THE FINANCIAL PHILOSOPHER

Having knowledge does not make one 'wise'

"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

Even the most brilliant of individuals with the highest of academic degrees and broad life experiences can fail miserably if they are without good judgment -- or what we may refer to as wisdom.  Examples of these failures can easily be found in investing, politics, the business world and your immediate surroundings...

In the holiday spirit of giving, I wrote another guest post for one of my favorite bloggers, Jeremy Day, of Insight Writer.  Please check out the post, Knowledge is not Wisdom, and take a look around Jeremy's blog while your at it!

I'm also excited about a special Christmas addition to my philosopher pages I am planning for publishing, here at The Financial Philosopher, on December 24...

Cheers...

'I am grateful that fate has hit me so hard...'

"Live as if you were living a second time, and as though you had acted wrongly the first time." ~ Viktor Frankl

Today, I have some perspective for you that may be a bit of a challenge for your heart and mind but something that may help you put this financial crisis in its proper place -- and to see it as an opportunity -- not just to buy stocks -- but to take a look at your life, your priorities and your pursuits and how they are aligned (or misaligned).

To set up the following passage, you should know the setting:  The highlighted words today come from Viktor Frankl's book, Man's Search for Meaning, which is set primarily in a German concentration camp during World War II.

Frankl, a behavioral psychologist and Jewish Holocaust survivor, observed among his fellow prisoners "that only the men who allowed their inner hold on their moral and spiritual selves to subside eventually fell victim to the camp's degenerating influences."

Frankl makes many anecdotal observations in the book -- some are quite horrific -- but they all offer profound lessons on life... like this one:

This young woman knew that she would die in the next few days.  But when I talked to her she was cheerful in spite of this knowledge.  'I am grateful that fate has hit me so hard,' she told me.  'In my former life I was spoiled and did not take spiritual accomplishments seriously.'  Pointing through the window of the hut, she said, 'This tree here is the only friend I have in my loneliness.'  Through that window she could see just one branch of a chestnut tree, and on the branch were two blossoms.  'I often talk to this tree,' she said to me.  I was startled and didn't quite know how to take her words.  Was she delirious?  Did she have occasional hallucinations?  Anxiously I asked her if the tree replied.  'Yes.'  What did it say to her?  She answered, 'It said to me, I am here -- I am here -- I am life, eternal life.'

When life hits you hard, do you find meaning in your suffering?  Do you find opportunity in adversity?  Do you run from a challenge or embrace it? 

Frankl and his book has helped me and millions of others see that meaning (and suffering) does not come from outside of ourselves.  I highly recommend reading it...

Here are a few more selected quotes from Viktor Frankl's book, Man's Search for Meaning, for your perspective:

"The last of human freedoms -- the ability to chose one's attitude in a given set of circumstances." 

"Ultimately, man should not ask what the meaning of his life is, but rather he must recognize that it is he who is asked."

"What is to give light must endure burning."

"When we are no longer able to change a situation, we are challenged to change ourselves."

Thank you, Mr. Frankl...

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Related Post: Mind vs. Brain Part II: Priorities, Pursuits and Productivity

Reflection: What do Investors really seek?

As an investor, if you were offered an average rate of return, of say 8% annualized, in exchange for lower volatility and lower relative stress, would you accept this offer? 

Or, if you are a trader with a passion for active investing, would you still be a trader if you were paid only a modest salary with a small cost of living increase each year, and no chance of bonus?  How about if there were no money involved at all?  Would you still enjoy it?

I'll end my week-long run of Uncommon Wisdom with the same philosopher it began, Blaise Pascal (1623-1662):  

A given man lives a life free from boredom by gambling a small sum every day.  Give him every morning the money he might win that day, but on condition that he does not gamble, and you will make him unhappy.  It might be argued that what he wants is the entertainment of gaming and not the winnings.  Make him play then for nothing; his interest will not be fired and he will become bored, so it is not entertainment he wants.  A half-hearted entertainment, he must delude himself into imagining that he would be happy to win what he would not want as a gift if it meant giving up gambling.  He must create some target for his passions and then arouse his desire, anger, fear, for this object he has created, just like children taking fright at a face they have daubed themselves.

So which is it:  The "entertainment of gaming" or "the winnings" that you seek?  Perhaps these market conditions will have many investors and traders seeking the alternative choice of passive investing...

What are your thoughts?

Life 'must be lived forwards'

History certainly has its value but it is difficult to prudently move forward if we are focused too intently on looking backward.

What's more, the present moment is valuable in terms of mindfulness and self-awareness, but can also be a source of anxiety, especially if we allow ourselves to be disturbed by the noise that surrounds us.

Today's Uncommon Wisdom comes from one of my favorite philosophers, Soren Kierkegaard (1813-1855):

It's quite true what philosophy says, that life must be understood backwards.  But one then forgets the other principle, that it must be lived forwards.  A principle which, the more one thinks it through, precisely leads to the conclusion that life in time can never be properly understood, just because no moment can acquire the complete stillness needed to orient oneself backward.

I believe the modern-day analogy of driving a car works well:  We should be mindful of the task at hand   (the present moment) and eliminate distraction to the best of our ability; check the rear-view mirror from time to time but not to the point of fixation; keep our own pace with the underlying goal of "arriving on time" with little regard for the pace others are keeping; and we should try to see the big picture so as to see, not only a few feet in front of us, but the road ahead and all that surrounds it.

In fact, perhaps we could travel well if we attempt to drive on a road that is a bit less traveled... 

What are your thoughts? 

The True Cause of the 'Mortgage Meltdown?'

To find the beginnings of this mortgage meltdown and credit crisis, perhaps we should go all the way back to the first person who enclosed a piece of land and called it theirs?

I found this piece of Uncommon Wisdom from Jean Jacques Rousseau (1712-1778):

The first man who, having enclosed a piece of land, thought of saying 'This is mine' and found people simple enough to believe him, was the true founder of civil society.  How many crimes, wars, murders; how much misery and horror the human race would have been spared if someone had pulled up the stakes and filled in the ditch and cried out to his fellow men: 'Beware of listening to this imposter.  You are lost if you forget that the fruits of the earth belong to everyone and that the earth itself belongs to no one!'

I won't add any words to this...

What do you think?

Is the fear of erring an error in itself?

The historic level of volatility in recent weeks is sure to shake the confidence of any investor, trader or money manager.

Does this type of environment not reflect what has happened in past bear markets?  Do we not always have the greatest doubt in the most dire of circumstances?  Is it not our "fear of falling" that perhaps is the cause of our falling?

Today's Uncommon Wisdom comes from G.W.F. Hegel (1770-1831).  You may want to read it at normal pace one time then slowly a second or even third time:

...if the fear of falling into error is the source of a mistrust in Science, which in the absence of any such misgivings gets on with the work itself and actually does know, it is difficult to see why, conversely, a mistrust should not be placed in this mistrust, and why we should not be concerned that this fear of erring is itself the very error.

Is your patience being tested like never before?  It is sure to be tested again.  Perhaps we should be careful not to allow ourselves to make the mistake of trusting our mistrust or of fearing our fear...

Uncommon times call for 'Uncommon Wisdom'

I've been contemplating how and when to begin a new category of blog posts where I will spotlight words of inspiration and philosophical quotes that go beyond the common-quoted words of ancient philosophers, classic authors and modern authors, such as Aristotle, Shakespeare and Eckhardt Tolle, respectively.

Now is the time for Uncommon Wisdom.  In this new category of posts, I will share some of the greatest thoughts (accompanied by very few of my own) that I have found to be useful and applicable to life as we know it (or how we may potentially view it) from lesser known authors or lesser known words from well-known authors.

Given the gravity of uncertainty and the need for a foundation of strength at this time, I will post one entry to Uncommon Wisdom every day this week...

Without further ado, here is the first of Uncommon Wisdomfrom one of my favorite philosophers, Blaise Pascal (1623-1662):

Man is only a reed, the weakest in nature, but he is a thinking reed.  There is no need for the whole universe to take up arms to crush him:  a vapour, a drop of water is enough to kill him.  But even if the universe were to crush him, man would still be nobler than his slayer, because he knows that he is dying and the advantage the universe has over him.  The universe knows none of this.

Thus all our dignity consists in thought.  It is on thought that we must depend for our recovery, not on space and time, which we could never fill.  Let us then strive to think well; that is the basic principle of morality.

To "think well" truly is the life preserver that only we can provide ourselves.  Do you agree?  What have you thought (or not thought) during the past several days that has given you comfort or guidance?

Perhaps it is our thought that makes us a reed, and only to "think well" allows us to bend in the force of even the most powerful of winds...