I promised someone in Germany that I would write about the economic troubles in Greece, but in the meantime I wanted to comment on some recent articles I’ve read on investing.
Investing is a common subject for us to talk about in Diamond Cutter Institute courses; it’s an obvious example of where Diamond Cutter Principals can come into play: do I invest in real estate or in stocks? Commodities or the tech sector? Should I worry about the market being on top of a bubble? When will it break or should I keep riding the wave?
It seems like it’s popular right now to discuss the next bubble—maybe in an attempt to be predictive (“As i wrote back in 2011, the investing bubble surrounding blah-blah was ready to burst”)– don’t people like to say “I told you so”?—and it seems the next bubble is social networking:
The sense of deja vu in the prospectuses of LinkedIn and Renren, the US and Chinese social networks, is overwhelming. With prices pitched at fancy multiples of revenue, no dividends payable for the foreseeable future and business models surrounded by uncertainty, we are back to the heady days of the 1990s dotcom boom. All the more so, given the multi-billion-dollar values at which companies such as Facebook and Twitter trade in secondary markets…
–Financial TImes, Monday May 16, 2011 edition
I’m not going to say these are good investments—invest in Renren, you’re sure to win! But trying to predict the next bubble bursting, I think, is a bit like saying I can’t plant the seeds to make my investments pan out.
I’m not here to defend investor greed—certainly, it might be that people speculating on the next-big-thing are setting themselves up for a letdown. We have a saying where I come from: “Fool me once, shame on you. Fool me twice, shame on me.” I also get that feeling of deja vu around the social networking boom, having been sold three times in two years by a company that failed during the dot.com shenanigans.
But nothing is certain. Must the bubble always burst?
We say no. The reason the “bubble bursts” is because the seed to see to have success wears out. What happens to the seed when it sprouts and eventually becomes a tree? It’s destroyed. It’s the same with seeds in the mind. When you check your stock reports, and your investment is up—you just burned a seed for generosity. Sorry about that.
So what do i do? live in fear?
Investors usually drop governance standards in a boom, and forget them in a bubble. Governance oblivion has manifestly set in here. As is the way with bubbles, fear will follow greed in due course. Many will lose their shirts—and complain on the social networks.
(BTW, the title of this article was “We will rue our failure to govern the social networks” which honestly, may be true.)
But we don’t have to live this way. The first rule of mental seeds is, “seeds are definite.” If we are generous, we will receive the things we need in return. So what’s the solution to the problem of the destroyed seed? When I check my investments, and stocks are up, how do I deal with the fact that that seed is destroyed?
How does any farmer deal with the fact that seeds are destroyed? Re-plant the seed.
You can do the same. Check your stocks; they’re up? Great. Be more generous. And they will keep going up. And up. And up.
Don’t fear the bubble, feed the bubble. It’s coming from your generosity. Can you keep it going?
Can we afford not to?