Horrid Facts, Stubborn Facts

September 11.

Two words. Sixteen years. Powerful emotions. Searing memories. Evocative stories.

Sixteen years ago, on Tuesday, September 11, 2001, I was sitting in front of a Bloomberg terminal when the first, cryptic hints about trouble at the World Trade Center crawled across the bottom of my screens (I think). I had been scheduled to fly to New York the day before and had reservations at the Marriott World Trade Center (3 WTC), which would be destroyed when the Twin Towers collapsed. Instead, I decided to stay home and go to a “Back to School Night” presentation at my kids’ school. As the day’s events unfolded, I recalled having been on the Merrill Lynch fixed income trading floor at the World Financial Center doing a STRIPS trade when I heard and felt the February 26, 1993 World Trade Center bombing. I was really glad I didn’t get on that plane to New York.

My little, not so evocative story is insignificant within the context of the tragic losses, horrible evil and incredible heroism of the “American epic” to which that day bore inexorable witness. But it is what happened to me. It provides context and a framing device to help me remember and think about what transpired and what it means. It is emotional to think about still. But many other stories are far more important.

The image reproduced below is central to several other converging stories from that dreadful day.

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“Hooray for Our Side”

HoorayLast night I went to a concert by Stephen Stills and Judy Collins, one-time lovers and long-time friends, but never before collaborators (except for Stills’ uncredited guitar backing Collins’ sixth album). They have a new recording coming out this month, supported by a tour of which last night’s event is a part. Stills was romantically involved with Collins when Crosby, Stills, and Nash began in 1968, but they split before the recording of CSN’s 1969 debut album. That record’s opening song, “Suite: Judy Blue Eyes,” the final encore last night, was Stills’ bittersweet look back at the relationship. The fledgling group’s performance of it is a highlight of the iconic Woodstock documentary and lives on as an evergreen classic-rock radio regular.

That they perform together now is remarkable. They cannot sing like they once did (and Stills cannot really sing at all anymore even though he can still shred on guitar), but it was still(s) great to see these old masters continue to work their magic after all these years. For me, the highlight of the evening was the iconic Stills protest song, For What It’s Worth (yes, that’s Stills, Jim Messina, David Crosby and Neil Young – The Buffalo Springfield – introduced in 1967 by Peter Tork of The Monkees in the video below).1

Stills and Collins both spoke last evening about certain songs regularly resurfacing due to societal need and argued that this song is one of them. Last night’s rendition was much less haunting and much more aggressive than the original, like the Stills solo version below.

The focus of the song is on the “battle lines being drawn … young people speaking their minds getting so much resistance from behind” while presumably speaking truth to power. That is a crucial part of the standard 60s narrative (along with peace, protest, love, and rock ‘n’ roll), even though it was also the most prolific period of domestic terrorism in our history. We have pretty much erased that from our collective memory. Continue reading

The Missing Ingredients

Within the art of storytelling, how important characters meet is often significant and portentous, laying the groundwork for and foreshadowing what is to come. For example, Florentino Ariza and Fermina Daza in Love in the Time of Cholera, by Gabriel García Márquez: “…that casual glance was the beginning of a cataclysm of love that still had not ended a half a century later.” A corollary to this general trope is the “meet cute” construct in various sorts of movies, most typically with love stories. For example, in Silver Linings Playbook, Pat (Bradley Cooper) has just been released from a mental hospital and is invited by a friend for dinner. Joining them will be Tiffany (Jennifer Lawrence), a woman with issues of her own. The host tells Pat not to ask Tiffany about her dead husband, Tommy. Yet almost immediately after she walks in the door, Pat says, “How did Tommy die?”

One of literature’s iconic first meetings takes place in Sir Arthur Conan Doyle’s A Study in Scarlet, wherein Sherlock Holmes and his soon-to-be partner, Dr. John Watson, meet cute (in an intellectual way) at the chemical laboratory of a hospital where Holmes was conducting experiments. They are brought together by a mutual acquaintance because they both are looking for affordable accommodations, which turn out to be the famous apartment on Baker Street. Holmes proceeds to astonish Watson with his observational and critical thinking skills by ascertaining much about the good doctor’s life and experience from seemingly scant evidence. Below is that famous scene in the BBC’s modern retelling of the Sherlock Holmes stories, starring Benedict Cumberbatch as Holmes and Martin Freeman as his stalwart sidekick, wherein this first Holmes story is re-imagined as A Study in Pink.

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“It’s not you. It’s me.”

It is a classic break-up excuse – “It’s not you, it’s me.” These five small words reek of phony compassion and are usually used to draw attention away from the real reason the relationship is being ended, often because the true reason is emotionally painful. The real message is typically much closer to “I don’t find you sufficiently attractive, but I can’t say that because then I’ll feel guilty. Oh, and by the way, I don’t really still want to be friends, either, so good riddance. I’m off to find someone as perfect as I am.” This excuse has become such a cliché that almost nobody buys it anymore. Why should they? We’ve all heard perpetrators of INYIM turn right around and tell anyone who will listen what the ex’s faults and failings were as soon as he or she is out of earshot.

But George has a point when he says, “Nobody tells me it’s them not me, if it’s anybody it’s me.” The sad truth is that a shocking amount of the time the crux of the problem – any problem – is us and not them.  Continue reading

Always Invert

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Larry Walters always wanted to fly. When he was old enough, he joined the Air Force, but he could not see well enough to become a pilot. After he was discharged from the military, he would often sit in his backyard watching jets fly overhead, dreaming about flying and scheming about how to get into the sky. On July 2, 1982, the San Pedro, California trucker finally set out to accomplish his dream. Because the story has been told in a variety of ways over a variety of media outlets, it is impossible to know precisely what happened but, as a police officer commented later, “It wasn’t a highly scientific expedition.”

Larry conceived his “act of American ingenuity” while sitting outside in his “extremely comfortable” Sears lawn chair. He purchased weather balloons from an Army-Navy surplus store, tied them to his tethered Sears chair and filled the four-foot diameter balloons with helium. Then, after packing sandwiches, Miller Lite, a CB radio, a camera, a pellet gun, and 30 one-pound jugs of water for ballast – but without a seatbelt – he climbed into his makeshift craft, dubbed “Inspiration I.” His plan, such as it was, called for him to float lazily above the rooftops at about 30 feet for a while, pounding beers, and then to use the pellet gun to explode the balloons one-by-one so he could float to the ground.

But when the last cord that tethered the craft to his Jeep snapped, Walters and his lawn chair did not rise lazily into the sky. Larry shot up to an altitude of about three miles (higher than a Cessna can go), yanked by the lift of 45 helium balloons holding 33 cubic feet of helium each. He did not dare shoot any of the balloons because he feared that he might unbalance the load and fall. So he slowly drifted along, cold and frightened, in his lawn chair, with his beer and sandwiches, for more than 14 hours. He eventually crossed the primary approach corridor of LAX. A flustered TWA pilot spotted Larry and radioed the tower that he was passing a guy in a lawn chair with a gun at 16,000 feet.

Eventually Larry conjured up the nerve to shoot several balloons before accidentally dropping his pellet gun overboard. The shooting did the trick and Larry descended toward Long Beach, until the dangling tethers got caught in a power line, causing an electrical blackout in the neighborhood below. Fortunately, Walters was able to climb to the ground safely from there.

The Long Beach Police Department and federal authorities were waiting. Regional safety inspector Neal Savoy said, “We know he broke some part of the Federal Aviation Act, and as soon as we decide which part it is, some type of charge will be filed. If he had a pilot’s license, we’d suspend that. But he doesn’t.” As he was led away in handcuffs, a reporter asked Larry why he had undertaken his mission. The answer was simple and poignant. “A man can’t just sit around,” he said.

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The Prediction Game

chess-board-closeupIn chess, there are 400 different possible positions after the opening two moves. There are 72,084 move combinations after each player has made two moves and over 288 billion scenarios after four moves each. The Shannon Number, which represents a conservative lower bound of the game-tree complexity of chess (the total possible move variations), is thought to be between 10^111 and 10^123. By comparison, there are 10^81 atoms that make up the known universe. I think we can all agree that national and global markets and economies are far more complex than chess. So tell me again why you think you can predict what will happen next in the markets or in the economy….

The Apocalypse is (Always) Nigh

A Christian radio network called Family Radio began spreading “​the word of God to the world” in 1958 in a mundane way, featuring hymns and conventional – albeit very conservative – Bible teaching. Despite many years of growth and financial health, founder and retired engineer Harold Camping became increasingly enamored with a personal brand of doomsday Bible prophecy suffused with numerology and eventually began pushing Family Radio toward that focus. After a more tentative prediction of 1988, the Berkeley-educated Camping thought that the world would end (he wasn’t absolutely certain, but was “more than 99 percent sure“) in September of ​1994​. He actively advocated that view on his popular daily, nationwide call-in show on the network in the months leading up to the predicted date.

Once September of 1994 had come and gone, things returned mostly to normal…for a while. However, Camping was still crunching numbers (to obtain “infallible, absolute proof”) and eventually decided that the correct date was ​May 21, 2011. He was really sure this time. First would come a massive earthquake, powerful enough to throw open all the world’s graves, followed by the heathen dying off until the end of the world in October. At Camping’s urging, Family Radio spent over $100 million (donated) dollars proclaiming Judgment Day to the masses over its roughly 140 stations and with billboards, fliers and more. The network’s website featured a “countdown clock” under the banner headline: “Judgment Day: the Bible guarantees it.”

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Like far too many others, Peter Lombardi, a 44-year-old contractor from Jersey City, N.J., took an “indefinite break” from his work to warn others about this coming end. He plastered his Dodge minivan with stickers proclaiming the “awesome news” of Judgment Day and paraded through Manhattan to spread the word and hand out fliers.

When May 21, 2011 came and went, Camping went back to his studies and soon “clarified” that the May 21 date was “an invisible judgment day” he had come to understand as a spiritual, rather than physical event. The actual day of apocalypse would not be until October 21.

Camping was wrong yet again. On October 22, Peter Lombardi was peeling stickers off his minivan. Family Radio was trying to decide what to do next. Its website was not immediately updated and the countdown clock was stopped at zero and holding. Harold Camping was attempting to figure out what had gone wrong, saying he was “flabbergasted” and “looking for answers.”

After this final, humiliating failure, in a letter to followers some days later, Camping apologized for getting it wrong and acknowledged that he had “no new evidence pointing to another date for the end of the world” and “no interest in even considering another date.” However, he found a silver lining to the confusion, noting that his “incorrect and sinful statement allowed God to get the attention of a great many people who otherwise would not have paid attention.” So there’s that. Camping thereafter largely disappeared from the ministry he had founded – it became a shell of its former self – and died in 2013 at age 92.

End 2Most end-times preachers do not make Camping’s mistake of offering a date certain. The cynical might suggest that offering specificity puts a sell-by date on both relevancy and donations. Yet there is a solid Biblical reason why preachers insist that it is not possible to know when Jesus will return. “But of that day and hour no one knows, not even the angels in heaven, but only the Father” (Matthew 24:36). What end-times preachers of every period and every ilk all agree on with unalterable conviction is a carefully crafted loophole. They insist that it is possible to know the season – if not the date – of the Lord’s return and that they are surely living in that season (I have never heard anyone try to define the length of “season”).

For a surprising number of people, it is perpetually the end-times. The apocalypse is always nigh.  Continue reading

“Worrying is a serious offense”

Q2.2017.2I was in Scotland recently for a wonderful holiday with my wife. We got up one morning and, quite typically, it was about 50 degrees and windy, with rain coming down sideways. In other words, it was beach weather in Scotland. Accordingly, my wife decided we would visit one of Scotland’s great beaches. (That sounded to me like visiting one of the great ski slopes at home in San Diego, but I digress.)

So off we went.

Happily, by the time we wound our way to the appropriate spot on the tiny roads of the Scottish Highlands, the rain had stopped. However, getting to our destination was going to require a three and one-half mile one-way trek across pasture, moor and dunes. But the end result was indeed a beautiful beach (above right).

Q2.2017.5My point relates to the pasture. There was a gate that allowed us to access and cross the pasture on our way to the beach, on which was posted a prominent sign (at left). The owner of the property was very clear that dogs needed to be kept on leads due to the threat of “worrying” the farm animals and that offending dogs would be shot.

Note the key final phrase: “Worrying is a serious offense.” That statement is similarly true in the investment world even though its meaning is slightly different.

When we worry about our investments, we tend to look at our statements more. When that happens, we see losses more often (only 53 percent of trading days are positive for stocks even though the S&P 500, for example, has returned in excess of 11 percent per year from inception) and thus trade too often because we are so loss averse (we feel losses roughly two to two-and-one-half times more strongly than commensurate gains). We chase performance to our detriment. The net result of this worrying is substantially lower returns.

For most of us most of the time, worrying will surely be counterproductive. It will lead to bad decisions and poor returns. So please, remember, worrying is a serious offense.