philosophy

A is A

© Can Stock Photo / hurricanehank

At the height of ancient Greek civilization, the philosopher Aristotle taught the Law of Identity. A is A. Everything has a single identity, not two or more, and two different things do not share the same identity. A is A. A dog is not a cat; an orange is not an orangutan, an olive is an olive.

One wonders what has been lost through the centuries, when considering Federal Reserve Bank policy. The Fed, as it is known, is charged with a dual mandate. It is supposed to promote maximum employment and stable prices.

If Aristotle were alive today, he might teach that stable prices are stable prices. This would be in accordance with the Law of Identity. A thing is what it is. Yet the Fed has adopted a 2% inflation target, supposedly in accordance with its mandate of price stability1.

At 2% inflation, a dollar today buys only 98 cents worth of goods next year and about 96 cents the year after. Prices would double every 35 years or so, under this inflation target. Over the course of a century, a dollar would shrink to about 12 cents in purchasing power. In what sense is this ‘price stability?’ It violates the simple precept that Aristotle taught 2,300 years ago.

One error some people make is presuming the things we can measure are important, and the things we cannot measure are unimportant. Higher dollar volumes of activity are presumed to be good. So when productivity or technological improvements reduce prices of things we purchase and use, we are obviously better off—but conventional economic statistics may indicate otherwise.

There are ramifications for us as investors. The threats to our prosperity from inflation may be discounted by the Federal Reserve. The advantages of technological progress are understated. We think this means we need to be more sensitive to the damage that future inflation might do to our wealth, and the opportunities presented by technological progress.

Clients, if you have any questions about this or any other pertinent topic, please email us or call.

1Board of Governors of the Federal Reserve System, https://www.federalreserve.gov/faqs/economy_14400.htm


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results.

The opinions expressed in this material do not necessarily reflect the views of LPL Financial.

The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

This is a hypothetical example and is not representative of any specific investment. Your results may vary.

The Meaning of Money

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Is money the root of all evil? Or is it what makes the world go ‘round? What IS the meaning of money?

Most of us receive most of the money we will ever make in exchange for our efforts. Our labor, our knowledge, our skills may be sold to employers if we are workers. They may be sold to customers or clients if we are in business. For this reason, in large part, money is the residue of the sweat we make while providing value to others.

What could be more noble than this symbol of being worthwhile to the rest of society?

In this framework, a 401(k) balance at retirement may be the end result of a lifetime of effort. An inheritance might represent two or more lifetimes of hard work. What could be more worthy of our best efforts to preserve and extend it?

While its sources are of interest, the uses of money have come into sharp focus for me recently. For the most part, my material needs are few. But money has become a vital factor in securing the health and welfare of loved ones.

The recent severe weather has resulted in hardship, pain, suffering and sometimes death for those who could not avoid its effects, or afford backup systems to meet special health needs. Oxygen concentrators require electricity, which sometimes fails. Refrigeration is needed for some kinds of life-sustaining medicine. Mobility is required to avoid some dangerous situations. All of this takes money.

When the power failed, we had a backup generator. When the storm threatened, we could leave the area. When the oxygen concentrator failed, we had another source. All of these things take money. And we had it.

Cathy’s care for children and work in the corporate world produced some of it. My efforts to help people with their plans and investing made some of it. Being good stewards of the amounts we were able to save provided some of it. The money came from worthy efforts, and it does important and worthy things for us.

Is money (or more properly, the love of money) the root of all evil? I don’t think so. It may be the evidence of lives of service and thrift. Luck? Certainly good fortune plays a role. And ill fortune surely plays a role in some people not having much of the stuff. We each must come to our own understanding of the meaning of money. This is mine.

Clients, if you would like to talk about this or any other pertinent topic, please email us or call.


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

Investing involves risks including possible loss of principal.

We Are All Connected

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Much has been written about the polarization of American society. While noisy disagreement and entirely human behavior has always been part of our fabric, the whole “us” versus “them” theme seems to be a bigger part of our social discourse. It seeps into our politics and economics too, it seems.

Yet everything is connected. What many miss are the interests we share.

If you hope to be collecting Social Security benefits many years into the future, you might have an interest in making sure that each child today grows up to be a healthy and educated and productive citizen. Why? They will pay more Social Security taxes if they do—and better work towards your financial future. You are connected to the next generation.

Some seem to assume that big companies are always out to get them, and favor any new regulation or restraint that might be proposed to limit their activity. Yet if we needed to fly across the country, would we dare do so in an artisanal airplane, built with locally-sourced materials by a local craft person? You are connected to big companies.

Likewise, the largest oil companies in the world routinely spend more than 96% of their revenues helping people get back and forth to work, powering their homes, and providing materials used in everyday life. If you use gasoline or electricity or plastic, you are connected to them.

“Wall Street”—to some, the only villains in the last financial crisis—presents another example. Communities building schools or sewers, employers building facilities or buying machinery, teachers hoping to retire on their pensions, people saving for retirement or living on their capital in retirement: all these depend on services from the securities industry. We are all connected.

Is this an argument for turning a blind eye to bad behavior or hurtful policies or injustice or anything else that cries out for change? No way. We each should challenge the things that deserve to be challenged, and support the things that deserve to be supported. We won’t all agree on which is which.

But perhaps our differences would more often get us to a better place if we each kept in mind that everything—and everyone—is connected.


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

The Meaning of Life

© Can Stock Photo / Toniflap

If you ask Google “What is the meaning of life?” you’ll have more than 25 million search results from which to choose. We cannot answer the question for you, but the question and its answer influence your plans and planning.

Whether we think about “the meaning of life” or not, each one of us has fundamental values and principles that shape our words and deeds and lives. If we are to rely on one another, we probably need some common ground on these values and principles.

We say this because strategy and tactics in planning and investing arise out of our values and principles. If there is some agreement on values and principles, then our strategies and tactics will likely make sense to everyone involved. But if we have completely different ways of looking at the world, then we would probably have different ideas about strategies to deal with opportunities and risks as they arise.

We work with a diverse clientele, people from all walks of life in every kind of circumstance, across the country. You have your hopes and dreams; our object is to understand them, and figure out what role we might play in making them more likely to happen. You may understand ‘the meaning of life,’ or perhaps like us you’ve concluded that life is a journey on the road to understanding. Either way, aren’t we all trying to make sense of it?

Whatever one might think about the meaning of life, it is certain to be better if we listen to one another, respect the intentions and plans of the thoughtful people around us, and help each other get where we are trying to go.

Although it may not look like it, that last sentence is our business plan. It isn’t like the ones you might find in a business school textbook. There aren’t any numbers or growth objectives or profit goals. Simply put, the better off our clients are, the better off we are likely to be.

That has meaning in terms of the resources we need to serve you, personnel and training and equipment and facilities. It shapes how we spend our time, researching markets and managing portfolios and talking to you and communicating in other ways. And it is a big factor in making our practice sustainable.

What is your fondest wish? What are your major objectives? What is the meaning of life? If you’d like someone to listen to your answers, please write or call. It’s what we do.

The Ant and the Grasshopper, Revised

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Most of us are familiar with Aesop’s fable of the ant and the grasshopper: the hard working ants slave away all summer building nests and storing food while the lazy grasshopper idly eats and makes merry. Each one calls the other foolish: the grasshopper tells the ants they should relax and enjoy life, while the ants admonish the grasshopper to work harder and prepare for winter. In the end the ants have the last laugh when winter comes and they have food and shelter while the grasshopper has none.

It should be noted that Aesop was not a bug expert. If he was, he might have realized that grasshoppers only live a few months and do not survive long enough to even see winter. Knowing this, the grasshopper was actually quite wise to ignore the ants’ advice. He lived his life to the fullest, with no time wasted on unnecessary labors.

The true moral of the story is this: it is equally foolish to hoard wealth we’ll never use as it is to squander wealth that we’ll need in the future.

None of us knows the date that is going on our death certificate. We should strive to emulate both the ant and the grasshopper, because we never know which one we’ll wind up as. Like the ant, we should work hard and save wisely to prepare for the future. But like the grasshopper we should also enjoy what we have, while we have it. We need to have a little fun every day, because we never know how many days we have left.