If you’ll forgive the indulgence, today I’d like to respond to an interesting – and personal – reader inquiry. The question may not have been intended as personal, but it wound up inspiring a fair bit of reflection. Here it is:

Mr. Litle,

I find your opinions on the world and U.S. economies very fascinating, to say the least. What I will like to read more of, if you can, is your opinions on some potential solution to these problems, or are you just good at highlighting problem but no solutions?

Thanks for your time in advance.

– TD Reader “Chuck”

Thanks, Chuck! (I think...)

If you want all the solutions you can stomach, here’s what I suggest. First, subscribe to Forbes and The Economist (two highly respected financial rags). Then make sure to catch Steve Forbes’ opening column in each issue of Forbes, and furthermore scan the final paragraphs in the lead article section of The Economist each week.

It’s a tongue-in-cheek suggestion (as you might have guessed). But you really will find a smorgasbord of “solutions” that way. Steve Forbes seems to have a forcefully simplistic opinion on how to fix every single economic problem on the planet. In similar vein, The Economist never tires of ending pieces with a schoolmarmish finger wag that always boils down to, “It would simply be best if world leaders did X.”

I subscribe to both of those venerable publications (plus at least a dozen others, if not more), and I take in absurd quantities of market-related information every single day. The challenge of this process requires me to read at different speeds, ranging from “leisurely” to “lightning bolt.” When it comes to the hand-waving solutions, I zip right past ‘em as if they weren’t even there. (When I come across a Thomas Friedman column, it’s like a blank page.)

The reason why is because most “solutions” of the forcefully delivered type fall into what I call the perfect world trap. The trap applies if whatever solution being offered deserves a “perfect world” qualifier. For example, “in a perfect world, Americans would have a more rational attitude towards healthcare.” Or, “in a perfect world, politicians would have a long-term rather than short-term focus.” And so on.

Many answers to the world’s problems are obvious in terms of what “should” be done. The more interesting question, in my view, is why what “should” be done in a perfect world so rarely plays out in the real one. Power corrupts. Self interest corrodes. Human nature throws a monkey wrench into the works yet again. And so it goes...

As a result of the many slips twixt cup and lip, the gap between clean theory and messy reality is more often than not Grand-Canyon sized. And thus I find myself with zero patience for goobers like Steve Forbes who, in their constant righteous claims of what “should” be done, act as if such a gap does not exist.

I wasn’t always so “anti-solution.” There was a time when I, too, thought fixing the world was merely a matter of getting the right multi-step instruction guide into the right hands. Over time, though, I soaked up more of the zen-like wisdom embedded in the old saying, “The wise man thinks what is easy is hard.”

Pragmatism and Profit

So why talk about this stuff then? Why bring up the world’s troubles in these pages, and dissect them as we do, if sweeping solutions are not the main point of interest?

I see two powerful reasons to do so – pragmatism and knowledge.

First, on the pragmatic side, let me share a crass aside with you. I intend to retire rich. Actually, I’ll probably never retire... I love what I do so much that it hardly feels like work. I can just as easily write to you, or make adjustments to my trading portfolio, from a luxury lodge in New Zealand or an old world villa in Spain as from my comfortable home office here in Reno/Tahoe.

But anyhow, point being, it is my direct and deliberate intent to accumulate a vast sum of wealth before riding off into the sunset. I don’t really give a damn about the money... but I love freedom and I love the great game that is markets. Trading is my passion.

And so, when something of import happens or some new political development bursts on the scene, the natural approach for yours truly is not, “Hmm... how can I find the ideal solution to this issue so that I can share it with the world in hopes that they will listen?”

Instead, my internal response runs more along the lines of, “Okay, what kind of curveball are these goofballs going to throw at us next... and how can we hit it out of the park?”

Or, more simply put, “How might this development impact markets, in either the short run or the long run (or both)? How can we profit from this (or just as importantly, avoid loss)?”

You see, pragmatically speaking, you and I can’t do a thing about the decisions being made in Washington, Brussels or Beijing. (They’re not listening to muckety-mucks like Steve Forbes or The Economist, so why in the world would they listen to us?)

Nor can we repeal human nature, or cure short-sightedness, or otherwise turn water into wine. But what we can do is accept the world as it is... interpret reality as it stands... and seek to create prosperity for ourselves from the swirling nexus of forces that drives current events.

One of the ironies in all this, I believe, is that the righteous souls hell-bent on saving the world often find themselves neglecting their own little corner of it. So much time and energy is spent banging on about impossibly idealistic solutions that real steps in the direction of real goals and dreams are left untaken.

That’s the general trouble, as I see it, with the popular focus on “making a difference.” All too often, the key question “Making a difference to whom?” is never properly considered.

Why the World Wags and What Wags It

“But hold on just a second,” I hear some of you say. “Taipan Daily isn’t all pragmatism, all the time, as you seem to be suggesting here. On occasion you talk about civil liberties and historic world events and other such things. And sometimes you guys take the odd turn that seems to have little to do with trading and investing at all. So what gives?”

To which I say, yep, absolutely true. It’s not all “show me the money” around here, if you’ll pardon the phrase.

And there are reasons for that too... the first one being that a real body of knowledge (as related to trading and investing) is broad and diverse and takes time to build – sometimes taking one to unexpected places. I have always seen that as a good thing, not a bad thing.

When I first got excited about markets (back in my wet-behind-the-ears college days), it was in part because trading and investing seemed such a grand excuse to learn a little bit about everything, yet still put that knowledge to work in a pragmatic way.

In other words, to be a trading and investing virtuoso requires some level of comfort and familiarity not just in the realms of finance and economics, but history, psychology, sociology, philosophy, game theory... even biology and physics to some degree... the list goes on and on. Above all, in your humble editor’s view, success in markets is tied to an intimate knowledge of the human condition (including one’s self) and the ongoing state of the world at large.

Again, what a great excuse to dig in and learn new things! There’s a lot happening on this silly old ball, as Bill Bonner sometimes likes to call it – and I, for one, often feel like a little kid turning over rocks in the woods, bursting with curiosity at the next potential find.

So in that respect, too, Taipan Daily is less focused on packaged solutions because there’s only so much time and energy to spare. Telling the world what should be done leaves less room for understanding the world as it is... and figuring out what might happen next... and learning how to profit from it.

I’ll leave you with one of my all-time favorite quotes, from T.H. White in The Once and Future King. Merlyn said it better than I ever could:

“The best thing for being sad,” replied Merlyn, “...is to learn to something. That is the only thing that never fails. You may grow old and trembling in your anatomies, you may lie awake at night listening to the disorder of your veins, you may miss your only love, you may see the world about you devastated by evil lunatics, or know your honor trampled in the sewers of baser minds. There is only one thing for it then – to learn. Learn why the world wags and what wags it. That is the only thing which the mind can never exhaust, never alienate, never be tortured by, never fear or distrust, and never dream of regretting.”

Other Related Topics: Justice Litle , Macro Trader

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