypocrisy.

I was fortunate.

I used to think there weren’t many things worse than hypocrisy. I suppose it’s just one of many things I thought I knew that proved to be untrue.

The Newest War

I think yesterday will mark the beginning of our newest war. Yesterday is the day the Trump Administration announced new stiff tariffs on solar cell imports and washing machines. China and South Korea will not be pleased. Nor will American consumers, who will end up paying more for electricity and home appliances. Some people will be pleased though. They include stockholders in Whirlpool, domestic solar cell producers (if there are any), and some people who will end up being hired by Whirlpool, although their numbers likely will be dwarfed by the number who lose their jobs in the solar industry. In short, there will be some winners and some losers in the short term. The long term is a different matter.

We’ve been down this path before so we have some idea what to expect. In fact, a lot of what’s happening these days is reminiscent of the years leading up to, and the early days of, the Great Depression. Then, the nation decided to pull back from its open border policies, both in commerce and immigration. It seemed like a good idea at the time, at least to some people. But as we know, it didn’t turn out so well.

That’s not surprising. For when one nation takes actions that hurt other nations, it’s reasonable and predictable to expect retaliatory measures. And that’s why I suspect yesterday marked the beginning of the newest war: it could well be the day the 21st-century trade wars commenced.

The problem with trade wars isn’t only economic. The larger problem is that they often lead to military wars. And casualties. And that’s exactly where I fear we’re headed. I will be surprised if we don’t find ourselves at war with China in my lifetime. And perhaps Russia, too.

Meanwhile, our stock market is looking a lot like the market in the 1920s. And we know what happened in 1929. I’m not predicting a repeat performance, but it’s safe to say there are risks that are being minimized or ignored. And that’s never a good thing.

Given extraordinarily high asset values and a highly leveraged corporate sector, along with unprecedented peacetime sovereign debt levels, it’s easy to imagine an eventual outcome that entails a lot of financial carnage, especially against the backdrop of economic inequality the likes of which we haven’t seen since the 1920s. Yet we don’t seem to be concerned.

The nation chose to go in a belligerent, self-centered, tribalistic direction in the last election. It was a foolish decision, but it was the decision we made. And now we’re seeing it play out.

The worst is yet to come. Nonetheless, I suspect most of us will come through it just fine. But some of us won’t. And it’s hard to know today who the winners and losers will be. We just have to keep our ears to the ground and be quick to react, I suppose.

We’ll do our best for you, Vera. And for your parents and your uncle Andrew. I suppose it’s my main mission in life now. I consider myself fortunate to have all of you in my life. Fortunate indeed.

Tired of the Games

Naval Ravikant is always worth listening to in my opinion. I recommend checking out his recent Periscope talk on Twitter.

Naval is a techie but also a modern-day philosopher. He said something in this talk that was timely for me. He said he’s “tired of the games.” That’s how I feel.

Consequently, he’s living life one day at a time. For people like me, that isn’t always easy. We’re goal oriented. We respond to challenges. So getting up without goals, and simply living in the presence, can be disconcerting at times. Yet I am so tired of the games and, at this point, have no desire to return to the games. The pursuit of money and achievement is no longer sufficient motivation.

I’m reminded of this when I’m speaking with clients who are consumed by their work: increasing prices, improving efficiency, improving margins — often through rationalizing (a fancy word for laying off people). I hate the way people talk about reducing their workforce. The lack of humanity is so profound. I recoil at what the pursuit of money and status has done to us.

More fundamentally, though, I’m not looking for more things to do. Yet I’m very much stuck in the future. It’s hard for me to live in the presence.

Yet that’s where I want to be. Need to be. It’s where I can find the deepest happiest. But it can be boring at times. Yet the alternative no longer holds appeal.

I’m tired of the games.

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.