ESSENTIAL MATTERS
by Bill Bonner
"We celebrate the beginning of Holy Week, with all its mysteries. But do not forget the essentials of
Christ's mission and his teachings. We don't have to search high and low for them. He told us: Love
God... and Love thy neighbor. That is what really matters."
Pere Marchand
Sunday's sermon
"What really matters?" I asked our gardener on Saturday.
Mr. Deshais spends most of his time alone - working in the garden by himself. He has no computer screen
in front of him - nor any CNBC or CNN to shape his thoughts. He has only himself - and the forces of
nature: the clouds overhead, the soil, the plants.
Mr. Deshais has time to think and not much more than his own thoughts to occupy his brain.
So, I decided to try out my new philosophy on him.
The Daily Reckoning sneaked into philosophical discussion over the last two weeks, dear reader -
like a teenager who takes up smoking. We sputtered and coughed out existentialism, relativism and
descriptivism. But just talking about them made us feel cool.
And so, without meaning to do so, we discovered a new side to ourselves - a new image... we became
philosophers.
I am still out in the countryside - while the children enjoy a two-week vacation from school. No
one south of the Loire nor west of the Hudson has any use for philosophy, but I can hardly wait to get
back to Paris. Perhaps I will rub a little burnt umber on my fingers and cough occasionally... or even
hold a hand-wrapped cigarette in my fingers... and jab at the surrounding air with it from time to time
to make my point. Paris loves philosophers - the more obscure and ridiculous, the better.
I will make Le Paradis cafe my regular hangout, like Sartre at Le Dome. How perfect! People will know
that I can be found there at almost any time of the day or night - a glass of wine in one hand... an unlit cigarette in the other. Besides, it's close to the office so I can sneak away from time to time and
do some work.
Oh, the philosophy itself... oh yes... that. Well, there's the weak spot of this plan. My philosophy -
which I share with you before releasing it to the public - has evolved from our insights about the stock market and how it works. Yes, this is probably the first major philosophy to sprout from financial advice - and probably the last!
Over the last year and a half, we have noticed:
1. Limitations of rational thought. We think we consider everything rationally and make decisions based on reason and available information - as the existentialists claim. But in fact, it is the heart, not the head, that is in command. The heart distorts logic and information to its own purposes. In short, we believe what we want to believe. "The head is merely the heart's dupe," said La Rouchefoucauld.
2. An inability to look into the future. When you put a gun to your head and pull the trigger, the results are predictable. But in complex systems - such as an economy, a stock market, or an individual life - the future is unknowable.
I quote the celebrated economist, John Maynard Keynes, on this point (the Daily Reckoning is still a financial service, after all):
"The outstanding fact is the extreme precariousness of the basis of knowledge on which our estimates of
prospective yield have to be made. Our knowledge of factors which will govern the yield of an investment
some years hence is usually very slight and often negligible. If we speak frankly, we have to admit
that our basis of knowledge for estimating the yield ten years hence of a railway, a copper mine, a
textile factory... amount to little and sometimes to nothing..." - from The General Theory of Employment, Interest, and Money.
3. Even the present and the past are largely unknowable. The world is awash with 'information' - so much that it is impossible to master it all.
Instead, people pick and choose bits and pieces of information that suit their purposes. The new "Information Age" does nothing to change this. It merely increases the costs of getting rid of unwanted information.
4. The perversity of markets. Not only can you not know what the future holds, but attempting to figure
it out actually distorts it! People searching for a Big Bottom in the stock market, for example, are unlikely to find it. Why? Because the Big Bottom only comes when people are so fed up with stocks that they stop looking for it.
5. The paradoxical and surprising nature of life itself: as I have said many times, investors don't get what they expect, but what they deserve. This is true in the rest of life as well. Patience, modesty, hard work, greed, fear, hubris and other virtues & vices pay off. People get what they've got coming - usually. Even love comes not to those who seek it, or horde it, but to those who give it away freely.
Life is full of surprises.
Many philosophies are founded on a 'theory of knowledge.' I take as my starting point a 'theory of
ignorance': it is everywhere and in everything.
You know neither how your stocks nor how your marriage will work out. Most of what you hear is nonsense. Most of what you read is moronic. And most of the people you meet are fools. And most important: the people who meet you think the same of you as you do of them. And you're both right! We're all fools - and all completely ignorant of the things that matter most.
"The key thing," said Mr. Deshais, "is to get into sync with the phases of the moon. That's the essential. If you ignore the moon when you plant your garden, you will not get a very good harvest.
And if you graft your fruit trees on a new moon - you will get very good growth, but very little fruit."
The key to the new philosophy of Essentialism: whatever you are doing, find the key principles, the rules, the essentials - and stick with them. More on
Essentialism on another slow news day.
Your essential essentialist,
Bill Bonner
P.S. Alas, my new philosophy is too sensible. It will never catch on.
MARKET REVIEW: Bizarro, USA
While there are some features of Australia that puzzle a visitor from the States – driving on the wrong side of
the road, drains circling the wrong direction, unbelievable heat in the middle of March, Australian
rules football – there is one thing that is remarkably familiar: debt.
Australia is a credit-financed society. Banks and finance companies "queue up" to get at the average
Aussie's money like 9-to-5ers at the pub during happy hour. "Levels of personal debt are over 40 percent of
spending," says one reliable source. "In 1999 the average household debt was $26,500 and Australians owed
unprecedented amounts on credit cards (an average of around $3,000 per person) and personal overdrafts." The
year 2001 saw an unprecedented level of bankruptcies.
And, as with the rest of the world, all eyes down under are on Wall Street. "Economic recovery" in the US means,
Australians seem to believe, the good times can keep rolling here, too.
Meanwhile, a profit warning from McDonald's, that great bastion of the Western world, helped to smack stocks
down on in New York on Friday... just at the moment when US investors are beginning to fear the Chairman will
yank the IV from their veins. The Dow closed 179 lower for the week to 10,427 on "worries" that the Federal
Reserve will soon start raising interest rates.
The Nasdaq also fell Friday... down 16 for the week to 1,851. The S&P 500 index shed a sliver on Friday to
round out the week at 1,148.
Cheers from down under,
Addison
 |
Previous Notes |
 |
|
 |
|
