The Price of Conduct

"About 70% of all jobs are found through networking"

Welcome to The Golden Sense! 2011 has been quite a year. It goes from the magic of Barcelona to the  joke of the Kardashian wedding and on to Katy Perry's spilt with Russell Brand or how about the tortured Syrian protesters or occupy wall street? The public was captured by the Casey Anthony and Amanda Knox trials, we say goodbye to Steve Jobs and Elizabeth Taylor, while the world saw Qaddafi killed and was amazed with the death of Osama Bin Laden.Yes, it's been quite a year. A year for many financial investors to forget. A year where the economy has slipped and Europe has crumbled.


Much of the news seems like random events or just things that happen. Many describe it as an anomaly or an un provoked event. However, I see things a bit different. I have noticed that events around the world often happen as a reaction to prior behavior or conduct. Sure there are earthquakes and tsunamis that are unavoidable, but what I am talking about is human behavior or a whole countries behavior. I'm interested in learning about conduct that allows me to see potential trouble. I want to use behavior to my advantage. I earned a Bachelor of Science in Psychology during my college years. It has always been of great interest to me. I have learned that psychology is sometimes contestable, however it's often very useful.

A great writer by the name Vedran Vuk who works for the Casey Daily Dispatch had an interesting story to tell. One that resonates for everyone on a personal level, professional level, and at the level of national foreign policy.

Vedran grew up in the Deep South, fights were a very regular occurrence at high school parties, football games, and even in hallways. Most folks are familiar with the stereotype of “Southern hospitality,” but constant fights are also a cultural element of the South. Perhaps this tradition grew out of 19^th-century dueling culture. Who knows?

However, in high school one can’t avoid them all. And one night, Vedran got into a fight with another kid named "Jim". Vedran didn’t start it and wasn’t looking for trouble. To make a long story short, Vedran was clearly in the right, and Jim was drunk and in the wrong. Unfortunately for Jim, his inebriation made him quite a poor fighter, and Vedran gave him quite a whoopin’, as the local vernacular puts it.

Justice served, right? Jim was in the wrong and got a beating. Well maybe; but unfortunately, right or wrong doesn’t really matter when it comes to fighting. Three months later, Vedran was at a house party and saw the same guy. Vedran didn't want to start any trouble, so he tried to avoid Jim as much as possible; but Vedran noticed Jim and his friends eyeballing him and whispering. There were three of them, and Vedran's regular crew of close friends was nowhere in sight to back him up. As the party went on, Vedran caught the drift from overhearing a few words here and there: They were planning to jump him at some point.

Vedran figured his chances of avoiding a fight were pretty slim, so he walked up to the guy and said, “Hey man, I heard that you guys want to beat me up. Look, we fought the other night, but I really have nothing against you. In fact, I’ve got a six pack of some good beer. If you and your friends would like to have one, that’d be fine by me.” Jim didn’t see it coming at all and had no clue how to respond at first. Then Jim and his buddies took the offered beers, and they talked for a few minutes and came to peaceful terms. They weren’t great buddies or anything afterward, but the situation was defused.

Vedran had friends in high school who took the complete opposite route – they constantly got into fights. And the more fights they entered, the bigger their problems became. Many of them would win almost every single fight, but it nearly got to the point where they couldn’t attend any social gathering without a situation like the one Vedran faced. Someone somewhere was always looking to beat them up. It created an endless cycle of more fights and more enemies.

A lesson can be learned on a personal level. Fights always bring resentment. Hopefully, your opponent doesn't become a business associate or a potential vendor to your company.

On a business level a lesson can learned. In the past giant companies such as Microsoft and Google have acted like the 500lb Gorilla in the negotiating room and stuck it to companies and potential entrepreneurs rather than work out deals. Today, these two companies face a barrage of attacks by competitors and individuals who want to deal with "preferred" companies such as Apple. Sure, it's the way business goes, but different paths yield different results.

Then there is foreign policy. There’s no doubt the United States has kicked some a$$ in the past, but at what price? Many countries tiptoe around the US, as if afraid to catch the federal government’s military ire, but at the same time they secretly plot to strike in case an opportune moment presents itself. And within the US, people now have to constantly watch their backs, as they’re monitored nearly everywhere, from scanners at airports to wiretaps on phone calls to sifting through email looking for “suspicious” words and phrases.

 This didn’t happen because we’re necessarily wrong – that’s just the way fights work.

The current strategy seems to be to fight everyone all the time and win every single battle. If a government can do that over the next hundred years, then that might be a reasonable security strategy. But anyone who’s been in a high school fight knows that this is a flawed strategy. It leads to either a life of paranoia or eventually being caught outnumbered in a dark parking lot, metaphorically speaking.

It boils down to this: the more people you knock out, the more people will be looking for revenge.

The story above is meant to be food for thought. I have a feeling some of my hawkish friends will jump all over me about this one. It's OK, I wrote it for them.


Until next time,
T. Norman

The year end numbers are in!!!!

 Check below to see how you did.


Actual values are courtesy of Shadow Statistic.

	12/31/2011	12/31/2010	2011
	values	values	gain (loss) %
Gold	$1,566.00	$1,410.25	11%
Silver	$27.81	$30.63	-9.20%
Dow Jones average	12,217.56	11,577.51	5.50%
S&P 500	1,257.60	1,257.64	0%
NASDAQ composite	2,605.15	2,652.87	-1.80%
US$ index	80.58	79.27	1.70%
Euro currency	1.2952	1.3385	-3.20%
10 year T-Note yield	1.87%	3.31%	-43.40%
Commodity index	305.3	332.8	-8.30%
Crude oil (NYMEX)	$99.06	$93.53	5.90%
Official CPI	3.40%	2.60%	30.80%
Actual CPI	6.60%	5.60%	17.90%
Official unemployment	8.60%	9.50%	-9.50%
Actual unemployment	22.50%	22.40%	0.40%

Below are the last day of the year quotes for gold.


2000 -- $273.60
2001 -- $279.00
2002 -- $348.20
2003 -- $416.10
2004 -- $438.40
2005 -- $518.90
2006 -- $638.00
2007 -- $838.00
2008 -- $889.00
2009 -- $1096.50
2010 -- $1421.40
2011 -- $1566.80

Gold has continued its incredible bull market run. I started investing in gold in 2006. The reason I invested in gold back then is exactly the same reason why I bought more this year. Nothing has changed.

Do yourself a favor. Buy gold to retain your purchasing power. The price it's quoted in is irrelevant.
 

References:

http://www.caseyresearch.com/cdd/foreign-policy-lessons-high-school?active-tab=archives