Volatility is not Loss (or Gain)

I’m a little bummed that the bottom fell out of the real estate market right after we “bought” our first house (we don’t own a house, we have a mortgage). More to the point, it’s no fun watching the value of any asset decline.

But the title phrase of this post, “Volatility is not Loss,” should give us some comfort. It’s something that any financial planner will try to express, and I heard it uttered by a broker on the radio yesterday afternoon. It’s a good sentiment to remember in times like these. A paper profit or a paper loss is just that, you don’t make or lose money until you actually sell an asset.

Every asset is different, but for those linked to the larger economy, like a house in a major metropolitan area or a mutual fund with broad holdings, things may not be as bad as they seem. The current financial crisis might lead to a permanent revaluation of many assets, but it’s also possible that this is just another business cycle. What goes down will go up again.

On the other hand, that is little solace for those around us who are losing jobs, struggling to pay bills, and wondering what the future holds. As the seasons of Thanksgiving and Advent approach, I hope that I/we will be grateful for what we have and redouble our efforts to help anyone we can.

Shalom.

A Policy/Ethics Question

Florida recently passed a law requiring older drivers (+80) to have their eyes examined. (Please refrain from guffawing). The result as described here, was a statistically significant decrease in fatalities among these drivers. At least three factors were involved. Some drivers flunked the test and stopped driving; others got new prescriptions to pass the test, which made them better drivers; others just let their licenses expire because they knew they would fail.

In my mind this is a public policy success. Fatalities declined and a bunch of folks can see better. This begs the question: should this policy be directed at drivers of all ages, instead of just older drivers? My uninformed guess is that there would be some benefit, but not as much as for older drivers.

So how many lives would make it worth it? If it would save 5 lives, would YOU require everyone to have their eyes examined? 100 lives? 1000 lives?

Nickolas

Late last Spring, Elaine and I went to a cookout with some folks from church. It was a small group, and we were staked out near a playground where several children who were not affiliated with our group were playing. While I was preparing dessert, the following actual conversation occurred.

Young Boy – I need a S’more
Travis – I can’t give you a S’more, there are a bunch of kids around here, and I don’t have enough for everybody
Young Boy – But I NEED a S’more
Travis – Kid, I don’t KNOW you
Young Boy – I’m Nickolas
Travis – Well, Nickolas, I’m not going to give you a S’more. It looks like you just ate; you’re wearing your dinner on your shirt (his shirt was covered with ambiguous food stains).
Nickolas – That’s not my dinner, it’s my mess
Travis – Well, you can’t have S’more unless you ask your mom
Older Boy playing on playground – Mom lets him have anything he wants
Travis – I don’t care. Nickolas, if you want a S’more, you have to go ask your mom.

(Nickolas runs off, then returns)

Nickolas – She said I could have one
Travis – Okay (reluctantly gives Nickolas a S’more which he happily devours).

I totally understand if this text doesn’t leap off the page, but it is one of the most memorable conversations I’ve ever had. Elaine and I happily recount it regularly.

The kid was just so optimistic and so-good natured. The way he said, “I’m Nickolas,” as if I had been hearing about him for quite some time, or should have already known, as if a name encapsulated everything you need to know about someone.

I can’t help but worry that this kid has a lot of pain coming his way. Trusting strangers, wearing your heart on your sleeve, and appealing to people’s better angels is a recipe for disaster.

On the other hand, it’s pretty motivating. I want to live in Nickolas’s world – everybody’s a friend; tell people what you want; ignore snide remarks; expect the best.