Life Balances

When you take accounting you learn about debits and credits. It comes clearer if someone explains the idea of outcomes and source of funds for the outcome.

For example, I incur an expense or buy an asset – debit, and balance it with a credit to some other account. Could be cash, bank or accounts payable.

The debits must equal the credits or there is a lot of work finding the error

Have you ever thought about how life balances?

Suppose I declare myself to have a right. An asset. Therefore, there must be a credit somewhere in the system. Something that gives effect to that asset. It could be a reduction in assets someone else owns, cash or bank, or an obligation they have accepted. Accounts payable.

There are two kinds of rights

Think of them as negative and positive.

Negative rights are the rights I have to be left alone, or to acquire something with my own resources. These rights are more natural. Think of the right to speak my mind, even if no one takes it seriously. One of their rights. Think of the right to not be arrested without due process. Think about the right to practice my religion. There are others.

I can enjoy these rights without placing a cost on anyone else in society.

Positive rights are different.

Positive rights are something I claim as a right, but in so doing I impose a duty on others to provide it. Housing, healthcare,, education, minimum income, and more. That would seem to violate any right others have to be left alone. They might prefer to keep their money.

When governments provide me with a right I could not claim and also enforce the funding of that right, they have essentially become armed robbers. They are taking from some by threat and giving it to others.

Governments much enjoy giving things to people. They have nothing of their own to give. So they must take from someone who has something.

The end result

The end result of legislating all positive rights is the same. Someone gets something for nothing and someone else gets nothing for something. To add insult, the nothing for something group must additionally pay all the overhead required to get the benefit to the beneficiary.  Governments are not especially frugal and so the final give up can approach double the price of the benefit bestowed.

It pays you to think one layer deeper.  Eventually the nothing for something crowd will stop participating, then what happens? It is hard to take back something once given as a “Right.”

There is an election coming, you might want to think the process through.


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How Much Should Gasoline Cost At The Pump?

It varies because input costs are different and depend on where you are. This is for Ontario and for delivery points within 125 miles of a refinery. I would be happy to amend it for errors. It comes close here and now.

Here’s what I can estimate.

The crude oil cost per liter

  • Crude oil Monday the 13th is US$ 71. 00. It varies by the nature of the crude. I find West Texas Intermediate is a reasonable proxy.
  • The Canadian dollar is at 79 cents  so $89.87 per barrel Canadian
  • There are 158.9 liters per barrel. Gasoline is just one of the products taken from a barrel. Some products like plastic feedstock are worth more, others like bunker C oil less. For this calculation I have assumed that on average, if I divide the barrel price by 125, I will get something near the cost allocation to gasoline for the crude

Using these variables, the price per liter for crude oil is just under 72 cents. 71.9 cents per liter

Transportation to the refinery.

If overland and we assume a pipeline then $5.00 per liter. If any other way, at least three times more.

So $5 divided by 125 = 4 cents per liter

Refining Cost

$4.00 per barrel for 125 liters of gas =  3.2 cents per liter

Transportation to dealer

This depends on how far from the refinery the dealer is. I have assumed 40,000 liters per tanker, $900 to load and unload and $3.00 per mile. Based on 125 miles from the refinery, the cost is 3.19 cents per liter. This could vary depending on the size of the tanker and the estimate for loading and unloading

Dealer margin

The range here is quite large. Large urban centers will tend to be higher than others because of their overhead.

I have used 2 cents per liter and it could be quite different from place to place.

Oil Company profit half a cent per liter. I have no idea but I need a line for it.

Direct Taxes

In Ontario, the road tax is 14.7 cents per liter of unleaded gasoline

The federal gasoline excise tax is 10 cents per liter. Diesel is 4 cents

The federal carbon tax is 8.84 cents per liter

Direct taxes are 33.54  cents per liter

Indirect costs

Credit card and debit card charges depend on the processor charge and the percentage of purchase using cards. I have guessed 0.75% of the ticket

HST is 13% of the final price.

What should a liter sell for.

Direct costs total $1.1869

HST plus processing costs total 13.75 % of the selling price, so the selling price will be $1.1869 divided by .8625 (1-.13-.0.75) which equals $1.376 per liter at the pump. The HST component will be 17.8 cents

Checking my work.

I find Dan McTeague’s Gas Buddy to be a useful tool. In my area the price of gas ranges between $1.339 and $1.389. The $1.376 seems reasonable. High test should be more but the only variable that changes when I go there is refining cost. I don’t know how they do it so I can’t estimate what’s reasonable there.

On the reserves, the price is around $1.18. Take out some of the direct taxes and increase the dealer margin is my first guess for the reason. I have not checked.

The takeaway

The government gets most of the money. 17.8 cents of HST and 33.54 cents of direct taxes for a total of 51.34 Cents per liter.

I don’t know how much the royalties are on the crude, but they are not zero, so they get more there. The Alberta site is opaque about this, but 25% of the WTI price seems reasonable That would be around 18 cents per liter. That is for oil sands production. I don’t know what it is for conventional production.

Let call it 70 cents to the governments. Roughly half.

I don’t drive a lot but it still adds up to about $1,000 per year. If I were someone who had to drive for work, like a contractor, I might be completely depressed. I could take public transit, but if  a contractor needs to pick up some lumber, and a bag of cement or a box of tiles, they don’t have that choice. Given poorer gas mileage and more miles, I suppose $400 a month would not be out of the question for this person. $5,000 per year. For commuters it could be huge too.

When you decide the oil companies are greedy profiteers, and maybe they are, you should build your case with specifics. When you do, you will see who the real profiteers are.

Look up inelastic demand in economics and you will see why it works like this. There is no substitute for gas yet so people will pay what is presented as the price.

I wonder how they will tax electric cars and trucks. When their greatest wish is to have all-electric vehicles is achieved, they will lose a lot of revenue when the gas taxes go away. I wonder what they will do. Some other hidden tax I suppose.


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Peter Thiel Is Fascinating

Peter Thiel is an intriguing, multi-dimensional person. Very smart, yet humble. That’s uncommon.

He has been a Wall Street lawyer, teacher, and venture capitalist. He founded of Confinity, later PayPal. He joined forces with Elon Musk’s online bank, in 2000 and sold the company to EBay in 2002 for $1.5 billion. He was the first outside investor in Facebook. He has used his money and skill since to build a formidable venture capital firm, participate in philanthropic efforts, be active in political causes, and live a successful life.

And he makes it look easy.

I knew of him before, but had not paid much attention. This YouTube video lead me to do some more research. It’s about 2 hours long. Peter Thiel and Dave Rubin. There are several other interviews and articles you might enjoy.

For business thinking

If you are thinking about starting a business, or are already running one, here are some of his thoughts:

“Startups operate on the principle that you need to work with other people to get stuff done, but you also need to stay small enough so that you actually can. Positively defined, a startup is the largest group of people you can convince of a plan to build a different future. A new company’s most important strength is new thinking: even more important than nimbleness, small size affords space to think.”

Seven Questions every business must answer:

    1. The Engineering Question Can you create breakthrough technology instead of incremental improvements?
    2. The Timing Question Is now the right time to start your particular business?
    3. The Monopoly Question Are you starting with a big share of a small market?
    4. The People Question Do you have the right team?
    5. The Distribution Question Do you have a way to not just create but deliver your product?
    6. The Durability Question Will your market position be defensible 10 and 20 years into the future?
    7. The Secret Question Have you identified a unique opportunity that others don’t see?”

“Sequencing markets correctly is underrated, and it takes discipline to expand gradually. The most successful companies make the core progression—to first dominate a specific niche and then scale to adjacent markets—a part of their founding narrative.”

“Shallow men believe in luck, believe in circumstances…. Strong men believe in cause and effect.”

“The opposite ideas are not automatically true: you can’t escape the madness of crowds by dogmatically rejecting them. Instead ask yourself: how much of what you know about business is shaped by mistaken reactions to past mistakes? The most contrarian thing of all is not to oppose the crowd but to think for yourself.”

“The Field of Dreams conceit is especially popular in Silicon Valley, where engineers are biased toward building cool stuff rather than selling it. But customers will not come just because you build it. You have to make that happen, and it’s harder than it looks.”

Learning more

He has published a book. “Zero to One” It deals with startups, and a larger idea. “How to Build the Future”

The Atlantic, October 2021, has an article that covers a lot of ground. The Contrarian   Peter Thiel is a very complex person.

Some other thoughts

“Grand visions inflate the bubble, so they should not be indulged. Anyone who claims to be able to do something great is suspect, and anyone who wants to change the world should be more humble. Small, incremental steps are the only safe path forward”

“The first step to thinking clearly is to question what we think we know about the past.”

“The future is simply the set of all moments yet to come. But what makes the future distinctive and important isn’t that it hasn’t happened yet, but rather that it will be a time when the world looks different from today.”

“The essential first step is to think for yourself. Only by seeing our world anew, as fresh and strange as it was to the ancients who saw it first, can we both re-create it and preserve it for the future.”

“The food pyramid that told us to eat low fat and enormous amounts of grains was probably more a product of lobbying by Big Food than real science; its chief impact has been to aggravate our obesity epidemic.”

The Takeaway

Whether you are interested in business, politics, philanthropy, or ways to seek success, Peter Thiel is a worthy study.

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What If Cultures Work Like A Grain?

We know that grains are more vibrant and produce more grain per seed, per acre, per dollar if they have been hybridized. Some would argue the hybridized result is not as easily digestible by humans as its predecessors because our bodies have not adapted to the changes involved. Could be true.

Children from the 1950s onward are larger than their ancestors. Until about the end of WW II most people married among people who had grown up close to them. Afterwards the gene pool was much expanded. Gene mixing produces more vitality and other characteristics.

How about cultures and religions?

There is a word for this – syncretism. What you get when you mix cultures or religions and some new amalgam forms.

The usual example of this is Rastafarian.  It combines aspects of Christian, Hebrew, and African practices and blends with the freed slave culture of Jamaica. Many find it hard to agree with all of it, but it is possible to see the pieces. Perhaps the easiest part to relate to is the music – Reggae. Bab Marley has certainly become an important character.

It began about 90 years ago and is still evolving. Where will it eventually lead?

It has always been there in religion

The Abrahamic religions have chosen to renounce the idea as they came to believe their religions were “revealed.” Nonetheless they retain aspects and important stories and parables that can be found in predecessors. Even within those there are divisions that relate to cultural pressures of their times.

Those differences seem large to the practitioners but less so to outsiders. For example, is there much fundamental difference moving from one Christian denomination to another.

The important question is do mergers improve the product or do they diminish it? That is a difficult question because the results are not immediately obvious.

Culture has the same propensity

Most people see diversity to be an advantage. No person and no culture holds all the truths. Exposure to other cultures refines our own beliefs. Some people think it makes the case that theirs is the best. Others think it proves that any particular culture has correctible defects and they can be repaired by adding aspects visible in some other culture.

Cultures change. In Europe, or North America, or China, or Africa, does the current culture seem the same as it was a century ago. I doubt someone from 1921 would recognize 2021. The harder question, would they see the value in the changes? Some aspects would seem wrong. Family breakdown. Tax rates. Government regulation.  Lawlessness and too many laws. Disingenuous politicians. Others would be good, once understood. I would enjoy explaining the internet to my grandfather. Movies on demand. Podcasts. A thousand TV stations. Better and more varied and relatively cheaper food. Automation. Computers. Others would be less clear. Smaller families. Reduced religious influence. Commuting. It’s hard to evaluate change while in the midst of it.

Ask yourself a question, would have it been different in Rome in year 50 CE compared to 50 BC. I would be surprised if it was so very different. How did they relate to change?

Change becomes the focus and people miss some of the useful changes that occur almost without notice. Change is difficult and people seldom try to assess the value of it before rejecting it. The first thing they reject is diversity. We should be careful with that.

There are situations where cultural change is denied. Japan being one. We should take a look at how that is going. I cannot see, given the internet, how it is possible to sustain that position. China works at it too. The Great Fire Wall is the method for now.

Anticipating the future

In business “synergy” is a common thought. Combining things leads to a result greater than the sum of the parts.

Why would we expect it to be different in cultural situations? We should not. Mixing ideas is an advantage. The offspring of the ideas is bigger, stronger, and more versatile ideas.

You might notice that synergy and syncretism are derived from a similar Greek root meaning “together”

Now, change is everywhere. Also conflicting ideas and anger. Division dominates for now. Can that continue?

If we assume that “together” creates better value for society, why would we not expect it to reappear? That would be In homage to the rule of life that asserts things that don’t work don’t last. The sooner we start to find commonality the better for all of us.

Find a way to see the point with someone who holds a different idea than you do. It might be better. It all begins locally.


I help people have more retirement income and larger, more liquid estates.

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Tiny Estate Planning Mistakes Are Still Costly

All About Estates often has useful ideas about estates, their planning, and their administration. They are usually short and easy to read.

This one deals with a very common situation that seldom, but not never, causes problems. It is a trivial problem to prevent and a devastating problem if it arises.

Ask why you have an estate plan, or do a will. Usually because your estate represents the sum of you financial life. It took a lifetime to build, why would you risk harming family relationships and incur costs needlessly.

Avoidance is far less costly than repair. Pay attention to details.

Joint Accounts Held As Tenants In Common Prevent Litigation

This blog was written by Holly LeValliant

Perhaps one of the most litigious issues in the area of estate law is the question of whether a joint account passes on survivorship when one of the owners dies, or whether the survivor holds the balance of the account in trust for the deceased’s estate.

Joint ownership of bank accounts between parents and children is common and can be a convenient tool to help children to manage their parents’ affairs during their lifetime.  However, when a parent adds their child as a joint account holder, the parent may expect the child to share the balance of the account with their siblings following the death of the parent.  When the parent’s intention has not been made clear, litigation can ensue.


An ageing parent adds one of their children as their bank account holder to assist in paying the parent’s bills.  All of the funds in the account belong to the parent.  Upon the parent’s death, the surviving account holder claims the balance of the account on a right of survivorship.  The Deceased’s Will divides the residue of their estate equally between their children.  The Deceased’s other children bring an Application to the Court seeking a declaration that the joint account was held in a resulting trust for the estate and should be divided between them in accordance with the Will. 

The leading case on the ownership interest in joint bank accounts is Pecore v. Pecore 2007 SCC 17(CanLII).  The Court held that when a parent gratuitously adds their child as a joint account holder, if that transfer is challenged, the child has the onus to prove that the parent intended the account to be a gift when the parent died.  This is called the presumption of a resulting trust, and when it is unclear what the parent’s intention was about the ownership of the account when they died, the resulting litigation can be lengthy and expensive.

Back to our scenario:  what can the parent do to prevent their children from litigating over the joint account?

The Court in Pecore considered whether banking documents can be used as a tool for joint account holders to clarify their intentions about their respective ownership interests in the account.  According to the unanimous decision, “if there is anything in the bank documents that specifically suggests the transferor’s intent regarding the beneficial interest in the account, I do not think that courts should be barred from considering it.  Indeed, the clearer the evidence in the bank documents in question, the more weight that evidence should carry.”

Let’s turn to our scenario again:  one way for the parent to avoid a dispute about their account is to specify in the account opening application that the account is held in a tenancy in common with their child.  Bank application forms often provide the option of specifying a) whether the account is held in a joint tenancy or a tenancy in common; and b) if it is held in a tenancy in common, what percentage of the account is held by each owner.  What this means is that the parent can enjoy the convenience of having their child as their joint account holder to help manage their assets during the parent’s lifetime, while making it clear in the banking records how much of the bank balance their joint account holder is entitled to receive on the parent’s death.

By placing ownership of the account in a tenancy in common, the transferor can make it clear that their portion of the account is an asset of their estate when they die.

The downside of holding a joint account as tenants in common is that probate tax would be payable on the percentage of the account owned by the transferor; however, the parent’s ability to prevent future litigation between their children can make this a good option in certain cases.

I help people have more retirement income and larger, more liquid estates.

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Learning Is Different Now

As an old guy, I look at what people learn. It seems to be less fact oriented than it once was. I suppose that is  a perception that would not stand a serious review. I am sure children and young adults are taught facts and possibly more than we ever learned. Maybe my real concern is the facts they are taught are a smaller share of all they are taught now.

In the old days

This again is perception. It may not be the same for each of you. I was taught in part by nuns. As a result, there is little you could do to scare me. We learned our facts and an immunity to fear. I think we were taught objectively, but I suspect there was a certain amount of bias that came in too.

The general bias of education at the time included, work together, be on time, be obedient, and learn to read write and do simple numerical tasks. This collection of educational good was exactly what was needed to help people be good workers in a factory.

Few went past high school by much. You could get a decent job with grade 10.

At university, I was in a math/science program, there was little beyond fact and technique. You learned to think about things you could prove and you learned to recognize untruth readily. Electives were few. In my case, economics, and a rudimentary, by today’s standards, course in operations research and system theory. As you might expect the electives have turned out useful. I have had little need for proving Simpson’s Rule or deriving the normal distribution. Partial differential equations and infinite Galois groups have added little to my adult life.

Computer science was in its infancy but exciting. You learned about structure and syntax and were seldom rewarded for carelessness.

There  was little about the wrongs of society. Maybe because society was still changing quickly, or maybe because many of the problems seemed on their way to solution without intervention.

Modern Times

I suspect the STEM program has not changed too much, but I did see a story recently where someone was attacking mathematics as racist and suppressing poor people. Mathematics is a way to communicate. To me, it seems objective.

What about the social sciences? I can accept that they are all left leaning. That is where you go when you have a need to learn about people instead of things. The left purports to be more caring, and to a point they may be.

The reality is that you cannot prove much. The level of confidence in their studies and the interpretation of results is immensely lower than for physics, or chemistry. Many studies cannot be replicated. That is not so much a problem as a statement of how complicated people are. People are chaotic. Weather predicting systems are not reliable either.

Today, in may university departments, humility is lost. People claim to know things that cannot be proven. Not in itself a problem, there are always unprovables. Take a look at Quantum Mechanics.  It is a place to look, not to hold as truth. It becomes a problem when you demand that others “believe” the unprovable, too.

How it hurts us

When logic and facts don’t work, it becomes necessary to use other means of persuasion. The first step is to overstate your knowledge. Exaggeration of the outcome is common and sets the stage for a narrative to fix the problem. You must then be quite strident in the rightness of your belief. No STEM trained person believes the idea of “settled science.” That is not a scientific concept. It is rhetoric, sophistry, and /or propaganda.

When people believe things that are not true, they make mistakes. Mistakes accumulate and are costly to repair.

What gets us into trouble is not what we don’t know. It’s what we know for sure that just ain’t so.”
Mark Twain

If something might be true but has nuance and unknown spaces, claiming certainty shuts down exploration and that limits the future.

Eventually people with too few facts to win arguments, resort to politics to implement their agenda. Politics is not about facts or reason. It is about persuasion. Persuasion is a clear and reasonably predictable field of study. Skilled people know how to capture your attention and help you make decisions in their favour.

The unfortunate reality is people who use persuasion instead of facts and reasoning as their tool seldom are held responsible for bad outcomes. They don’t get better. Mistakes are your best teacher if you must pay the price.

Reducing the problem

I doubt there is a cure but the effects can be less if we work at it. Each of us must act.

The citizens have duties:

  1. Acquire some tools. Learn how to identify spurious statistics and false arguments.
  2. Challenge the “experts.” In high school a common demand was “Show your work.” We should hold people to that standard.
  3. Understand that things can look different from a different viewing point. If something is a life threatening problem it provides one set of data and reasonable actions. If it is a problem that can be resolved over time, the actions are quite different. Urgency is nearly always a persuasion trick. Never underestimate human ingenuity when it comes to solving slow moving problems.

The government and other institutions have duties

  1. Don’t claim emergency powers unless there is an emergency not solvable in any other way.
  2. Be able to show your work. The reasoning around several points.
  3. Show why other alternative methods were rejected.
  4. Prepare a Cost/Benefit study on the proposal, including costs other than money
  5. Identify potential secondary and tertiary effects and their likelihood and cost if they appear.
  6. Know how to stop. What happens if the program does not achieve its overall purpose and/or intermediate goals?

The takeaway

  1. In creating the chaos of woke politics, no one is blameless. Some have been noisy and bossy, others too complacent.
  2. It will take a long time to repair. Start with yourself and then begin to demand the facts and reasoning for proposed programs.
  3. Use common sense. We cannot spend ourselves to prosperity.
  4. All proposals requiring that someone or some group be demonized are wrong. All the billionaires in America could not fund the budget deficits for the next two years. No one told you that did they.
  5. Racism is a trick. Part of the divide and conquer technique.
  6. Poverty is sometimes a mindset. Money won’t solve it if it is.
  7. When people show you their true character, believe them. Someone who lies 5% of the time should not have any credibility.
  8. Schools might not teach your children useful life skills. That’s on you now.

I help people have more retirement income and larger, more liquid estates.

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Lying With Statistics

You can tell the truth and convey the wrong message. If you do it on purpose, that’s a lie.

An example.

It is based on a 24 Aug 2021 CBC report that I doubt is a lie of any kind, but let’s see how the data can be used to create one.

“Of the 434 cases today with a known vaccination status, 279 were people who haven’t had a single shot. Another 41 cases were found in people who have had one vaccine, and a further 114 cases were found in fully vaccinated people..”

That is 64% of the new cases involved unvaccinated people, while 36% involved vaccinated people.

A possible misleading message is this. True but misleading. In 2020 not a single new case involved a vaccinated person. All the cases involved unvaccinated people. Clearly, it has become very risky too be vaccinated. The unvaccinated are showing up with a 36% reduction in their share of cases, while cases involving the vaccinated are exploding. From none to 36% of all cases.

Can you imagine the headline? “Vaccines implicated in 36% of all new cases. Unvaccinated cases falling”

What to watch for.

Most statistical lies are based on just a few methods.

  1. Inconsistent context. Like the example. There was no vaccine in 2020 and there was in 2021. Any comparison will be misleading.
  2. Be sure the end points are representative of the whole. Carefully choosing the ends can be very misleading. Suppose I say my investment fund rose 68% in a year. 9 March 2009 to 9 March 2010. Nice, but what if you also knew the fund rose 16.5% in the one year from 1 July 2009 to 1 July 2010. Picking the beginning of the period carefully increased the apparent return more than four times. Never accept one number as conclusive.
  3.  Comparison to small numbers. Suppose the odds of getting some rare disease are two chances in 100,000 careful research finds that if you eat peanut butter the odds become 4 in 100,000. The headline? Eating Peanut butter doubles your chances of getting the disease. There is still 99996 out of 100000 you won’t but 99996 compared to 99998 isn’t very newsworthy. Can you imagine this headline, “Eating peanut butter reduces your survival chances by two thousandths of one percent.” Both comparisons are true. The second will not affect your behaviour.
  4. Watch for graphs using inverted scales. They convey the wrong message because intuitively  up means up.
  5. Be sure the headline and the story convey the same message. Most people read only headlines.

The takeaway

The news needs to be spectacular or people don’t pay attention. Think if reality means what the headline implies.

I help people have more retirement income and larger, more liquid estates.

Call in Canada 705-927-4770, or email

Do We Know More Than We Used To?

It’s hard to say people know much more than we once did. The reports of there being thousands, even a million times as much to know as there once was may be vastly overstated.

It is a statistical thing and we are easily mislead. More in the afternoon post today.

Growing information.

People would have us believe the quantity of stored information is growing at an amazing rate. They relate to the number of zetta-bytes available.  That number has 21 zeroes. In 2020 Statista estimated 6.7 Zetta-bytes existed.

The unanswered question relates to whether quantity is a measurement of information at all.

Consider, a high definition picture can be about 5 megabytes. Two quadrillionths of a zetta-byte. A vanishingly small share. We also know that 5 megabytes is about the same size as the collected works of William Shakespeare. The Bible is about 15% smaller still. Obviously 5 megabytes alone doesn’t inform you about the value of the information.

I think there may be another hi-def picture added before there is something, in terms of knowledge or ideas, worth the Shakespeare collection, or the Bible. How about Wikipedia? About 20 gigabytes. about one three-trillionths of the total. I wonder what makes up the  other 2,999,999,999,999 parts

Seeking Wisdom.

There is a long way to go from a megabyte on a hard drive to wisdom. The pattern is data, the stuff on the internet, information, the stuff you can use to build with, knowledge the structure that arises from curated information, and wisdom when you know how to connect knowledge to what you are trying to do.

How many  megabytes does a one minute Tik Tok video use? Tik Tok videos are about 14 megabytes per minute. How many of the would you need to get to wisdom? A plethora, I think.

Don’t let quantity tell you an answer unless you can judge the quality of the data for your purpose. Quantity is not often a good substitute for quality.

The takeaway

  1. Never believe raw numbers. Always seek their quality and context before trying to use them.
  2. Meaning matters, especially meaning to you
  3. Don’t believe you cannot keep up. Most of the “information” available has too little meaning to qualify as knowledge, or even information.
  4. Meaning attaches to wisdom and data doesn’t add much to that. Be discerning.
  5. The media is looking for catchy headlines. Beware.

I help people have more retirement income and larger, more liquid estates.

Call in Canada 705-927-4770, or email 

Look Forward

“There is something wonderful in seeing a wrong-headed majority assailed by truth.”

John Kenneth Galbraith

Every one of us is wrong-headed about something. Most of it doesn’t spill over into the public space. Sometimes though, there is a mental malaise that takes over society.

The madness of crowds

Charles MacKay, a young Scottish journalist wrote a book about it in 1841. It is still popular. You could get a free copy of the original at Gutenberg if you like. Printed copies can be found at Amazon and even bookstores.

What does “Extraordinary Popular Delusions and the Madness of Crowds” have to say?

How manias work.

The book deals with three manias. The Mississippi Scheme, the South Sea Bubble, and Tulipmania.

What do they share? 

The usual suspects. All of the suspects are emotions. In the beginning greed is a motivator. People like the opportunity to make easy money, greed, and they especially like being in on the action early. Pride in their acumen I suppose. Later they may experience other emotions. A common one is fear of missing out. Maybe they could borrow some money and enlarge their position,  Eventually the positions become illiquid and real fear sets in.

In the early going, it’s all good to be in, but what if you can’t get out? Entirely different emotion.

What about Apple or Amazon? You could have bought either in the 90s and made huge money. Neither was a sure thing. But! Amazon had a growing business with a proven model. Apple had Steve Jobs. There was evidence of potential, and you could find and add more. Mania’s are evidence-free spaces.

The pattern is always the same. The smart people think they have the right approach and the ones who doubt are fools.

Does smart save you?

Apparently not. Isaac Newton would likely be in the top 10 candidates for smartest person in any room. During the South Sea Bubble he was smart for a while. He invested in the South Sea Bubble, not called that at the time, and sold when he tripled his money. His profit was about $1 million in todays money. But the madness set in and later he bought back in at a much higher price. Some claim he lost all his money and some he had borrowed to invest. The evidence is unclear.

Intelligence is not a defense to emotion.


Can tulip bulbs be worth more than a house? Apparently yes, even though in retrospect it is easy to say they are not. Just like in the stock market there are two prices for a thing.

  1. The intrinsic value. –  In simplest terms, what it will earn
  2. The market value.  –  What it will sell for.

With the tulips, there came to be a wide gap between intrinsic value and market value. That happens everyday with something. You might recall the dot-com bubble, Bernie Madoff, Theranos, Worldcom, Bre-X, and Enron, to name a few. Once you are aware of the difference, you have a better chance of avoiding the madness of the crowd.

Earnings are more likely to provide value than a story about the future.

The defence

It’s hard to be objective. There is a starting place, though. Mark Twain had the useful idea. “Whenever you find yourself on the side of the majority, it is time to pause and reflect.

Bubbles sell ideas that will pay off in future. The evidential connection is tentative at best. They fully rely on the market value idea of price. To be harsh, they rely on the idea of there being a bigger fool who will pay even more than you have paid.

Know that participation in a market price environment is speculation, not investing.

In principle, I find nothing wrong with speculating, go for it if you think you have better or newer information. Just don’t think of it as investing. Investing is evidence based, investing pays off over time, you can explain investing to children.

Be disciplined enough to restrict speculative investments to a small share of your portfolio.

The takeaway

  1. Know the difference between investing and speculating.
  2. Understand speculating needs emotion and hype. A narrative.
  3. Be careful of bandwagons. You could end up under the wheels.
  4. Study examples of speculative collapses. They all look about the same, and you can learn to see the symptoms early.
  5. Herd mentality eliminates individual thought. “A group is extraordinarily credulous and open to influence; it has no critical faculty”  Sigmund Freud
  6. The idea of crowd psychology applies to more than speculative money-making ideas.
  7. Who manipulates the crowd’s mind? Why? Pay attention to that. The propaganda techniques are getting better every day.

If you can stay outside the crowd, there is a chance you can experience the joy of the crowd being “assailed by truth.” It won’t be easy, but truth is durable.

I help people have more retirement income and larger, more liquid estates.

Call in Canada 705-927-4770, or email 

9/11 Recalled and Thought About

I remember 9/11 quite distinctly. I was in my office and there came images that were more than disturbing. In the beginning I had no real concern. I knew a little about the World Trade Center Towers and estimated they would stand.

There was almost no factual information available. Small planes had struck them before without damage. Until the second plane hit, it might have been an accident.

Then the pentagon.

The rule is:

  1. Once could be an accident.
  2. Twice could be a coincidence
  3. Three times is organized

Then a fourth plane was disabled in flight by the passengers. Very brave and capable people.

What did 9/11 mean?

It is likely the defining moment for western society from at least the end of WW II. A band of miscreants, from our viewing point, resident in caves, using box cutters as weapons, took down arguably the most visible symbol of finance and power.

People were forced by the circumstances to reconsider their advantages. Over the next two decades, the whole idea of the success of western society and culture came into dispute. It has come to be chaotic.

What happened?

It lead to the adventure in Afghanistan. When you look objectively, the ending seems to have recreated the original problem, but with our adversary holding more and better weapons. I think we cannot argue any measure of success there.

It is very hard to establish how the world is better now. Objectively, it is easy to argue that North America and Europe are worse off.

9/12 was the key 

In times of chaos people can behave to achieve collective goals, or they can distribute new ideologies. In the early going collective goals seemed to dominate. Examine how Gander Newfoundland responded to the arrival of 38 wide-body airliners and 7,000 people in their community of 10,000. The documentary “Come From Away” is wonderful. People helping people matters.

Do we still hold that message foremost or have we decided to fraction into dozens of intersectionality defined groups? Perhaps local community values survive. National is not obvious.

Something to consider

We may have had a delusional belief in our safety and power. Once we discover that delusion, where do we go next? We had two choices:

  1. Change our approach to building a society
  2. Re-examine our original approach and develop it further. That requires that we recognize that our complacency was delusional.

Looks like we have chosen option #1. Typically, divisive behaviour is contrary to building a strong society.

Consider a thought from the father of public relations and author of “Propaganda” and “Crystalizing Public Opinion.” Edward L. Bernays.

“The existence of a society based on individual rights and personal liberties is dependent on a population which has developed this capacity for individual-consciousness, or in other words on a society of individuals who understand themselves and treat others as individuals first and foremost.”

The choice is individual or crowd

It seems we are moving toward crowd behaviour. We are creating dozens of identity based groups. . Where does it go?

“Each group…considers its own standards ultimate and indisputable, and tends to dismiss all contrary or different standards as indefensible.” (Crystallizing Public Opinion, Edward Bernays)

Do you see any evidence of that?

Divide and conquer works. “”Divide the many and weaken the force which was strong while it was united.” Machiavelli

Crowd psychology is not like individual psychology. A crowd does not behave like any individual within it. if you divide society into groups that are likely to clash – race, gender, religion, ethnicity, and political preference, you should expect people to spend their time in conflict rather than in building. You can agree that is not very productive. We are reacting poorly. Individualism and freedom built something that worked.

“Life is 10% what happens to you and 90% how you react to it.” Charles Swindoll

We have more in common than anyone thinks. Overcome the propaganda. Build.


I help people have more retirement income and larger, more liquid estates.

Call in Canada 705-927-4770, or email 

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