THE FINANCIAL PHILOSOPHER

Bear Market Logic Part 2: There's 'Blood in the Street'.... Now What?

"Courage is knowing what not to fear." ~ Plato

It's times like these -- when emotions lead market direction -- that the use of logic is arguably most useful and the use of emotion is least useful...

In this market environment, or any market environment for that matter, the prudent question is not, "What should I do?" but it is "What should I not do?"

Let's extend upon our discussion from a previous and related post, Bear Market Logic:

• Between 80% and 90% of the returns realized on stocks occurs in less than 10% of trading days. So, if you're out of the market when stocks resume their march upward, your long-term returns may suffer significantly.
• From 1990 to 2005 a $10,000 investment would have grown to $51,354 had you just sat tight from beginning to end. However, if you had missed the best 10 days in that 15-year period, your returns would have dwindled to $31,994; if you had missed the best 30 days, you'd be looking at a mere $15,730.
• Nobel laureate William Sharpe found that market timers must be right an incredible 82% of the time just to match the returns realized by buy-and-hold investors. While long-term investors were sitting tight, the market timer was fretting over when was the best time to get in or out of the market and not necessarily earning greater rewards.
• Between 1986 and 2005, the S&P 500 compounded at an annual rate of return of 11.9% -- even in the face of the market crash in 1987, two recessions, two wars, 9/11, the 2000's "tech-wreck," accounting scandals (i.e. Enron), and more. Due to market timing, the average investor's return during that time was only 3.9%.
• In absence of information, coupled with blinding emotions, herd mentality typically (and mistakenly) overwhelms logic in financial markets.  This behavior often marks the highest points and lowest points of each market cycle. 
• Uncertainty and emotion in investors, as measured by extreme market volatility, and illustrated by the CBOE index (aka "The Vix"), are at levels (above 40) typically indicative of market bottoms in recent history. 

"The world is so constructed, that if you wish to enjoy its pleasures, you also must endure its pains." ~ Swami Brahmananda

So what logical conclusions may we draw from our observations of history?  Timing the market, which would include this week's panic-induced sell-off of stocks, is not a winning strategy.   In other words, time in the market is almost always favorable to timing the market.  This rhyme of history is especially important when the fear of others, and of our own, will test our reason.

These observations would also indicate that, if you are a long-term investor (more than 10 years) and your stock exposure is limited to money that you do not need for more than three years, history will tell you that the correct response to the current market panic is... nothing.

"All know the way, few actually walk it." ~ Bodhidharma

Baron Rothschild, the quintessential banking opportunist, is said to have advised that the best time to buy is when "there is blood in the streets" and Warren Buffet, arguably the greatest investor of our time, implies that his success is founded upon the idea that, if an investor insists on timing the market, the investor "should try to be fearful when others are greedy and greedy when others are fearful."

I believe it is reasonable to assume that there is blood in the streets and that others are certainly fearful in financial markets today.  While many would attest to this wisdom, or at least admit knowledge of its sensibilities, very few are willing to separate themselves from the herd... but those few who have applied this courage, or as Plato said, "knowing what not to fear," in the past, have been significantly rewarded more times than not...

Source:  Profit From Market Timing, by Rich Duprey, The Motley Fool, January 23, 2007

I could not have said it any better...

"I quote others only in order the better to express myself." ~ Michel de Montaigne

What behaviors brought us to where we are today?  How can we learn from them for our own growth? What ideas of those who came before us and words of wisdom from the past can help us in the future?

Often it is best, I believe, to defer to the words of others.  As for which words answer which questions, I will let you decide that for yourself...

"Wall Street never changes:  The pockets change, the suckers change, the stocks change, but Wall Street never changes, because human nature never changes." ~ Jesse Livermore

"As life closes in on someone who has borrowed far too much money on the strength of far too little income, there are no fire escapes." ~ John Kenneth Galbraith

"...an individual who undertakes to live by borrowing, soon finds his original means devoured by interest, and next no one left to borrow from..." ~ Abraham Lincoln

"Money, you have lots of friends hanging round the door.  When it's gone and the spending ends, they don't come no more." ~ Billie Holliday

"If a man is proud of his wealth, he should not be praised until it is known how he employs it." ~ Socrates

"Thought is the organizing factor in man: intersected between the 'causal' primary instincts and the resulting actions." ~ Albert Einstein

"All that we are is the result of what we have thought.  The mind is everything.  What we think we become." ~ Buddha

"Money often costs too much." ~ Ralph Waldo Emerson

"The third-rate mind is only happy when it is thinking with the majority.  The second-rate mind is only happy when it is thinking with the minority.  The first-rate mind is only happy when it is thinking for itself." ~ A.A. Milne

"Don't let your special character and values, the secret that you know and no one else does, the truth -- don't let that get swallowed up by the great chewing complacency." ~ Aesop

"Men are disturbed not by things, but by the view which they take of them." ~ Epictetus

"A man who fears suffering is already suffering from what he fears." ~ Michel de Montaigne

"There is no truth.  There is only perception." ~ Gustave Flaubert

"When the mind is in a state of uncertainty the smallest impulse directs it to either side." ~ Terence

"The ignorant mind, with its infinite afflictions, passions, and evils, is rooted in the three poisons -- Greed, anger, and delusion." ~ Bodhidharma

"Fear always springs from ignorance." ~ Ralph Waldo Emerson

"The markets can remain irrational longer than you can remain solvent." ~ John Maynard Keynes

"The emotions aren't always immediately subject to reason, but they are always immediately subject to action." ~ William James

"The most common cause of low prices is pessimism -- sometimes pervasive, sometimes specific to a company or industry.  We want to do business in such an environment, not because we like pessimism but because we like the prices it produces.  It's optimism that is the enemy of the rational buyer." ~ Warren Buffett

"I do not take a single newspaper, nor read one a month, and I feel myself infinitely the happier for it." ~ Thomas Jefferson

"Real knowledge is to know the extent of one's ignorance." ~ Confucius

"To make no mistakes is not in the power of man; but from their errors and mistakes the wise and good learn wisdom for the future." ~ Plutarch

"Every person, all the events of your life, are there because you have drawn them there.  What you choose to do with them is up to you." ~ Richard Bach

"When one door closes, another opens; but we often look so long and so regretfully upon the closed door that we do not see the one which has opened for us." ~ Alexander Graham Bell

"There are things known, and there are things unknown, And in between are the Doors." ~ Jim Morrison

I could not have said it any better...

What Would The Greatest Thinkers Think of the Financial Crisis?

What would Lau-tzu say about lending practices?  Would Confucius use a credit card?  Would Michel de Montaigne listen to Jim Cramer? What would Shakespeare say about spending?  And what would Ayn Rand say about government bail outs?

"The reading of all good books is indeed like a conversation with the noblest men of past centuries who were the authors of them, nay a carefully studied conversation, in which they reveal to us none but the best of their thoughts." ~ Rene Descartes

Human behavior has not changed in three-thousand years or perhaps, if at all, in the history of mankind.  The perspective I receive from reading the thoughts of the greatest thinkers who lived dozens, hundreds or even thousands of years ago is amazing.  If humans behaved the same in 600 BC as they do now, what makes us think it will ever be different -- or if the way we act will ever change?

Reading the thoughts of the greatest thinkers reminds us that human behavior never really changes -- only the circumstances and settings change -- and provides insights into how we may affect our own behavior in light of the predictability of that of others.  Our only control is of our own thoughts, desires and emotions -- and even that control is limited to the degree of our self-awareness and emotional intelligence...

"Government 'help' to business is just as disastrous as government persecution... the only way a government can be of service to national prosperity is by keeping its hands off." ~ Ayn Rand

Much of where we are today in the financial crisis is the doing of the federal government.  Of course, no one twisted the arms of consumers or forced them beyond their will to buy homes, cars, clothes and self- indulgence, but the federal government certainly made it more possible.  Historically low interest rates and an arguably over-friendly business environment gave complacency and greed just enough room and energy to manifest into the monster it inevitably would become...

And now that same government will "save us" from the monster it fed, nourished and unleashed...

"You have power over your mind -- not outside events.  Realize this, and you will find strength." ~ Marcus Aurelius

If the federal government bails out financial firms with $1 trillion of our tax dollars, what control do we have over this?  Of course, we may cast votes to elect our government representatives but those in office now are those who will make the decisions now -- not those for whom we cast votes in the next election or elections to follow.

What may we control?  Our thoughts, our emotions, our desires, our asset allocation, our attention allocation, our investment selection, our actions and our passivity are all within our control to some degree.  The actions, or lack thereof, of others and entities outside of ourselves are not within our control.  How we prepare for, or how we react to, outside events is where our strength will be established and determined.

"He who establishes his argument by noise and command shows that his reason is weak." ~ Michel de Montaigne

What would Montaigne say about Jim Cramer or any talking head that essentially sells ad time and books with noise?  Their "reason is weak" and their purpose is not founded upon altruism; therefore, we should be careful of frantically searching for answers in the media.

If anything, we could look to the noisemakers as examples of how not to actand as a proxy for the extremes of foolish behavior in financial markets and the world beyond.  In fact, the precise opposite actions and reactions of the noisemakers have proven to be prudent more times than not.

"Have more than thou showest, speak less than thou knowest." ~ William Shakespeare

The current financial crisis is a result of behavior completely opposite to these famous words from Shakespeare.  In western culture, we have both the desire and the capacity to buy now and pay later -- we wish to show more than we possess -- our display of material wealth is actually a display of our credit capacity and our desire is stronger than our will.  Because we can buy it now, we do buy it now, with little consideration of consequences.  This display is not one of financial power -- it is a display of our borrowing power -- and the lack of power over ourselves.

"Freedom from the desire for the answer is essential to the understanding of a problem." ~ Jiddu Krishnamurti

What happens now?  Where will this financial crisis lead us?  Is the worst behind us or is the worst ahead of us?  These questions in themselves are distractions from solutions to the problem.

We always look for answers from other people -- from other sources outside of ourselves.  If we stop asking questions, the silence itself allows us to listen to the real source of answers -- that which is within ourselves.

"Wealth and rank are what people desire, but unless they are obtained in the right way they may not be possessed." ~ Confucius

Our society has become a status and debt society.  If we may not possess wealth and rank then we will borrow it to inflate our egos and our economies until they become too large to contain.

I do believe that "wealth and rank" may be achieved in "the right way."  Of course there are examples to the contrary but those who begin with a passion for something other than money, then money often follows that passion; and when our altruism inspires us to give away money, it often attracts more money -- not because of the love of money -- but because of the pursuit of a passion other than money.

"There is no calamity greater than lavish desires.  There is not greater guilt than discontent.  And there is no greater disaster than greed."~ Lau-tzu

The cycle of greed is coming to an end.  Of course, the end of this cycle will not mark the end of greed -- it will only mark the end of this particular manifestation of greed. 

Do you remember Enron?  They were the ultimate symbol of the particular form of greed and hubris that ended the last market cycle.  This market cycle's poster children will likely be Bear Stearns, Lehman Brothers, and AIG -- or perhaps others loom... 

"I tell you that virtue does not come from money but from virtue comes money and every other good of man." ~ Socrates

This quote contains the core of my financial philosophy:  Money does not bring meaning -- it brings short- term rewards, which is a human and flawed pursuit.  The path to a meaningful existence is not the path of least resistance -- the shortest distance between two points is not necessarily a straight line... 

It's been said thousands of times in thousands of different ways but the truth remains that our life is a journey and our fulfillment, meaning, actualization, or whatever word you want to attach to the true source of our well-being, is about the journey itself -- it is not about the destination -- if there even is a destination.

If we pursue meaning in our lives, money may follow.  If money does not follow, it will not matter because we are already "rich" -- we find contentment in our pursuits -- and what happens outside of our control is just a production of the natural course of things.

Related Posts:

Weekend Wisdom: Going Through the Emotions

The 'Diminishing Marginal Utility' of Wealth

How Long is Your Lever?

Images: "The Wise Man" by Jim Warren

 

The Beginning of the End (and of Brilliance)

"All human situations have their inconveniences. We feel those of the present but neither see nor feel those of the future; and hence we make troublesome changes without amendment, and frequently for the worse." ~ Benjamin Franklin (1706-1790)

It's time for a bit of perspective...

The chaos of the week will have most people intensely focusing on events as they occur without considering how their decisions, or lack thereof, will impact their future.  As we think of and feel the challenges of the present, we essentially hold ourselves in the past, and we prevent ourselves from moving forward;  we focus on what negative results could occur rather than how we may benefit; and we feel things that are not within our control as we lose sight of those things that are within our control.

Prudent risk management would have us investing long-term assets with a holding period of at least three years.  Ask yourself if you believe stocks are more likely to be higher in three years or if they may be lower.  If you haven't guessed, I'm firmly anticipating the former.

It is interesting to note that this week's stock price declines erased about three years of stock price gains.  The lesson implied here is that, when the market is strong and the bull market duration is reaching average length, an assumption that stock prices will be higher in three years is not prudent risk management.  Conversely, an assumption in today's bear market that stock prices will be lower in three years is not prudent either...

"Only in quiet waters things mirror themselves undistorted.  Only in a quiet mind is adequate perception of the world." ~ Hans Margolius

It is difficult to step outside of the noise and simply observe.  Let's take a quiet moment to make some observations about this week's turmoil for some perspective and, more importantly, to learn lessons for our future utility and growth:

• <="<" li="li">We learned that the unexpected and the hidden have tremendous power.  Understand and remember that, no matter how wonderful or tragic, the revelation of the unknown provides knowledge and transfers the unknown's power to us.
• <="<" li="li">Mass movements (high volume) in one direction increases the energy to move in the other.  Think of your lessons in physical science -- a pendulum that swings back and forth.
• <="<" li="li"><="<" li="li">Market sentiment is the opposite now (fear and panic) as it was in early 2007 (complacency and greed) when I observed signs of the beginning of the end of the last Bull market.
• <="<" li="li"><="<" li="li">The media can't stop talking about the terrible state of our economy and financial markets; the word panic was used quite frequently this week; <="<" li="li">large firms are collapsing; the weak are being devoured or rescued by the strong; stock price declines not seen in years are occurring; and the negativity and bad news has spread completely from Wall Street to Main Street. These are all indicators that the current cycle is drawing ever closer to an end.
• <="<" li="li"><="<" li="li">Volatility (as measured by "The Vix") is essentially a proxy for human emotion and uncertainty.  The Vix touched levels this week that have marked the beginning of the end of bear markets in the recent past.

"Before the beginning of brilliance, there must be great chaos. Before a brilliant person begins something great, they must look foolish in the crowd." ~ From the I Ching, traditionally viewed as written by Fu Hsi (2852-2738 BC)

This week may not mark the bottom for stock prices but it is showing signs of the beginning of the end --the beginning of brilliance for the prudent investor:  Chaos brings order; storms and earthquakes destroy the weakest of structures and bring the construction of stronger ones; fires bring new life; nothing comes from something; something comes from nothing; and death gives sustenance and meaning to life.

Related Posts:

Weekend Wisdom: Uncertainty, Volatility and 'The Vix'

Investing in 'The Movement of Things'

Weekend Wisdom with Mohnish Pabrai

Bear Market Logic

There is More Power in the Hidden...

"A hidden connection is stronger than an obvious one." ~ Heraclitus (c.536-470 BC)  

As children we learned to love surprises and to fear the dark.  For financial markets the greatest mover of stock prices, up or down, is the unexpected.   The unknown possesses more power than the known.  How can this be?  Are we not taught and often reminded of Sir Francis Bacon's famous assertion that knowledge is power?     Let's apply some logic here:  If our capacity to acquire more power is contingent upon the acquisition of more knowledge, then any power not yet acquired presently exists as the unknown -- the hidden.   This has tremendous impact on our ability to reach our potential, not only as investors, but also as human beings...  

"True wisdom comes to each of us when we realize how little we understand about life, ourselves, and the world around us." ~ Socrates (c.469-399 BC)

The gap between known and unknown is filled by perception. Once we realize that the unknown is greater than the known, we also realize that our perception is creating most of what we call “reality,” which may be disastrous.

Where we expose ourselves to weakness is the simple, yet common lack of awareness of our own ignorance -- not knowing that there is much that we do not know.  While we cannot acquire material knowledge -- or see the hidden; by virtue of recognizing our ignorance, we can acquire what we may refer to as wisdom, via the simple awareness of our ignorance -- yielding to the unknown -- or recognizing that the hidden exists...

"The difference between what the most and the least learned people know is inexpressibly trivial in relation to that which is unknown.” Albert Einstein (1879-1955)

The unknown has incredible power, primarily because we do not acknowledge its potential, or even its existence.  This has broad and overlapping applications.  Let's look at a few examples of how the hidden has harmed people:

• Assuming that large firms, such as Bear Stearns, Lehman Brothers,and Merrill Lynch cannot fail.
• Sharing with others details about you that they do not need to know.
• The false perception that real estate values never go down.
• The thinking that more money brings more security.
• Failing to recognize complacency.  
• Saying "It's different this time."
• Saying "It's the same this time."
• The Titanic is unsinkable.

"I hope our wisdom will grow with our power, and teach us that the less we use our power the greater it will be." ~ Thomas Jefferson (1762-1826)

• With the acquisition of wealth, our capacity to borrow against it increases.  A larger shovel only enables us to dig a deeper hole.
• If we give money/power to others, we increase our own potential for more money/power.
• It is not easy, if not impossible, to plan for the unknown; therefore, expect it and embrace the hidden and you will gain power. 

"One's own self is well hidden from one's own self; of all mines of treasure, one's own is the last to be dug up.” ~ Friedrich Nietzsche (1844-1900)

Ignorance represents what we do not know. If we know that there is much that we do not know -- admit to our selves that we are ignorant -- we become more powerful by leveraging the power of the unknown because we have revealed that which is hidden -- our ignorance.

If you are an active investor or trader, you already know that there is more to be gained by investing in that which is least known, understood or appreciated by the market but there is also more inherent risk involved and, therefore, more self-awareness and emotional intelligence is required.  This lesson also extends to personal relationships and any other endeavor that requires embracing the unknown... 

When we learn that there is much more to learn about ourselves and the world around us -- that there is much “hidden” from our view -- we realize our own ignorance and become empowered -- we shed more light upon the dark -- and most importantly, we enable the discovery and awareness of our self.

I refer to this as wisdom…

Related Posts:
Weekend Wisdom: When is 'Illusion' Good? Delusion, 'Non-bottom callers' & The Afflictions of the Investor's Mind

Weekend Wisdom: Uncertainty, Volatility 'The Vix'

Stocks & Storms, Humans & Hurricanes

"There are some things you learn best in calm, and some in storm." ~ Willa Sibert Cather

The storm is here.  What do I do?  This is a dangerous question -- not because of its prudence -- but because of it's timing... 

The prudent action to take as the storm approaches, arrives and passes is the action that should have been taken long before the storm was just a tropical depression forming off the west coast of Africa -- it is a process or strategy formed before the onset of complacency or fear -- it is your plan. 

Decisions made during the calm are more likely to bring favorable results than those made during the storm.  Creating a process while unaffected by emotion effectively removes you (and your damaging emotions) from the given decision at the given moment of necessity.

"Don't let your special character and values, the secret that you know and no one else does, the truth -- don't let that get swallowed up by the great chewing complacency." ~ Aesop

Time breeds complacency in the minds of fools: Eventually, the same human flaws will lure us into believing that "everything is OK" just before things turn for the worse.  As more time passes from the previous "big storm," the danger for harm increases.  Consider the lack of action in the days before and following Hurricane Katrina:  It was 1969 that Hurricane Camille, a category 5 storm, battered the New Orleans and Mississippi coasts.  The knowledge of how to evacuate was certainly present during Katrina.  But 36 years of compounding complacency was also present -- and the devestating aftermath and human tragedy followed...

"If you spend your whole life waiting for the storm, you'll never enjoy the sunshine." ~ Morris West

Just as complacency results in under-reaction, fear tends to the opposite results.  This hurricane season, only 3 years since Katrina, the pro-action and preparedness for Hurricane Gustav was tremendous and, quite arguably, bordering on over-reaction.  It was the kind of action that should have been present during Katrina.  Going forward, however, complacency will build again as every storm with no major impact comes and goes... until the next big storm arrives...

Does this behavior sound familiar?  There is no mistake that investor behavior is no different than that of behavior (or lack thereof) during hurricane season -- it is not just particular to stocks or storms -- it encompasses all human behavior.

"Perception is strong and sight weak. In strategy it is important to see distant things as if they were close and to take a distanced view of close things." ~ Miyamoto Musashi

Our perception, or how we see things, often and to our detriment, becomes our reality. Something incredibly large can appear quite small when it is far away and vice versa. Where we can get ourselves into trouble is when our perception gives us a false sense of reality.  Knowing this about ourselves enables us to plan or strategize accordingly...

Is it prudent to evacuate 200 miles inland several days prior to a projected Category 1 storm?  Probably not.  Is it wise to jump out of stocks at the first sign of market weakness?  Probably not.  Should we evacuate a storm while it is upon us?  Probably not.  Should we jump back in the market when we perceive prices to be at a bottom?  Probably not.

So, what is the right decision? 

I will not pretend to know the answer to this question.  Prediction is a fool's game.  The most prudent behavior is that of consistency of action in all environments.  And like the weather, the very nature of financial markets is that its behavior is not possible to predict with consistent accuracy; however, it is possible to control our own behavior.

"Human misery must somewhere have a stop: there is no wind that always blows a storm." ~ Euripides

While there is a right time for almost any given action, thousands of years of human behavior tells us that we will react (or not) based largely upon the proximity of the last big storm.  Do we know which action or reaction is right at the right time?  No.  Can we prudently form a process or strategy that will largely eliminate the wrong reaction at precisely the wrong time?  Yes.

Storms come and go.  We know this.  The exact arrival time and location, intensity, and longevity, however, are nearly impossible to know in advance, even with modern technology.  By the time these crucial items are known in absolute terms, the storm has already come and gone. This is why it is not logical to try for pinpoint accuracy in a forecast or even concern ourselves with the small storms but to look at the big picture of probabilities and strategically plan ahead for the big storms.

"The little reed, bending to the force of the wind, soon stood upright again when the storm had passed over." ~ Aesop

The objective is to survive the storm -- to predicit our own behavior and act accordingly -- not to predict the behavior of the storm and make mistakes accordingly.  How we weather the storm is dependent on our actions before it arrives -- not on our actions and reactions during and after the storm. Otherwise, we are susceptible to over-reaction or under-reaction -- either of which may be harmful to some degree.

Hurricanes and financial markets are cyclical.  We know storms and economic and market cycles will come and go.  We have detailed knowledge of those that have passed but our practical knowledge of those storms to come ends there...

Knowledge of our self, however, always has room for expansion...

Related Posts:

Quiet In The Storm

The Storm of Irrational Exuberance

Weekend Wisdom: Perspective on Perception

A 'Factory for Unhappy People'

"Education is an admirable thing, but it is well to remember from time to time that nothing that is worth knowing can be taught." ~ Oscar Wilde

Why does one pursue higher education?  Is it to acquire knowledge?  What do we do with the knowledge once it is acquired?  Do we ultimately want money, power and social status or do we want to learn more about ourselves?  What can a classroom teach us of life?

A recent article in BusinessWeek, "What I Learned at Harvard Business School," provides some rather interesting perspective into the pursuits of business school students, as written in the book, Ahead of the Curve: Two Years at Harvard Business School, by Philip Delves Broughton.

Here are some selected excerpts from the BusinessWeek article that highlight Broughton's Harvard experience:

Broughton provides an insightful and entertaining, behind-the-scenes glimpse at a powerful institution that he sees as generally succeeding in its mission of transforming students into business leaders.  But he views HBS as failing them in almost every other way.  It is, in his persuasive account, a 'factory for unhappy people...'

Broughton found little to criticize and much to praise about the HBS case study method, which gets students to find fixes for company problems...

But ethics is another matter...

Many of Broughton's classmates came to HBS ethically challenged, he says; some qualified for financial aid by depleting their savings with the purchase of expensive cars...

The pressure to follow conventional paths is a recurring theme, with classmate after classmate either battling the forces of conformity or succumbing to the siren song...

[Broughton] gives insight into daily life at Harvard and the 'fear of missing out' that leads many students to attend every event, no matter how trivial...

He came away appalled by the power that business wields in our society and by the ability of an institution like Harvard to perpetuate that state of affairs.  'Has society allotted too much authority to a single, narcissistic class of spreadsheet makers and PowerPoint presenters?'

It's interesting how Broughton reveals the unhappiness that is produced by the pursuit of money, power and social status via higher education.  I wonder if most of the HBS students truly believe that their degrees will bring them the kind of success that produces real fulfillment -- what they believe to be happiness?

"That's one thing about a little education.  It spoils you for actual work.  The more you know the more you think somebody owes you a living." ~ Will Rogers

I touched on this issue before in a previous post called, The Knowing-Doing Gap, where I pointed to studies of behaviors and teaching methods in business schools that would have their graduates learning how to "talk smart" and strategically climb the corporate ladder but never really learning how to "do" much of anything.  After all, knowledge is power. Actually applying this knowledge is not necessary for "success" in the world of big business today -- one only needs to look and act "smart" and let others do all of the "doing." 

I say knowledge may be power but it is certainly not wisdom and that the word, student, has no boundaries...

"When the student is ready, the teacher will appear." ~ Buddhist Proverb

I have a personal view on higher education and should disclose that I am less than one year from completing my masters in business administration (MBA) degree studies.  When I began the program five years ago, I was looking to advance my career -- to climb the corporate ladder.  Now, when I look back, I realize that I was pursuing the MBA to make me a faster runner in the rat race -- a pursuit that brought more stress and unhappiness -- not happiness via money, power and social status.

I now see that the knowledge acquired through "higher education" is still beneath the self-knowledge acquired through the highest form of education, which is found within ourselves...

...And when I "graduate" from business school and hang that MBA diploma on my wall, I will be able to look at it and be perpetually reminded that the greatest lessons I learned during those five years were learned outside of the classroom...

Related Posts:

The Knowing-Doing Gap

Enabling Opportunities

Curing Affluenza