“Science, my lad, is made up of mistakes, but they are mistakes which it is useful to make, because they lead little by little to the truth.”
Science class, or any other class, is made up of mistakes that carry a discounted grade and perhaps a discounted sense of self.
The education we sell, the one we wish for for our kids and the one we seek for ourselves, is best achieved by those that can tune out the bell ringing, point deducting, grade norming, and finger pointing.
In order to thrive in the “fail up” sales pitch of modern school culture, you must first have been imbued with high self-esteem, been born to the parents that get it, and been assigned to the teachers that don’t use grades as weapons.
In other words, you have to have won the lottery.
What if work were assessed using rubrics rather than grades? What if your report card were a digest of the type of work you tend to deliver, rather than a derivative numerical abstraction of the same? What if your final mark, if such a thing were necessary, were a measure of your improvement over time, rather than the mean of your performances over time?
What if your work, both the successes and the mistakes, were seen as the thing that leads you little by little to the truth?
What follows is an apocryphal sound bite from financial media inspired by the events of a day in mid-July 2021. This quote could very well take place on any given day, a few dozen times per year, with dates, parties, and events interchangeable:
A seven-day positive streak in the markets was broken with the news that Google is being sued for anti-competitive practices related to the operation of their app store. As this news broke, we’ve learned that the Japanese government decided to ban spectators from the upcoming Olympic Games because of the worrying surge in COVID cases. Additionally, labor numbers, employment numbers, news of a hurricane approaching the Atlantic coast, and a half dozen other things that are freaking us all out has led to a several-hundred point drop in the Dow Jones index.
Like I said, replace Google with Apple, replace Tokyo and Olympic with Europe and tourists, and you’ve got a whole new news day filled with reasons to be fearful. Reasons to be negative.
But are these reasons filled with fear or fear filled with reasons?
Often and especially after sequential days of positive movement in the indices, the market turns negative and starts to look for reasons to justify that negativity. The usually turn to macroeconomic indicators or force majeure headlines like extreme weather or, in the case of 2021, COVID numbers. If we see beyond this “fear filled with reasons” tendency, the mindful investor can capture the opportunity to open or add to a position otherwise avoided due to high valuations.
In order to identify these moments of market inefficiency, it’s helpful to identify what it is that you DO fear.
Here’s what I fear:
Long-term economic decline
Permanent decline in birth rate
Lack of faith in business and industry
Threats to democracy and the rule of law
Large-scale war that includes nuclear and/or biological weapons
Irrevocable ecological destruction brought about by climate change
Of these items, the only ones I’m legitimately concerned about are war and climate change. War could very well happen tomorrow and there’s nothing I can do about it. And if my orbit does become impacted by weapons of mass destruction, I’ve got bigger problems than my portfolio balance. Climate change probably won’t permanently impair our way of life until well after I’m dead. So, from an investing perspective, I don’t have any reasons to be fearful.
The media and the market will give you as many reasons to be fearful as you have time to dream up. Incorporate them into your investing strategy at your own peril.
In two ways, these actors are doing you a favor.
First, they are forcing you to envision the near future as something other than what it is—relatively safe and relatively predictable. The day journalists get on the news and say “Everything’s swell” is the day I will head for my basement closet.
Secondly, every time someone, whether a media personality, a politician or a fund manager gets on TV and enumerates the things you should be scared of, they present a buying opportunity for those of us fortunate enough to know what we know.
The world is relatively safe, relatively predictable, and over 80% of Google’s revenue still comes from advertising. Buy $GOOG.
This undated photo shows electric vehicles being plugged into what we today would refer to as charging stations. Early in the 20th century auto makers dabbled with electric vehicles. They repeatedly came back to the enterprise, most notably with the Saturn EV, profiled in “Who killed the Electric Car.” In every instance, the future was there for all to see. It just wasn’t evenly distributed.
Any time a good idea dies in its infancy, we can look to two reasons: technology and mindset. The batteries were laughably short-lived and the network of charging infrastructure to make long-distance travel possible was non-existent. And yet, as recently as a few years ago, the situation was no different. Battery technology (including but not limited to longevity, size, weight and cost) kept the major manufacturers from jumping into the EV space, and since ICE vehicles were still selling, with pickups and SUVs being the most lucrative categories, Ford and GM stayed where the money was.
Then Tesla. And Fisker. And Rivian. Lordstown. Lucid. Et cetera. The small outfits that tolerated the the lack of profitability in order to realize the dream of sustainable EV production themselves created the technology and mindset that led to sustainable EV production. (Let’s ignore momentarily that profitability is a key component of sustainability.
There were missteps along the way. In their investor presentations, the Nikola Corporation famously rolled a semi down a hill in order to simulate what it would look like if their long-haul EV tractor had worked. Then CEO Trevor Milton was swiftly mocked and relieved of his duties, and both Ford and GM withdrew their interest and investment capital. Notwithstanding the technology that already existed, if Tesla, Fisker and others had not sufficiently changed consumer and investor mindset, would Nikola’s gag have put EVs back on the shelf for another generation?
Electric vehicles are no longer the future. They are the present. The name of the game now is adoption rate. As we look to the future, what are the trends that reflect an unevenly distributed future? Hybrid workplace, augmented and virtual reality, Internet of Things, decentralized finance. These are just a few of the trends that have made headway in recent years, most of which gained momentum (or at least mindshare) during the 2020 lockdown. Which glimpse of the future will you seize on, invest in, adopt into your professional practice?
Sometimes the future stares us in the face and we don’t know what we’re looking at. These police officers didn’t know what they were looking at. They saw an affront to law and order. They were actually looking at the future 16-term congressman from the state of Georgia, John Lewis. Future on the right, the past on the left—unevenly distributed.
If I had had the opportunity to meet Rep. John Lewis before his passing, I would have thanked him for bringing the future to us a little sooner than the country expected. He paid dearly for it.
What social trends do we see going on around us? What is as it should be and what is in dire need of change? Is the thing you see that makes you uncomfortable or makes you angry wrong, or is it the first glimpse of a future you have an opportunity to be a part of?
If you spend more than five minutes in the room with a self-proclaimed “educational innovator,” they will point out that the classroom of 2021 looks very much the same as it did in 1921. It’s one of our favorite zingers.
COVID-19 forces the world to adopt remote learning, and we learned two things from it: 1) It sucks and 2) It holds promise.
More than anything, we learned that regardless of where we are in our technology and our mindset, learning is nothing if not a deeply social enterprise. We NEED to connect with the people we learn from and learn with. And yet, as any introvert can tell you, not EVERYTHING needs to be done in groups of three framed around a “do now” and an “exit ticket.”
So, as schools reopen in the fall, or as those that have been open loosen restrictions, what should endure from our flirtation with virtual school? What does the future look like, its full distribution we’ve only begun to glimpse?
An English teacher colleague of mine has recently rekindled his love of teaching writing. He is far from stagnant in his practice, but neither does he chase every pedagogical whim for the sake of being “the innovative teacher.” He swings at pitches that he know will drive in runs.
When our school went virtual in the spring of 2020, he was forced to conduct writing consultations with students via a screen-shared Zoom call. This intimate setting allowed deep conversation, thoughtful inquiry and self-assessment, and frank conversations about one’s writing. Suffice it to say, this practice will endure the reopening of schools.
A math colleague began the practice of “breakout rooms of one.” She put her students alone in a breakout room during moments of reflection and assigned them a conversation with themselves. They had to speak out loud and they had to participate in both sides of the conversation. Although it took practice, students responded positively to the exercise. In particular, they like holding the responsibility of both formulating the question and finding the answer, of providing both the point and the counterpoint to a problem.
Which brings us to now. Nearly out of the pandemic, we probably spend more time looking to a more normalized future than thinking about our constrained past. Which of those constraints are worth holding on to? What should live on in your teaching practice? In the life of your school? What’s worth distributing now?
You’d have to ask a biologist to be certain, but I suspect that things in nature tend toward symmetry. The left side of the human face tends to look like the right side. One edge of a leaf looks largely like the other. Not so for investment gains.
Regardless of market optimism, regardless of where we are in the market cycle at a particular moment, regardless of what you think the economy holds in store, the potential for gains is astronomically asymmetrical to the likelihood of losses over time. The reason is simple. The most you could ever lose on an investment is 100% of your initial capital. The most you could gain is infinity.
Infinity is a pretty stupid word when talking about investing. But the 10,000% gain you would have gotten from your ownership in Netflix or Amazon is indistinguishable from infinity.
Because of the asymmetry between gains and losses, it is not absurd to propose that if you make 20 investments and 18 of them turn out to underperform or merely perform with the market averages, just holding those two remaining stocks for the long term just might put you in a position of life-changing outperformance.
Imagine that. In what other context can 10% of your decisions that result in a positive outcome outweigh the other 90% of your decisions that have a negative outcome.
As investors, the odds are heavily tilted in our favor. If for no other reason, the best time to start investing is now.
There’s a Chinese proverb in which several blind men are summoned to court to answer the question, “What is an elephant?” As each man grabs a hold of one part of the elephant, the men in turn make their estimations:
“An elephant is a round pot.”
“An elephant is a thick tube.”
“An elephant is a large leaf.”
After some time the men begin arguing with one another about the nature of an elephant. Each of them is right, but only partially right. They only have access to one perspective of what is a very objective reality.
We can all agree that there is a thing called objective reality. In so far as our coaching practice is concerned, we have to acknowledge that we only see the portion of reality that we’re privy to. And that lot only represents a portion of the portion that our coachee/client/colleague is privy to. It’s a portion of a portion of reality.
The only remedy for this condition is curiosity. To stay curious in our coaching response keeps questions flowing, keeps options open, keeps the blind man running his hands down the elephant hide, searching for more information about the true form of the thing under examination.