Toll-free: (877) 631-6311 | Local: (602) 626-3100 |
Office Open
.(JavaScript must be enabled to view this email address)
Leaves in a Swimming Pool

Leaves in a Swimming Pool


There’s an old saying: My problems are like leaves in a swimming pool. It means that it makes no sense to be angry or upset about the fact that you have leaves in your swimming pool, because… you have a swimming pool! Your life is so great that you have a swimming pool, and you’re upset that you have leaves in it? A little perspective is needed.

So whenever I find myself tied up in knots about this or that problem, I like to think that things could be (and have been) much, much worse.

Are Americans Too Negative?

Sometimes I think we have a problem with perspective. A lot of people in this country like to focus on the negatives—stagnant incomes in lower deciles, for example. But someone with an income in the 20th percentile in the US (about $20K) would be one of the richest people in the world—by a lot.

Sure, many people don’t have jobs, but many people do—and companies can’t hire workers fast enough.

Here’s my favorite chart:

It’s funny—my article “I Heart Capitalism” from about a month ago stirred up all kinds of controversy. (For more controversial topics, check out these short interviews, each only a couple minutes long, that I did on volatility, interest rates, and my highest-conviction trade: shorting Canada.)

If you recall, I talked about how prices of certain goods were collapsing in real terms. People criticized the article, pointing out how the prices of some things, like higher education and health care, are skyrocketing. It brought out all the pessimists.

May I remind people that higher education and health care are two of the most heavily subsidized sectors in America?

In health care and higher education, the free market isn’t allowed to function properly. It’s no wonder prices are so high! The market works just fine when you leave it alone; prices will go down over time.

One of the things I forget as a “Wall Street guy” or a “finance guy” is that people take problems like joblessness, underemployment, and stagnant incomes very seriously, because there is a human cost to them. “Poverty porn” has become a whole new genre of journalism or at least one that hadn’t been popular since the 1930s. We’re bombarded with information on a daily basis about how hard people have it.

So it’s easy to sit back in my air-conditioned office and manipulate my spreadsheets and talk about how, no, actually, our standard of living is much higher than it was 15 years ago, even though it may not seem like it. People don’t like those arguments. They seem insensitive. And maybe I am insensitive, since I haven’t been a working stiff since my Coast Guard days.

But it has gotten to the point where if you are an optimist, you are persona non grata. Don’t tell my friends, but I use Facebook as sort of a social laboratory. I post provocative things and see how people respond. I was posting on Facebook recently about how we are close to curing cancer (it’s actually true—read for yourself), and people were cynical about it! How can you be cynical about curing cancer, saving millions of lives?

There was a piece on Vox recently, with 26 charts showing how the world is getting unimaginably better. The charts showed that poverty and hunger were decreasing, and that our access to leisure time and cheaper food, and our life expectancy were all getting better. I posted that on Facebook. It got a handful of likes. People were trying to figure out what my angle was.

I think human beings naturally have a pessimism bias, but I think it’s gotten out of control.

The problem with pessimism is that it affects people’s politics. If we think that the world sucks and always needs fixing, then we are going to elect really angry, indignant people who are going to try to fix something that may not be broken.

Happiness Is Hard to Find

Parts of the financial markets are overheating. Silicon Valley is stupid. Credit is too tight. If you look hard enough, you can probably find a bubble somewhere.

I remember 1999 like it was yesterday. People were happy. They were deliriously happy. Life could not have been better.

We were at the tippy-top of eight years of uninterrupted economic expansion (really 17 years—the 1991 recession had been quite mild), there were no wars, the Dow hit 10,000, the Nasdaq hit 5,000, everyone was day trading, people were listening to Britney Spears… madness.

It was the closest thing to complete social euphoria I have ever seen.

The stock market has been going up for six years now, and is up 200%. And people are miserable. Just miserable human beings.

Stock market tops are not usually made when people are miserable. I suppose there is a first time for everything. But it seems unlikely.

Sincerely,

The Leaves in a Swimming Pool Guy

Did someone forward this article to you?

Click here to get The 10th Man in your inbox every Thursday.


Discussion

We welcome your comments. Please comply with our Community Rules.

0 comments

Mike Leach
April 1, 2015, 8 p.m.

Good article, Jared - great perspective.  I don’t fully agree, mind you - In the US in particular today, the glass IMO is at least as much half empty as it is half full - even (perhaps especially) looking the long term.  (Unsustainable entitlements and questionable demographics)

But some of the responses you got that I read above are classic - and fully illustrate your points.  (Not to even mention those folks that apparently seem to think more government, more government spending, and more regulation are the key to fixing the very real problems we do have - including lack of quality and too high costs for health care and education.  What insane, BIzzaro world do these folks come from anyway? ;-)

Jared, I think we are overdue for another cyclical bear market.  But maybe the most valuable part of your article is your (correct IMO) assessment that most bear markets start from a position of euphoria - and right now just about EVERYBODY is upset, miserable, and pessimistic.  Seems to me a good case for not going too heavily into cash just yet.

Nick Proferes
March 28, 2015, 8:29 p.m.

I really think this chap lives in a bubble or perhaps some bizarre parallel universe.
“In health care and higher education, the free market isn’t allowed to function properly. It’s no wonder prices are so high! The market works just fine when you leave it alone; prices will go down over time.”  The facts just don’t support this, The OECD countries with the lowest cost healthcare and best health outcomes in terms of longevity, ALL have universal healthcare systems highly regulated and supported by government.  The same is true for tertiary education costs.

“stagnant incomes in lower deciles”  Lower relative to what? the top 1-5% perhaps

“someone with an income in the 20th percentile in the US (about $20K) would be one of the richest people in the world—by a lot.”  Perhaps if compared to third world countries but those have a much lower cost of living that the US.

“Sure, many people don’t have jobs, but many people do—and companies can’t hire workers fast enough.”  What sort of companies?  The figures I see on employment suggest an awful lot of people having to take part time or service industry jobs just to put food on the table, so under employment is still a big factor.

“The stock market has been going up for six years now, and is up 200%. And people are miserable. Just miserable human beings.”  People (investors) are miserable (especially those who are retired and on fixed incomes) because they are having to chase yield in a more risky stock market due to the low interest and bond rates.

I think I’m just going to have to unsubscribe to this newsletter, it’s like shooting fish in a barrel.

dethorn@gmail.com
March 26, 2015, 6:17 p.m.

Jared, you are awesome! I absolutely love your style!!! Keep it up and all the best:D

randyj.bowman@gmail.com
March 26, 2015, 4:37 p.m.

You can’t be serious about your comments about a cure for cancer, can you? I have little doubt there are probably at least a few cures for cancers but the the official medical and pharmaceutical establishment never let such protocols see the real light of day and anyone even attempting to use any non-standard treatments are instead ridiculed, often falsely discredited and even subjected to loss of medical license to keep them towing the line of the cut, burn and poison standard of cancer care from the AMA.

Yes, many people are jaded and perhaps even outright negative these days and while that is not the best mindset in which to excel in Life in general, I can certainly understand how they got there.

On the other hand, just pretending to be purely naive is certainly no better. What in your experience really makes you think that a true “cure” for cancer will ever be allowed into the public realm by Big Pharma and the mainstream media so that it can in very short order totally destroy the very large and extremely profitable business of cancer?

The big pharmaceutical companies are certainly not going to produce it despite supposedly having invested more money than we can count over the last many decades reportedly in that very endeavor. Also, the media is not going to air it, not when their pharmaceutical sponsors spend over $29 billion a year on media advertising to promote their drugs (amount from 2011.)

However, you appear to me to have been around the block a time or two and have at least a modicum of smarts.. so none of this should be any news to you whatsoever.

Pick any truly major disease over the last few decades, whether cancer, heart disease, Aids, diabetes, etc.. and show me where any actual “cure” has been generated and made available to the public for any one of them. I am betting you cannot do it.

Why is that? Because they are not in the “cure” business and absolutely do not want anybody else to be in that business either.  They are instead in the business of “managing symptoms” such that you thus need their products for the remainder of your natural life (assuming you can stand the side effects) however long that might be.

If they come up with and offer up a real cure, the likelihood is that you would only have to take it once or perhaps at most a few times and you are done, no more revenue for them! They are absolutely not going to let that happen. If somehow enough people change their diets and lifestyles such that a particular major disease rate drops dramatically over time, then they will rush out a vaccine or a cure and manage to manipulate the facts to make it seem like they were the ones that provided the solution and are to be lauded.  It is the same process they have used in the vaccine business (another very large revenue producer) for decades already. 

The big pharmaceutical companies go to great lengths to attack the credibility of anything that might get into the wind about a cure of any truly major disease. If you truly think otherwise, you simply are not paying close attention. They even go to great lengths to manipulate the drug studies they submit to the FDA for drug approvals and it is a common practice, as disclosed by The Mayo Clinic and also a top researcher at UCLA the other day for the pharmaceutical companies to hire professional writers to cover the features and results of their new and existing products after carefully eliminating all but the most minor negative results from any of the tests, that they themselves conduct, such that their products appear totally safe and then pay a famous physician to put his name to the article as though it were written and thus fully endorsed by him, when in reality he virtually had nothing to do with it other than lending his name for compensation.

Whistle-blower scientists at the FDA are regularly castigated and threatened with horrendous lawsuits if they even attempt to disclose any negative findings, most especially if it appears their might be any evidence of collusion between the drug applicant and the higher levels of the FDA. 

Of course they even lobbied Congress successfully to eliminate the public’s ability to sue them for negative and harmful results from the dangerous products they sell.. on the basis they have already gone through the expensive and required routines of having the FDA supposedly validate and approve their products for safe use in the public venue.

Of course, last time I looked the guy who was running the FDA at that time was one of the top guys from none other than Monsanto! The swinging door of lucrative executive employment between Big Pharma and the FDA is in constant use and thus we effectively have the FDA in cahoots with the very companies they are supposed to regulate. I am reasonably certain this is also no real surprise to you. So, maybe you were just testing for opinions and maybe a little controversy in this article here as well, not just on Facebook?

So, while I concur that it is not great to operate from a mindset of constant negativity, neither is it beneficial to operate from one that is pollyanish.  Having been a trader, you are more than accustomed to parts of the real world and how things work than a good percentage of your readers may be and I usually really like your articles but I found this one a bit disingenuous based upon the example you used.

The 10th Man

Fundamental investing and technical analysis are vulnerable to human behaviour—but human behaviour itself is utterly predictable and governments' actions even more so.

Read Latest Edition Now

What you always wanted to know about investing, but that you didn’t know to ask

Get Jared Dillian's The 10th Man

Free in your inbox every Thursday

Privacy Policy

Get in Touch

PO Box 192495,
Dallas, Texas 75219

Toll-free: (877) 631-6311
Local: (602) 626-3100

Copyright © 2020 Mauldin Economics, LLC. All rights reserved.
×
The 10th Man

Wait! Don't leave without...

Jared Dillian's The 10th Man

Instinct and financial experience combined by a former Wall Street trader and served in one of the industry's most original, entertaining, contrarian voices. Get this free newsletter in your inbox every Thursday!