Gongol.com Archives: August 2024
August 5, 2024
The risk is digested when you buy
The panicked state of global stock markets has made for some real turbulence as cliche-addicted financial writers fill their column-inches with predictable phrases like "flight to safety" and filler about "risk". It's all a rather silly way of looking at things, since any one-day decline of 3% in a stock-market index projects out on an annualized basis to the market zeroing-out completely, which is an obviously impossible proposition. ■ Even the phrase "sell-off" is awfully misleading, since by definition, every stock sale by one party was a stock purchase by another. It's easier, though, to make a big story out of emotional reactions rather than cool logic. ■ In 2015, Warren Buffett told the assembled shareholders of Berkshire Hathaway, "We've been very cautious about what we've done because of the people among our families and friends who are invested in the company. We could have played harder at times, but I'd rather be 100 times too cautious than 1% too incautious. People looking at our past would say we've missed plenty of good opportunities." ■ People who think that "safety" is found in selling stocks -- especially when they're in a tizzy -- get it completely backwards. The time to make "safety" a priority is when you buy an asset: If you're quite positive that you've paid a price that is less than (or, at least, no more than equal to) the intrinsic value of that asset, then you can sleep soundly, no matter what everyone else does around you. ■ That's the kind of caution Buffett was talking about: Letting anxiety prevail before a purchase (sometimes to the point it keeps one from "playing harder" and taking a chance on what might turn out to be profitable later), so that there's no cause for panic after the purchase. Everyone is liable to make mistakes in that process, but people who look first to the intrinsic value of all investments -- from stocks to real estate to even education -- and only secondly at price have no need to be alarmed.
The polluted condition of the Seine has been bad enough to cause some physical distress for Olympic athletes who came into contact with the river for their competitive events. That, in turn, has been the cause of some loss of face for the French, who are otherwise viewed as a wealthy and advanced country. ■ While the French situation is a matter of pride over a choice to use a river (when alternatives could have been available -- Toyko built all-new, man-made venues for the 2020 Games), there are still 1.5 billion people on this planet who don't have access to basic sanitation services, like toilets or latrines. That's unconscionable in this day and age. ■ As many as 4 million people suffer from cholera every year, of whom as many as 143,000 may die. Meanwhile, an estimated 1.7 billion cases of dysentery are suffered each year. ■ These are thoroughly preventable diseases; the basic technologies to rehabilitate polluted water and to purify raw water in order to make it drinkable have been proven for well over a century. So while France is losing face over its polluted river, much greater real suffering takes place outside of the spotlight every day because basic sanitation and potable water services are not yet universal.
A meme that circulates on Facebook groups with names like "Baby Boomer Fun Events" proposes that "Younger Americans will have trouble believing this," but "there was once this guy named Walter Cronkite, who would read the news on television every weeknight. He didn't seem to have an agenda [...] He would just read the news, and then we would all just make up our own minds about what we thought." ■ It's a charmingly sentimental statement -- and the claim isn't all that far from what Cronkite himself probably would have said about his own coverage. Cronkite seems to have authentically thought of himself as a neutral, unbiased source of news and information. ■ But even if Cronkite did a respectable job of trying to report without fear or favor, it's misleading to believe that he was as neutral as the ideal might have suggested. ■ When Cronkite decided the running order of the stories to be covered on his evening news broadcast, or used his authority as managing editor of the broadcast to devote more or less time to a story, or chose to quote one source rather than another, he applied a set of values and made a judgment. ■ Inevitably, those judgments reflected values and opinions. And they were subject to the constraints of a newscast constrained by time and resources: News tends to be covered more thoroughly by television when there's a camera nearby. When Cronkite would sign off by saying, "And that's the way it is", it gave a false impression of comprehensiveness. Whatever one might think of Dan Rather's other faults, his use of the much more restrained "That's part of our world tonight" actually did a better job of reflecting the limits of reality to the audience. ■ Media literacy in Cronkite's day, as well as our own, requires the audience to realize that no tale of the day is complete, no single perspective is definitive, no report can hope to uncover all of the motivations behind events, and no journalist (no matter how aspirational or high-minded) can be completely without bias. ■ Reporters generally can and should strive to be both thorough and fair, and reasonable efforts should be devoted to earning the trust and goodwill of a fair-minded public. But audiences, too, need to realize that even Walter Cronkite wasn't really "just reading the news".
