| The Psychology of Deception — Part One |
Tuesday, 10 August 2021 — Gold Coast, Australia | | By Vern Gowdie | | Editor, The Rum Rebellion |
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[8 min read] Dear Reader, The psychology of deception starts from a young age. Children are told a jolly fat man in a red suit — transported by flying reindeer — comes down the chimney (even if you don’t have one) and gives you gifts. And then there’s the giant rabbit with a basketful of chocolate eggs. It’s always puzzled me why a rabbit has eggs and not an oversized chicken. Allowing children’s imaginations to run wild is harmless deception. Why spoil the tradition. Before we continue, I wanted to share an update from the editors of Australian Small-Cap Investigator. After extensive research, Murray and Ryan have just written a report with seven exciting stock recommendations. They have identified exciting new trends offering significant upside potential. To learn more about Murray and Ryan’s service, please go here. Back to today’s topic. When we reach the adult world, the deception tends to be not so harmless. Climate change…is it really real? Has COVID-19 been released as part of the Great Reset…with society willingly ceding greater control to government? Iraq’s weapons of mass destruction (WMD)…was this just a money-making exercise for the military industry? To suggest all (or some) of the above are part of a global power play by the elites, risks being ridiculed and dismissed as a conspiracy theorist. So, for the most part, we accept the narrative we’re told. Easier to swim with rather than against the tide. Do I think climate change is real? No. It’s a massive con job. I wouldn’t trust Al Gore to tell me the time with my own watch. Was COVID-19 released deliberately or accidently…I harbour suspicions. And we know WMDs were never found in Iraq…so what was the real agenda? Some will agree with me and others most certainly will disagree. Who’s right? To some extent it does not matter. Even if my conclusions are 100% correct, what can I do about them? I have neither the time nor energy to waste on trying to prove or disprove these deceptions. Here at The Rum Rebellion our main aim is to provide you with information to help you make more informed choices with your finances. Therefore, the deceptions (and lessons learned) I’d like to share with you today and tomorrow are market related. The Roaring 20s The Roaring Twenties was a decade of advancement. Automobiles. Telephones. Films. Radio. Electrical appliances. Society was energised by these leaps forward in progress. Brimming confidence led to a booming share market. Easy money was on offer. Buy this today and make a small fortune tomorrow. The market made it easy for the psychology of deception to take hold. Seeing was believing. People bought the story…they let their imaginations run wild with the possibilities. One who wasn’t buying the market’s BS (short for Bullish Story) was Roger Babson. Babson was an investment banker/fund manager/statistician/ economist…and a very successful investor. The following edited extracts are from Business Insider… ‘Babson’s success as an investor and in running his investment research firm was, to some large degree, based on his unique (some might say unorthodox) beliefs in how markets functioned. ‘…during his time at M.I.T., Babson became interested in Newton’s third law and posited a theory that the business cycle was driven in part by the interplay between human participants and gravity. ‘Working with M.I.T. Professor of Engineering George F. Swain, Babson applied the concept of actions and reactions to classical economics, which led to the development of the Babsonchart of Economic Indicators.’ Based on his proprietary indicators, Babson warned investors at the September 1927 annual National Business Executives Conference… ‘[T]hat the stock markets were reaching dangerous levels.’ At that time, the Dow was around 200 points…doubling in value over the three previous years. No one listened. A year later, the Dow was up another 30%. At the 1928 annual National Business Executives Conference, Babson warned the market was overvalued and… ‘[A] terrific correction could occur.’ No one listened. The market surged almost another 50%...rising from 260 points to 380 points. In September 1929, Babson’s address to the National Business Executives Conference in Massachusetts began with… ‘I repeat what I said at this time last year and the year before, that sooner or later a crash is coming which will take down the leading stocks…’ Eventually logic (mathematics) trumps emotion, but you may have to wait longer than you think for rational thought to prevail. In Babson’s case, his conviction in the maths was vindicated in October 1929. The following excerpts from his 1929 address are just as true today as they were in the late 1920s. Please read them carefully and note the strong correlation between the mindset then and now (emphasis added): ‘Fair weather cannot always continue. The Economic Cycle is in progress today as it was in the past. The Federal Reserve System has put the banks in a strong position, but it has not changed human nature. ‘More people are borrowing and speculating today than ever in our history. Sooner or later a crash is coming and it may be terrific. ‘Wise are those investors who now get out of debt and reef their sails. This does not mean selling all you have, but it does mean paying up your loans and avoiding margin speculation. Sooner or later the stock market boom will collapse... Some day the time is coming when the market will begin to slide off, sellers will exceed buyers, and paper profits will begin to disappear. Then there will immediately be a stampede to save what paper profits then exist.’ Babson picked the deception early. However, it took more than two years before the market’s trickery was exposed. In the interim, Babson’s credibility was questioned…did his mathematical modelling no longer apply? In the midst of a boom, no one wants to be told there is no market Santa Claus or Easter Bunny. People want to be deceived. To believe in the unbelievable. Perhaps it is different this time. It never is. Take note of what Babson said in his 1929 address…it is so applicable to today. Tomorrow we look at some more recent deceptions…ones that even the best and brightest fell for. Regards, Vern Gowdie,
Editor, The Rum Rebellion Vern is also the Editor of The Gowdie Letter and The Gowdie Advisory — investment services designed to help everyday Australians avoid the financial pitfalls of a volatile economy and make informed decisions to grow their wealth for generations to come. Advertisement: You just got given an ‘unbelievable gift’ What’s your best course of action from here — if you missed out at $12,000 to $20,000 bitcoin? What are the strategies to employ if you already own or trade cryptos? And, most importantly… What’s the REAL story behind falling crypto prices? The story the mainstream isn’t telling you? Why is the smart buying on weakness, while the small holders are panic selling? Honest truth is cryptos are just a tiny part of what’s unfolding. We’re at an inflection point in investing. And falling prices of bitcoin and other crypto assets are actually an ‘unbelievable gift’. But you need to employ the right strategies. You’ll find five of them here. |
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| A Home Remembers. A House Forgets. |
| | By Bill Bonner | | Editor, The Rum Rebellion |
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‘This ole house once knew his children
This ole house once knew his wife
This ole house was home and comfort
As they fought the storms of life
This old house once rang with laughter
This old house heard many shouts
Now he trembles in the darkness
When the lightnin’ walks about ‘Ain’t a-gonna need this house no longer
Ain’t a-gonna need this house no more
Ain’t got time to fix the shingles
Ain’t got time to fix the floor
Ain’t got time to oil the hinges
Nor to mend the windowpane
Ain’t a-gonna need this house no longer
He’s a-gettin’ ready to meet the saints ‘This ole house is a-gettin’ shaky
This ole house is a-gettin’ old
This ole house lets in the rain
This ole house lets in the cold
On his knees I’m gettin’ chilly
But he feels no fear nor pain
“Cause he see an angel peekin”
Through a broken windowpane’ This Ole House by Stuart Hamblen ‘Our family lived here for more than 200 years,’ the young woman explained. She was a great-niece of the woman from whom we bought the place. Attractive, polite…blonde and slight, she just walked in through the front gate and introduced herself. ‘I never lived here, but my father and grandfather talk about it all the time. It was their home.’ We gave her a little tour yesterday. Downsizing Word comes this morning that Elon Musk, sometimes the world’s richest man, sold his many lavish mansions and now lives in a tiny, USD$50,000, pre-fab house. Mr Musk is, of course, a phenomenon. Founder of several billion-dollar companies (the best known, Tesla)…married three times (twice to the same woman)…already father to five boys from his first marriage and now having children with his current partner…he is probably not a good illustration of anything. That is, he is sui generis — like a man with three buttocks — an example of only one thing: himself. Last year, Musk vowed to ‘sell almost all physical possessions’. We spent last week exploring the trend. Transitory. Transactional. The ‘subscription’ economy. In the future, says the World Economic Forum, ‘we will own nothing…and we will be happy.’ Today, we neither propose nor anticipate a countertrend. Instead, we write in elegiac mode, not about what lies ahead, but about what is being left behind… Beating heart This weekend, we tidied up our workshop after years of neglect. A man’s workshop, like a woman’s diary, is where he has most control over his thoughts. In his atelier, if nowhere else, he is boss. He can hammer, screw, bend, cut…all the things he might like to do elsewhere, but civilisation and good sense hold him back. His workshop, too, is where he keeps his whatchamacallits and thingamajigs…ready to plug the leaks, charge the batteries, and restore order to the cabinet doors. It is his command centre…the beating heart of the home. It is where he can think most clearly. And more importantly, he doesn’t have to. | Source: Bill’s workshop at his house in France |
A workshop implies not just a house, but a home. It is not just something you live in, but something you take care of…something you share your life with. A house may be transitory, but a home is permanent. Finding a home Our house here in France was a wreck when we found it in 1994. It had little functioning heating, plumbing, or electricity when we moved in. But it had a workshop. And we were young and full of energy. We spent the next 18 years fixing up the house. We left our home in Maryland to explore the world. We wanted to know how others lived. We wanted to see things…do business…learn languages and foreign customs…go places. As soon as we were able, we went…and this was one of the first places we went to. It was here that we raised our children. Even when we were living and working in Paris and London, we still came here for weekends and holidays… This was home. Memories of home And what a joy it was. The long, summer evenings on the porch…swimming in the pond…campfires…hikes…horseback rides, with the clip-clop of eager hooves on the cobblestones… …the brisk mornings and quickening pace of autumn, as the All Saints vacation approached…the plane trees and chestnuts, their leaves turning golden and drifting to the ground… … a roaring fire in the dining room at Christmas time… …green, wet spring times that seemed to last forever… …one child always armed with wooden guns and swords…another who went to sleep each night studying his book of dogs… …a daughter who awaited her moment of fame on the big screen…another who needed to be rescued from bad friends… …a son who quickly grew taller than his father…another who wanted to leave us for boarding school… …an aunt who lost her bearings…a mother who was always there and always helpful… …the old walls remember them all. A home remembers. A house forgets. Solidity and timelessness What especially drew us to the house and the area was the appearance of solidity and timelessness. Washington’s sprawling wealth and power were smothering the old Tidewater by the Chesapeake. Practically every month, a new house went up — much like the one before it — and a new family moved in, with no attachments to the area, save a good-paying job in the Capitol. In coming to France and putting down roots, it felt less like we were leaving our home, and more that our home had left us. Here, we were rediscovering it. Moving on But we couldn’t stay. There was more to discover. More places to go. More things to do. The children left France for college in the US. We had to move, too…but we didn’t entirely move on. We left France, but kept the house. One son, who now lives in Paris, comes down periodically to check on things. But mostly, the house sits and waits. Doors locked. Shutters closed. Furniture covered with sheets to keep the cobwebs off. Like a faithful hound at the gate, it watches the road…looking for our return. Home again And then, when we finally get here, it welcomes us with shutters and windows thrown open and a warm gush of summer air… In a matter of minutes, the old house comes back to life…it is home again. And then, we go to work…just as we did more than a quarter of a century ago. For now, after so many years, it is time to repaint the woodwork…repair the cracks…oil the hinges…and fix the roof. An ancient relative of ours used to refer to the homeplace as ‘the family stronghold’. There was a time when houses were fortified against marauders and brigands. Later, the family stronghold became where you started out…and where you retreated to when you were down on your luck or needed a rest. Out in the country, big houses became centres of industry, where teams of people — men, women, and children — worked together to bring in the crops. Friends of ours in Ireland live in the oldest continually inhabited house on the island. Surrounded by thick, stone walls, it was built for safety. Now, it presides over a large farm…and is used as a venue for music festivals. Changing times Times change. Stone walls don’t offer the protection they once did. And farm life no longer requires so many people. Today, young people leave…and the old farmers spend the days alone in their air-conditioned cabs. The old houses need upkeep. And not everyone enjoys scraping paint on his holidays. The next generations make their lives in distant cities. Instead of coming back to the homeplace for vacations, they go skiing. There are old homes in the US, too. A family friend had a certificate on his wall. It congratulated him for keeping the Maryland farm in the same family since the time of the Revolution. Our friend had lived all over the world; he was an army lawyer, who played a key role in the Nuremberg trials. But when he retired, he came home to run the family farm. He died a few years later. By then, his five daughters had departed for careers in New York, San Francisco, and even Moscow. None of them wanted the farm. It was a burden. They sold it…and the old farmhouse burned down in mysterious circumstances soon after. More to come… No, not all memories of home are happy ones. Regards, Bill Bonner,
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