Day of discussions. It started during the monthly barbeque which was postponed 2 weeks until I arrived. Someone started talking about Creationism and the schools in the US. It was the perfect opportunity for me to pipe up and mention my views on the topic. I said although I was a strong believer in evolution and a huge admirer of Charles Darwin, I thought that if a community wanted to allow a school to teach Creationism, that I would be all for it.
Silence.
I had to qualify that eventually with the separation of church and state, but this started a long discussion about the potential assault on science by non-scientific thinkers. My view is that this has always been the case and that it was probably far worse 100 years ago. Not everyone needs to be an evolutionary biologist, and science, especially that branch of science, can have a devastating impact on people's religions, destroying the foundation on which their lives rest. Everyone is wrong about understanding the universe, it's just a matter of degree and in which ways. [NOTE: however, on the subject of the origin of species, Creationists are obviously wrong while the science model matches observations far better, but like all models of reality, still needs more tweaking. I say this to make it clear that I'm not using the moral equivalence argument that, since both are wrong, that they're equally good. That sort of thinking is logically incorrect.]
I spent most of the rest of the day discussing things with various people. Economics, globalization, investing, manga (including DeathNote), Indian cooking, Japanese language, and lots of other things.
In explaining how I do investing (Graham/Buffett principles), I realized that I had stumbled into an important observation about my own situation: I've been far too cautious and have been chopping off long tail potential gains. Now that it's the next day, I don't really see why this was such an important "note to self". I already knew that and wrote about it many times on my financial blog. But I trust that there was an important perspective that I had at the time which I've since forgotten. I've written before (and mentioned on Friday) that Charles Darwin had a rule that if you see something unexpected, you need to write it down quickly or else you'll forget it. Essentially your mind will distort the observation and fit it into your existing mental model of the world when the unexpected thing is really a sign that you should be doing the opposite: look to see if you need to change the model to fit the observation.
Essentially the simplified "note to self" was to look for, and take, the really big moves when they show up. This is something from the game of go. You can play go and have every one of your stones be a good move and still lose the game because you missed, at a few key points, very big moves which change the entire direction of the game. Sometimes what seems like a good big move is wrong, but that's ok. Mistakes will happen regardless of whether you're playing it safe or looking for big moves. That is what I saw last night! [ValueClick was a big move, but I treated it like a garden variety investment.]
At this point in time, I've had enormous amounts of time to evaluate and shuffle my investments. I believe that I now hold a basket of very big moves, although the market prices are all down.
One important perspective that came up during discussions about economics was about the impact of globalization. Australia's manufacturing is moving to China and Eastern Europe. And there's a fear that the research and development associated with that manufacturing will go as well. In the worst case, Australia would be left behind and go into economic decline.
In talking about how agriculture declined enormously during the 20th Century as a source of jobs (but yet everyone got far wealthier), the key perspective occurred to me. 20 million intelligent, educated, productive, hard-working people are not just going to sit down, give up, and stop working. If all the existing jobs slowly transferred to other places, capitalists with money and insight (at least some of them will have very good insight, and it only takes one) will find something for those people to do which matches their skills. Those few capitalists will reap enormous rewards and other will soon follow down the same path.
One of Bill Clinton's big strengths was in recognizing that job disruption was inevitable and he focused on retraining the people affected. Don't try to "protect" jobs, instead protect the workers.
There are very big signs of inflation here in Australia. I heard several on Friday and I've noticed that prices here are very high. I think that instead of looking for differences in products and services here, I should look for price differences. Australia could very well be the "canary in the coal mine" for inflation. Vendors are often afraid of raising prices in the US because they can lose important market share. Also, Americans are probably ruthless in playing vendors off of each other to keep prices down (at least temporarily). Australia is a small market. Perhaps it's more exposed to the economic weather than the US?
The average house in Melbourne sells for about US$420,000. It doesn't seem like the incomes can really support prices that high. I fear there will be some significant disruptions in the future.
Another important perspective I got on Friday was about seeing and responding correctly (actually I really mean rationally here) to the big picture. No details, sorry.
Last but not least, it's dificult to avoid seeing that Melbourne has an extremely high concentration of very beautiful women.
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