Sunday, December 29, 2013

Deep Risk; Deep Do Do!!

Deep Risk; Deep Do Do!!

What is risk?
·         A four letter word (that doesn’t begin with ‘F’)?
·         A game by Parker Bros?
·         Not achieving the expected outcome/goal/objective?
·         The probability of not achieving expected outcome/goal/objective?

Furthermore, how is uncertainty different than risk?

Whereas risks are known and may, within some variance, be measured and with some semblance of probability, uncertainty is, as Donald Rumsfeld best stated, the unknown, unknowns.’

All is ephemeral (also translated as ‘vanity’)

Man, fearing extinction of sense of self (overwhelming identified with the body), seeks to alleviate risk and uncertainty (in futility) trying to ‘insure’ permanence, continuity and certainty – PERIOD – through acquisition.

Insurance is a tool of acquisition to minimize risk. Plain and simple, insurance is the transference of some degree of risk. PERIOD. Insurance is based on taking a smaller certain loss to prevent a much larger risk. (Note, though rated AAA+ by ‘so called independent insurance rating agencies,’ Mutual Benefit Life, New England Life, Confederation Life all constructively went under.’).
Traditionally and theoretically, the personal financial life planning process  is one of prioritizing and aligning one’s resources and risks to ‘insure’ or increase the probability of making the expected outcome (the expected goal).  However, as the French (frogs) say, ‘that’s all well and good in reality, but how about the theory?
The reality is quite the opposite given:

·         the ‘more’ cultural categorical imperative override derived from the prime mobile of ‘acquisition,
·         ‘the sub derivative reality that the client seeks ‘more,’ regardless of lip service to the opposite
·         Overwhelmingly, planner compensation is based to assets under management or commission

Thus, given the above, the more, more more context & consequential more-onic thinking is compounded and becomes normative by comparison, rationalization and justification superseding, overruling, & countermanding assertions of the process.
Regardless, of the distinctly different platforms of more or enough, there has been a general acknowledgement of the following risks (though not all inclusive) relative to ‘more’ or ‘enough’ orientations. The relative degree of  each  of the following ‘risks’ has been further classified as either ‘shallow’ or ‘deep’  by author William Bernstein

·         Market risk
·         Reinvestment risk
·         Liquidity risk
·         Business risk
·         Tax risk
·         Interest rate risk
·         Concentration risk
·         Job/Career risk (1)
·         Inflation risk (purchasing power risk)
·         Deflation risk
·         Currency risk
·         Political risk

What has changed as a consequence of cultural shift towards entitlement,  grievance card industry membership, taking not making (you didn’t build it), and redistribution (theft renamed) in the name of ‘fairness’ by Animal Farm (2) Fairisses, are two shallow risks that have become potentially deep risks  and more probable:

·         Confiscation risk
·         Devastation risk

True, devastation can come from natural disasters (hough many would classify the so called phony scandals of ‘IRS targeting conservative groups, Benghazi, and Obamacare as a man made devastation disasters. But the confiscation risk potential disaster is sequentially front and center. Yet, it is barely noticeable as the  left continues to lull to sleep the country (regardless of ‘duck’ calls’ analogous to the story of the frog in the kettle:

If you drop a frog in a kettle of boiling water it will jump out immediately in reaction to the pain. On the other hand, if you put the frog in water that is room temperature, slowly heating it, the frog will remain in the kettle and eventually cook to death.

So deep confiscation risk starts with slowly but sequentially increasing the temperature:
·         Ignite with  ‘hope and change’ (even if hoax and chump change),
·         Boost the temperature with a stimulus  (that wasn’t shovel ready) and a summer of job (that didn’t occur)
·         Increase temperature with envy  having upper income ‘folks’ pay  ‘little bit more’ to ‘spread the wealth’
·         Fuel the coveting by raising income taxes on ‘the rich’ (even though 46% pay no federal income tax), and 3.8% redistribution tax again for upper level income people for Obamacare,
·         Heighten the flame with heated class warfare rhetoric (even though the income inequality gap has become greater despite the above and because of the above) calling makers takers and ‘you didn’t build it’ in reaction formation
·         Turn on the after burners intensifying the income inequality pitchfork teleprompter reading while dousing and marginalizing equality of opportunity.

And thus, the frog croaks in the deep do do sleep of confiscation risk – without even singing polliwog a yank(eed) my doodle all the day.

Man is asleep

Remember Confiscation risk next election.

1.-  Each job (employed source of income) has a ‘beta’ (a volatility). Most doctors income (pre-Obama) has a low beta/volatility factor whereas those in sales (for example real estate which is highly dependent on interest rates) has a much high volatility to their income.
2.- “All animals are equal, but some animals are more equal than others” akin the smug elitist so called egalitarianism of SP’s (secular progressive collectivists).

No comments:

Post a Comment