THE FINANCIAL PHILOSOPHER

Global Warming: An Existential Lesson in Risk & Consequence

"The supreme function of reason is to show man that some things are beyond reason." ~ Blaise Pascal (1623-1662)

With the Global Warming debate front and center this week, I am reminded of how arguments on the subject find themselves rooted almost entirely in science and risk analysis with little consideration of consequence.  While I am well aware that ideology and money, unfortunately, play large roles in shaping the scientific arguments, the Global Warming debate is most prudently framed by an analysis of uncertainty and consequence.

Perhaps the greatest lesson in uncertainty and consequence is found in Pascal's Wager:

"Belief is a wise wager.  Granted that faith cannot be proved, what harm will come to you if you gamble on its truth and it proves false?  If you gain, you gain all; if you lose, you lose nothing.  Wager, then, without hesitation, that He exists." 

Pascal's Wager underscores, quite effectively, the human folly of not prudently measuring the consequences of our choices in relation to their potential outcome.  To Pascal, the consequences of a choice may be far more important than the likelihood of its outcome.

To frame the Global Warming decision further, consider a few choice excerpts from one of my favorite pieces on risk and uncertainty:

Typically, in situations of choice, risk and uncertainty both apply.  Many situations of choice are unprecedented, and uncertainty about the underlying relation between cause and effect abounds...

Although risk is quantifiable, uncertainty is not.  Rather uncertainty arises from imperfect knowledge about the way the world behaves.  Most importantly, uncertainty relates to the questions of how to deal with the unprecedented, and whether the world will behave tomorrow the way it behaved in the past.

To summarize, decisions are not always best made in light of empirical study.  In the face of uncertainty and the unprecedented, the prudent decision is simply to err to the side of caution. 

If humans take the position that their activities are adversely affecting the earth's atmosphere and choose to change their behavior, what is the worst that can happen, even if they are wrong in this assumption?  If, conversely, humans take the position that their activities have no adverse impact on the earth's atmosphere and choose not to change their behavior, what is the worst that can happen if they are wrong?

Certainly, Pascal would say that wagering on God's existence, even if it can't be proven, is still the most prudent, considering the potential outcome if one's assumption is wrong.

In other words, if you find yourself on the wrong side of a particular argument or decision, which side would you rather be on?  Which has the worst potential outcome or consequence? 

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Related:

A portion of this post consists of edited portions of a previous post, titled Finding God in Behavioral Finance....

For a wonderful graphical display of the opposing views on Global Warming, check this large image from Information is Beautiful: Climate Change Deniers vs The Consensus (hat tip to The Big Picture)

There is no such thing as 'Financial Freedom'

"Man has the power to act as his own distroyer -- and that is the way he has acted through most of his history." ~ Ayn Rand

What is the greatest deception in the history of finance?  Is there such a thing as "financial freedom?"  I wrote a post over at The Big Picture that makes an honest attempt at answering these questions (or at least to provoke the answers within your own mind).

You may read the post by clicking on this link:  The Greatest Deception in the History of Finance.

If you have an extra moment, please join in the discussion at The Big Picture that follows the post in the "Comments" section.  The blog author (Barry Ritholtz)'s readers often have interesting insights into everything from psychology to investing to economics to philosophy (just like you)!

If you are new here, to The Financial Philosopher, you might try some of the following links to posts related to "The Greatest Deception..."

The Financial Fallacy of Patterns, Causation & Correlation

Are Financial Plans Illusions?

(Why You Need to) Get 'Rich' Quickly!

Quotes on Contentment

The Financial Fallacy of Patterns, Causation & Correlation

"Nobody goes there anymore.  It's too crowded." ~ Yogi Berra

Is last week's Yankees win a bullish indicator for stocks?  Stock prices are at a 13-month high, does that mean that the market will continue to go up in the short-term?  Or are stocks due for a correction?  Do the answers to these questions really matter to your investment strategy?

Perhaps the greatest strength and simultaneous weakness of the human brain is its hard-wired tendency for pattern recognition.  Certainly this heuristic wiring aided in pre-historic man's search for food and avoidance of danger but does it translate to prudent financial decisions?  Not necessarily. 

In fact, pattern recognition might be the root cause of most economic and market bubbles (and bursts), including those leading to the current financial crisis. 

Those of you readers who are traders might counter my point by saying that momentum trading is real and can be quite foolish to ignore.  Nothing attracts a crowd like a crowd!  While this is true -- the crowd is "right" more often than it is "wrong" -- it also opens the door to peril -- to the confusion between causation and correlation and to the illusion of control.

"Death is caused by swallowing small amounts of saliva over a long period of time." ~ George Carlin

Humor, which I believe to be a form of philosophy, sure does have a way of illuminating the folly of human thought and behavior, doesn't it?

At root of searching for patterns and confusing causation with correlation is the philosophic term, fallacy, which is simply an instance of poor reasoning. 

Perhaps the most common fallacy, with regard to investing, is the gambler's fallacy.  For example, if a coin is tossed three times and it lands on heads each time, a large majority of people will detect a pattern and reason that the fourth toss will also be heads.  Perhaps a smaller group might reason that it will land on tails, citing that the odds are against another toss landing on heads.  Reasoning for both of these bets is fallacious because the chance of a coin landing on heads or tails is always 50%, regardless of the outcome (or number of) previous tosses.

With regard to investing, do Summer months cause stock prices to fall or is it just a period of time during most calendar years that is coincidental with weak stock market conditions?  For example, the "sell in May and go away" phrase is based upon historical stock price movement (patterns) and suggests an investor avoid stocks from May through October.  This year, however, the market, as measured by the S&P 500 jumped more than 18 percent from May 1 to November 1.

Of course, daily movement of the stock market is no toss of the coin and there are certainly times where technical analysis is more prudent than fundamental analysis.  Furthermore, there is another counter-argument to be made, with investing and trading, that there is no real reason to distinguish between causation and correlation. 

Essentially, the investor is looking for probability of an outcome. Regardless of how irrational the behavior may appear, all data must be considered because crowds often act irrationally.  If the crowd anticipates higher stock prices because the Yankees win the world series, then this event may feed more of an illusion that conditions are favorable to buy stocks, thus becoming a self-fulfilling prophecy of sorts.

"Too keen an eye for pattern will find it anywhere." ~ T.L. Fine

In summary, and as with everything, there is a balance to be found but this balance is only accomplished through self-knowledge and self-awareness.  To prevent a fallacious inference, one must be aware of the brain's tendency to find patterns; to take action on the pattern-based decision; and then to be given the illusion of control if the action is affirmed or "proves to be correct."

Put simply, do not be fooled by patterns!  In fact, don't even look for patterns because you'll find one every time and everywhere you look!

Contrarian View: V-Shaped Recovery

"Excess generally causes reaction, and produces a change in the opposite direction." ~ Plato

Humans like to watch for (and make decisions based upon) patterns.  This behavioral trait is certainly no exception in the world of capital markets and economics.  The most watched pattern at the moment might be the current and projected shape of the recession.

Economists like to describe the shape of economic recessions as V-shaped, U-shaped, W-shaped or L-shaped, the letter shapes of which reflect the respective form taken in a graphical illustration.  It is important to note that economists have not proven to be forecasters by nature and that traders and investors in capital markets often believe the consensus view of economists to be more wrong than right.

A recent BusinessWeek article, The Recovery: It's The Herd Vs. History, noted that the average forecast of economists calls for modest growth in real gross domestic product of 2.7% over the next year.  In fact, the NY Fed President, Bill Dudley, says there will be no V-shaped recovery. 

History, however, suggests that deep recessions are followed by strong short-term recoveries -- stronger than economists are now forecasting.  Additionally, the stock market and other indicators of future economic activity seem to be forecasting a V-shaped recovery:

As you can see, at least at the moment, the stock market, along with other leading economic indicators, is pointing toward a V-shaped recovery, which contradicts most of what conventional wisdom has been saying for several months.  The same BusinessWeek article, by James C. Cooper, goes on to make a few other observations that counter current and recent expectations of economists:

...in the first year after the severe slumps in 1973-75 and 1981-82, real GDP grew 6.2% and 7.7%, respectively.

The average number of quarters for GDP to regain its business-cycle peak in the past nine recoveries [is 1.9 quarters].

Like a rubber band, the economy snaps back in proportion to how far it was pulled down, as consumers finally upgrade old laptops and buy new clothes, and businesses replace inventories and worn-out equipment.

The common argument [against a stronger recovery] is that the usual rebound effect will be limited by the aftershock of the financial crisis:  Credit growth is plunging, because households need to unload debt and save more amid lost wealth and tight credit...

Early in recoveries, the growth of household income is a more important impetus to spending than credit.  As job losses fade, pay from wages and salaries, about 60% of aftertax income, will turn up, as it did in July for the first time in nine months.

My non-quantitative/behavioral/philosophical perspective is that one must be careful to look at any economic cycle, especially this one, as "average."  At the same time, one must be careful to make the assumption that consumers, who make up nearly 70% of economic activity, will act according to scientific forecasts.

At present time, consumers appear to be more rational than usual:  They are spending less than they earn and are largely avoiding debt.  This would support the consensus view of economists that the recovery will not be V-shaped.

Complacency, however, must never be underestimated.  As the memory of the financial crisis becomes increasingly replaced by months of economic growth and growing 401(k) balances, consumers will return to their irrational behaviors of spending more than they earn and funding their life today with tomorrow's money.  This would support a V-shaped recovery.

"The difference between what the most and the least learned people know is inexpressibly trivial in relation to that which is unknown." ~ Albert Einstein

Simultaneously, one must consider the unknown and make a conscious effort to resist taking action upon the "easy forecast."    When an expectation seems obvious or when an answer is easy to come by, the prudent minded person, given that there is time to pause, will make an honest effort to find reasons that they (and/or the herd) could be wrong.  The easy forecast, especially at this time last year, was for an L-shaped recovery, which now is obviously not the case.  Evidence also now reveals that this is no U-shaped recovery either.

A V-shape, however, can always be the beginning of a W-shape!  As history repeatedly reveals, nature likes to hide! 

To conclude, and to reiterate last week's point to resist the temptation to watch for patterns and act upon predictions, the prudent investor does not spend time trying to forecast the future direction of capital markets and the economy. 

One must first consider their own "personal economy" and how to allocate financial resources in a way that supports life pursuits beyond money.  Short-term market fluctuations are fodder for media noise -- not a basis upon which to form sound financial decisions.

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Related:

Know Thy Risk 

Quotes on the Unknown, the Uncertain & the Hidden

The Rhyme of Irrationality

"Man has the power to act as his own destroyer -- and that is the way he has acted through most of history." ~ Ayn Rand

I recently ran across a few articles that got me thinking about irrational behavior, especially with regard to the key players (politicians, the federal reserve, big business, and the investor herd) in financial markets.  Each article is worth a read; however, I will provide the key takeaways and then follow with a few of my own thoughts, which will hopefully provoke your own:

Predictably Irrational: How Investors Frame Decisions:

• Author of the popular book, Dan Ariely, shares some of his observations from research in the field of behavioral finance at a recent industry conference for investment advisers.
• Ariely says, "Your brains are fooling you in a repeated, systematic way, and they are doing the same for everybody."
• The abundance of choices increases complexity and decreases the brain's ability to make good decisions -- the process of investing (selection, monitoring, buy/sell decisions) is rarely simple, yet decisions are made quickly.
• When decisions affect events further in the future, people act more rationally.  As time frames shorten, temptation plays a greater role and decisions become more irrational.  Ariely calls this "hyperbolic discounting," which explains why people don't save, diet or exercise -- the rewards of immediate temptations are valued too greatly.
• To overcome temptation and other related and irrational behavior, investors (and their advisers) should create binding contracts that anticipate temptation and provide details for rational reactions, such as re-balancing a portfolio in the midst of large swings (up or down) in stock prices.

Can Irrationality Be Rational?:

• Blog author, Barry Ritholtz, of The Big Picture, comments on a recent New Yorker article, titled Rational Irrationality, which discusses "the real reason that capitalism is so crash-prone."
• Mr. Ritholtz's take on the New Yorker article is that the author rationalizes irrationality, for example, on the part of big financial firms having little choice but to participate in financial bubbles or suffer by comparison to others who are profiting.
• This appears to Mr. Ritholtz as overlooking the consequences of a narrow short-term view.  In other words, how can one rationalize irrational behavior simply because others are participating (and profiting at the moment)? 
• Prudent risk management requires that a money manager or CEO go against the crowd at times of irrational exuberance and to exhibit objective judgment rather than herd behavior.

Why Capitalism Fails:

• The article observes recent interest in a somewhat obscure macro-economist, Hyman Minsky, who died over a decade ago, and whose studies predicted exactly the kind of financial meltdown we are experiencing today.
• In true bubble (and human) fashion, Minsky noted that periods of economic stability, as we experienced over the past few decades, would set the stage for monumental crises.  As Minsky observed, "Success breeds a disregard of the possibility of failure."  That success, of course, encourages borrowers and lenders to take on more risk and eventually a "euphoric economy" would develop.  Once this kind of economy develops, any panic, such as the failure of a large firm, would create a sudden economy-wide attempt to shed debt.
• This moment of panic, the watershed moment, would later become known as "The Minsky Moment."  Speculators and Ponzi borrowers would collapse first, followed by the remainder of market participants, even the more stable players.
• Minsky aptly named his idea "The Instability Hypothesis."  In the wake of a depression, he noted, consumers, businesses and financial institutions are all extraordinarily conservative.
• So, what now?  Minsky's solution, put briefly, was for extended programs from the federal government, even more than is currently being implemented.  Understandably, there is much concern today of socialism creeping into our governments so Minsky's solution will not likely be fully implemented.

With regard to these articles, especially the latter, I will avoid the temptation to cast judgment on any particular political view.  What I will opine, however, is that capitalism does not "fail" -- it simply follows a natural cycle that reflects human behavior that happens to go largely unchecked in a free society.

In a free society, individuals, businesses and institutions have an almost limitless capacity to fail, just as they have equal capacity to succeed.

The events in financial markets developing over the past few decades and unfolding within recent years simply speak to my consistent argument that human behavior, which is part of nature, has not fundamentally changed in thousands of years.  Only the environment has changed.

All of these observations underscore my belief that a great understanding of human behavior, combined with a significant degree of self-knowledge, allows for an understanding of all things touched by human behavior, including and especially financial markets.  In other words, knowledge of financial markets and financial instruments is less critical to understanding their cycles than the knowledge of human nature itself.

The only real certainty is that irrationality of participants in financial markets will return again, although it will manifest itself in a different form -- not a "repeat" but a rhyme of irrationality, if you will, that will continue to occur as long as humans populate the earth.

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Link to Don Ariely's book: Predictably Irrational: The Hidden Forces That Shape Our Decisions

Additional Reading on the subject of capitalism and human behavior: Atlas Shrugged by Ayn Rand.

On Investing, Gambling & Bounded Rationality

"A given man lives a life free from boredom by gambling a small sum every day.  Give him every morning the money he might win that day, but on condition that he does not gamble, and you will make him unhappy.  It might be argued that what he wants is the entertainment of gaming and not the winnings.  Make him play then for nothing; his interest will not be fired and he will become bored, so it is not entertainment he wants.  A half-hearted entertainment, he must delude himself into imagining that he would be happy to win what he would not want as a gift if it meant giving up gambling." ~ Blaise Pascal (1623-1662)

I had the privilege of writing a few guest posts this week on my favorite investing and economy blog, The Big Picture.

One post, "Are You an Investor or a Gambler?," makes an attempt at differentiating between investing and gambling.  Be sure to read (and join in) the comments that follow the post!  Readers often have the most interesting and insightful discussions.

The other post, "Do you consume information or does it consume you?," suggests that today's abundance and velocity of information does not increase the capacity to make rational decisions.  In fact, the information age decreases the capacity for rational thought (bounded rationality), as economist and psychologist, Herbert Simon (1916-2001), has explained:

...in an information-rich world, the wealth of information means a dearth of something else:  a scarcity of whatever it is that information consumes.  What information consumes is rather obvious:  it consumes the attention of its recipients.  Hence a wealth of information creates a poverty of attention and a need to allocate that attention efficiently among the overabundance of information sources that might consume it.

If you are new here at The Financial Philosopher or a "regular" visitor with interest in these topics, you may wish to explore the topic of Behavioral Finance further on these blog posts:

Beware of Confirmation Bias
We Are All 'Naive Scientists'
Finding God in Behavioral Finance
Know Thy Risk
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Pascal Image by Shannon

Disclaimer: The information on this site is provided for discussion purposes only, and should not be misconstrued as investment advice. Under no circumstances does this information represent a recommendation to buy or sell securities.

Where is the pendulum now?

"Excess generally causes reaction, and produces a change in the opposite direction." ~ Plato

Do recent gains in the stock market reflect reality?  This is somewhat of an oversimplification but the stock market is a forward-looking, "discounting mechanism," which essentially means that today's prices reflect investors' expectations for corporate cash flows several months from now.

The price movement on the broader indexes, since the most recent lows on March 9, 2009, is up roughly 50%, which would suggest that the collective expectation of investors is that the worst is behind us and we are quite likely climbing our way out of recession now. 

What if this sharp rise in stocks proves to be a result of a premature and unjustifiable assessment of the current economic environment?  Have stock prices gone up too far, too fast?  Are we due for a "correction?"

Where is the pendulum now?

"The markets can remain irrational longer than you can remain solvent." ~ John Maynard Keynes

Irrationality exists at both ends of the sentiment spectrum: Stock prices can be pushed far too low by fear and uncertainty (as one may easily recollect from the recent past), just as stock prices can be pushed far too high by complacency and over-confidence.  The investor herd is "right" most of the time but eventually stock prices return to the mean or some reflection of "fair value."

Consider just a few observations that may suggest that stock prices have either pushed ahead of fair value or are "priced to perfection," setting the stage for a fall in stock prices if (and when) investors discover that their expectations may be too high:

• Consumers represent roughly two-thirds of the US economy and they are saving more and spending less.  In the short-term, this trend will not support the economy.
• Unemployment remains historically high and does not show signs of improvement in the short-term.
  
• Credit card companies are squeezing consumers by lowering credit limits and increasing interest rates, further constricting consumer spending.
• Federal stimulus is ending and it may be time for investor caution as recent strength in home and auto sales may prove to be fleeting:  The $8,000 tax credit for first-time buyers ends in November and the "cash for clunkers" programs ended this week.
• Stock mutual funds and Exchange Traded Funds (ETF's) had record inflows in July.  Record inflows (or record outflows) are often contrarian signals of unsustainable stock price movement.

"Bad reasoning as well as good reasoning is possible; and this fact is the foundation of the practical side of logic." ~ Charles Sanders Peirce

As with any logical observations, they are just that -- logical observations!  Any knowledgeable person could find supporting data for either side of the argument (stocks going up or stocks going down).  Knowledge, therefore, does not by default translate to good judgment.

Furthermore, media noise is concentrated on the short-term (using information from the immediate past) and leverages emotion to sell advertising.  This noise is not suited for the long-term investor, who is best served by tuning out the noise and investing according to their own objective and risk tolerance.

For now, investors may at least find comfort in observance of the pendulum's swing in the positive direction -- a stark contrast to this time last year.

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Plato image by Shannon

Related Posts:

Beware of Confirmation Bias

Recession is Official: Is it Time to Look Forward?

Disclaimer: The information on this site is provided for discussion purposes only, and should not be misconstrued as investment advice. Under no circumstances does this information represent a recommendation to buy or sell securities.

Beware of 'Confirmation Bias'

"In the case of any person whose judgment is really deserving of confidence, how has it become so? ....  Because he has felt, that the only way in which a human being can make some approach to knowing the whole of a subject, is by hearing what can be said about it by persons of every variety of opinion, and studying all the modes in which it can be looked at by every character of mind.  No wise man ever acquired wisdom in any mode but this...." ~ John Stuart Mill

Do you seek out information that agrees with your perspective?  Of course you do!  And investors are certainly no exception to this behavior.  Not only do you prefer to seek views that align with yours but you tend to ignore those that do not.  Is this healthy behavior?  Perhaps it is and perhaps it is not; however, your humble author will suggest that an awareness of this human tendency is healthy and the unawareness of it is not...

"Faced with the choice between changing one's mind and proving there is no need to do so, almost everyone gets busy on the proof." ~ John Kenneth Galbraith

Confirmation bias is the technical name for people's desire to find information that agrees with their existing view.  Information that reinforces favored preconceptions is over-weighted (also known as self-attribution bias) and any information that conflicts with this view is ignored. Taken from an investing perspective, possibly you have said something like this: "Nah, it's a short-term blip -- the market will soon return to its most recent pattern." 

"There is no conversation more boring than the one where everybody agrees." ~ Michel de Montaigne

Now that you may be at least a bit more aware of your tendency to over-weight information you find agreeable and to under-weight information that you do not, how may confirmation bias be overcome? 

• You can begin by attempting to give equal time to information sources with which you agree as to those with which you disagree.  No mind has ever grown without stretching beyond its comfort zone.  Is it not the blunt stone that sharpens the blade?
• Also beware of the mainstream media because it tends to attach itself to the bias of the herd.  Have you noticed a recent shift in the media's overall sentiment from bearish to bullish?  The popular view seems to be shifting toward stating The Recession is Over.  This is the same media that said, less than one year ago, that the US Economy was headed for The Next Great Depression.
• When you find yourself overwhelmed with reasons to make a decision to do something, force yourself to come up with reasons why you should not do it (or remember the third alternative -- deferring the decision to a later time).
• Simply be aware of what information you consume.  If information were food, would your "diet" be healthy?  Is it balanced?
• Don't be mentally lazy.  Complacency is a breeding ground for other potentially damaging behaviors, such as greed and hubris.

"The difference between what the most and the least learned people know is inexpressibly trivial in relation to that which is unknown." ~ Albert Einstein

Any person with a few minutes of time and minimal education level can find data points to support any given view, especially about something that is, at present time, unknown.  No matter how convincing an argument (or how strong your attraction to like-minded perspectives) be sure that your decisions are actually yours.

"There is only one side to the stock market; and it is not the bull side or the bear side, but the right side." ~ Jesse Livermore (hat tip to The Kirk Report)

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Source: Behavioural Finance: Insights into Irrational Minds and Markets

The Greatest Overall 'Expense' of Your Life (& How to Minimize it)

Given just a moment to think about it, what do you believe is the greatest financial expense of your life? 

At the root, especially with regard to money and personal finance, your overall expenses may be simply broken down into discretionary and non-discretionary -- to what you really don't need and what you really do need, respectively.  The former may be associated with your lifestyle expenses, or as wanting more; and the latter with the basics, such as food, shelter and clothing.

"We tend to forget that happiness doesn't come as a result of getting something we don't have, but rather of recognizing and appreciating what we do have." ~ Frederick Keonig

The greatest overall expense of your life is the pursuit of happiness; and the greatest antidote to this expense, and hence the greatest means of reducing it (and simultaneously achieving true wealth), is to reduce your desire for more and to make a conscious and consistent effort to prevent your happiness from stretching beyond what it is now -- in other words, you must master the art of contentment.

"I love to go and see all the things I am happy without." ~ Socrates

First, try taking a moment to measure what you are (or could be) happy without.

Think of things, such as an iPod (and the seemingly annual upgrades), Cable TV, Blackberry, subscriptions to periodicals, lattes at Starbucks, and the Wii game console (and numerous games to support it).

How many thousands of dollars (and thousands of hours) do these items represent?  What do all of these items have in common?  They all provide temporary states of happiness, which are all eventually consumed, leaving you hungry for more, all of which you may have been just as happy (or happier) without...

"We often say of others who claim to be happy despite circumstances that we believe should preclude it that "they only think they're happy because they don't know what they're missing." Okay, sure, but that's the point.  Not knowing what we're missing can mean that we are truly happy under circumstances that would not allow us to be happy once we have experienced the missing thing.  It does not mean that those who don't know what they're missing are less happy than those who have it..." ~ Daniel Gilbert, Stumbling on Happiness

We've discussed happiness stretching before.  We've also discussed the difference between a state and a trait before.

Of course, there is quite a good argument that some discretionary expenses bring some level of satisfaction, in the form of entertainment or education, that may be well-worth the monetary (and time) expenditures.

This consumption, however, is a personal decision; and for every discretionary expense, there is an alternative choice that may reduce or even remove the price (both monetary and otherwise) completely.  This discretion (or choice), of course, is yours... and the opportunity cost -- the cost of foregoing an alternative choice -- must be considered.

"Happiness is your nature.  It is not wrong to desire it.  What is wrong is seeking it outside when it is inside." ~ Ramana Maharishi

What if, for example, rather than playing on the Wii for one hour per day, you read a book, learned how to play a musical instrument, had an engaging conversation with a loved one, planned to start that business you always dreamed of, or you simply took a nap?

"Why are philosophers intent on forcing others to believe things?  Is that a nice way to behave towards someone?" ~ Robert Nozick

This post is not intended to be judgmental; however, I will humbly say that any person sincerely intending to help another, will poke and prod at their being until that person has given some thought as to the way they have acted and how they will act from this point forward. To put it bluntly, a good teacher will, at times, appear to be an asshole.

"If thou wilt make a man happy, add not unto his riches but take away from his desires." ~ Epicurus

Now go and make a list of items that you can live without and you may enable the life that you have already wished to lead!

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Related Page: Quotes on Contentment

Recommended Reading: Stumbling on Happiness

New Bull Market or 'Bear Market Rally': Why Make Predictions?

"Even if someone knew the entire physical history of the world, and every mental event were identical with a physical, it would not follow that he could predict or explain a single mental event (so described, of course)." ~ Donald Davidson

Now that the rally appears to be losing steam, the predictions for a "retest" of the March 9 low (or even a plunge below that mark) are gaining in velocity.  Perhaps these people making predictions are more brave, more knowledgeable or more foolish than I; but what good does it do to make such predictions anyway?  Will those making the predictions act on them?  Do they manage money?  Are they trying to sell books/newsletters/advertising?

To affirm my own thoughts on prediction, I looked through some of my favorite philosophy books for some support.  I thought you might like to read some of them and form your own conclusions with regard to making predictions (of course you will notice that my bias is against making and acting upon predictions).

"It is clear, then that the idea of a fixed method, or of a fixed theory of rationality, rests on too naive a view of man and his social surroundings.  To those who look at the rich material provided by history, and who are not intent on impoverishing it in order to please their lower instincts, their craving for intellectual security in the form of clarity, precision, 'objectivity', 'truth', it will become clear that there is only one principle that can be defended under all stages of human development.  It is the principle: anything goes." ~ Paul Feyerabend

"Too keen an eye for pattern will find it anywhere." ~ T.L. Fine

 

"The supreme paradox of all thought is the attempt to discover something that thought cannot think." ~ Soren Kierkegaard

"We must not, therefore, wonder whether we really perceive a world, we must instead say:  the world is what we perceive. . . . To seek the essence of perception is to declare that perception is, not presumed true, but defined as access to truth." ~ Maurice Merleau-Ponty

"A likely impossibility is always preferable to an unconvincing possibility." ~ Aristotle

"Until a man has expressed his emotion, he does not yet know what emotion it is.  The act of expressing it is therefore an exploration of his own emotions.  He is trying to find out what these emotions are." ~ R.G. Collingwood

"Those who have knowledge, don't predict.  Those who predict, don't have knowledge." ~ Lau Tzu

"The difference between what the most and the least learned people know is inexpressibly trivial in relation to that which is unknown." ~ Albert Einstein

"A hidden connection is stronger than an obvious one." ~ Heraclitus

"It is the mark of an educated mind to rest satisfied with the degree of precision which the nature of the subject admits and not to seek exactness where only an approximation is possible." ~ Aristotle

"Men in the game are blind to what men looking on see clearly." ~ Chinese Proverb