The Unsinkable brian cork™

Brian Patrick Cork is living the Authentic Life

running with the Bulls and driving Cattle

October28

Back in 1977 Grandad said to me: “You can be a leader or a follower. Leaders know whom to follow at critical points in their lives. But, don’t ever be the wrong leader of followers”.

That requires some careful thought, and much more perspective.

Over the summer of 1988, while teaching me how to first listen and then sell (while also teaching me how to sail in Santa Monica Bay) David Sugarman, my “Jewish mentor” advised me, in that brilliant sepulchural baritone of his: “don’t bother buying a stock you might ever want to sell.”

“Trust in human nature”, he added.

These, strategies (they might be foundational philosophy /1) if you will, then required careful thought, research, informed decision-making and maturity to pull off over a lifetime.

Through the Spring of 1999 I remember the DOW breaking 10,000 for the first time with it’s delicious opportunity to revisit and contemplate David’s words.

Under pressure of very awkward and highly suspect circumstances, the market began it’s dark and ugly descent towards 6000 last year, and I decided to hold firm to Grandad and David’s, always great and evident, wisdom.

Every where I went, the only talk you could hear was about how low the DOW might go. It reminded me of the whole OJ Simpson ordeal. It’s all anyone seemed to want to focus on.

I could easily draw a correlation between the two topics. However, as a Prudent Gentlemen, I don’t see the point as it reduces the advantage, and lessons the potential effects and opportunities now relative to Laws of Natural Selection.

I will, however, offer an example, with the hopes loyal readers of this Blog harken and, perhaps remember when the next test rears itself.

I first listened to, and then observed, a local and hapless friend defy common sense and guidance, as he sold off all of his investments, leveraging both a dirth of intelligence while timing his decision to match, perfectly, mind you, the very bottom of the market. He was firm in his convictions and determined to panic. The chap was convinced the market was going to “crater (a clever and dramatic, albeit meaningless terms financially)”. I had told him there were many reasons – most of them built-in, while others were easily psychological (although both cleverly manipulated) that the market would not go below 6000. You can read more about that here (but, there is more elsewhere), and on this very Blog. Do it!

In any event, he bought into the frantic mooing to be found permeating the internet, and stampeded with so many others, failing to see the buying opportunities, and sold into a crashing market designed to fatten the wallets of the happy minority.

That fellow was a follower. And, he might have actually been a leader of followers (he was a bad example of something, or maybe a good example of a bad thing), to make his plight all the worse.

Today he’ll wring his hands and tell you that his wealth managers “screwed” him, as they misled “everyone (typically this is what thirteen year olds say in the absence of empiric evidence)” regarding their research abilities and understanding of market trends. I’ll wager they had been telling him to sit tight. The storm always abates, and the market always comes back.

Just like the current market will.

Because you can trust human nature (make sure you read that aforementioned post). And, try it from the view of a Heterodox. Consider it a Kobayashi Maru, and literally, an opportunity to Kill that Bear./2

This is an obvious point, but the only people that “lost” money in the stock market are those that panicked and sold into a down market. Conversely, there is new wealth, big money, being created, on paper, by people that have been buying stocks up for the past six months.

I have, and with good reason, cause to make another stand, right here, and say we’ll break back up, and through 12500, by the end of the First Quarter of 2010.

Do some leading research. Maybe you begin with why are the banks really hoarding all that cash?

Peace be to my Brothers and Sisters.

Brian Patrick Cork

1/ There is some agreement, therefore, that philosophy is based on method, and is rational, systematic and critical, or characterized by logical argument.

Intrinsic Character: Philosophy can be distinguished from empirical science and religion. The Penguin Encyclopedia says that philosophy differs from science in that its questions cannot be answered empirically, i.e. by observation or experiment, and from religion, in that its purpose is entirely intellectual, and allows no place for faith or revelation.

2/ From the Movie: “The Edge”.

what next America?

January27

As I have already stated on this Blog, 2008 was a financial crisis, affecting mostly “Wall Street.” 

Looking ahead, what can we expect for America?

2009 will be the year “Main Street” gets hit. 

Mind you, 2009 will be awful for A LOT of people.  But, I believe it can be pretty good for some people focused on Best Business Practices, clear thinking, opportunities and having a plan.

But, generally speaking, the damage to the real economy so far is trivial to what will happen over the next two years.  There will be two big stories.

Business bankruptcies

Going into 2007 we knew that our financial sector was unusually strong, well-managed with strong balance sheets.  False!  Going into 2009 we know that our non-financial business sector is well-managed (outside of some weak sectors, like autos), with strong balance sheets.  Expect to be disappointed and astonished yet again.

Triage

That is a VERY scary word.

Everybody wants bailouts.  Worse, the expectation of bailouts means that few preventive measures will be taken.  This referred to as “moral hazard”.  We see this, for example, at work in California – which is already de facto bankrupt.  But, nobody gives an inch.  No lower government spending; no lower government wages; no reduced government employment; and, no higher taxes (there is more; but, you get my drift). 

Why compromise? 

Well… The Federal Government will not let California go broke.  Or the auto companies.  Or the universities.  Or the banks and insurance companies.  Or millions of households (not actually sure about that one yet).

There is not enough money to bailout everybody.  Triage will be necessary.

I have seen this under the worst possible scenarios.  But, you can probably relate to it in terms of what Kate Beckinsale does with lipstick on the foreheads of the wounded at Pearl Harbor (but, it is one of the most gripping scenes in the 2001 movie). 

To wit:

  • Those who will die anyway:  no treatment. 
  • Those who will recover anyway:  no treatment. 
  • Those will will recover only with treatment.

Making these harsh decisions might be President Obama’s greatest challenge. He may have one of the toughest jobs ahead of him since Truman.

Looking beyond the downturn, what can we expect?

The consensus confidently – almost to a man – anticipates inflation, against which the Federal government will fight either successfully (optimists) or unsuccessfully (doomsters). 

This is, however, absurd. 

People are already preparing for this “inevitable” outcome by owning mostly short-term debt.  As the end of the downturn approaches — inflation can only manifest itself in times or full employment or via a currency crisis — everyone will (should) take strong measures.  Even elderly ladies in Peoria will own inflation-protected bonds, short-maturity bonds, and hoard gold bars in their basement.

These measures will foreclose inflation as a workable option.  As the government is forced to either issue vast amounts of short-term debt or monetize the debt, inflation becomes useless as a tool.  Short-term debt becomes an albatross during inflation:  interest expense skyrockets as interest rates soar.

Seriously.

Hyperinflation always remains an option – as does atomic war and mass suicide. 

However, none of these are “solutions” in any meaningful sense.  

Seriously.

With a history of vast deficits behind us, and larger deficits ahead (from baby boomer’s retiring), the government will choose Door #2:  default.  We will just not pay all our obligations.  This is historically the most common solution.

How we decide who to pay — and how much to pay — will test America as it has seldom been tested.

  • Do we pay our foreign debts?
  • To what extent do we renege on promised social security and medicare benefits?
  • To what extent do we raise taxes vs. defaulting?  

The big unknown

The recession of the late 1920’s became a Great Depression due to a series of public policy errors. 

Most seriously:

  1. Many nations abandoned the gold standard too slowly, and
  2. The nation with the largest trade surplus wrecked the world trade system.

America was the culprit (for #2),  enacting the Smoot-Hawley Tariff Act in 1930.  We can only guess at the equivalent of mistake #1, but the prime candidate for #2 is China devaluing the RMB to boost its exports. 

More later.

Remember what Hemingway thought of Spain.  Go read those books.  Spain can be defended.

“Sons Gonna Rise” by Citizen Cope.

Peace to my Brothers and Sisters.

Brian Patrick Cork

reflection? realization?

January18

I love New Years Month, and the turn of the new year, largely because it’s a time where we all (or some /1) take the opportunity to reevaluate our lives, assess where we’ve been, and plan where we’re going. 

It’s a phenomenal event, pivotal, and magnificent. 

I hope you all take the time to do it.

As for my assessing 2008, I found that I’d been so greatly blessed.  I had a splendid year; nearly incomparable in fact.  Even in spite of such tough times (global – if not epic in it’s very proportions). 

The brief time (so far) I’ve taken to reflect has surely manifested Gods hand in my life.  I do feel unworthy – and, certainly incapable of creating such a great year autonomously.

But, then, the business man in me forces me to oft revisit the notion that God has a plan for us; And, we are in-charge of the milestones.

The realization of that reflection caused me to rededicate my life in many respects. Just to be clear, I reboot this, and myself continuously. My Mom taught me to question every thing, and accept nothing.

Cork Interlude: By the way…  I have no idea where this Blog entry is going.

It will sort itself out.

And, that is one of the points I MIGHT be trying to make here.

One of those areas of rededication is with my Blog.  I feel strongly that this is an endeavor the people want me to undertake. God and my friends have blessed me with the talents to do only a few things well.  And, so perhaps it’s my duty to use those talents appropriately – leaving room for the Spirit, or the meaning behind the Spirit to magnify my efforts so that they’ll be of enduring value.

Wow… I certainly have a high opinion of myself.

But, if I am wrong, why am I then so fortunate?

In any event, the whole process of reflection upon the past with the perspective of today tends to call out the starkest instances of entropy /2 experienced in our lives.  Those areas where we’ve let slip the most.  Those are the areas we need to proactively rededicate ourselves to. 

And, I never rest (just ask anybody at all close to me). I am concerned (and curious [and questioning]) about EVERYTHING.

Or, am I simply restless?

Life is not casual.  Life is engaging, and requires us to be engaged with it.  Spend too much time as a bystander, and you find your life is filled with more regret, than accomplishment and opportunity.

“Verily I say, men should be anxiously engaged in a good cause, and do many things of their own free will, and bring to pass much righteousness”. 

Doctrine and Covenants 58:27 (I believe this is from the Book of Mormon). /3

Peace be to my Brothers and Sisters.

Brian Patrick Cork

____________________

1/ Let’s be ever mindful of the reality that ten percent of us have ninety percent of what everyone else wants.

2/ Entropy.  It’s a concept that describes the natural deterioration of order.  It’s a process of degeneration that begins almost instantly, in almost everything.

3/ Don’t panic (I’m not).  I am not Mormon; nor considering the faith – other than using (leveraging? /4) scripture to TRY and make a point. I was asked recently if I were Jewish. I took that as a compliment.  So, before this ignites a firestorm in my community – go and read my entire Blog history. Or, call me.  But, you might have to buy me a beer (or, many). Modelo Especial, please (right babe?). But, just to be clear, I remain a Heterodox.

4/ Are we ALLOWED to use a footnote within footnotes?

Brian's Book Report for 2008

December22

Many of you know my story.  I went to three High Schools in four years – and, all I cared about was getting to the Olympics.

I some how got into College, and Radford University became my portal to the world – past, present and future.  There I met Dr. Nick Pappas who inspired me to care about history and learn (understand) how we can impact the future.

This is a situation report on the global economy.   Speculation, attempting to find order from the confusing and rapidly-changing datastream.

  1. The roots of this crisis lie in the cumulative decisions of us all — collectively — over the past 3 decades.
  2. The problem grew to become major problem as a result of regulatory decisions made over the past decade or so.
  3. We passed the last exit during the 2001 recession, with the government’s decision to supercharge credit expansion instead of allowing a natural recession to rebalance the economy (as Volker did in 1980-82).
  4. The financial crisis ignited in December 2006  with the collapse of the mortgage brokers.
  5. It became a conflagration as a result of the governments ad hoc response, incremental steps taken into the void without a plan.
  6. The financial crisis hit the real world in Fall 2008, a cardiac arrest of global economic activity.
  7. So far ”Main Street” has experienced only the fore-quakes, the tremors before the main event.
  8. I suspect it will hit during the next few months.
  9. Manipulated, albeit effective and dramatic, investment and economic upswing by the end of the first quarter.

The defining characteristic of this downturn is the unexpected breaking of links in the economic machinery.  Home prices crash far beyond anything seen since the 1930’s.  Major finanical institutions crash.  Astonishing floods of government money poured onto the fire.  Perhaps this slowed the crash, perhaps it had no effect.  Every step of the way brought new surprises.

Many Americans (most?) are still in denial, believing this will be a recession like the others since WWII.  Like children on the beach looking out to sea.   “Oh, wow — look at the big wave!”

What’s next?

Viewpoints about the crisis have coalesced into three camps. 

  1. The “normal global recession” camp.  Just another cycle, US GDP down perhaps -3% peak to trough.
  2. The “worst recession since the 1930’s” camp.  A bad scene, but the world’s governments are now on the job. Fiscal and monetary policy will do the job, again.  US GDP down 5% or so.  See this example.
  3. The “worse than worst” scenario.  Government policy might not work — or it might work but only with long lags.  Uncertainty rules; the outcome is unknowable.

Those in the first two camps believe that the worst of the crisis has passed in that its course now runs in familiar channels.  The small minority in the third camp believes that the world has changed.  The post-WWII is ending.

What to watch

China.  The world will muddle through if China manages to grow its GDP at 4 – 5% in 2009 – 2010, with global gdp perhaps in the -1% to 1% range (roughly).  If China goes to zero growth — or negative — then the game changes.  Everyone must return to the blackboard to prepare new forecasts.  Forecasts for a deeper and longer downturn.

What is happening in China right now?  Opinions vary widely.  Everything is fine.  It’s on the verge of imploding.  The best answer IMO is that we do not know.

The big picture

The ancien regime lasted a hundred years, from the Treaty of Paris in 1815 ending the Napoleonic Wars to the outbreak of WWI in August 1914.  A hundred years of prosperity and peace (more or less) for much of the world.

All that died in August 1914.  The transitional period was difficult.  Thirty years of megadeaths and economic collapse, with an intermission.

The new world brought another period of peace and prosperity, perhaps the greatest 5 decades the world has ever seen.  Now the two superpowers of that era both have uncertain futures.   The world sinks into a severe recession.  Beyond that new challenges await.

  1. Peak Oil
  2. Climate change
  3. The shift of power from west to east
  4. The second demographic transition, aging populations and perhaps extinction for some major cultures.

Perhaps the new world will be even better than we can dream.  It’s up to us.

Me?  I am forever optimistic (Its just part of being me [and Racer X]).

What do you think Dr. Pappas?

Meanwhile – watch: Burn After Reading.  It’s brilliant.  The ending sublime chaos.

Peace be to my Brothers and Sisters.

Brian Patrick Cork

What’s All This About?

"What am I looking at?", you might wonder.

Lots of stuff.

Meanwhile, here, I discuss events, people and things in our world - and, my (hardly simplistic, albeit inarticulate) views around them.

You'll also learn things about, well, things, like people you need to know about, and information about companies you can't find anywhere else.

So, while I harangue the public in my not so gentle way, you will discover that I am fascinated by all things arcane, curious about those whom appear religious, love music, dabble in politics, loathe the media, value education, still think I am an athlete, and might offer a recipe.

All the while, striving mightily, and daily, to remain a prudent and optimistic gentleman - and, authentic.

brian cork by John Campbell





photos by John Campbell

 

Share this Blog with friends or enemies (via Twitter). Do it!:

Archives

Linkedin

View Brian Cork's profile on LinkedIn

Categories