Bulls on Parade

The U.S. equities market is on an historic role; up over 200% since the great recession of ’08-’09.  As an investor, mostly for retirement, this is a great thing for my stock portfolio and has helped me tremendously.  The recent spike since the presidential election is the part I find troubling.  There is an old saying, what’s old is new again, and that should scare the crap out of anyone with money in U.S. Securities.

I know most of my readers are not market saavy investors, and the topic of market technicalities could put a four year old jacked up on pop-rocks and jolt soda to sleep in a New York minute (yes I just aged myself).  However, without getting too technical, let’s look at some very curious information.  Stocks are a piece of a company; hence their name, “share”.  It’s a small piece of the ownership and entitles you to a commensurate piece of the “profit” of that company, both today’s profits, and future profits.  As logic would suggest, a share in a profitable company with a bright future is historically worth more than an equivalent share in an unprofitable company with a dismal future (anyone visit a Sear’s store lately?).  That paradigm has held since the birth of publicly traded stocks.  The value of a stock overall can be viewed in context of how much it costs for a share relative to how much profit that company is making and will make in the future.  This is known as a Price to Earning Ratio, or PE Ratio (asleep yet?).

So, I’ll skip to the punch line.  Historically, over the last 150 years, the stock market as a whole has averaged a PE Ratio of 16, with some variation up and down based on the health of the overall economy; ratios go up when the economy is growing or coming out of a recession, and go down when the economy is entering a recession or slowing down.  Today’s market PE ratio is 31.

The last time it was this high was in 2000 before the tech bubble burst.  Before that? September 1929. Nervous?

No amount of promised corporate tax rate cut (which hasn’t actually passed Congress yet), can account for that ratio being so high.  Some analysts are questioning if the old historical paradigm of stock value is changing. Has the Market Paradigm Shifted? The short answer is no.  The long answer, is that the market is at unsustainably high-levels because people set market prices, and as I’ve come to conclude based on 40 years of empirical observation; people are stupid and greedy.

When traders investors gamblers ignore basic market fundamentals and analyst data, they are acting as all humans do… with self-interest.  No one wants to see this bull-market slow down, because that would mean admitting to a long-standing logical fallacy that Wall-street has pushed on society for years; that low taxes (or the promise thereof) equals growth.  It simply doesn’t hold true with empirical study, and by continuing to drive this bubble into uncharted territory, the market is openly admitting it has no foresight, no self-control, and more importantly, no interest in facts.

So the next time someone tells you they want something because it’s “good for businesses, the market wants it”; politely remind them that the market is just a junkie looking for a fix so they don’t have to come down off their high.  Junkies will tell you anything and everything to avoid facing sobriety and the consequences of their actions.

(cover art credit – National Geographic)

The Moments In Between

I never intended for this to become a political blog, it just so happens recent events have compelled my thoughts in that direction.  I plan to steer it back as whim and chance allow:

Today, in between shuttling the Pragmatist’ sons to little league games and running errands, I had a chance to “get some steps in” as we colloquially call walking now days.  I had an hour before our afternoon game started and had access to a local park trail along a wooded stream snaking its way between neighborhoods in my suburban town.  I swept along at a good pace, focused on getting as many steps in as I could in my allotted time and keeping my heart rate in an acceptable “zone”, all tracked of course on my fitness watch and monitored via Bluetooth on my “smart” phone.  Meanwhile, I methodically visualized the tasks ahead of me at work this week. The picture of the modern man, I thought to myself somewhat boastfully.

And then it hit me, rather starkly and without regard for my schedule or intent.  I don’t know if it was a splash of light at just the right angle, or the rustling of the leaves, or perhaps a bird call or the earthy scent of slowly decaying leaves, but instantly I was immersed in an overwhelming sense of nostalgia and deep calm.  My legs had stopped moving letting my eyes fully absorb my surroundings. I found myself drowning in a sea of rich deep hues of greens, yellows and reds.  The powerful, yet waning October sun trickled through the impossibly thick beech wood canopy, speckling the forest floor with pockets of warm light.  The breeze in the trees gently keeping the light from resting anywhere for too long, and the whirring of the autumn crickets seemed to be all around. And I was overcome with warmth and calm and an overwhelming sense of peace.

In that moment I was swept away from literally everything; every worry about the world, my children, finances, politics, all of it; absolutely gone from my mind.  I paused as long as I could to just absorb the beauty of it all, and the serenity I had found in between.  In between the neighborhoods, the highways, the strip malls and airports.  In between the baseball games and chores and paying bills.  In between the smartphones, iPads, and laptops. In between the important functions of my “real” life.

Will I experience a moment so calming and perfect again?  Perhaps, but likely not many.  Assuming I live to a normal life expectancy, I will get maybe a few dozen more chances at that moment, maybe more; but will I see them? Will I be aware or will I be too fully distracted by the daily activities of living to recognize what the universe is offering me?  How many times have I already walked past this perfect moment?

I have always held fast to the belief that humans were not meant to attain immortality because it would strip away the urgency of our lives.  The acknowledgement of impending demise, and our omnipresent awareness of it, adds intensity to our journey, knowing we are only given so many days, so many opportunities to accomplish our goals; so many moments to savor.  Without the threat of time running out, would we be capable of love?  Would we hold on as tightly to our families if we didn’t know that we only have so many shared moments with them, so many times to embrace them?

I can’t tell you the meaning of life, but I know one thing for sure, and that is human actualization doesn’t happen in any outlook calendar, or at work, or on television or on Facebook.  It happens when we slow down enough to recognize and appreciate the perfect moments offered to us in between.

The Lone Wolf and Our Not-So-New Normal

May 18^th, 1927. Bath, Michigan

That is the place and time you can generally point to as the opening volley of the lone-wolf mass murderer/domestic terrorism era in the United States.  A disgruntled white man on the Bath School Board named Andrew Kehoe, secretly filled the school with explosives and detonated it while school was in session, killing 38 kids.  Later he drove his truck filled with dynamite up to the chaotic scene, pulled out his rifle and shot the dynamite, killing himself and three others in the ensuing explosion.

90 years later, and we find our-selves mired in a seemingly un-ending plague of domestic terrorists, using our children, our mothers, our fathers, our sisters and brothers, friends, and colleagues, as cannon fodder in wave after wave of innocent slaughter.  Sometimes they leave signs of their impending break, other times we have no warning.  Regardless, they leave us broken; shaken again and again out of our self-imposed emotional shell of safety.  We are sickened, scared, angry, and frustrated.

But not shocked.  Oh no.

No longer do we get to use the veil of “surprise” when discussing these events.  Nine decades, four full generations, a life-time of these images stares at us from our history books, so no; we are no longer allowed to express shock.  We’ve lost that privilege.

Some of these people use explosives, some use airplanes, some use trucks, but most use guns.  Guns seem the most effective and easiest to use; but make no mistake, they are merely the tool.  Tomorrow, we will repeat the same national debate we’ve had for decades; sensible gun control (which would be nice but won’t prevent this), improved mental healthcare (which would be nice but won’t prevent this), increased security (which wouldn’t be nice and still won’t prevent this).

Let’s start with guns; as much as I would be happy to see a repeal of the 2^nd amendment and mass de-weaponization of this country; that will not happen.  Our constitution, for all its brilliance, does not allow for much grey area around stipulated rights.  This is our Supreme Court’s interpretation of the law, not mine.  Change will require repeal.  Repeal will require ratification by three quarters of state legislatures.  Given the political landscape of our country, this is a complete impossibility.  Even if you could manage to convince 75%  of our state legislatures to repeal the 2^nd amendment, any attempt to enforce disarmament would be met with full-on insurrection by the large minority of our populace that has not evolved on this topic.  This is not alarmism, just practical acceptance of what we are as a country.  We are, as a nation, inextricably attached to guns for better and most definitely for worse.

Ok, let’s address mental health. Yes, let’s.  Our system is broken and we absolutely should be looking to enhance services for those in need.  The problem is that most of these individuals do not present with “mass murderer”.  Millions of people in our country have mental illness, such as bipolar disorder, depression, schizophrenia, etc.  There is no single profile that correlates with this behavior, and the large majority of these events are perpetrated by those who have not previously been identified as needing help.  Those that have been identified rarely present at a level justifying involuntary detention. Even if our system were vastly improved, there will continue to be individual outliers, particularly the “martyr” type perpetrator apparent here and in Orlando.

Finally, increased security; essentially useless against events like this latest one.  Las Vegas, for a variety of reasons, is one of the most highly monitored and secured cities in this country. Security is only as effective as the latest threat.  How could security have stopped this one?  The concert goers were screened, they were not the issue.  This person concealed a cache of weapons in his luggage.  Unless we concede to having our luggage searched every time we check into a hotel, this could not have been prevented.

Depressed yet?  Don’t worry, its worse than you think.

I would make a rational argument that the root cause of this scourge and its apparent metastasis, as absolutely terrifying as it is to acknowledge, is our society itself. We now inhabit a world where it is possible to live in close proximity to thousands yet be completely emotionally isolated.  A society where any slighted or disgruntled person can find a treasure trove of bias confirming information online in mere seconds. A society where our media feeds us horrors from every corner of the world in real-time, and sensationalizes every one of these events with a twisted glorification proportional to the level of the depravity.   Worse, our reactionary outrage on social media feeds this beast, creating the very incentives driving these individuals to enact the next “worst” thing ever.

Like a genetic mutation in our body, this behavior is a cancer in our society; difficult to find and even harder to remove. We innocently and inadvertently feed it every time we log-on, tune-in, and flip out.  At my core, I hope we can (finally) pause and have rational discussion on the topics above, but I have absolute confidence that we won’t.  Our great nation’s ability to challenge itself on difficult issues like this has atrophied from years of complacency.  This topic is hard, and like the dying patient who keeps smoking despite their prognosis, we are set in our ways, and aren’t interested in the prescription necessary to fight this particular cancer.

So we won’t.  Until the next worst-thing-ever.

To Wage War

Pardon me while I interrupt your weekly gas-lighting session by our POTUS.  Unless of course you think who does and doesn’t stand up for our national fight-song is more important than the massive state of economic inequality in this country… in that case carry on.  Nothing for you to see here.

As our Congress again tries to repeal Obamacare, what is increasingly apparent to everyone paying attention, is that they really aren’t interested in fixing the ailing healthcare system in the United States.  The predominant interest is finding ways to reduce the tax burden on the wealthy.  Every attempt to restructure our healthcare system is in effect, a proxy attempt to allow those earning large amounts in income, to share less of it.  It’s that simple, and any who suggests otherwise just isn’t paying attention to the details.  This is an indirect flanking maneuver today; next month’s tax “reform” bill will be a direct assault.

While I have many thoughts on healthcare markets that perhaps I will delve into some time in the future; today I want to address the GOP infatuation with lowering taxes as a means to stimulate the economy and drive economic growth.  There is no clear empirical evidence that marginal tax rates and GDP growth are even correlated, much less causal. Full Stop.

For a lengthy analysis of the actual evidence for those of you so inclined, you can find a good white paper here.

Let’s pause for a moment and acknowledge that maybe we are focusing all our time and energy on the wrong side of the ledger.  What if instead of squabbling over a few percentage points on marginal tax rates, we focused on why we even need to squeeze an extra 4.6% out of the top end of our income tax base…it’s because most people simply don’t pay income taxes.  This is an indisputable fact that many liberals don’t want hear, and was called out in the 2012 election cycle by Mitt Romney’s gaff when speaking to donors in a closed door session.  While I disagree with Mitt’s motives at the time, he wasn’t wrong.  The majority of Americans do not pay federal income taxes; not because of any fault of their own, but rather because our wage system does not allow them to earn enough to even qualify for the minimum federal income tax.

Getting to my point: Instead of arguing over who gets the last bite of pie, we need to simply bake more pies.  Increasing wages for the bottom two quartiles of income earners would solve a multitude of societal problems that we currently try to fix through socialistic redistribution programs and tax subsidies.  That isn’t to criticize those efforts, but why do we spend so much time working on treatments and so little time addressing the underlying disease of low wages.  Simply put, when people earn more, they require less subsidy, be it Medicaid, insurance premium subsidies, earned income credit, or direct welfare and food assistance.  They also tend to spend more when they have more to spend, driving UP consumption; a good thing for our consumer dominated economy.

Yes, your Triple Espresso Mocha Whip Frappuccino will cost you a few cents more.  As will your trip to Walmart or even your trip to the dental hygienist.  Prices on labor intensive services and good will increase proportional to the percentage of labor required in executing that service.  And that is okay, because with proportionally more wages in your pocket, you will have more than the required price increases.  Frankly, you have been paying BELOW MARKET prices for those goods anyway since our government has had to subsidize the wages of the people providing them.  I’d rather see the cost of my hamburger go up from $5 to $6 and pay a fair wage, than have that extra $1 be collected in taxes to then simply go back to that worker in Medicare subsidies.

And before I have to listen to someone start complaining about the fact that minimum wage increases lead to reduced employment, this too, has no basis in empirical evidence.  In fact, there is no direct correlation in national minimum wage increases and unemployment what-so-ever.  To be clear, I am not talking about simply increasing the minimum wage, but rather all wages in the bottom two quartiles of income earners.  Low earning salaried positions have suffered the same wage deflation over the past 40 years that hourly workers have, with a greater and greater share of corporate earnings going directly to the pockets of equity shareholders.  Investors and markets act as if this is some fait accompli; that stock returns should naturally increase on the backs of labor (even when the companies are not growing); and they have convinced the American people that this is not only normal but the “correct” behavior.

Source: Washington Post

That, my friends, is a pile of USDA grade A bullshit.  A canard of elephantine proportions repeated ad nauseam by wealthy fiscal conservatives until the populace finally conceded it must be true since it is repeated so often.

By and large this redistribution of corporate earnings away from workers has created the massive and unsustainable inequity we see in America today.  EVEN as we see unemployment dropping to very low-levels, the available jobs simply do not pay sufficient wages to support the average cost of living. NOT just at the lowest end of the wage scale, but throughout the economy.  Correcting this trend will not only support a reduction in required government subsidies to the poor, but will increase the tax-base overall, reducing pressure on the top income tier to support the lower quartiles, and allow for a broader and reasonable dialog around what a “fair share” really looks like, something the wealthy should applaud.

Call your representatives.  Tell them to stop fighting over irrelevant tax rates and start focusing on the real problem, wages.  Rational Conservatives and Progressives alike should be eager to jointly stand up for that anthem.

 

A Dying Dream?

Today, I am experiencing a very real and painful emotion.  I have never felt disgust toward my own country before and it hurts in a way that I’m struggling to cope with.  You see, despite the far-right’s claims otherwise, I, like most progressives I know, really love our country.  And when I say love, I mean capital “L” love, with a passionate fervor that is difficult to describe.  I cry at war movies, I read history books with pride, I reflect with wonderment at the majestic vision that is our constitution, of which I keep a copy in my nightstand.  Heck, my children are named after founding fathers.  Men who stood up to the inequity of tyranny and said “enough”.  I solemnly believe that the United States is the single greatest experiment in self rule the world has every known.  99.9% of us trace our DNA to other continents, yet we came together on THIS continent to participate in a great social venture never before seen in history.  We do not share blood or lineage or culture, yet we all form a common people, woven together by the desire to bring a better life for our families.  Whether your people came here last week, last century, or in 1613, as my patrilineage did; we share a dream.

Today, I witnessed the duly elected leader of my beloved country, spit in the face of the very essence of American exceptionalism.  By choosing to end DACA, we look into the eyes of nearly one million people… OUR PEOPLE, and we tell them that they must pay for the sins of their fathers; that their contributions to our great experiment are unwanted; that their bet on America was a bad investment.  We tell them that our need for vindictive and cruel, twisted vengeance is greater than our love for the character of what makes our country the greatest on earth.

While my anger and frustration with this president run deep, up until this point, one could at least attempt to rationalize the actions of this administration based on a combination of narcissism, incompetence, and unadulterated greed.  Greed, it can be said, is the most powerful of the sins; and as despicably unconscionable as many of the policy decisions to date have been, you could at least see the motivation to enrich the already rich.  Today, however, there is simply no motivation that can explain this action beyond cruel hatred for mankind and a total blindness to what America actually is.  These dreamers are employed with no-criminal histories, have never taken public assistance, and are paying taxes.  They are our farmers, our nurses, our care-givers, our teachers, our tradesmen.  They are AMERICAN by their behavior, if not by legal status.  More American, perhaps, than those who seek to expel them.

Look, despite my reverence to my country, I’m not naive to her multitude of sins. We have a knack for wrapping our cruelty in a warm blanket of moral condescension and twisted puritan snobbery.  Combine that with our penchant for false bravado and an unparalleled capacity and willingness to wage economic and physical violence against our enemies, and each other, America is not for the faint-hearted.  Sometimes you have to open a window to clear the air of our foul hypocritical stench.  And yet, I still love her.  I love her because we still  offer the world a drug so powerful, that 241 years later, the people are still hooked on its infinite high.  We offer individuals from around the world, an opportunity to come here, to be what they were born to be, to work towards their dreams, to find success no matter their religion, or culture, or caste, or race, or gender, or nationality of origin; to achieve a dream .  A dream so grand and aspirational that we were arrogant enough to name it after ourselves.  We all want that American dream.  Inexcusably, we just extinguished that dream for nearly a million people today and created something more akin to an American nightmare.

I love my country, but today, I am not proud of her.  I hope she wakes up soon.

Who is the Pragmatist?

This is a personal experiment for me as I recently have felt compelled to try my hand at writing.  I suspect there isn’t much in the way of demand to read one dad’s perspective on the world in the 21st Century… particularly when that man is as boring as I am.  I have no great life story. No intense biography or monumental exploits to lean on or point to saying “I’ve done things and you should listen to what I say”. I’m just a GenX dude who thinks about the world around me and does my best to understand it.

I’ve wasted days researching mundane trivia for no other reason than I have a thirst to “know”.  I just like being aware of how my universe works, how each tool I use performs, why things are the way they are.  I get frustrated when I discover things work inefficiently or for archaic reasons embedded in social behavior and without scientific merit.  Regardless, I find solace in the study of things much in spirit of an observational scientist might.

I know that I’m not alone in this habit. Many people enjoy the act of pondering, so I am hardly unique.  Nor do I believe that I am somehow in possession of a superior intellect or remarkably unique perspective on life… That I’ve discovered a “new” vision that I am compelled to share.  No, I simply need an outlet to express what bubbles out of my somewhat scattered and disorganized brain.  I need a way to channel the musings and thoughts that flood me day in and day out.  A relief valve if you will.  And since I am a product of the internet age, what better way to manifest that expression than with this most uniquely narcissistic invention, the blog.

So here I am.

I am a man, a father, a husband, a son, a brother, a friend, a student, a scientist, an engineer, an executive, an employee, and a pragmatist.  I believe I am moderately competent, but not particularly great, at all of these roles despite my intense desire to improve upon each of them. Somehow I feel that writing is something that may actually help me cope with the challenges that I incur in each of these pursuits, so this is my plan:

To write what I think; to capture the fleeting discussions I have with myself every day; to not be afraid to share my inner musings.  I will write for therapy, for understanding, for fun, and for community.  I doubt you will learn much here, but I hope you will stay and share none-the-less.

Welcome.