Friday, December 26, 2008

A Short Excerpt...

From a great book:

...As nature teaches the spectators to assume the circumstances of the person principally concerned, so she teaches this last in some measure to assume those of the spectators. As they are continually placing themselves in his situation, and thence conceiving emotions similar to what he feels; so he is as constantly placing himself in theirs, and thence conceiving some degree of that coolness about his own fortune, with which he is sensible that they will view it. As they are constantly considering what they themselves would feel, if they actually were the sufferers, so he is constantly led to imagine in what manner he would be affected if he was only one of the spectators of his own situation. As their sympathy makes them look at it in some measure with his eyes, so his sympathy makes him look at it, in some measure, with theirs, especially when in their presence, and acting under their observation: and, as the reflected passion which he thus conceives is much weaker than the original one, it necessarily abates the violence of what he felt before he came into their presence, before he began to recollect in what manner they would be affected by it, and to view his situation in this candid and impartial light.

The mind, therefore, is rarely so disturbed, but that the company of a friend will restore it to some degree of tranquility and sedateness. The breast is, in some measure, calmed and composed the moment we come into his presence. We are immediately put in mind of the light in which he will view our situation, and we begin to view it ourselves in the same light; for the effect of sympathy is instantaneous. We expect less sympathy from a common acquaintance than from a friend; we cannot open to the former all those little circumstances which we can unfold to the latter; we assume, therefore, more tranquility before him, and endeavour to fix our thoughts upon those general outlines of our situation which he is willing to consider. We expect still less sympathy from an assembly of strangers, and we assume, therefore, still more tranquility before them, and always endeavour to bring down our passion to that pitch, which the particular company we are in may be expected to go along with. Nor is this only an assumed appearance; for if we are at all masters of ourselves, the presence of a mere acquaintance will really compose us, still more than that of a friend; and that of an assembly of strangers, still more than that of an acquaintance.

Society and conversation, therefore, are the most powerful remedies for restoring the mind to its tranquility, if, at any time, it has unfortunately lost it; as well as the best preservatives of that equal and happy temper, which is so necessary to self-satisfaction and enjoyment. Men of retirement and speculation, who are apt to sit brooding at home over either grief or resentment, though they may often have more humanity, more generosity, and a nicer sense of honour, yet seldom possess that equality of temper which is so common among men of the world.

-Adam Smith, Theory of Moral Sentiments

Wednesday, December 10, 2008

This Is The End

No, not of the world economy. Many of you may have already assumed this was coming, but here it is- this is the end of any sort of consistent posting on this blog. It has been a great experience and I loved doing it, yet it is time to start attending to other matters. I thought I would finish with some brief closing thoughts.

The recession has now been going on for one year now, and people are worried. To some extent, there are valid reasons. In the short term, we are looking at an economy which has been built up on years of excess corporate greed and fundamental imbalances. A similar situation is faced around the world, and investment risk aversion is at extremes in the markets.

So be it. Prices today would have you believe that humanity can not settle its problems and move forward. It is predicting human ingenuity will all of a sudden ground to halt; that the world has plateaued, and in fact, will have to actually recede from levels experienced which must have been too high. I think such beliefs are ludicrous. The markets may be rattled, but citizens will get through this crisis with much less fear and panic thanks to a social system with security and safety nets. And more importantly, an amazing thing is happening today in the world. More people are being educated, exposed to ideas, and put to work, than ever dreamed of before. That is billions of people thinking creatively and progressively, wanting a better lifestyle. And I'd bet that their desire and perseverance will create a safer, and wealthier, system for themselves and humanity.

For investors in corporate America, that is terrific news. But prices today are caught up in the current fear. Not only do they not reflect this long term potential, but in fact they actually assume a doom-like future. The choice really comes down to one of opportunity cost- either you can put your excess money under the couch or in government bonds, where it will be sure to earn you nothing; or, you can put your money to work into business and likely make significant returns on the back of long term global prosperity. I'm strongly in favor of the latter.