Progress..............................

 lots more fun here

Cycling...................

 The way I see it there are really only two constants in the markets: risk and cycles.

Risk has to exist because without it there would be no reward.

And nothing is more dependable than cycles because market psychology, fundamentals, risk appetite and investor emotions are constantly changing. Strategies, asset classes and securities go in and out of style in part because the pendulum always swings back and forth between fear and greed but also because the future is unknowable.

-Ben Carlson, from here

But, but, but........................

"Recyclers in the U.S. are now awash in dirty plastic, with no outlet for their commodity. Much of that is headed for landfills."

-as culled from here

Even in little Newark, Ohio this is a real thing.  Two months ago, we were prepared to bid on a local 90,000 square foot abandoned industrial building.  On a price per square foot basis the building was ridiculously cheap.  One catch.  The previous owner, who was walking away from the building, stocked the whole place with giant bales of compacted dirty "recycled" plastic.  The buyer of the building also got the bales.  We had several quotes for hauling the dirty plastic to the landfill - there being no other use for it.  That cost changed the building from ridiculously cheap to a bit too risky for our taste.

There is no doubt that many of our fellow citizens feel virtuous when they carefully sort their trash and take their recyclables to a recycling center.   Not sure that feeling is warranted.

Rating this as "correct"...................

Finally, a goal-oriented mind-set can create a "yo-yo" effect.  Many runners work hard for months, but as soon as they cross the finish line, they stop training.  The race is no longer there to motivate them.  When all of your hard work is focused on a particular goal, what is left to push you forward after you achieve it?  This is why many people find themselves reverting to old habits after accomplishing a goal.
     The purpose of setting goals is to win the game.  The purpose of building systems is to continue to play the game.  True long-term thinking is goal-less thinking.  It's not about any single accomplishment.  It is about the cycle of endless refinement and continuous improvement.  Ultimately, it is your commitment to the process that will determine your progress.

-James Clear, Atomic Habits:  An Easy & Proven Way to Build Good Habits & Break Bad Ones

One damn thing after another................

     By summer the storm had passed, and McKinley plunged into his next political adventures:  a second gubernatorial term and preparations for an 1896 presidential run.  But now the political landscape was entirely changed by economic hard times that hit with a fearsome force.  It began in the farm sector, where a real estate boom had drawn in thousands of Eastern investors beguiled by low interest rates and prospects for quick wealth.  A $200 investment in Western land had been know to return $2,000 in a few months, historian John D. Hicks reports, adding, "Small wonder that money descended like a flood upon those who made it a business to place loans in the West!"  Then came the drought of 1887, and the bubble burst.  Farmers couldn't produce sufficient crops to pay the mortgage;  money dried up;  banks and their borrowers went under.  In drought stricken Kansas, half the state's Western farmers pulled up stakes and fled.
     The Western farm bust soon undermined the industrial sector, particularly the railroad industry, and panic swept the country.  Railroads had been expanding on borrowed money and now couldn't cover the debt service as farm shipments dried up.  As railroads declined, so did the rest of industrial America and the big-city Eastern banks.  One result was falling stock prices, which precipitated a run on gold supplies as holders of securities cashed out of the market in exchange for gold.  By spring the Treasury's gold reserves had dropped below $100 million, considered a minimum confidence level.  By year's end, about the time of McKinley's reelection, some 500 banks had failed, more than five times the annual average of the previous five years, and a record 15,242 U. S. companies went bankrupt.  Unemployment soared.
   
-Robert W. Merry,  President McKinley:  Architect of the American Century

G. E. ..............................

Musings on Markets has an interesting post about how one might think about General Electric today.  In between the lines are lessons for all businesses.   Two excerpts:

"If there is a lesson to learn from GE's fall from grace, it is that even the best conglomerates are built on foundations of sand. Note, though, that while this lesson may be learned for the moment, it will be forgotten soon, as are most other business lessons are, and we will surely repeat the cycle again in the future."

"Don't get me wrong! Jack Welch was an inspirational top manager, a man with vision and drive, but he was also an imperial CEO, who made his board of directors a rubber stamp for his actions. As we look at a new generation of successful companies, this time in the technology space (the FANG stocks and the Chinese giants), with visionary founders at the top, it is worth remembering that power left unchecked in any person (no matter how smart and visionary) is dangerous."

via

And it couldn't happen to a nicer group of people...

And I truly get the frustration of being a business cycle economist in the midst of what will almost certainly be a record-breaking expansion. Imagine a business cycle economist going year after year without a recession to ride. It’s like Tinkerbell without her wings.

-as lifted out of this Calculated Risk post

It's California's fault................

     Did you know that these here United States have had a recession every decade since California achieved statehood?   According to these statistics, that's the truth.  So, is a recession lurking around the corner?

     Ben Carlson, in his A Wealth of Common Sense blog, says, "Someone who thinks correlation implies causation in these things would assume that means we’re due for a recession in the next couple of years before the new decade hits."

    Carlson, wiser than most, confesses not knowing.  He concludes his post on the subject like this:

Recessions typically occur because certain parts of the economy get overheated and then corrected. Yet even economists don’t have an overarching model or theory that can accurately explain when, why or how that will happen.

The reason this is the case is that something as complex as economic activity is mainly controlled by human behavior, not rational economic textbook theory.

Charlie Munger once asked a group of college students, “How could economics not be behavioral?” His response: “If it isn’t behavioral, what the hell is it?”

Human behavior isn’t predictable enough to rely on the calendar to forecast the next recession. The next one could occur in 2019 or 2025. I wouldn’t be surprised either way.

Hard to disagree with this..............

....................(although I'm a bit surprised they haven't offered help re-cycling all the damn boxes around here):

Amazon’s laser-like focus on creating value for consumers and keeping them satisfied with low prices, huge selection, speedy delivery and great customer service goes a long way towards explaining its phenomenal success as a retailer, which gets reflected in the meteoric rise in its stock price and market capitalization.

-Mark J. Perry, as excerpted from here

Opening paragraphs..........................

History moves in cycles.  The plague of political correctness and assaults on free speech that erupted in the 1980s and were beaten back in the the 1990s have returned with a vengeance.  In the United States, the universities as well as the mainstream media are currently patrolled by well-meaning but ruthless thought police, as dogmatic in their views as agents of the Spanish Inquisition.  We are plunged once again into an ethical chaos where intolerance masquerades as tolerance and where individual liberty is crushed by the tyranny of the group.

-Camille Paglia, from the Introduction to Free Women Free Men:  Sex - Gender - Feminism

The more things change......................

He was perfectly astonished with the historical account I gave him of our affairs during the past century, protesting it was only heap of conspiracies, rebellions, murders, massacres, revolutions, banishments, the very worst effects that avarice, faction, hypocrisy, perfidiousness, cruelty, rage, madness, hatred, envy , lust, malice, or ambition could produce.

Jonathan Swift, channeling Gulliver, circa 1726

My favorite optimist..................

................notes that failed populist revolts often bring the unexpected tyranny.  History may not repeat itself, but its cycles sure seem similar (and not very pretty).  Full post is here.  Two wee excerpts here:

"There is a lesson here. Europe as a whole is heading down the same path: slow growth and far too many people living off redistribution rather than enterprise — in private, public and voluntary sectors. The goose that always lays the golden eggs of prosperity is the habit of exchange and specialisation: people doing what they are good at, and getting better at it with innovation, while swapping the results freely with others through commerce."

"Yet history shows that free exchange is constantly at risk of being infected and captured by parasites and predators who live off productive people through taxes, tithes, rents, slavery, subsidy, war and theft. This is what killed the goose in ancient Greece and Rome, in Renaissance Italy and Holland’s golden age. From time to time anti-oligarch insurgents are needed to purge the parasites, expel the predators and free the economy from their burden."

From the "Change is Hard" category.....

"......all of the knowledge and technological advances in the world are never enough to change behavior."

-Ben Carlson, as culled from this "it's always and never different" post. that leads off this way:

"I'm fascinated with financial market history because learning about prior cycles gives you a sense about how some things never change while others are in a constant state of flux. It’s both always and never different this time."

Cycling..............................

If you torture financial data enough and play around with start and end dates you can show almost anything you want historically, but it’s obvious that the stock market is cyclical in nature. Periods of high returns are eventually followed by periods of low returns. Cycles are one of the few dependable aspects of investing in stocks.

-Ben Carlson

Recurring seasons..............................

This era could be summed up much as Charles Dickens wrote in 1859 in  A Tale of Two Cities:  "It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair..."
     In this era of enormous, stunning intellectual progress and simultaneous fearsome calamities, the reprehensible paths take by mainstream leadership is not surprising, nor was their propensity to cling to rigid theologies and politics of "us and them."...

-James C. Harrington and Sidney G. Hall III,  Three Mystics Walk Into A Tavern

Not to disappoint anyone, but the "era" being discussed is the 13th and 14th centuries.  Ah, the winding staircase that is history.

The cycling of history............

For neither the first nor the last time in history, heady success sowed some of the seeds of its own demise, and what had been a court that proudly displayed its community's wealth and superiority began to be perceived as a self-indulgent and narcissistic court unwilling or unable to tend directly to the governance of that community.

-Maria Rose Menocal,  The Ornament Of The World:  How Muslims, Jews, and Christians Created A Culture Of Tolerance In Medieval Spain

As history cycles....................

     But to the south, Toledo's takeover by a powerful Christian monarch who was a real contender, not just another strongman of some minor city, provoked a historically fateful military reaction.  Alfonso's defeated and dismayed rival for control over Toledo, the equally ambitious and accomplished Mutamid, based in Seville, asked for military help from the Almoravids, the fundamentalist Muslim regime that had recently taken control of Marrakech and established the polity we know as Morocco.  The Almoravids were Berber tribesmen who had been building a considerable empire in North Africa.  These fanatics considered the Andalusian Muslims intolerably weak, with their diplomatic relations with Christian states, not to mention their promotion of Jews in virtually every corner of their government and society.  But the somewhat deluded Mutamid of Seville cared little about their politics, and imagined he could bring them in to help him out militarily and then send them packing.  The Almoravids thus arrived ostensibly as allies of the weak taifas and quickly succeeded, in 1086 in defeating Alfonso VI.  These would-be protectors, however, stayed on as the new tyrants of al-Andalus.
     By 1090, the Almoravids had fully annexed the taifa remnants of the venerable al-Andalus into their own dour and intolerant kingdom.  For the next 130 years, Andalusian Muslims would be governed by foreigners, first these same Almoravids, and later by the Almohads, or "Unitarians," an even more fanatic group of North African Berber Muslims likewise strangers to al-Andalus and its ways.  Thus did the Andalusians become often rambunctious colonial subjects in an always troublesome and incomprehensible province.  They had irretrievably lost their political freedom, but the story of Andalusian culture was far from over:  although bloodied, the Andalusians were unbowed, and their culture remained their glory - viewed with suspicion , yet often coveted by all their neighbors, both north and south.

-Maria Rosa Menocal,  The Ornament Of The World:  How Muslims, Jews, and Christians Created A Culture Of Tolerance In Medieval Spain

Cycles...............................

The classical world did not believe in linear progressions, but rather in cyclical ones, often using the metaphor of human birth, aging, and death as a natural referent. Cultures and nations start out in diapers like babies and often end in them too—as do aged humans. Civilization is certainly advancing along an arc of greater wealth and more sophisticated technology. But even that trajectory is not settled, as Hollywood’s apocalyptic Road Warrior and zombie films remind us. I do not think the arc of the moral universe of Mark Zuckerberg is any more likely to bend toward justice than was nineteenth-century J.P. Morgan’s, however postmodern the former’s social media products may be.


-Victor Davis Hanson, as excerpted from this essay

Oh, by the way...........................

On peaks and valleys................

Seth Godin explores why it is hard to stay on top:

Success means more employees, more meetings and more compromise. Success means more pressure to expand the market base and to broaden the appeal to get there. Success means that stubborn visionaries are pushed aside by profit-maximizing managers.

Full post is here.