Four Buffett’s

Risk comes from not knowing what you’re doing.
—  Warren Buffett
Price is what you pay.  Value is what you get.
—  Warren Buffett
Rule No.1:  Never lose money.  Rule No.2:  Never forget rule No.1.
—  Warren Buffett
In the business world, the rearview mirror is always clearer than the windshield.
—  Warren Buffett
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On This Day In:
2018	Change Happens
	Day 13: Ginger / Mint Relief
2017	Still Removing Bricks
2016	Namaste
2015	Still Learning
2014	Dark Processes
2013	To The Last Link
2012	Slept In Again
2011	Home Again, Naturally
2009	Thoughts after a long day of OT…

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Thinking Ahead

If you are thinking a year ahead, sow a seed.  If you are thinking 10 years ahead, plant a tree.  If you are thinking 100 years ahead, educate the people.
—  Kuan Tzu
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On This Day In:
2017	I’d Like To Try
2016	Or Blog (And Bound)
2015	Welcome The Virtuous
2014	Closing The Gap?
2013	On Parenting
2012	What Knowledge Is
2011	The Indefinite Accumulation Of Property

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Stock Market Sets More Records Under #DumbDonald

And the records just keep on getting set this week:
1) First President to ever have the Stock Market fall 1,000+ points in one day during his administration  —  Donald Trump
2) First President to ever have the Stock Market fall 1,000+ points in one day TWICE during his administration  —  Donald Trump
3) First President to ever have the Stock Market fall 1,000+ points in one day TWICE in one week during his administration  —  Donald Trump
4) First President to ever have the Stock Market fall 1,000+ points TWICE during his first term  —  Donald Trump
As I said in a prior post, most market gains are not directly attributable to any specific action by a President, neither are most market losses.  But, when you take “personal” credit for the gains “since getting elected”, I think you should also accept the blame when there is a market loss – “correction” or otherwise – during your administration.  Oh, but not “TeflonDon”…  After all, the economy is still fundamentally sound.  Or, so we’re being told.
And, yes, Mr. President we’re tired of winning!  Please, make it stop!!
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On This Day In:
2017	An Accumulation Of Acts
2016	Here’s Lookin’ At You Kid
2015	How To Be Omnipotent
2014	The Promise Of Future Love
2013	Christian, n.
2012	Praise
	Don’t Let Me Be Misunderstood
2011	A Few More Lyrics From The Past
	5 For The Price Of 1

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Two Views Of The Starting Line

The foundation of wealth is the first decision well made.
—  John Pierpont (J. P.) Morgan
It is very much easier for a rich man to invest and grow richer than for the poor man to begin investing at all.
—  Barbara Ward
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On This Day In:
2016	Never Had It, Never Will (Donald Trump)
2015	20/20
2014	All Of My Best Ideas Come While Walking…
2013	Learn To Learn
2012	I Remind You
2011	Respect And Prestige
2010	Living Legends (Willie Nelson) and the Gettysburg Address

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Knowledge Pays

An investment in knowledge always pays the best interest.
—  Benjamin Franklin
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On This Day In:
2016	Brief Glimpses And Full Glances
2015	Pursuing Perspective
2014	Wearing Down?
2013	Labouring Under A Curse
2012	Listen To Yourself
2011	Career Tips (Part 1)
	No Captain Dunsel

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Accepted Fraud

“The Big Short”  (2015)  —  movie review
Last night I watched “The Big Short“, which is a movie about how the banking, finance, credit bureaus  and real estate industries defrauded the American public (actually the entire world) and got away with it.  The movie stars Christian Bale, Steve Carell, Brad Pitt and Ryan Gosling and is rated “R” for language and frontal nudity (brief scenes with strippers).  The movie uses cut-aways to random famous people to provide “definitions / explanations” and (I guess) a bit of levity.  This act of having the person on camera “speak” to the audience is known as “breaking the fourth wall”.
For some time now, about forty years ago, the banking industry moved away from traditional “banking” and started trying to make money off of making money.  This began as an attempt to monetize risk into products which could be sold.  This was done via derivatives, which is a fancy way of saying “money for nothing”.  It is not really “nothing”, it’s position, options, leverage, coverage, insurance, or any number of other names for financial security – or rather, the illusion of financial security.  Some people think of it as shared risk.  I think it’s more traditional name is gambling.
Okay.  I’ll get off my soap-box and get back to the movie.  Four groups of financial players discover the housing market is being fraudulently (and criminally) propped up and, in fact, is in a giant bubble.  A “bubble” happens when greed takes over common sense in a market and prices for the items in the market are far higher than the actual value of the item and / or the ability of the buyer in the market to purchase the item.  Theoretically, when you lose the ability to pay for something, you should stop buying it.  However, in a true bubble, because “everyone” expects the price to continue to increase, the buyers continue to buy under the assumption the price will continue to go up and just before you lose the item (foreclosure for realty), you sell the item and take whatever profit you can.  IF you can time your exit correctly and get out with a profit, you win.  However, this is not true investing.  It is merely speculating.  This speculation is what is at the heart of the movie.
That is the “before” side of the movie.  The four groups know there is a bubble and one of them creates a derivative to profit (vastly) if the housing market bubble bursts.  The other three parties  get wind of the derivative and essentially go “all-in” to bet on the crash.  This is all happening in roughly 2005.  The expectation is the crash will happen in early 2007 when a percentage of mortgage loans which are variable rates with short-term fixed rate teasers have the teaser expire.
When 2007 rolls around and the housing market does crash, the derivatives don’t initially pay out because the banks / credit agencies / insurance companies  and government don’t want the national economy to collapse.  Essentially, the U.S. Taxpayer (via the government) foots the bill for the losses of the restructuring financial market.  Inevitably, a few of the large financial players “go away” (get bought up at severe discount) and the global economy is saved.   Here, the key point of the movie is that the little guy in America loses their home, but none of the fraudulent bankers and financiers goes to jail.  The irony is they (the banks and financiers) have prevented legislation which might stop this from happening again in the future, and we are back on the same roller coaster again.
Final recommendation:  highly.  This is a complicated movie about a complex subject.  The average person seeing the movie will probably not understand the financial portions of the movie.  They will (probably) understand the effects of the bubble burst because most of us have been living through the results (recession) over the last ten years (and still going).  This is not a great movie, but it is an honorable attempt to educate the working people of America.
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On This Day In:
2015	Even The Little Ones
2014	Who’s On First?
2013	No Equal Measure
2012	A Single Host
2011	No Exemptions
2010	Memories Of KSA – Inside The Fire

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Economic Engines

In addition, at least in America, science has been treated sort of cavalierly, not only by the public but also by government.  The idea that science is just some luxury that you’ll get around to if you can afford it is regressive to any future a country might dream for itself.  Innovations in science and technology are the engines of the 21st-century economy; if you care about the wealth and health of your nation tomorrow, then you’d better rethink how you allocate taxes to fund science.  The federal budget needs to recognize this.
—  Neil DeGrasse-Tyson
Quoted by Rachel Edidin in the March 2014 Wired magazine article titled: “Neil DeGrasse Tyson on Why Cosmos Will Be Better Than Ever“
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On This Day In:
2013	Weren’t You Supposed To Be Reading?
	Absent Friends
	Where I Stand
2012	Hangin’ With His P’s
	Help Save
2011	Six Facets Of Good Leadership

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