Sunday Morning Reflections: Learning to See Things as They Are
Sunday morning is traditionally a day of peace, family, worship and a break. At its' best it's a time to take a step back from the hurly-burly of the week, take a deep breath, clear your head and get re-grounded. We all need such periods and it's no accident that every religious tradition, among other reasons, provides them. At it's best Sunday is a day not just of rest but of reflection. So we'd like to suggest a topic for contemplation - learning to see things as they are.
Now it's not as if we haven't ranted on before about the topic - "facts, facts, what are the facts" - and will keep on doing so. Sometimes the facts as raw data are hard to decipher so you need a framework for ordering them into structured information. Which, in our small way, we make an attempt at providing. And we spent a lot of time this last week on gathering data, putting up frameworks and exploring interpretations on the credit markets, the Fed's recent actions, the stunning and monumental changes in the way we're going to be running our economy and so forth. But we're not even sure ourselves that all that has sunk home because it's still early in the game and it's hard to see what's coming and how it'll impact us, individually and collectively.
We do know though that navigating these turbulant times will require at least three things:
1) a clear-head and a calm mind
2) a focus on the facts based on the patterns and frameworks that work which make sure our mind is clear because we understand what's going on
3) and the ability to act on the implications and conclusions of our analysis.
Now after the break we bring in some other voices courtesy of TheBigPicture who we 'borrowed' three posts, or excerpts thereof, to reinforce our point. One is on the post-fact society - a label we find enormously amusing and another is on the permanent reality distortion field the NAR seems determined to maintain around Housing. Yet that RDF is in fact more damaging to the NAR and the nations' realtors and the Housing market than helpful. Because at the end of the day pretending the world is otherwise can only be gotten away with for so long. Eventually it catches up with you.
It may take a while but it does. And there "being nothing new under the sun" let us announce the new Age of Kipling. A poet much referenced, little read and often neglected and grossly misunderstood. As an example sometime really read his poem that includes the famous "east is east and west is west" sometime - you'll find the conclusion very different than any time we've ever seen it quoted and used.(The Ballad of East and West) You can find him online complete here btw. But in turbelent times we think a different one is appropriate:
If
If you can keep your head when all about you
Are losing theirs and blaming it on you;
If you can trust yourself when all men doubt you,
But make allowance for their doubting too;
If you can wait and not be tired by waiting,
Or being lied about, don't deal in lies,
Or being hated, don't give way to hating,
And yet don't look too good, nor talk too wise:
If you can dream -- and not make dreams your master;
If you can think -- and not make thoughts your aim;
If you can meet with Triumph and Disaster
And treat those two imposters just the same;
If you can bear to hear the truth you've spoken
Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to, broken,
And stoop and build 'em up with worn-out tools;
....see the URL for the whole and perhaps consider this one as well:
"I Keep Six Honest..."
READINGS
Investing in a Post-Fact Society One of the concerns we have expressed here over the years is that there was much more -- and less -- to the post 2001 recession recovery than met the eye. Several years ago, this was a controversial position. We first suspected we were on to something, however, when the many critics of this view found it much easier to use epithets (negative, naysayer, perma-bear) than to do the credible critiques of our positions, or any kind of critical analysis. It reminded me of an old lawyer's joke: "When the facts go against you, stress the law; when the law is against you, emphasis the facts; when your case has both the law and the facts against it, call the other lawyer an asshole." As of March 22, we are still in the early stages of any sort of widespread understanding about this post-recession recovery cycle. Many people are just starting to realize how much fertilizer has been spread around. Many of the stated economic gains have been a false ghost. Whether it was overstated job creation (NFP), understated inflation (CPI) or "inflated" growth (GDP), a shocking amount of the debate about the economic expansion has been primarily spin.
Good Advice During Turbulent Times What happens when markets suffer a panic? Well, a lot of things: investors deal with emotional outbursts, a frenzy of talking heads, and lots of really bad advice. At the same time, these dislocations create opportunity -- if you manage to keep your wits about you. From an interesting article in the WSJ this week, comes this modified list.
How Counter-Productive is Realtor Association Spin? One of themes we've looked at over the years is the spin that some trade groups put out on top of their data releases. Some Trade Associations, like the ATA tonnage index, or the Home Builders Index, simply put out the straight dope -- an unvarnished, unblinking look at their industries, so their members can better make informed business decisions with the available data. Other groups massage the data, spin the message, and try to present their info in the most positive light -- regardless of the underlying data. They seem to believe that if only the public believes things are okay, it will become a self-fulfilling prophecy. The National Association of Realtors falls into this latter category. They have been calling the bottom in Housing, well, ever since the top 2 1/2 years ago; Their consistent claims of stabilization and price improvements later in the the year -- as prices have continued to slide -- have earned them the title of Worst. Forecasters. Ever. What is more damning, IMHO, is that they are not just wrong, but purposefully misleading for commercial purposes. I believe that is defined as Fraud.Occasionally, they manage to find success -- but only when a complacent and/or ignorant financial press fails to do its job. Today, we see evidence of that in an embarrassingly incorrect front page story in the Wall Street Journal: Wave of Foreclosures Drives Prices Lower, Lures Buyers. And what were those numbers? The year-over-year data for existing home sales were DOWN 23.8% below February 2007 levels. That datapoint never found its way into the WSJ article at all. I cannot recall a more blatant misreporting of fact, or a larger or more embarrassing error in a front page WSJ article, ever. While the NAR might be high-fiving each other over their successful deception at the Journal, they may wish to reconsider.