“Collette said hope costs nothing. But it does. It costs the time you spend hoping.” – Michael Masterson


The Corona Economy: How Bad Is It… Really? 

It’s time for another look at our Corona Economy. Time to assess the amazing amount of economic damage the shutdown has caused and make some guesses about how long, how bad, and how widespread the coming recession will be.

Recession? What? You think that things are under control? You feel confident that the economy will bounce back once we get this virus thing out of the way?

This is the way I see it…

The US economy is shrinking.

In my May 1 blog post, I noted that since the Corona Crisis began, our national production was down $10 trillion. That’s $10 trillion that was lost forever. No matter what happens in the future, that loss cannot be erased. In the three months since then, GDP has continued to shrink. In the second quarter alone, it fell by 10%. That’s higher than any 3-month period in the history of our country.

Unemployment is still crazy high. 

The unemployment rate has gone down considerably since it peaked this spring, with jobless claims down from nearly 7 million in the third week of March to 1.2 million last week. Overall, the official unemployment rate has dropped from about 13% in April to 10.2% today.

Of course, the official unemployment rates are entirely bogus. They don’t count people who are unemployed and not looking for work. This number was about 6 million before the $600 giveaways. It’s probably 10 million now. Plus, the official rates don’t include part-time workers that want, but can’t find, full-time jobs. And on top of that are the problems with the way workers are classified. The most egregious: Those on furlough are counted as working, rather than as unemployed.

If you add back in those purposeful and possibly accidental errors, the actual unemployment rate is probably about 16%, which would make current levels higher than at any time since the Great Depression.

200,000+ businesses have been closed for good. 

According to a study by the University of Illinois, Harvard Business School, Harvard University, and the University of Chicago, more than 100,000 small businesses had shut down permanently from March to the beginning of May. In June and July, another 100,000 may have been shuttered.

“We are going to see a level of bankruptcy activity that nobody in business has seen in their lifetime,” James Hammond, chief executive of New Generation Research told The Washington Post. “This will hit everyone, but it will be harder for small businesses since they don’t have a lot of spare cash.”

And Mark Zandi, chief economist at Moody’s Analytics, predicts that total failures for small businesses this year will pass 1 million.

It goes without saying that the closing of hundreds of thousands of small businesses will have a domino effect on hundreds of thousands more, the little shops and restaurants that survive on the patronage of these small businesses in small communities around the country.

Entire industries have been decimated. 

Travel bans have gutted the transportation industry, drastically cutting not just airline revenues but train travel, bus travel, and car travel. Uber and other such businesses are down more than 75% since last year.

The near halt in travel has sent oil prices tumbling, putting thousands of businesses that support oil and gas distribution out of business and millions more Americans out of work.

In the retail sector, it’s not just small shops and restaurants that have been forced into bankruptcy, it’s beauty shops and fitness studios and day care centers. The list goes on and on.

But things don’t seem so bad… right? 

I know. The unemployed have been getting federal paychecks. Businesses are getting billions in loans. And the stock market has been charging along.

That don’t change the facts.

When I last wrote about this (May 1), I noted that the numbers then were worse than they were at the nadir of the Great Recession of 2007-2009. And that even though the Great Recession officially ended in June of 2009, the growth of the GDP afterwards was anemic. Well… except for a modest improvement in the phony unemployment rate, all the key economic health indicators have only gotten worse.

Remember how difficult it was to make ends meet from 2009 to about 2016? It could be worse this time.

What about the bailout? Shouldn’t that help? 

The coronavirus scared the hell out of millions of Americans, with studies predicting mortality rates of 6% and 3 million dead before the end of the year.

It was a national health emergency that could have united the country. Instead, it morphed into a ludicrous political drama, with the Democrats accusing the Republicans of being heartless and incompetent, and the Republicans accusing the Democrats of exaggerating the danger to tank the economy and bring Trump’s ratings down.

When it came time to pass an economic stimulus bill, partisan politics continued. The first round of bailouts cost US taxpayers $2.4 trillion that the Treasury had to borrow. And that was on top of $2.2 trillion approved to cover the budget deficit. The current package will add another $1 trillion to $3 trillion to that, bringing the total national debt to $25 trillion or more.

That – spending trillions of dollars we don’t have – has been the government’s solution to an economic disaster that is as bad as any we’ve had since the Great Depression.

Let’s stop here and remind ourselves that debt and spending have been the primary causes of every economic disaster the US economy – and, for that matter, every economy – has ever had.

If your kid were in debt because of a gambling habit and told you he was going to get himself square by borrowing money from a loan shark, would you think that was a good idea?

So that’s the real problem. We may never know how necessary it was to shut down the economy, but the solution to the economic damage it did has been a borrowing spree greater than ever in our history (and in the entire world).

And nobody in Washington thinks there is the slightest thing wrong! The old debate about responsible spending and balancing the budget has gone out the window. Those free checks from the government have bought the hearts and minds of the entire electorate. We may be doing something we’ll regret later, the most conservative say, but what the hell! Let’s print more trillions and wish for the best!

What to expect. What to do. 

If you believe the stock market is the economy, I don’t know what to tell you. There are good reasons to believe stocks will continue to move up. The biggest reason is all these trillions of free dollars.

I have converted about 75% of my stocks into cash for reasons I explained on July 24. As I said then, my decision wasn’t based on any certainty that the market is going to crash, but on the possibility that it might.

If you understand that the stock market is not the measure of the wealth of the US but the measure of only the wealthiest 10%, you should be very concerned about all this debt and continued spending. You should be worried that sooner or later the bill will come due. And the only feasible way that the government can manage that debt is by allowing for an extended period of “moderate” inflation – low enough that the Treasury can pay the interest on its debt, but high enough that it can erode the value of that debt. And what that means is stagflation: years and years of increasing prices without any significant economic growth.

Unless you are already wealthy, this means that you will get a lot poorer over the next 5 or 10 or even 15 years.

There are things you can do to protect yourself and profit. I’ll tell you about it in my next essay on the Corona Economy.

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Note: The following essay is an excerpt from the upcoming new and revised edition of Ready, Fire, Aim. 


The Innovation Myth


Innovation has nothing to do with how many R&D dollars you have…. It’s not about money. It’s about the people you have, how you’re led, and how much you get it.” – Steve Jobs


One of the great myths in business is that the first to the finish line is the one that gets the biggest prize. “Get this product out before the competition,” say marketing and product development executives, “or we will fail.”

The evidence does not support that rationale. The first product to market isn’t always the winner. Best sellers usually come later, in the second wave. Often these second-wave winners are knock-offs of first-generation products reinvented by Fortune 500 companies.

Of course, there are times when a small company’s timing and product mesh together perfectly and it captures not only the lead position but also the dominant position in the industry for some time. But that is rare.

Taking first place should not be the entrepreneur’s primary objective. The smart businessperson understands that long-term growth is built on multiple front-runners, none of which need to be number one.

Look back at any of history’s most popular products, from Apple’s iPods to Hublot’s Big Bang watches, and you will find that the innovations they represent were already being developed in slightly different ways by other, competing companies at about the same time. (In Apple’s case, it was portable, personalized record collections. In Hublot’s, sports watches made of high-tech metals.)


Malcolm Gladwell Got It Right 


Instead of looking to be first in the market with a new product, business leaders should aim at producing products that capture the imagination of prospective buyers – versions of existing products that have features and benefits that catch fire.

Malcolm Gladwell explained this beautifully and persuasively in The Tipping Point, his breakthrough book about social and commercial trends. Of all the marketing ideas I have heard over the years, this one has been one of the most useful to me.

It has helped me understand, in a very clear way, why some of my seemingly great ideas worked so well and why some of them were shocking failures.

It makes such complete sense because it corresponds to what every good marketer learns sooner or later: You can’t dictate to the market; you must let the market tell you what to do. All of the very successful product launches I’ve been associated with were – I realize now – evolutionary, not revolutionary processes. And all of the big failures – the product launches that lost millions – were brand-new ideas that the market had, until that point, shown no interest in.

Tipping-point products are hard to come by, but they can grow your business by leaps and bounds. They will bring you new customers at double or triple or quadruple the rate you could get by marketing ordinary things.

I’m not dismissing ordinary products entirely. In fact, in my experience, the tipping-point phenomenon follows the Pareto Principle. Eighty percent of your sales will come from ordinary products. But if you want to grow your company, you have to be able to produce at least one tipping-point product out of every five.

How do you do that?


A Lesson I Learned the Hard Way 


Early in my career in the information publishing business, I developed a product and a promotional plan that was a big success. It broke all sorts of marketing records for our company, earned tens of millions of dollars, and made me feel like I had figured the business out.

My boss gave me a sign that read “Marketing Genius.” I loved that sign. And for a while, I believed it.

If I had created one breakthrough product, I could create another one and then a third, and the sky would be the limit. All I had to do was tap into the marketing genius that was located somewhere between my ears.

I’m sure I don’t have to tell you what happened. My record in the years that followed my annus mirabilis was piebald. I had a fair number of hits, but they were mostly doubles and triples. And I had strike-outs too. What was going on?

It took me several years to realize that the great success I had with that first product launch was due to much more than me. First, it was, like all marketing coups, a combination of just the right product at just the right time. And second, it wasn’t the child of my sole genius. My boss and a marketing consultant critiqued both the concept and copy through five or six heavily blue-lined drafts.

Nowadays, I don’t even try to fly solo. I know I’ll get much better results much faster by working with a creative team. If I get an idea showering in the morning, I’ll have a “what-do-you-think” memo out by the end of the day. And that’s just to get the engine running. I am as anxious as ever to move things along, but I know that I’ll end up with a better result if I shape my idea with the help of others.


A Simple Formula for Creative Brainstorming 


I’ve developed a formula for creative brainstorming. I can’t say that I have ever seen it proved out in research, but it works for me.

1. Early Thinking

You need a minimum of three people to brainstorm. Two works better than one, but three works much better than two. The problem with two is that you often find the discussion getting into a rut. You say one thing. Your brainstorming partner says something else. You repeat your position. She repeats hers. Eventually, the conversation stalls. With three people, this seldom happens. I’m not sure why exactly. It may be that the third person represents an audience. Even if only two people are talking, having someone there to listen – even if that third person is not normally involved in brainstorming – forces you to be at your best, to work hard to present your ideas in their strongest form.


2. Getting Ready 

During the initial stages of product development, I usually limit the team to three: me and two smart people that I trust. But nowadays, working with a much larger business, it’s sometimes necessary to expand the team at certain times and for certain reasons. Most of the time, when I expand the launch team, it is after the product and the marketing plan are 90% figured out and ready to be put into action.

In The Tipping Point, Malcolm Gladwell argued that there is a limit to the number of people that can efficiently work together. That limit is six or seven. My preference is six. Since our meetings at this point are more about execution than innovation, I want the people in charge of execution to be there. But since the product is only 90% figured out (Ready… Fire… Aim), some further brainstorming is always done. Often with very good results.


3. Playing Chess 

Brainstorming is like chess. A game can take a year, a day, or just a half hour. And when it goes on too long, it can be frustrating. I have attended countless full-day and multi-day and even two- or three-day creative sessions that, in my opinion, could have been done in half the time. (I’ve always been impatient: “Okay. Great idea. Can we have it done tomorrow?”) But experience has taught me the wisdom of slowing down, so I resist the urge to set the project timer to warp speed.

However, when it feels like I am wading through the muddy waters of Lethargy Lake, I do everything I can to speed things up. And that usually works. Because if brainstorming is like chess, it’s also like basketball. After a long and sometimes fun game of back-and-forth, everything important happens in the last quarter.


4. Clarity and Purpose 

The best way to brainstorm efficiently is to be clear about what you want to accomplish at each session. Avoid the temptation to cover too many topics in one meeting. Six half-hour meetings spaced a day or two apart are likely to be 1000% more effective than one six-hour meeting because of all the chewing-it-over time participants will have.

Set the meeting’s objectives in writing, in the form of an agenda, with a time limit for each topic and for the meeting overall. I know that this is the kind of “anal thinking” that rankles some people – especially “creative” types. I used to feel that way. Nowadays, I’m all for restrictions. To me, time and topic limitations make good thinking great.


5. The Feeling

Most good product and promotional ideas don’t work. That’s a fact of business life. When I think about the hundreds of ideas I’ve brainstormed, I can retrospectively divide them into two groups: those ideas that the team was super-excited about and those that elicited a generally positive but not enthusiastic response.

About half of those that we were hyped about worked, and some of them worked very well. Only a small fraction of those that we felt moderately good about worked.

And that’s why, over the years, I developed a standard for new product and marketing ideas – an emotional standard: We don’t launch this thing unless and until we are all super-excited about it and super-sure that it will work.

That may seem like too high a standard. But it isn’t if you have the right people in the room.


6. The Right People in the Room 

When it’s time to “Fire” the launch of your new product or advertising campaign, you will have to include all sorts of good and thoughtful managers in the process. But during the brainstorming sessions – and especially the early ones – you must limit the participants to those people that are not just smart but enthusiastically committed to helping you grow the business. They should be ambitious. They will likely be competitive. Some will be contrarians. But they must be, absolutely must be, people with the brain power and the heart power to make a good idea a great one.


7. From Each According to His Brain 

Creative sessions work best when everyone contributes. But that will never happen if your creative team is divided into the smart people and the rest. The usual situation is that preference is given to the marketers and product people because it’s their job, normally, to come up with ideas. But if that were true, you wouldn’t need brainstorming sessions at all. You are all there for a reason – to generate fresh ideas. And they will come faster and be judged more fairly if everyone on the team feels like he has an equal right to be there.


8. Don’t Comment… Contribute 

It may seem counterintuitive, but the best way to encourage a free flow of ideas is to establish and maintain strict rules about the flow of communication.

The number one reason brainstorming sessions break down is because of intellectual laziness. It’s very hard to come up with a novel idea. It’s very easy to criticize one. To limit negative comments and diversionary conversations, I sometimes impose the following rules:

* Specific suggestions only. Nobody is allowed to speak in generalities or make general comments. They waste time, confuse people, and give rise to long-winded discussions.

* No specific criticism. When an idea is suggested, I will take a poll to see how many people in the group like it – but I don’t allow any specific criticism of the idea. Just tell me whether you like it or not and move on. We don’t have time to hear why.

* Be positive. I try to say something positive about every idea that is contributed, even the weak ones. If an idea gets a mediocre reception, I ask, “How could we make that better?” rather than “Here’s what’s wrong with that.”

* Encourage the meek and cut the windbags short. To keep up a steady generation of ideas, you have to be willing to control the conversation. The moment someone begins to pontificate – and you will know the second that happens – derail his speech by asking a question. Encourage the wallflowers to speak by prodding them with questions and complimenting their answers. Get the group working toward the goal of coming up with new ideas by reminding them of it over and over.


9. A Culture of Innovation 

I’ve been talking here about brainstorming new product and marketing ideas, but brainstorming is just one part of a much larger process. You can have the best creative team in the industry and come up with a dozen great ideas every week, but if your business can’t implement them well and quickly, it may do you no good.

Ultimately, you need an entire workforce of creative people in order to be an innovative company. And that includes everyone from the receptionist to the people in the warehouse to the customer service people, and so on. To grow your company, you need to develop a company culture of innovation and speed. (I will talk more about how to achieve that in my next essay on innovation.)



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“I collect human relationships very much the way others collect fine art.” – Jerzy Kosinski


Collecting Art: The Six Lessons I Had to Learn*  

If done correctly, a first-class art collection will serve as a secondary investment portfolio to fund your retirement, protect you from inflation, insure you against economic or political instability, and provide a lasting legacy for your heirs or a charity of your choice.

My education in buying the right kind of art – art that makes sense as an investment – began when I was lucky enough to wander into an art gallery owned by Bernard Lewin. I didn’t know it when I met him, and he never mentioned it, but he was the most important broker of Mexican art in the world at that time.

I spent a lot of time browsing in his gallery and asking a lot of questions… all of which he answered simply and clearly. With his help, I learned some very important lessons and made what turned out to be some very profitable decisions.


Lesson #1: Don’t Buy on Impulse 

“Fall in love, but don’t buy on impulse.” This was the first big lesson that I learned from Mr. Lewin. This advice, which I barely understood at the time, proved to be invaluable over the years.

The point is, first impressions can be deceiving. You can’t know whether a particular piece will “hold up” (sustain your interest) unless you’ve looked at it at least several times and have thought about it in between.


Lesson #2: Not All Art Is Created Equal 

Some art is, indeed, relatively worthless – just “pictures that you hang on a wall,” as Sid, my surrogate Jewish uncle used to say. Some, like antique paintings and sculpture, has definite and assessable value. And some, fine art, can be an immensely good investment.

When talking to new collectors, I suggest thinking about art in terms of four broad categories: decorator art, commercial art, amateur art, and investment-grade art. (Note: These are my own categories. They are not used across the industry.)

Decorator Art is art (paintings, drawings, photographs, sculpture, prints, and so on) that is created strictly as decoration. The images and colors are often “made to match” (i.e., chosen to blend with or complement the overall interior design of a particular space). It’s the kind of art you see in chain restaurants and budget hotels.

Commercial Art is, in my mind, a touch above decorator art and is meant to appeal to a slightly more sophisticated buyer. It is produced by artists that have developed a competency in their craft and is marketed by dealers for the general public. In other words, it is made to sell well and quickly in the kind of galleries you find in upscale shopping malls, resorts, and cruise ships.

The quality of commercial art varies widely, from pretty good to very bad. And even the best pieces have modest to no investment potential because of the way they are made and sold. The most popular images are replicated by the hundreds or even thousands, and have little value for serious collectors and museums.

Amateur Art is art produced by artists who don’t make a substantial living from their work and are rarely represented by dealers. It is the art that is produced by students and spouses and retirees for the fun of making it. In terms of quantity, amateur art is by far the largest category. You can find it in attics, basements, yard sales, and flea markets – and also in many small galleries and antique shops.

The quality of amateur art ranges from very good to very bad. Good pieces that are old (100 years or more) can be sold as antiques – and as antiques, they will have lasting value. But if it is not antique, amateur art is not good for investment because it is, by definition, produced by “unknowns.” As a result, it is unlikely to appreciate much (if at all) over the long run.

Investment-Grade Art is art that is likely to appreciate in value.

What makes a piece “Investment-Grade”?

For most people, art is all about beauty. But if you think about the history of art, you will recognize that a piece that sells for tens of millions of dollars today isn’t valuable because it’s more beautiful than similar works. It’s valuable because, for whatever reason, the artist who produced it made his way into the small galleries, then the better galleries, then the smaller museums, then the bigger museums, and finally into books on art history.

So, if you think about future historical value, rather than aesthetics, when you buy art, you will have a much better chance of developing a valuable collection. And predicting what will be historically valuable in the future is much easier than predicting what will be considered beautiful in the future.

You do it by asking yourself the following sort of questions when you consider making a purchase:

* How respectable are the critics who support this artist?

* What art-world big shots are buying his work?

* What museums are buying his work?

* What media/images/techniques of his are most sought after?

Now when I happened into Mr. Lewin’s gallery years ago, I did not have this perspective. Nor had I spent much time wondering why some art becomes more valuable over time. I was lucky that my interest in collecting art was stimulated by a gallery owner who happened to be selling investment-grade art. Had I walked into a different gallery, I might have ended up as a different kind of investor than the successful one I’ve become.


Lesson #3: Buy Only Investment-Grade Art 

The first pieces I bought from Mr. Lewin have appreciated considerably over the years. I haven’t done the math, but my guess is that I’ve realized an annualized return of more than 8%.

Considering the fact that I knew so little about collecting at the time, I’m very happy with that. So, the third lesson I have for you is this: If you want to build a financially valuable art collection, you must limit yourself to investment-grade art.

You may think that you don’t have the money for that. In fact, you probably do. One of the first pieces that I bought from Mr. Lewin was a pencil sketch by Rufino Tamayo, the great Mexican master. It cost me $750 – equivalent to about $1000 today.

You couldn’t buy that drawing today for $1000. (It is worth more than 10 times that.) But for $1000, you can find plenty of good pencil drawings by other artists whose works are in museums. And you can buy their pastels and gouaches for a bit more.


Lesson #4: Buy Unique Pieces by Established Artists 

After helping me narrow down my choices to four investment-grade works that I could afford, Mr. Lewin surprised me by telling me that he’d be happy to buy them back in the future. (This is something I’d never heard a salesman say.)

He explained that I was buying pieces that had a very high chance of appreciating nicely. He had no doubt that I could sell any of them back to him for a profit… and that he, in turn, could eventually sell them for even more.

“You see,” he said, “you are buying original pieces by established masters.”

He picked up the Tamayo sketch. Pencil on rough paper. Hardly a masterpiece, but still one of a kind.

“For the same price,” he said, pointing to a print leaning against the wall, “you could buy that limited edition print of one of Tamayo’s paintings. But,” he said, holding the sketch up to the light, “there is one – and only one – of these. And there are 199 additional versions of the print. Which do you think will be worth more in the future?”


Lesson #5: Buy the Best Pieces You Can Afford… Then Trade Up 

Another one of my early purchases from Mr. Lewin was a watercolor  by José Clemente Orozco. It wasn’t the best Orozco Mr. Lewin had in his gallery, but it was better than some, and it was the best I could afford. I paid $18,000 for it, and it’s recently been appraised at between $125,000 and $150,000.

Fact is, better-quality pieces tend to appreciate more and faster than inferior ones. So, had I bought a lesser Orozco, I suspect I might not have gotten that same return. And that brings me to the second part of this lesson…

As you develop your collection, gradually sell off the mediocre pieces and use the proceeds to buy better ones that are likely to give you a higher ROI. (This, by the way, is the same strategy I use with my real estate properties.)

To develop the sort of collection I want, I need at least two or three major pieces by each of the Central American masters that I’m now focused on. Right now, for example, I have about 15 works by the great El Salvador master Carlos Cañas. Half of them are fairly minor works – smallish drawings or pastels on paper. A few are good, medium-sized paintings. And two are masterpieces, the sort of paintings that the Museum of Modern Art would display to show Cañas’s genius.

I’m happy to sell all of my mediocre Cañas pieces and a few of his good ones. But I will never sell the two masterpieces. I intend to enjoy them – and watch their values rise – as long as I live.


One Final Lesson…

If you do an internet search for “art investing,” you will find many articles and essays by dealers that eschew buying art as an investment. Instead, they say, you should “just buy what you like.”

This is not good advice… for several reasons.

First, it is illogical. It presumes that there is a difference between an art object that you like and one that has investment potential.

Second, it is harmful to the novice collector. It presumes that the art you are likely to “like” as a novice investor will continue to please you after you’ve been at the game for some time. And that is not, usually, what happens. Novice collectors like art that they see as “beautiful.” But what is beautiful to the inexperienced eye often looks derivative and obvious to the experienced eye.

You might, for example, absolutely love the $5000 Peter Max you bought when you were on that Caribbean cruise. But 10 years later, you may be embarrassed to have that thing on your wall. And then when you discover that you can get – at best – only $2000 for it (after 10 years), you’ll feel doubly duped.

Third, the statement itself is disingenuous. Dealers usually throw it in as a sort of disclaimer after pitching you on a particular commercial-grade artist or work of art. It translates to: “If this doesn’t appreciate as I’ve led you to believe, don’t complain. At least you like it.”

So why are all those “experts” telling you to buy what you like?

Here’s the thing about buying what you like: Tastes mature. The more exposure you have to art, the more sophisticated your tastes will become. Your goal as an art collector is to buy pieces that you like now and will likely still like in 10-20 years. And guess what? Most investment-grade art has that durability.

* This series of essays gives you an advance look at a new book that I’m working on, based on my experiences over the past 40+ years as a collector and investor in fine art.  

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How to Buy Gold Bullion Coins:

A Quick Guide for Beginners 

“We desire gold not for its true value but for the glittering illusion of value it gives.” – Michael Masterson

Suddenly, everyone wants to buy gold!

I’ve been reading about gold for 40 years and writing about it for the last 20. During that time, gold’s popularity among investors has gone up and down in longish waves. Recently, the tide has been rising like a tsunami.

To answer all the questions I’ve been getting on gold, I’ve put together the following Q&A. It’s meant for tyros, but there may be information here that will surprise experienced coin buyers.

One caveat: The market is hot right now – which means that prices are high. Keep that in mind when you read the following and when you make your decisions.


Q: What is gold bullion?


A: Gold bullion is gold in the form of bars, ingots, or coins. In terms of purity, gold bullion can be 22 karats (91.7% gold) or 24 karats (99.9% gold). The value of gold bullion generally tracks the spot price of gold, plus a “premium” (additional charge) that covers the cost of minting, storage, distribution, and sales commission.


Q: What is the “spot price” of gold?


A: The spot price is what it cost to buy at any given minute. It goes up and down, like virtually every commodity, due to speculation in the markets, currency values, current events, and other factors. Although the spot price is very exact (down to the penny) and tracked to the second, it is a theoretical number in the sense that it represents the cost of gold without a premium. And there is almost always a premium, even between dealers. Still, it is a very useful metric because it tells you, as a buyer, how much of a premium you are paying for the coins you buy.


Q: What is a gold bullion coin?


A: It is a coin made by a private or public mint that is either 22 or 24 karats. Bullion coins are usually distinguished from numismatic coins.


Q: What is a numismatic coin?


A: It is a coin that is limited in supply and bought for its rarity and beauty, like fine art. Rare coins can make good investments. What I like about rare coins is that if you buy a bad one – a common coin in poor condition – it will still be worth at least the spot price of gold. But if you buy a truly rare coin in mint condition, it can eventually have a value that is 10 to 100 times the spot price of gold.


Q: Bullion coins vs. numismatic coins: Which type should I buy?


A: If you are buying gold coins as a hedge against inflation or as insurance against the collapse of the dollar, you should definitely buy bullion coins, not numismatics. If you are buying gold coins as an investment, you should consider numismatics. You can, of course, buy both kinds of coins – at a ratio of maybe 60/40 or 80/20 bullion to numismatics. If you do buy rare coins, it is very important to buy from a trusted source. (See more on that at the end.)


Q: Are there different kinds of bullion coins?


A: Yes, there are hundreds – probably thousands – of uniquely different bullion coins. But for beginners, it’s smart to group them in two categories: those minted by governments and those minted by private companies.


Q: So which kind should I buy?


A: For beginners… government-minted bullion coins – for several reasons: (1) They are minted in larger quantities, which makes them more liquid than privately minted coins. (2) The premiums (cost above the spot price of gold) are easy to track and therefore it’s easier to avoid overpaying for them. (3) They come with the inherent (and, in some cases, stated) backing of the government that mints them.


Q: Which government-minted coins do you recommend?


A: Most people buy bullion coins that are minted by the country they live in. Thus, most Americans buy American Eagles and American Buffalos. Most Britains buy British Sovereigns. And most Canadians buy Canadian Maple Leafs. But many experienced coin buyers like South African Krugerrands. My own stash of gold bullion coins is 50% American Eagles, 40% South African Krugerrands, and 10% Canadian Maple Leafs. I feel comfortable recommending all three.


Q: What are the differences between those three – the pros and cons?


A: The first difference is the purity of the gold. American Eagles and Krugerrands are 22 karat, which means they are about 92% (91.67%) pure gold. Canadian Maple Leafs and American Buffalos are 24 karat, which means they are 99.9% pure gold.


The second difference is the amount of gold. Maple Leafs and Buffalos are more pure, but Krugerrands and American Eagles are slightly bigger and weigh slightly more than their 24 karat cousins. That difference equalizes the difference. In other words, the amount of gold is the same (1 troy ounce) for all four coins.


The third and most important difference is the liquidity of a particular coin – how easy it is to buy and sell. Like every other asset class, the liquidity of gold coins depends on how many are available in a given market.


Of the four, American Eagles are by far the most liquid. About 80% of the gold bullion in circulation in the US is in the form of the American Eagle. It is also the most-traded coin in the world. Krugerrands come in second. More than 50 million ounces of gold Krugerrands have been sold since production began in 1967. Maple Leafs come in third, with about 20 million in circulation. And Buffalos come in way behind with only about 2.5 million in circulation.


In terms of liquidity, I think Eagles, Krugerrands, and Maple Leafs are all a safe bet. Buffalos are safe, but I would not recommend them for beginners.


Q: Are there any other differences that I should be aware of?


A: There are a few that could be important.


Maple Leafs and Buffalos, being 24 karat, are softer than American Eagles and Krugerrands. That makes them more prone to bending and scratching. But condition is not a consideration in terms of tracking to the spot price of gold. They are all equal in this regard.


Another difference is the question of government backing as legal tender. As legal tender, the government that issues the coin guarantees that it can be used to settle a debt or meet a financial obligation. All four of these coins are guaranteed as legal tender.


Two final differences relate to investing and privacy. The American Eagle is an approved investment vehicle for Individual Retirement Accounts (IRAs). It is also exempt from the IRS’s Form 1099-B reporting requirements, which means your buys and sells are not publicly recorded.


My bottom line on these differences: All four of these coins are suitable as a chaos hedge and/or insurance against the collapse of the dollar. In terms of gold content and government backing, all four are equal. The small circulation of the Buffalo puts it fourth on my personal preference list. And the IRA and privacy advantages of the American Eagle put it at the top.


Q: I heard that Krugerrands are illegal for US citizens. Is that true?


A: No longer. They were banned in 1985 as a strategy to push South Africa to end apartheid. The ban was lifted in 1991.


Q: Are there denominations of bullion coins like there are with dollars?


A: Yes. Eagles, Buffalos, Maple Leafs, and Krugerrands all come in 4 sizes: 1-ounce, 1/2-ounce, 1/4-ounce, and 1/10-ounce denominations.


Q: What denomination should I buy?


A: That depends on your budget and your purpose. In general, the smaller the denomination, the greater, in percentage terms, the premium. This is not unfair. Think of the premium as the cost of minting, storage, distribution, and sales. Those fixed costs are the same regardless of the size of the coin. So it stands to reason that the smaller coins will tend to have relatively higher premiums.


If your objective is to minimize the premium you will pay, you should buy the largest denomination you feel comfortable buying. However, there is an interesting argument for buying the smaller denominations: In a scenario of total economic collapse, gold (and silver) will become the currency of choice. In that situation, having smaller coins will make trading them for things that you need much easier.


Q: I’ve seen bullion coins. Some of them have dollar amounts printed on them. For example, the American Eagle has $50 on it. Does that mean the coin is really worth only $50?


A: Not really. What you’re looking at is the face value of the coins. In theory, face value is what the coin would be worth as legal tender. And if you were concerned about that, Krugerrands would be your choice since they have no face value and the South African government’s guarantee behind them is correlated to the spot price of gold. But in practice, the value of all bullion coins is correlated to the spot price. This is not an issue I’m worried about.


Q: Can I buy bullion coins directly from the US and Canadian mints?


A: No. You have to buy them from a registered, private dealer – and each government publishes a list of those dealers. There was a time when you could buy American bullion coins from US banks, but that is no longer true.


Q: What about dealers that sell online? Is it safe to buy from them? Or is it better to go with a local dealer?


A: It is usually just as safe to buy from a well-established dealer online (or by phone) as it is to buy directly from a local dealer – and there are some distinct advantages. When you buy directly, you get immediate possession, you have no shipping or insurance fees, and you have more privacy. On the other hand, the selection is likely to be more limited than it is with an online dealer. Plus, the price you pay will usually be slightly higher (because of the extra costs involved in retail business) and liquidity will be less for large buybacks.


Q: What about the coins that I see advertised on TV and in newspapers. Are those dealers safe sources?


A: Sometimes yes. Sometimes no. But considering the cost of that sort of advertising, the possibility of paying more than you should is something to consider. So long as you compare the price of the coin to the spot price of gold, you can figure out if you are being overcharged. A problem with some of these dealers is that they have very persuasive salespeople that will try to get you to buy other types of gold coins with prices that are much higher than the spot price. The bottom line in buying gold bullion coins is the premium: how much the dealer is charging you above the spot price. Know the spot price. Demand a fair premium.


Q: So what is a fair premium for a gold bullion coin?


A: When I was buying gold coins, from 2002 through 2004, the spot price of gold was low (in the $400s) and the premiums were low – about 3% for 1-ounce coins and 5% to 6% for 1/2-ounce coins. Today, the spot price of gold is nearly $2000 and the premiums are about twice what they were back then. Amaru, our crack researcher, did a survey recently and found that even the most competitive dealers are charging 6% premiums for 1-ounce coins and 12+% for half-ounce coins.


Q: So, historically speaking, both the spot price of gold and the premiums are high. Is that fair?


A: The spot price is absolutely fair. It reflects supply and demand in a free market. The premiums are also fair in the sense that dealers have the right to charge what they want. They aren’t holding a gun to your head. But if you know the spot price and do a bit of shopping on the premiums, you should be okay.


Q: Should those high prices dissuade me from buying coins?


A: No. If you think of gold as an inflation hedge and/or as insurance against economic Armageddon, the premiums are reasonable. The one-time premiums you pay for almost any other form of insurance are typically in these ranges – and for life insurance, sometimes higher.

If you are buying bullion coins for investment purposes, a premium of 6% or 10% is relatively high. It means that the spot price for gold will have to go up $120 to $200 an ounce before you make your first percent of profit.


Of course, if the spot price of gold goes to $10,000, as some are predicting, current prices and premiums will seem cheap.


I didn’t buy gold as an investment and I’m not starting now. But I certainly understand the reasons why you might want to. If you do decide to buy bullion for investment purposes, consider this: Krugerrands or Maple Leafs have, on average, premiums that are significantly lower than Eagles. If, instead of paying a $120 premium for a 1-ounce Eagle you could buy a 1-ounce Krugerrand or Maple Leaf for a premium of only $80, why wouldn’t you do it?


Q: One last question: Are there any dealers that you can personally recommend?


A: I can recommend two companies: David Hall Rare Coins (my personal dealer), and APMEX (recommended to me by Tom Dyson).


David Hall Rare Coins – These are my go-to people because I’ve known them for 30 years and trust them 100%. The owners are David Hall and Van Simmons. They specialize in high quality rare coins, but they will sell you bullion coins at competitive prices. If you are interested, contact Van Simmons at Van@Davidhall.com or call 800-759-7575.


APMEX – Founded in 1999, APMEX (American Precious Metals Exchange) is one of the largest online bullion dealers in the country, with over $11 billion in transactions. Based out of Oklahoma City, APMEX sells gold, silver, platinum, and palladium products and also buys gold and silver from customers. Their prices are competitive and transparent (no hidden fees beyond shipping/item costs).



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In the mid 1990s, when I began consulting with Agora, the business had its headquarters in a mostly black Baltimore neighborhood. It was about a mile from the inner harbor, where I had an apartment on the sixth floor of a new, rather luxurious, building. On pleasant days, I’d walk to work, always stopping for breakfast at a little market about a block from my office that was run by a family of Koreans.

There was nothing about the place that was exceptional. The lighting was poor and the aisles were narrow. But the shelves were overflowing with every sort of consumable you could possibly need. And it had a counter that was just long enough to accommodate four stools. The only way you could not have a clear picture of what I’m describing is if you have never been to any large- or mid-sized city in the USA.

The family that owned it – the parents must have been in their late fifties – had three teenage daughters. The parents worked from opening to closing. The girls worked after school and on weekends. They were not, by American standards, friendly. But because I wanted to get to know them a little, I gradually and gently pushed against their modest formality.

The parents were immigrants. They spoke just enough English to communicate with their customers. The children had been born in the US. They were intelligent, hardworking, and extraordinarily respectful of their parents. All three of them were accepted – on scholarship – into good local colleges. The family was, in other words, an Asian-American cliché.

What struck me at the time was how the family managed the girls’ education. While the eldest was in college, the other two continued working at the family business. When the eldest graduated, she went back to work and the second daughter went to college. When the second daughter graduated, she went back to work and the third daughter went to college.

I asked the girls if they thought it was fair – if they thought they should have been able to go off and start their own careers (and lives) once they had a diploma. They had no idea what I was talking about. My question made no sense to them.


Asians in America, Part II:

Why Are They So Successful? 

“Immigrants have been coming to our shores for generations to live the dream that is America. [We] have seen time and again that that dream is achievable.” – Nikki Haley

On Monday, I talked about the amazing success Asian immigrants have had in America. In terms of wealth, health, education, and optimism, they outrank every other racial group, including White Americans.

Why is that? Why is it that Asian-Americans, themselves victims of bias and discrimination, have achieved so much?

One factor may be that so many of them are first- and second-generation immigrants. There is a theory that immigrants are by nature an above-average group – more ambitious and enterprising than their countrymen that choose to stay home. So this could well be a key reason why Asians have done so well in the US.

But there are other reasons, too. If you spend even a single day researching Asians in America, you will discover that, despite the differences among them, they share some cultural characteristics. Specifically, they have a belief in and a commitment to:

  1. Hard work – and not just hard work but working harder than their peers.
  2. Education – and not just getting good grades but being better educated than their peers.
  3. Family values – a respect for the nuclear family and parental authority.


Hard Work 

Asian-Americans have a pervasive belief in the rewards of hard work. In a recent poll, 69% said they believed that “anyone can get ahead if he or she is willing to work hard.” More importantly, 93% described themselves and members of their country of origin as “very hard working.”

But do Asian-Americans actually outwork other races?

According to the Bureau of Labor Statistics, Asian-Americans work about the same number of hours as every other racial group. Here is the data:

* White Americans – 38.9 hours per week (on average)

* African-Americans – 38.7 hours per week

* Asian-Americans – 38.9 hours per week

* Hispanic-Americans – 38.2 hours per week

As you can see, the differences in terms of hours worked are very small.

But as I said on Monday, there are some stark differences when you look at unemployment figures. Asian-Americans – at an astonishing  3% – have the lowest unemployment rate of any racial group.

That could indicate not just a commitment to work but also a shame in not working – two very different values.



Asian-Americans place a high value on education. And they work as hard as, or harder than, any other racial or ethnic group in America at educating themselves and their children.

As I pointed out on Monday:

* 87% of Asians aged 25 and older are high school graduates.

* 53% have a bachelor’s degree or higher.

* 23.6% have a graduate or professional degree.

And they’re great students.

There have been many studies done on why Asian-Americans do so well in school.

In one, a meta study of two national surveys that followed about 5000 students from kindergarten through high school, researchers were looking for evidence to explain the superior academic performance of the Asian-Americans. They had theorized that it had something to do with their innate cognitive ability – but that’s not what they found. Instead, it seemed to be due to a high-effort mentality instilled in the children by their parents. Asian-Americans, the researchers said, view education as a primary means for upward mobility – and they exert considerable pressure on their children to succeed.


Family Values

Compared to other racial groups, Asian-Americans place a higher value on family, marriage, and parental fealty.

Consider this:

* According to a Pew Research Center study, the majority of Asian-American adults list having a successful marriage and being a good parent as two of the most important things in life.

* Asian-Americans are more likely than other racial groups to live in a multi-generational household. Some 28% live with at least two adult generations under the same roof.

* 84% of Asian-American children (17 or younger) belong to a household with two parents. This compares to 68% of all American children. And only 16% of Asian-American newborns have an unmarried mother, compared to the national average of 40%.

* Asian-Americans have a strong sense of respect for their parents. About two-thirds say that parents should have a lot of or some influence in choosing their children’s profession (66%) and spouse (61%).

This is at least partly influenced by philosophical and religious teachings. Filial piety is an important element in Buddhism, Korean Confucianism, Taoism, and in Japanese and Vietnamese cultures.

* And here’s something I found noteworthy: In a recent study, 62% of Asians said that they believe American parents do not pressure their children enough.


Hard to Argue

Those are the facts.

What’s interesting is that this amazing story of Asian-American success in the US is not being told and celebrated. It is being ignored and even disputed because it suggests that a major thesis of identity theorists – that systemic racism is the cause of income, wealth, and education inequality in America – may be wrong. It also suggest that the solution to financial, social, and educational inequalities may not be as easy as making political, regulatory, or economic changes.

I’ll come back to this and related “identity” questions in future essays.



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“When feelings are strong, reason declines and facts get distorted in a miasma of context.” – Michael Masterson


Asians in America, Part I:

Why Are They So Successful? 


Let’s take a break from identity politics. Let’s talk about Asian-Americans!


Just kidding. But the facts are noteworthy.


According to a recent Pew Research Center survey, Asian-Americans are the highest-income and best-educated racial group in the US. They are also “more satisfied than the general public with their lives, finances, and the direction of the country.”


A century ago, most Asians in America were overwhelmingly low-skilled, low-wage laborers that lived in crowded “ethnic enclaves.” Today’s Asian-Americans have improved the quality of their lives in just about every way that quality of life can be measured.


But what may be the most impressive fact is this: These accomplishments were achieved by a group that is primarily immigrant. (Among all Asians in the US, nearly 6 in 10 were foreign-born in 2015, according to the Census Bureau.)


If you were interested in the subject of “How to Succeed as a Minority in America,” the history of Asian-Americans would be something you’d want to study.


So let’s take a look.


A Short but Impressive History of Asians in America


Asians began immigrating to the US about 150 years ago. As you might imagine, they were subject to a good deal of social discrimination. They were also the victims of systemic race-based laws and policies – e.g., the Chinese Exclusion Act of 1882, the Immigration Act of 1917, and the National Origins Act of 1924. And let us not forget about the internment of 120,000 Japanese-Americans, without due process, during WWII.


In 1965, the federal government passed the Immigration and Nationality Act, which led to large-scale immigration from countries in the Far East, Southeast Asia, and the Indian subcontinent. Each group had its own unique culture. Yet they all shared certain traits that allowed them to make immediate and significant progress – progress that began with the first generation and accelerated with the second and now the third.


Today, just 55 years later, Asian-Americans are at the top in every category of “achievement” I could find. Let’s look at five of them: education, income, wealth, unemployment, and health.




According to a recent Pew Research Center study:


* 87% of Asians aged 25 and older are high school graduates.

* 53% have a bachelor’s degree or higher.

* 23.6% have a graduate or professional degree.




In 2018, the median annual household income for Asian-Americans was higher than that of every other racial group. It breaks down as follows:


* Asian-Americans – $87,194

* White Americans – $70,642

* Hispanic-Americans – $51,450

* African-Americans – $41,692




Asian-Americans are the wealthiest racial group in the US. In 2013, they ranked second (behind White Americans) in terms of median net worth. In 2020, just seven years later, they are at the top of the list.




Asian-Americans have the lowest unemployment rate across all racial groups. I couldn’t find post-Corona Crisis numbers, but last year it was an astonishing 3%.




Again, Asian-Americans are at the top. According to the most recent data from the CDC:


* Only 8.3% of Asian-Americans were reported to be in fair or poor health.

* Only 12.5% of Asian-American men and 4% of Asian-American women smoke.

* Only 11.7% of Asian-American men and 13.6% of Asian-American women are obese.


Surprising Data 


Before I did the research, I would have guessed that Asian-Americans are less obese than other racial groups in the US. And I might have guessed that they are less likely to be unemployed. But I would not have guessed that they have more education and rank higher in terms of income and net worth than any other racial group (including White Americans).


And remember, we’re talking about people that make up only about 5% of the US population and are mostly first- and second-generation immigrants!


At a time when attention is so focused on inequality in the US, you’d think that the story of Asian-Americans would be a much-discussed subject. You’d think that scholars and politicians and anyone else concerned with income inequality, wealth inequality, education inequality, and health inequality would be looking to them for ideas about solving the gaps that exist between the races.


You’d think. But it ain’t happening. In fact, in academia and the mainstream media, the topic is absolutely taboo.


But I find it interesting. And if you do too, you’ll want to read Wednesday’s blog. In Part II of this essay, we will take a look at the values, beliefs, and habits that have allowed Asian-Americans to have such remarkable success, despite the many obstacles they’ve had to overcome.


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Update on My Investment Portfolio:

Why I’ve Just Sold Most of My Stocks 


“Be fearful when others are greedy, and be greedy when others are fearful.” – Warren Buffett


I’ve just sold about 75% of my stock portfolio. I’ll tell you why…

The Economic Outlook Is Scary

At a macro level, our economy is fragile. For one thing, the US has never been in so much debt. The national debt has been growing pretty much non-stop for 20 years, but it accelerated significantly under Obama and Trump. It is currently $26 trillion. That is 107% of our GDP. The last time the debt-to-GDP ratio was that high was in 1948, at the end of WWII.

And then there is our consumer debt: the debt private citizens carry on mortgages, loans, and credit cards. That hit $14 trillion in March, a record high, surpassing by almost $1 trillion the record set at the height of the 2008 financial crisis.

This level of debt is scary. But what’s scarier is that there are only two or three elected officials left that believe in balanced books and sound money.

The business outlook is bleak. Since January, US GDP has dropped nearly $3 trillion, from $21.8 trillion to $19.2 trillion. Thousands of small and medium businesses, employing millions of medium- and low-skill workers, have been shut down. The economists I trust are prognosticating that as many as half of them are closed for good.

By these and many other metrics, the US economy today resembles that of the economy after the real estate bubble collapsed in 2008, except for debt, which is worse. Given that, it seems reasonable to believe that we are looking at an attenuated recession and a feeble recovery.

Longtime readers know that I don’t buy or sell stocks based on macro analysis. But I don’t ignore it either.


The Upcoming Election

This is the main reason I converted 75% of my stock portfolio to cash.

The pollsters and their pundits are predicting that Trump will be ousted in November and the Democrats will sweep the House and perhaps even the Senate. The Democratic agenda is for higher social spending, $500+ billion on infrastructure, and higher taxes for businesses and high-income earners. But I’m even more concerned with the talk about eliminating the cap on the Social Security tax.

Wall Street doesn’t respond well to the threat of higher taxes. So as we approach the November elections, if it looks like Biden will be elected and the Democrats will win both houses of Congress, it’s very likely that we’ll see a big drop in stock prices. A 30% to 50% drop wouldn’t surprise me.

So those are the three reasons I decided to sell most of my stock portfolio: I have a continuing concern about US debt, a suspicion that we have entered into another extended recession, and a strong hunch that if it becomes apparent that the Blues will dominate the November elections, the stock market will take a dive.

Longtime readers will rightly be surprised to know that I’ve sold off 75% of my stock holdings. They will remind me that my investment philosophy has always been to buy world-dominating companies and hold them long-term. They will further remind me that as recently as April 6, I repeated that viewpoint in explaining why I did not sell any of my stocks as the markets were tumbling from the Corona Crisis.

Yes, I’m violating that rule now. Let me take you through my thinking process…

I “lost” millions in March and April. The loss was just on paper, but it still didn’t feel good. Because I didn’t panic and didn’t sell then, I was able to see the market climb back up this “wall of worry.” And now I’ve regained (again, on paper) all that I had lost.

The balance of my stock portfolio is at an all-time high. But there is a fair chance that the market will take a dive sometime between now and November. And if it does, it could be, as I said, a steep dive – 30% to 50%.

So I did what I sometimes do when I’m in a confusing situation like this. I interviewed the three parts of my brain.

First, I asked my limbic brain, the part that’s in charge of my emotions: “How would you feel if that happened?”

And Limbic Brain answered: “Like horse shit. Like a fool. But I would blame-hate you for keeping our money in the market.”

Then I asked my reptilian brain, the part that’s in charge of my instincts: “What would you do if Limbic Brain felt like that?”

And Reptilian Brain answered: “I would definitely panic. I would be afraid the market would drop even further. I would take flight. I would tell Limbic Brain to sell everything – all of our stocks – immediately and eat the loss.”

And finally I asked my rational brain: “What do you think of all this?”

And Rational Brain said: “Normally, I’d tell you to ignore Limbic Brain. I’d say that Reptilian Brain is bluffing. But in this case, why take the chance?”

“What do you mean?” I asked.

Turning to Limbic Brain and Reptilian Brain, Rational Brain said: You have told us how badly you would react if our portfolio dropped again by 30% to 50%. How good would you feel if we held on to our stocks till November and they went up in value?”

“Like by how much?” they asked.

“Say, 10% to 15%,” Rational Brain said. “Which, I might remind you, would be an unprecedented three-month climb, considering where they are now.”

Limbic Brain and Reptilian Brain went into the corner, as they always do when confronted by Rational Brain, and conferred. After a few minutes, they emerged.

“So how would you feel about our making another 10% to 15% on top of our current gains?” Rational Brain asked.

Limbic Brain shrugged. Reptilian Brain, lacking shoulders, said, “Meh.”

Rational Brain turned back to me. “As you can see,” he said, “my less intelligent but immensely muscle-bound siblings don’t really care if our stock portfolio goes up. But they really, really are going to go nuts if it goes down again.”

“Yes, I can see that,” I said.

Rational Brain leaned forward and stared into my eyes. “You know what you should do,” he intoned. “Sell all or most of your stocks right now and wait until November. You will be giving up the unlikely possibility of getting modestly richer over the next three months. But you will be safe from the more likely possibility of becoming considerably poorer.”

“That makes sense,” I said to Rational Brain.

He winked. “That’s what I’m here for.”

And that’s why I sold 75% of my stock holdings. If you are having some of the same concerns regarding your investments, conduct an interview. Your brain parts are yours, formed by your own knowledge and experience. See what they have to say. And then do what your Rational Brain advises.


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Injustice in the Oldest Sport in America:

“Systemic Breedism” Exposed in the Westminster Dog Show 

“From the equality of rights springs identity of our highest interests; you cannot subvert your neighbor’s rights without striking a dangerous blow at your own.” – Carl Shurz


Longtime readers will not be surprised to hear that the longest continuously sponsored sport in the US is the Westminster Dog Show. It was established in 1877. Before the invention of the light bulb, the automobile, and the zipper. Before the building of the Brooklyn Bridge and the Washington Monument and the establishment of the World Series.

But what is not generally known is that since 1907, when Westminster held its first competition, 30% of the winners of Best in Show have been White Fox Terriers. And there has never been a single win for a Golden Retriever.

“This is a scandal that has been kept under the kennel floor for too long,” argued an editorial in The New York Pravda earlier this year. “Looking at the numbers over the years it’s impossible to deny that dog competition in America has been plagued by a history of egregious classism and breedism – with White Fox terriers winning 12 times and the Golden Retriever never winning a single time!”

For those readers unfamiliar with the lexicon of Breed Justice Theory, a new degree-granting major at Harvard’s Department of Canine Studies, here are some definitions:

Breedism: The belief that different breeds possess distinct characteristics, abilities, or qualities, especially so as to distinguish them as inferior or superior to one another.

Institutional/Systemic Breedism:  Policies, practices, or judicial judgments, whether intentional or not, that result in unrepresentative awards in dog shows, from local events to regional events and up to and including the supreme court of justice in canine recognition: the Westminster Dog Show.

There is also a third kind of breedism that is more hotly debated: unconscious breedism. This idea was popularized by The New York Pravda bestseller Terrier Fragility, which asserts that the only possible explanation for the exclusion of Golden Retrievers over the years is “an unrecognized prejudice against the Golden by judges and owners.”

Executives at the AMA and Westminster have argued that they are “breed-blind” when it comes to judging dogs. Their criterion is merit, and it is the breeders and handlers of the Golden Retriever over the years that are responsible for their poor performance in competition.

But as has been pointed out in the recent New York Pravda bestseller How to Be Anti-Breedist:

If you believe that all breeds are equal, then Golden Retrievers should be winning Best of Breed at least 30% of the time. But they haven’t. They haven’t even won once!  And don’t tell me it has anything to do with merit. First of all, the Golden Retriever is clearly one of the most beautiful, intelligent, and best-tempered breeds among the Canis lupus familiaris.”

We checked the facts. The author is correct:

For at least the last 33 years, Golden Retrievers have been the third most popular purebred dog in the US, after Labrador Retrievers and German Shepherds. Exact figures don’t exist, but experts calculate the total number of Golden Retrievers in the US at 500,000 to 750,000.

But according to the expert BJWs (breed justice warriors) that we consulted, the concept of merit is in itself a form of breedism. “Merit-based award systems are inherently breedist,” they say, “because they have historically lead to inequality of outcome in dog judging.”

They also assert that the problem began at the beginning, at the first Westminster show in 1907:

“The framers of the Westminster constitution were not the egalitarian dog lovers they represented themselves to be,” said Justice Seeker, founder of the Union for Breed Equality, based in San Diego, California.

“They were clearly biased in favor of terriers. In fact, they didn’t even consider Golden Retrievers as purebreds back then. Who won in 1907? It was a terrier bitch named Champion Warren Remedy that took Best of Show!”

I have to agree. These wonderful dogs of color (there are three shades of Golden) should have had their place on the podium after Labrador Retrievers and German Shepherds (numbers one and two in terms of population in the US). And White Fox Terriers should be lucky if they place tenth.

I have to acknowledge that this is a personal issue for me. I once owned a Golden Retriever. And I can tell you: Every time one of those privileged White Fox Terriers won Best of Show, it hurt me and Jefe – our Golden Retriever – to the bone.

Speaking of bones, last year a Golden Retriever did place second at Westminster. But that was clearly a bone thrown to the BJWs. This should not fool us. We cannot accept this sort of chicanery. We need to do something serious to end the inequality now. And the solution can’t be a matter of raising awareness (which this essay, I hope, has done). Nor can it be achieved by firing a few judges. No. We must go all the way to the rotten core of systematic and unconscious breedism. We must reimagine a new kind of dog show, a single dog show like Westminster, but with freedom and equality for all.


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Hydroxychloroquine and the Politics of the Corona Crisis 


“Just trust yourself, then you will know how to live.” – Johann Wolfgang von Goethe

In his earliest speeches about COVID-19, Trump downplayed the threat and up-played the hope that a vaccine or therapeutic drug would soon be available. On March 19, he mentioned one such drug specifically: hydroxychloroquine (HCQ). It’s a medication that has been used to treat malaria, rheumatoid arthritis, and lupus for nearly 70 years.

In his usual bombastic style, Trump talked about the drug as a miracle cure. That struck left-leaning politicians and media (LLP&M) as odd. “Why single out this one drug?” you could almost hear them thinking. “We know he’s an amoral narcissist who knows nothing about science or medicine. Something nefarious is going on.”

They launched an investigation and discovered that one of the stocks in the Trump family portfolio was none other than the company that makes hydroxychloroquine.

“Trump Touting Drug for Personal Gain!” the headlines read. But before the ink dried, pro-Trump politicians and media were doing their own research. They found that the shares held by the family had a value of just a few hundred dollars. The charge that Trump was pumping the stock was absurd.

With that salvo missing the mark so widely, the LLP&M fired a more targeted shot: “Trump is not a doctor!” they pointed out. “He’s an arrogant, ignorant businessman. How dare he promote an unproven medication!”

How dare he, indeed?

There could be only one answer. The RLP&M had to find evidence that HCQ is effective – i.e., that Trump was right.

And thus began a soap opera of misinformation that has continued non-stop.

Let’s look at some of the highlights:

On March 19, Trump announced that he was going to “fast-track” FDA approval of HCQ. He said that the drug had shown promise and that “it has been around for a long time, so… it’s not going to kill anybody.”

Two days later, he tweeted about HCQ again. This time, he cited a study conducted by France’s Aix-Marseilles University.

The study,  published in the International Journal of Antimicrobial Agents, looked at 42 patients that had tested positive for COVID-19. Initially, 26 took daily doses of 600 milligrams of HCQ, six took 600 milligrams of HCQ plus azithromycin, and the rest acted as a control group, getting a placebo only. Of the 26, one died and five others dropped out. So the completed study consisted of 20 on HCQ only, 6 on HCQ plus azithromycin, and 10 in the control group.

The results were encouraging. All of the patients treated with HCQ and azithromycin were free of the virus after five days. The 20 that took HCQ only recovered, but more slowly. The control group experienced more symptoms and even slower recoveries.

The researchers concluded: “Despite its small sample size, our survey shows that hydroxychloroquine treatment is significantly associated with viral load reduction [or] disappearance in COVID-19 patients and its effect is reinforced by azithromycin.”

Their conclusion was challenged almost immediately for being too small and too quick. One critic quoted by the LLP&M, Elisabeth Bik, questioned the peer review process, noting that it took only a few days, rather than months, which is typical.

On March 24, the major media published a story about a man in Arizona that died after ingesting a non-medication form of chloroquine phosphate in an attempt to avoid contracting COVID-19. Ignoring the fact that chloroquine phosphate is not HCQ and was never approved by the FDA, as HCQ was, the LLP&M jumped all over it, accusing Trump of promoting a deadly poison.

Nevertheless, on March 28, the FDA issued an emergency authorization allowing hospitals to treat COVID-19 patients with HCQ.

On April 10, a group of physicians published a statement expressing concern that using HCQ “might do more harm than good.” Three days later, a small study in Brazil noted that some patients taking high doses of HCQ had developed an irregular heartbeat. And then, on April 22, a retrospective study of 368 patients conducted by the Veterans Health Administration and published in the New England Journal of Medicine concluded that HCQ “showed no benefit for patients hospitalized with COVID-19.”

Again, this was widely reported by the LLP&M.

On May 11, HCQ and azithromycin were back in the news. JAMA (the Journal of the American Medical Association) published a retrospective cohort study of 1438 patients hospitalized in metropolitan New York from March 15 to March 28. The study measured mortality rates among four groups: one that was treated with HCQ only, another that was treated with azithromycin only, a third that was treated with both, and a control group that received no drug therapies at all.

The study found a lower mortality rate with the three groups that were treated with one or both of the drugs, but noted that the differences were statistically insignificant.

It was enough for the FDA to reverse its emergency use authorization and declare: “In light of ongoing serious cardiac adverse events and other potential serious side effects, the known and potential benefits of HCQ no longer outweigh the known and potential risks.”

This was widely reported in the LL media as proof that HCQ was not effective. It also gave Joe Biden the chance to put his presidential opponent in an ethical checkmate. Trump, he said, is pushing “dangerous drugs. Our country is now stuck with a massive stockpile of HCQ, a drug Trump repeatedly hailed.”

Well, the RLP&M wasn’t going to turn on their king so easily. They had their scientists look into the JAMA study and noted that it was neither peer reviewed nor scientifically sound. “They didn’t adjust results for variables such as disease severity, drug dosage, or when the patient started treatment,” Allysia Finley noted in a recent WSJ opinion piece.

In late May, the Lancet medical journal published a large-scale international study claiming that hospitalized COVID-19 patients treated with HCQ were 30% more likely to die than those not treated with the drug.

Again, this made headlines. But on June 4, a review of the study by 120 doctors and scientists said that it had “significant flaws in the data and methodology.” They pointed out that, in their conclusion, the researchers did not disclose that the patients had been given HCQ, on average, four days after symptoms had appeared. (Which, by the way, should not have been surprising since the protocol for HCQ called for using it before or immediately after symptoms appeared.) “It stands to reason,” the reviewers said, “that taking HCQ in the fourth day would be unlikely to work very well.” They also pointed out that the conclusion neglected to note that the same data showed that people that took HCQ within two days of exposure were 38% less likely to develop symptoms.

Shortly thereafter, the Lancet retracted its publication of the study, stating that not only was the conclusion questionable, but the researchers had refused to provide their raw data for inspection.

On June 5, the day after the Lancet’s publication of the study had been challenged, the University of Oxford announced that a midpoint review of their HCQ trial had found no clinical benefit. “This report should change medical practice worldwide,” the leader of the review proudly said at a press conference.

On July 15, Oxford released more information on the trial. It turned out that the patients had been treated with HCQ nine days after symptoms appeared – again, much later than the suggested protocol.

On June 30, the Journal of General Internal Medicine published a study which found that patients treated with HCQ at New York’s Mount Sinai Health System hospitals were “47% less likely to die after adjusting for confounding variables such as underlying health conditions and disease severity.” The patients had been treated, on average, one day after the onset of symptoms, and with a dosage that was three times smaller than the dosage used in the Oxford trial.

Another report, published July 1 in the International Journal of Infectious Diseases, found that patients treated with HCQ at Henry Ford Health System hospitals in Detroit were “50% to 66% less likely to die after adjusting for confounding variables including other treatments.”

And finally, an FDA safety review published July 1 reported 5 adverse side effects from HCQ among the tens of millions of doses that were distributed to hospitals as a result of their emergency use authorization.” In other words, HCQ wasn’t harmful to the vast majority of the patients that were treated with it.

So as of right now, the RLP&M are winning the chess game. The latest data suggests that HCQ may be an effective treatment in reducing symptoms if given early and according to FDA guidelines.

But the game isn’t over. In fact, the pace has accelerated. By the time you read this, there will almost surely be a report in the LLP&M on some new study that concludes that, no, HCQ is not effective and that Trump was and is a dangerous fool.


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The Pareto Principle, Part III:

Entropy and the Impossibility of Equality 

“If you don’t like something change it. If you can’t change it, change your attitude.” – Maya Angelou


Let’s talk about the Second Law of Thermodynamics…

The Second Law of Thermodynamics states that “the entropy of a system never decreases over time. Instead, systems evolve towards thermodynamic equilibrium, which is the state of maximum entropy.”

In layman’s terms, this means that everything in the universe has a natural tendency to fall apart. To become less structured and more chaotic.

And by ”everything,” I mean everything: the galaxies, the solar system, and the Earth. The Earth’s oceans and mountains, its countries and cultures, its denizens, molecules, atoms, and subatomic particles.

In our day-to-day lives, entropy is the reason that absolute order – in anything – can never be maintained. As James Clear, author of Atomic Habits, explains, there are simply so many more ways that things can go wrong than right:

“Imagine that you take a box of puzzle pieces and dump them out on a table. In theory, it is possible for the pieces to fall perfectly into place and create a completed puzzle when you dump them out of the box. But in reality, that never happens. Mathematically speaking, an orderly outcome is incredibly unlikely to happen at random.”


Entropy and Equality 

Let’s switch topics for a moment and get back to an idea that we looked at in Part I of this series. [LINK 7/13] I’m talking about the idea of equality and the current global movement to achieve equality in economics, governance, education, and even health.

When I was young, the campaign for equality was about the protection of equal rights under the law. The law was based on the Constitutional thesis that all men are created equal and are thus endowed with the unalienable rights of life, liberty, and the pursuit of happiness.

Today, the call for equality is very different. It is a call for equality in terms of outcomes. The logic is that inequalities in desirable circumstances – e.g., income or social standing – are inherently bad.

(Please notice that I am not addressing the “why” argument advanced by post-modern leftists: that the cause of inequality of outcomes is “systemic” racism and gender bias. We don’t need to address that for the purposes of this discussion.)

Question: How does this idea of equality – this ideal of equal outcomes – work in the real world? How does it fare in a discussion that accepts the validity of one of the most important laws of physics?

Answer: Not very well.

Let’s start with this…

Equality is about order. It’s about balance, aesthetic preferences, and, for many people, ethics: how things should be.

But from the perspective of the Second Law of Thermodynamics, it’s easy to see that it is an impossibility. Actual equality – in any form whatsoever – is a state that is contrary to that law. Nature is designed to destroy it. Its chances of existing in any system (anything, anywhere) are one in a trillion. And if, by chance, some state of equality occurred, it would be dissolved in a nanosecond because of entropy.

As applied to wealth, equality is an idea that we may find appealing. We can, if we want, make it an ideal towards which to strive. But the effort, however great and sustained, will be futile. Because the universe, as I said, will not tolerate it.

Imagine wealth equality as an acre of landscaping – a patch of perfection that you create in a tropical jungle. If you worked 24 hours a day trimming, fertilizing, watering, and otherwise tending to every blade of grass, you might be able to maintain its perfection for a while. But the moment you took a nap, the jungle would reclaim its rightful domain.

Consider the many historical revolutions that occurred to (at least partly) establish economic equality. What happened with them?

In every single case, it was the same. The revolutionary leaders (who were mostly upper- or upper-middle class) replaced the former rulers (also mostly upper- or upper-middle class). Most of the wealth of the ejected class was claimed for “the people,” but stayed in control of the new rulers. A sprinkling of that wealth was dusted on the poor. (Which did them no economic good at all, as their numbers, as a percentage of the population, did not diminish.) The laboring class continued on as the laboring class. The big losers were usually the merchant class – the entrepreneurs that were responsible for the wealth that existed. They paid the bill. (No need to believe me now. I will prove it to you in a future essay.)

My big point is this: Attempts to equalize wealth have never worked. The inequality that was so unbalanced before the revolution was always – after a year or so – equally unbalanced after the revolution. The only difference was that some of the faces at the top changed.


Once again, the Pareto Principle :

This, of course, gets us back to where we started: the 80/20 Rule, a.k.a. the Pareto Principle.

We have established that in virtually every free market economy (and even most controlled economies), there is an inequality of wealth ownership/control that is roughly 80/20. And we have wondered why that is.

My idea is this: Pareto’s Principle “works” because it is aligned with the Second Law of Thermodynamics, one of the most universal principles of physics. The Pareto Principle is, in fact, a mathematical ratio that roughly describes the natural state of entropy.

Put differently, the Pareto Principle tells us that with respect to wealth, the universe wants there to be an imbalance that is roughly 80/20. And that, however much we try to equalize wealth through legislation and economic incentives, nature will do everything it can to achieve this preferred equilibrium.


So what? 

You may find my little proposition repugnant. The notion that inequality is nature’s preference rubs against the grain. It argues with your better instincts. You want to dismiss it out of hand. You find it absurd.

I get it. But I think the evidence is on my side.

Two questions I’ve been trying to answer since I got on this train of thought:

  1. Why would nature want entropy to be the standard? Why would the universe be designed to move from order to disorder? It seems like the wrong direction.
  2. If the universe is programmed to move towards disorder, why do people keep trying to create order? Why do we continue to try to improve our lives? Why are we always trying to make everything better?

For the moment, I have only two weak answers to these questions.

Why is the universe falling apart? It’s not really falling apart. It’s expanding. Falling apart is how it feels when you are a tiny part of it. For you, things are always out of order. But for the universe, things are moving as they should – outward.

Why do we keep trying to create order out of chaos? Why not just give up and go with the flow? Because it’s just the way we are. Homo sapiens is a peculiar animal. It is 99% the same as all other animals, but 1% different. And that 1% has to do with our undeniable and unstoppable instinct to change and improve things.

Whether it’s a question of how we find shelter or feed ourselves or protect ourselves, the history of Homo sapiens is the history of one of 100 million animals trying to create change.

And that, to me, explains the current ideal of equality in the US. Since the old standard of equality under the law has been largely attained, social justice warriors now are clamoring for a new standard: equality in outcomes. Today, if you are some version of a thinking ape and equality is your subject matter, you are being pressured to advocate for this change… regardless of whether it makes any sense in terms of the Second Law of Thermodynamics or the Pareto Principle.

It’s not going to work. But you can try. And if you do, you will likely feel virtuous – righteous and morally superior.

If you try very hard, you may be able to change the wealth inequality ratio from 80/20 to 70/30 or even 60/40. But remember this: The new equilibrium will last only for a brief moment in time. Because the very second you achieve that bit of change, everything in nature, including the people you are “trying to help,” will begin the relentless move back to nature’s comfort zone. Which, thanks to Vilfredo Pareto, we understand.


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