Thursday, June 22, 2023

Morning Note: Products of Our Environment

Believe it or not, I'm struggling this morning to come up with yet another way of articulating the same old story here on the blog... Man! I'm looking forward to when conditions change and I can begin singing a different tune! 

Nevertheless, patient I'll remain, as, believe me, haste makes for some bad decision-making when we're talking investing!

Indeed, patience is absolutely critical to long-term investment/risk management success... As is knowing oneself -- one's idiosyncrasies, one's ideology, one's innate fears, one's biases, etc. -- and knowing how to transcend the characteristics that may hamper one's ability to see the world as it is, as opposed to how one wants, or fears, it to be.

So, lacking any pithy idea for this morning's note, I'll change it up a bit and share a popular article I wrote during Nick's freshman year in college (had to be 2007), which I featured as Day-31 in that little daily devotional I published back in 2013... 

While in reading it this morning, these many years later, I cringe at my then arrogant tone (I too was much younger then), the ultimate message jibes with the above:

DAY 31: Products of Our Environment

The measure of one’s intellect is no match for one’s predisposition.

With bent brow he peers above wire-rimmed spectacles resting near the tip of his nose, his gaze descending upon three dozen young frontal-lobe-underdeveloped college freshmen. With blatant contempt for the values that built a great nation and provided him a platform to stand above the impressionable, the pretentious PhD addresses his barely post-adolescent pupils.
With incomparable eloquence he marvels the lower-classmen. His charge is to teach, his objective to impeach. To impeach a commoner’s allegiance to his country, to a flag dressed in stars and stripes. He exposes capitalism for how he sees it—a system of selfishness, of ruthless abandon, of obscene opulence. There are no subtleties in his reproach.
He offers up the life of one William Gates, the near-wealthiest man on earth and the product of the dark-sided capitalism. He implores his students to consider his rhetorical query: “How can we allow a single human being to earn literally hundreds of millions of dollars in a single year while others toil for a workman’s wage?” Lacking sufficient knowledge, or courage, not a student would challenge the pompous professor.

Later that evening, as my then eighteen-year-old son shared his story, I was amazed to find that I could actually feel my pulse pounding from within my eyeballs. While I was fully aware that my offspring would encounter ideologies that wouldn’t always jibe with the teachings of his old man, I was nonetheless taken aback that this econ professor would dare exploit his position to promote his warped ideology.
I proceeded to equip my son with the obvious retorts, such as, “How can we allow a college professor to knock down six figures when we have kindergarten teachers working their bottoms off for less than half that amount?”

I was considering how I might personally lambast the conceited collectivist for imposing his personal agenda onto my young son and his classmates when the obvious occurred to me: there was no way I nor anyone else would change this sadly misguided individual’s mind or how he addresses his students. And besides, he’s just an unfortunate product of his environment—perhaps a disciple of one of his own college instructors. Challenging him directly or petitioning for his dismissal for pushing his politics would be a profound waste of time and energy. In fact, in a way, I’m kind of glad he’s there. In the case of my son, he’s learning that ignorance is ignorance, even when it’s well-credentialed and dressed in fine eloquence.
Of course I’ve nothing to worry about; Nick is an independent-thinking, proud-to-be-a-capitalist young man. Either that or he is, in the certain opinion of any passionate socialist, a product of his environment—a disciple of a delusional free-market-capitalist father. And I’m okay with that.

So, I, the capitalist whacko, think the socialist professor is nothing more than an extension of his ideological upbringing, and he would think the same of me.  And you know, maybe we’re both right—perhaps we are each, when it comes to our politics, largely products of our environment.
And to be perfectly honest, while I’m no psychologist, I do believe that to be the case. In fact I’m reasonably certain this condition afflicts virtually all walks of people— and trust me; the measure of one’s intellect is no match for one’s predisposition. Years spent at our nation’s greatest universities can be practically wasted, for when the academic emerges, his insight into the world at large is first and foremost filtered through the political veil that has been engrained into his very being.
Therefore, in the case of my son’s teacher, again, there’s absolutely no changing his mind. And the same goes for me. There’s absolutely nothing that will change my belief in free-market capitalism.
Might as well throw in the optimistic conclusion while I'm at it:
In the opinion of the proctor in my Day 31 essay, the United States is heading down a path of destruction, which, by the way, is what I hear regularly from some of my capitalist-minded brethren as well. The distinction being that the collectivist-minded professor believes capitalism will be our doom, while the capitalist fears we’re heading toward a socialistic dead-end. And while I’d expect such cynicism from the professor, I’m always a bit surprised when I hear it from one of my patriotic pals.
Truly, to suggest that this great country’s entrepreneurial foundation, having survived all that the past two-and-a-quarter-plus centuries could dish out, can’t survive a political term or two is, quite frankly, preposterous. Yet, all too often, I hear those who would profess their faith in the American way brood on as if the next piece of legislation will spell our demise.
So with all due respect, if you have found yourself complaining in a similar fashion, while I understand your concern, you have got to be kidding me! Of course this is just me filtering the world through my environmentally influenced ideology. And, you know, I’m okay with that. 
It is my sincerest hope that the past month has brought you some insight into how the political process impacts the economy. While at times things may seem hopeless, while indeed the pendulum will continue to swing between ideologies, I believe there’s a bright future in store for the free-market ideal— I suspect I’ll be publishing more on the subject in the years to come. 

Asian stocks were mostly red overnight, with 11 of the 16 markets we track closing lower.

Europe's getting hammered so far this morning, with all but 2 of the 19 bourses we follow trading down as I type.

Amid ugly breadth (70% of SP500 members in the red) US equity averages are mixed to start the session: Dow up 22 points (0.07%), SP500 up 0.16%, SP500 Equal Weight down 0.45%, Nasdaq 100 up 0.64%, Nasdaq Comp up 0.50, Russell 2000 down 0.55%.

As for yesterday's session, US equity averages closed lower: Dow by 0.3%, SP500 down 0.5%, SP500 Equal Weight down 0.9%, Nasdaq 100 down 1.4%, Nasdaq Comp down 1.2%, Russell 2000 down 0.2%.

This morning the VIX sits at 13.58, up 2.88%.

Oil futures are down 2.76%, gold's down 0.72%, silver's down 1.36%, copper futures are up 0.16% and the ag complex (DBA) is down 0.97%.

The 10-year treasury is down (yield up) and the dollar is up 0.12%.

Among our 34 core positions (excluding options hedges, cash and money market funds), 8 -- led by VNM (Vietnam equities), DBB (base metals futures), Johnson  & Johnson, XLK (tech stocks) and Dutch Bros -- are in the green so far this morning... The losers are being led lower by URNM (uranium miners), Albemarle, OIH (oil services companies, EZA (South African equities), SLV (silver).

"No other characteristic of great investors is as important to their success as their willingness to ignore conventional wisdom..."
--Rubenstein, David M.. How to Invest: Masters on the Craft 

Have a great day!

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