perception

What Are You Looking At?

© Can Stock Photo / sanayamirza

In planning, we take a look at the world in which we operate. Our plans need to be grounded in reality to have a chance to work out. If I plan to learn to fly by flapping my arms vigorously, the laws of biology and physics are going to have an impact.

When we look at the world, two kinds of things are especially pertinent. Challenges are the obstacles to our success. The stuff in between the challenges are possibilities. The Wright brothers evidently spent no time trying the arm-flapping thing, or fussing about the challenges of physics and biology. Eventually, one of their possibilities was converted into the accomplishment of flight.

The way some people talk about challenges, fighting them or overcoming them seems to be a key element of success. In that line of thinking, challenges occupy a central role.

I have been in a situation where the challenges seemed impossible. In fact, many have failed to overcome the same kind of challenges. Reflecting later on this chapter in life, a surprising realization emerged.

Under the pressures of the situation, I had no time to think about anything but the possibilities. After the initial planning, the challenges turned out to be totally irrelevant.

The realization: when you focus on your possibilities, your challenges disappear.

Thus the question in the title. What are you looking at? Your focus, your perception, these things change the world.

We’ll be thinking about this more. There are applications to other parts of our work for you. In the meantime, if you would like to talk about this or anything else, please email us or call.

Life in Four Dimensions

© Can Stock Photo / fredmantel

Kurt Vonnegut wrote about a race of beings who could see in four dimensions. The fourth dimension is time. “All moments, past, present, and future, have always existed, always will exist.” They could look at different moments from the past or future the way you and I might look at a stretch of the Rocky Mountains.

This is an interesting way to think about the work we do together with you, planning for the future. It requires us to see the future we want, and do what is needed to make that plan potentially become reality. People in their working years need to see ahead a decade or two or three, and envision the future.

Our investment process relies heavily on history, being able to see the past. Most conditions in the economy and markets repeat from time to time in one form or another. We can better understand these things when we know what has gone on before. In other words, seeing the past may provide clues that help us in the present.

The Vonnegut quote contains an implication with which we strongly disagree. The idea that the future is already set implies that nothing we do matters.

In fact, our whole philosophy is that the choices we make are crucial in shaping the future. There are many things beyond our control, but we control our actions. We do not control the future, but we can work to make the best things more likely to happen.

Putting this all together, we can formulate our own idea about life in four dimensions: learn from the past to shape the future we desire. When we work together, we have a better chance to pull this off.

Clients, if you would like to talk about this, or anything else, please email us or call.

Review and Outlook: Perception and Reality

© Can Stock Photo / sborisov

The gap between perception and reality is a key concept for us, as contrarian investors.

Year-end is a logical time to stand back and assess the year just ending, our current situation, and prospects for the next year. Many others ably describe the facts and statistics and the major themes. We will look at a pair of critically important things that may have fallen into the gap.

We believe the president has a flawed understanding of global trade. He recently spoke again of disastrous trade deals, massive profits to other nations, and millions of American jobs lost. The reality is, trade lets us get more for everything we produce, and pay less for everything we consume. It enriches America and the world.

We aren’t here to argue politics. But we are here to understand economics and markets as best we can, for your benefit and ours. The markets may be underestimating the potential for damage to the economy, corporate profits, employment, and stock prices if the president’s rhetoric ever translates into actual policy.

The second concern is about Congress, and a problem to which both parties have contributed (in my opinion.) The American system of governance historically produced major legislation through a bipartisan process. The Civil Rights Act, Social Security, Medicare, and the Tax Reform Act of 1986 were all products of give and take between members of both parties. All of these endured.

Without debating the merits of either, the Affordable Care Act and the recent tax legislation are the products of a partisan process. Both featured closed-door negotiations by small groups, deal-making that benefitted narrow groups to win votes, and straight party-line votes that produced less-than-perfect outcomes.

The ACA has been under attack since it was passed, and is now being unraveled by the opposition. The same thing could happen in the years ahead to the tax legislation. Uncertainty about tax policy may create problems for companies and the economy.

The short version of all this is that we are optimistic—as always. But our eyes are wide open. We will continue to diversify into sectors that may be less affected (or unaffected) by these issues. This is consistent with our core principles of seeking the best bargains and avoiding stampedes.

Clients, if you would like to discuss these issues further, or have anything else on your agenda, please write or call. In the meantime, we are enjoying the results of 2017 and hopeful about what will happen in 2018.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.