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All women are beautiful...

March 1, 2012

About four weeks ago, I was having dinner with a good friend at a wonderful Italian restaurant in Vancouver. Conversation being what it is, the evening meandered through work, travels, the kids, and naturally, education – a topic near and dear to my heart. All of this talk was interlaced with what clearly reflected a set of shared values.  Of course, this led eventually to talk of money… specifically, one's station in life.

"Don't get me wrong," I said to my friend. "I want to be filthy rich," to use the vernacular.

Then I stopped myself, visibly grimacing, and pondered for a moment on how to better articulate that thought and still be truthful. Before I could find the words, my friend held up his index finger to interrupt, and jumped in:

"No you don't, Kevin. You want to be clean rich."

"Yes, that's it. That's exactly it! I want to be clean rich!" So much the better expression.

We then launched into a discussion framed by one of my favourite contextual devices, the continuum. As evidenced by every turn of the clock, we do not live in a black and white world. We live in a world of greys. Pure and simple answers, except as reflected by a smaller-than-you-might-think set of values, are non-existent. Reality sees us in a constant state of sacrifices. That's not to say sacrifices of that small set of values. Those are sacrosanct… I think… so far, anyway… maybe… well, let's table that discussion for now.

To our continuum of the day, shall we? At one end sits Mother Teresa, altruism, self-sacrifice for the good of others. At the other end reside a few people on Wall Street. I'm sure I don't need to paint the caricature in any detail. Suffice to share a posting I saw the other day on a chat forum – to the effect of: "Stock investing is war. Winning a war is not about who's right. It's about who's left when it's all over."

Well, that pretty much captures everything that's wrong about the investment world, doesn't it? Doesn't matter how I win, just that I do.

This sort of rationalization, I'm afraid, is commonplace. It's used to justify entirely unacceptable behaviour. When you can convince yourself that the rules of the game are framed in this way, anything goes. It's a bad version of the joke that preceded our ball hockey games back in the 70s, held every Sunday afternoon at Stanley Park Senior Public School. I'm sure you've shared this experience. Teams would be cobbled together and straws would be drawn to see who played goal. We had no protective equipment, of course, so if you played in the net, you replaced one mitten with a baseball glove, and made good use of the discarded mitten as your only means of protection. Hey! A tennis ball is not that soft at high speed, especially when frozen. Teams gathered at centre and rules and boundaries were quickly declared, as follows: "The only rule is that there are no rules." Laughter and mayhem ensued, with ankles slashed, cross-checking into snow banks as standard fare, and any rules about 'no slap shots within 20 feet of the goal' held in utter contempt. Guess who got stuck in goal more often than not.

We Canadians are a polite people, indeed… until you place a hockey stick in our hands.

Well, that's just a story, mostly true, but exaggerated a wee bit, to be sure. Winning at all costs was not tolerated, even within a group of rough-and-tumble teenagers. We knew, implicitly, that the 'system' was a fragile thing, dependent entirely on everyone's willingness to come back next Sunday. The stock market is no different, I think. The more it's abused, the lesser the number of willing targets there will be next week. I've written more than enough on the weakness of self-regulation in this market, so let's not go there. Let's stick to the continuum referenced above.

I have a conversation, off and on, with another good friend about different places on this continuum. It usually starts with his remonstration: "Be careful, Kevin. The people in this business only look out for themselves. Don't be naïve. You'll get burned." From my perspective, this is that black and white interpretation of the world again. My preference is to look at this question, like many others, as best illustrated on a much nuanced continuum. With Mother Teresa at one end and (some operators on) Wall Street at the other, we're the rest of us somewhere in between (unless we're one of those operators on Wall Street, of course).

Our point of residence along this continuum is governed by the trade-off between selfishness and altruism. Let's leave any discussion of selfish altruism for another occasion. We're all partly selfish and partly selfless. Here's the key. To the extent that we are prepared to sacrifice our self interest for that of another, we take two steps toward Mother Teresa. To the extent that we are prepared to walk by a suffering soul, or even to inflict suffering on that soul, devoid of remorse, we take two steps toward the red guy with horns and a pitchfork. All of us live somewhere along this line… no exceptions. Where are you on this continuum? Where am I? Where's your neighbour? Your mother?

Well, in many cases, I'd guess the correct answer is, "It depends." How can that be? Well, place yourself into different situations and ask the question again. When you're walking down the street, and you see a young child running into traffic, what do you do? Many people, if not most, would place themselves at some risk in favour of rescuing the child. Playing with your kids when you'd really like to just take a snooze. Helping a complete stranger across the road. Being honest and forthright in your business dealings. Easy choices for most of us, I think… I hope. Why is it, then, that the investment world attracts operators who can respond in these described situations with selflessness, yet compartmentalize their activities in the stock market as immune from honest dealings. Perhaps it's the anonymity of it. Perhaps it's a lack of character education. Perhaps it's just a natural state for an aberrant… wait a minute! Can an aberrant have a natural state? I think not. It's an unnatural state, then, in which the otherwise normal individual holds in abeyance the normal 'rules of the game'. When we can, in our minds, create a uniquely permissive set of rules, special to one particular environment, that environment becomes unlike all others, and exempt from normal rules of engagement.

In my observation, everyone is for themselves, but it's a matter of degree. The distinction is captured in one of my late father's favoured declarations: "All women are beautiful… just some more than others." Everyone is for themselves, I say… just some more than others. Some are willing to sacrifice great portions of their self interest in the service of others. Others are willing to do just about anything to serve themselves.

I'm of the firm belief that we're talking about a 'normal' distribution here (as in the bell curve).

Here's the thing. I do not believe that most operators in the investment world are devoid of morality. Maybe I am naïve, my friend, and I appreciate that you have made a great many sacrifices on my behalf, but it's just not how I see the world. Benefit of the doubt is my starting point for any relationship. I get burned from time to time as a result, but for me, it makes for a much happier and healthier life… I think. Yes, trust has to be earned. I agree. At the same time, I feel strongly that the benefits of remaining open to possibilities outweigh the downside risks of the occasional encounter with a miscreant. I guess one's view of the relative mix of good and bad people in the world will be key to any consideration of new relationships.

Make no mistake of it. I'm no Mother Teresa. Not even close. Unlike her, I would very much like to be very much rich… but make that clean rich. If, at the end of my journey, I end up clean poor, yet true to the path, I'll be fine with the outcome. If I'm lucky, my journey will be well guided by a short list of values and I will remember to keep this list close in times of temptation.

Life is a journey… life is good.

Be well,

Kevin Graham

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