Vol. 23 No. 5
January 2000
SEASONS GREETINGS FOR 2000 . . .
Happy Y2K! This letter is being mailed out in mid-December along with all the other newsletters due as promised to you for the next year because at this point it is impossible for me to guarantee that all newsletters will be delivered in 2000. This is the only way I can think of to meet my obligations to you to fulfill the subscription you paid for in advance. I think it would be extremely unethical for me to accept the trust you placed in me by your advance subscription payment, then to use the Millennium Bug as an excuse to deprive you of what you’ve paid for.
I expect no less from others with whom I’ve contracted for future delivery of goods and services. There should be no reason why contingency plans shouldn’t have been placed into operation to mitigate the effects of Y2K. I strongly believe that if a vendor can’t perform on a contract, customers should been informed and have had their money returned. So, the reason why your newsletters all came in a bunch was that we could think of no other way to be certain they got to you in anticipation of disruptions in mail delivery that could take place in 2000.
Ever mindful of the fact that we’re all operating in an information vacuum regarding what the true state of the world will be in 2000, I’m going to focus the content of the year-2000 newsletters on solving problems that I think are reasonable to expect. But, I could be wrong about a lot of things.
Heretofore, the CommonWealth Letters have tried to present information based upon my personal knowledge and experience concerning a variety of opportunities and caveats related to single family house investment. But when I write about Y2K, about all I have to go on are the gleanings from myriad conflicting reports on the subject; none of which are based upon much other than the opinion of the person generating the information.
Unfortunately, because I’ll be trying to look around corners and over hills into the next 12 months, these next 12 issues of the CommonWealth Letter have little more credence about the near term future than the informed guesses of all those “Y2K Experts” in government and private industry from which they were drawn. They could be way off base. Or they could be just what you’ll need to confront arduous times.
My job, as I see it, is to provide the tools as best I can to cope with the brave new world of 2000 so as to create the most benefits for subscribers. Bear in mind that, while I have a treasure trove of experience to draw upon in the event that Y2K proves to be a calamitous event, the conclusions that I reach with regard to life in 2000 may be completely off base. If such proves to be the situation, the only way that I can remedy sending you information that you can’t use is to mail the unexpired portion of your CommonWealth Letters subscription to you again. Thus, as soon as I can be certain that letters sent through the mails will reach you on a timely basis, I’ll start sending out monthly newsletters to help us all deal with the world in which we’ll all find ourselves.
Most importantly, as I see it, you are paying me to try and provide insights and techniques to help you to continue to prosper in 2000 through the use of single family house investment strategies as you have in previous years. Fulfilling your expectations is what I consider to be my paramount “mission-critical” task.
Whatever comes of Y2K in the next few months, or as it affects the future, it won’t be the events that affect your life, but the way in which you respond to them. If I can contribute to the well-being of you and your family, I will have done my job.
BEWARE OF LOSING SIGHT OF YOUR PERSONAL MORAL HORIZON . . .
In the foregoing paragraphs, I’ve attempted to illustrate my personal approach to Y2K, and one that I think would be productive for most people. We’re all going to be affected in one way or another by the year-2000 date roll-over. To put this into perspective, Y2K might frustrate some of our personal or business plans. It might put a real dent into our standard of living. It could change future prospects for our children. But, it shouldn’t be permitted to change our personal standards of conduct, ethics, or personal honor. If we allow it to do that, the road back to success will be up-hill all the way. I hope the way in which we handled your subscription will illustrate my point.
First, we recognized that potential problems could arise through no fault of our own, but that we had an obligation to our subscribers to find a way to deal with them in such a way as to minimize the negative effects on others who depend upon us.
Second, we refused to allow a situation imposed by external forces to give us an excuse to depart from our ethical base; our personal and corporate definition of right and wrong behavior.
Third, that we believe the results that any of us achieve have less to do with the challenges and obstacles that we have to overcome than with our conviction that we can indeed endure and overcome whatever life offers up to us, even though we may have to work harder, spend more money, take more risks, and receive fewer rewards in the process. That’s our philosophy. What’s yours?
Developing a personal moral and ethical philosophy is important. It acts like the North Pole to the compass of life to keep us headed in the right direction to arrive at the destination we’ve chosen. It can give us the extra energy we’ll need to persevere in the face of the adversity that Y2K could visit upon us. It could be the key to how well we’ll do in 2000. We can learn a lot from history.
The major scandal of the 1950s was the acceptance of a Vicuna fur coat from a lobbyist. Then came the decade of the 1960s. One of the unheralded gifts of the Kennedy years of the early 1960s was a new term: “Situational Ethics”. In so many words this replaced traditional American mores, standards, and values with “If it feels good, do it.” This decade, that started with President Kennedy appointing his brother as Attorney General, and the disaster of the Bay of Pigs invasion that condemned Cubans to 35 years of dictatorship, marked an era of American leadership that spawned the Viet Nam war, the drug culture, Woodstock, burned American flags, and increased criminal activity everywhere, ultimately leading to the assassination of both Kennedy’s and Martin Luther King, Jr.
In the aftermath of Y2K, all of us must demand high levels of personal and public ethics. Maintaining public morality is going to shape the world in which we’re all going to have to live. This will have to be a “bottom up” effort, starting with the individual who takes an active role in his or her personal life and local community. Only when the majority of voters insist on ethical behavior will we be able to observe it among our law-makers and leaders. The “silver lining” to the Y2K cloud is that the citizens may toss out federal and state officials who failed to prepare for Y2K and bring control over taxes and government back to local levels. Y2K may well herald a return to traditional values, but only if each of us does so first.
None of us is going to be able to function in our brave new world alone. Without knowing what resources will be available to meet the challenges, it is essential that we enlist the mutual efforts of our neighbors and friends to establish a support network. Rather than isolating yourself, reach out now, in this holiday season to others to assist them in their preparations and contingency plans. By helping others minimize the effects of Y2K, you’ll build relations in these waning moments of the 20th century that could last for years.
Y2K IS TO THE 21ST CENTURY AS WORLD WAR II WAS TO THE 20TH.
I’ve been fortunate in my life to have witnessed the aftermath of earth-shattering events and to see how ordinary human beings have coped with them. World War II was the defining event of the 20th century. It created more havoc than any other event. More than anything else, it determined the course of civilization in this century.
Here in the US, an unprecedented spate of “war-time” laws were passed, many of which deprived millions of citizens of their property. Ask anyone of Japanese ancestry who lived in California about what happened to their rights when they were interned and their properties confiscated. Travel, the mails, rationing, the kind of work you could do, access to information were all controlled by unelected bureaucrats. Fifty years later, some of these temporary agencies are still alive and well. But, the resurgence of the American economy, and our financing of European recovery via the Marshall Plal are the stuff of legends. When it comes to government interference in our lives, we can expect that Y2K could cause history to repeat itself. Nevertheless, we survived WWII and we can survive Y2K, if we persevere.
Y2K is a world-wide phenomenon. What will happen in other areas? In 1945, the devastation in Europe, Singapore, and Japan was beyond comprehension. Political regimes, economic systems, means of production, financial resources, physical plant and equipment, entire communities had to be rebuilt from the ashes. But it happened. By any reckoning, the most phenomenal period of exploration, economic growth, development, expansion of political freedom, extension of the human life span, bar none, in all history. Yet, people everywhere didn’t participate equally. Why?
Economic resurgence is linked to the desires of the citizenry and to the political system that people select via the political process. In the 20th century Americans surrendered much of their individual freedom in exchange for government relief that they have ultimately paid for with higher taxes and inflation. You can be sure that the federal government will distribute money and credit to States and Counties to alleviate pain and suffering, but it will also tighten its grip on the way, and to whom, federal funds are given.
Once again, Americans will be given the choice of sacrificing freedom for a dole. Many will eagerly choose short term relief for themselves and their families without regard to how this will restrict future economic opportunity. That would be a mistake.
In the course of human events, throughout history, lasting accomplishment has been linked to those political systems that provided for high levels of individual freedom and respect for property rights. The world’s largest economies, the United States, the United Kingdom, Japan, Germany, Italy, France all evidenced this. Conversely, the countries with the most human resources, China, India, Russia, Eastern Europe, Africa, Central And South America, and much of Asia were largely left behind. Why? In all of these regions, productive people didn’t have the political freedom, means, or incentive to exploit their personal talents in order to fulfill their dreams and ambitions. Thus, they resign themselves to settle for the status quo. In the United States, you can be sure that your government is going to tempt you with all sorts of goodies. These may include insuring the return of any money that became lost, strayed, or stolen in banks and brokerage accounts. You may be offered temporary government employment or low cost loans.
If the public elects to cling to government largess rather than to aggressively beginning to carve out a better future, that simply means that there will be less competition, and more opportunity for those few who decide to rebuilt their futures. Over the 50-year WWII postwar period, American citizens have enjoyed a truly golden age. More people have graduated from college, more companies have been formed, and everyone has lived better. We will do it again, bigger and better.
FREEDOM TO FAIL AND TO START AGAIN IS THE KEY TO SUCCESS . . .
What has all this got to do with dealing with Y2K? It illustrates the results of choices people make when dealing with world-wide adversity, and provides a model for all of those who have been felled by Y2K to recover and to prosper in this brave new 21st century we now confront. Recent history has shown us that those who choose to wait for social politics to solve economic problems wind up virtual slaves to a system that rewards non-producers at the expense of producers. The producers depart for more favorable climes. Ultimately, without producers to keep things running, the economy fails. That’s what happened in Russia.
By way of contrast, more than anything else, freedom to succeed or fail as entrepreneurs has made the US economy the largest in the world, and the lifestyle of Americans the highest in the world. Our political system has rewarded creative and productive people handsomely, motivating others to try to emulate them.
We don’t have to look clear back to what has been termed “the age of the moguls” of the 19th century in whch Morse, McCormack, Edison, Bell, Carnegie, Sloan, Dupont, Ford, Boeing, etc. catapulted American into the forefront of industrial societies. People like Gates, Jobs, Dell, and American companies such as Intel, Intuit, Cisco Systems, AOL, Ebay, Amazon.com, Lucent Technologies have lead us into the information age in the waning years of the 20th century. It’s to these pioneering entrepreneurs that we can look for inspiration as to how to deal with the 21st century.
The attribute that the above individuals and companies all shared was that what they accomplished was done on their own in spite of government, not because of it. They took enormous chances. In each of their eras they contended with events that were on the cutting edge of technology, daring to go where no man had gone before. Their vision was upward at future possibilities, not downward to be sure government safety nets were in place to save them from their own mistakes. They used personal initiative to find a need and fill it. That’s the most productive approach I can think of to deal with Y2K.
Y2K is either going to be a non-event, or it is going to seriously re-arrange the financial furniture in many people’s lives, careers, investments, and businesses. Any time that markets are in turmoil, opportunity lurks just around the corner. Readers of this newsletter already know how to buy and sell without institutional credit. We understand the uses of Options and the wealth the maximum leverage they permit can bring. We can use leases to control occupancy, possession, and income from real estate. Best of all, those who know what to do and how to do it will be able to function in the financial terrain that Y2K affords. Readers of this newsletter might want to look up some of the early issues written in the last half of the 1970 to refresh themselves on how to buy in both deflationary and inflationary markets.
Subscriber Jack Griffin of Tampa said it best: “A pessimist is a guy who always sees the glass as half empty. An Optimist is a guy who always sees the glass as half full. An entrepreneur is a guy who always sees the glass as half-priced.” You’ve got the choice of retreating from the financial arena to lick your wounds and look for sympathy. Or you can see this as a marvelous opportunity to capitalize on all the things you know how to do to springboard yourself to higher levels than ever before. We’ll do the best we can to help you do this in the following group of CommonWealth Letters.
Think of Y2K as a lifeboat in which you are stranded. You can sit and await rescue; or you can enjoin other survivors to contrive a way to survive and find your way to shore. It will do you little good to try to merely save yourself, because you’ll need others to help man the boat, set the sails, and bail if need be. The only way you’ll be able to achieve this is by respecting the rights of others in the same boat as yourself. If they perceive that you are only out for yourself, they won’t help. Indeed, they might hinder your efforts. Demonstrating your own ethical standards is your most powerful tool. Use it.
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