Money and Finance
- Howard Marks And The Economic Cycle
This is a long excerpt from Howard Marks’ November 2001 Memo “You Can't Predict. You Can Prepare.” I think it is an important topic/mental model to keep in mind, both for today’s investing environment and for future ones. Especially since...
- When To Throw In The Towel On A Stock
In Morgan Housel's excellent article, "If Other Industries Were Like Wall Street", he shares this satirical story: If we were as impatient about gardening as we are investing: Sam plants some seeds in his backyard. He checks back four hours...
- A Simple Formula For Investing Success
The best time to plant a tree was 20 years ago. The second best time is now. - AnonymousInvesting is simple, but not easy. - Warren Buffett When my wife and I lived in England, we had the pleasure of visiting her relatives in a small village in Gloucestershire...
- New Year's Resolutions + Happy New Year
I hope you had a great Christmas. These are my goals for 2015. Investing Goals 1) Have a 12 month annual expected dividend of $1,500. 2) Receive $1,000 in dividends. 3) Create a sharebuilder Motif Loyal 3 account and invest regularly in defensive...
- Easy To Grow And Good For Your Budget Plants
Gardening is one of my passions. It's my distressing therapy and exercise. I love to watch my plants grow, to pick up fresh herbs, vegetables or fruits directly from a plant. It make our life more beautiful. Growing your own vegetables, fruit and...
Money and Finance
Christmas Trees and the Logic of Growth - By Mark Spitznagel
Central banks are creating a tinderbox by keeping alive many very bad investments.
The ubiquitous greenery of the season has me thinking conifers and stock market crashes. There is much to be learned from the coned evergreen trees that form vast forests across the Northern Hemisphere. As the oldest trees on the planet, the mighty conifers have survived threats of catastrophic extinction since the time of the hungry herbivorous dinosaurs.
The conifer's secret to longevity lies in a paradox: Their conquest has been largely the result of episodes of massive forest destruction. When virtually all else is gone, conifers show their strength and prowess as nature's opportunists. How? They have adapted to evade competitors by out-surviving them and then occupying their real estate after catastrophic fires.
First, the conifer takes root where no one else will go (think cold, short growing seasons and rocky, nutrient-poor soil). Here, they find the time, space and much-needed sunlight to thrive early on and build their defenses (such as height, canopy and thick bark). When fire hits, those hardy few conifers that survive can throw their seeds onto newly cleared, sunlit and nutrient-released space. For them, fire is not foe but friend. In fact, the seed-loaded cones of many conifers open only in extreme heat.
This is nature's model: overgrowth, followed by destruction of the overgrowth, and then the subsequent new growth of the healthiest and most robust, which ultimately leaves the forest and the entire ecosystem better off than they were before.
Pondering these trees, it is not too much of a stretch to consider the financial forests of our own making, where excess credit and malinvestment thrive for a time, only to be destroyed—and then the releasing of capital into markets where competition has been wiped out. The Austrian school economists understood this well, basing a whole theory around this investment cycle.
After the purge, great investment opportunities are created, from which prolific periods of growth emanate—provided that sufficient capital remains to reinvest into the fertile and now-open landscape.
Suppressing fire, creating the illusion of fire protection, leads to the wrong kind of growth, which then invites greater destruction.
The ubiquitous greenery of the season has me thinking conifers and stock market crashes. There is much to be learned from the coned evergreen trees that form vast forests across the Northern Hemisphere. As the oldest trees on the planet, the mighty conifers have survived threats of catastrophic extinction since the time of the hungry herbivorous dinosaurs.
The conifer's secret to longevity lies in a paradox: Their conquest has been largely the result of episodes of massive forest destruction. When virtually all else is gone, conifers show their strength and prowess as nature's opportunists. How? They have adapted to evade competitors by out-surviving them and then occupying their real estate after catastrophic fires.
First, the conifer takes root where no one else will go (think cold, short growing seasons and rocky, nutrient-poor soil). Here, they find the time, space and much-needed sunlight to thrive early on and build their defenses (such as height, canopy and thick bark). When fire hits, those hardy few conifers that survive can throw their seeds onto newly cleared, sunlit and nutrient-released space. For them, fire is not foe but friend. In fact, the seed-loaded cones of many conifers open only in extreme heat.
This is nature's model: overgrowth, followed by destruction of the overgrowth, and then the subsequent new growth of the healthiest and most robust, which ultimately leaves the forest and the entire ecosystem better off than they were before.
Pondering these trees, it is not too much of a stretch to consider the financial forests of our own making, where excess credit and malinvestment thrive for a time, only to be destroyed—and then the releasing of capital into markets where competition has been wiped out. The Austrian school economists understood this well, basing a whole theory around this investment cycle.
After the purge, great investment opportunities are created, from which prolific periods of growth emanate—provided that sufficient capital remains to reinvest into the fertile and now-open landscape.
Suppressing fire, creating the illusion of fire protection, leads to the wrong kind of growth, which then invites greater destruction.
- Howard Marks And The Economic Cycle
This is a long excerpt from Howard Marks’ November 2001 Memo “You Can't Predict. You Can Prepare.” I think it is an important topic/mental model to keep in mind, both for today’s investing environment and for future ones. Especially since...
- When To Throw In The Towel On A Stock
In Morgan Housel's excellent article, "If Other Industries Were Like Wall Street", he shares this satirical story: If we were as impatient about gardening as we are investing: Sam plants some seeds in his backyard. He checks back four hours...
- A Simple Formula For Investing Success
The best time to plant a tree was 20 years ago. The second best time is now. - AnonymousInvesting is simple, but not easy. - Warren Buffett When my wife and I lived in England, we had the pleasure of visiting her relatives in a small village in Gloucestershire...
- New Year's Resolutions + Happy New Year
I hope you had a great Christmas. These are my goals for 2015. Investing Goals 1) Have a 12 month annual expected dividend of $1,500. 2) Receive $1,000 in dividends. 3) Create a sharebuilder Motif Loyal 3 account and invest regularly in defensive...
- Easy To Grow And Good For Your Budget Plants
Gardening is one of my passions. It's my distressing therapy and exercise. I love to watch my plants grow, to pick up fresh herbs, vegetables or fruits directly from a plant. It make our life more beautiful. Growing your own vegetables, fruit and...