Skip to main content

Dr. Brett on breaking the social contract

Dr. Brett Steenbarger at TraderFeed sparked some interesting discussion this weekend with his post on, "Breaching the Social Contract".

Dr. Brett offers up some examples of this breach of trust here:

"
Consider the following situations that I have encountered in recent weeks:

* A young lady in college is suddenly told by her parents that they no longer have the funds for her education. She will have to go to work to come up with the tuition. She cannot find work and doesn't know how she will graduate;

* A long-time employee of a large company is downsized to a part-time job and will be losing his benefits. He doesn't know how he will afford health care for his family. He heard about the earnings possible to traders and is considering applying for a training program that will tap him of much of his savings;

* A retired couple learns that their investment adviser has put them in volatile, high load funds that were initially described as conservative. They are stunned when they see their account statement showing a large loss in their principal, and the husband is contemplating a return to the workforce...

...In each of these cases, the individuals entered situations with expectations born of an implicit social contract. With the rending of the economy, that contract is breached--and breach brings hurt, confusion, anger, and despair. Listening to each of their stories, I am reminded of spouses who experience the infidelity of a partner: with the loss of trust, nothing is ever quite the same. It is difficult to sustain optimism and confidence in the face of doubt and uncertainty..."

I'd say that this theme, one of broken social contracts, has become an accelerating trend in our country today.

What are the causes behind these developments? Have a look at the full post and judge for yourself, or add to the discussion.

Popular posts from this blog

Seth Klarman: Margin of Safety (pdf)

Welcome, readers! Signup for free email updates at the Finance Trends Newsletter . Update: PDF links removed due to DMCA notice. Please see our extensive Klarman book notes below. New visitors, please check the Finance Trends home page for all new posts. Here's something for anyone who has been trying to get a look at Seth Klarman's now famous, and out of print, 1991 investment book, Margin of Safety .  My knowledge of value investing is pretty much limited to what I've read in Ben Graham's The Intelligent Investor (the book which originally popularized the investment concept of a "Margin of Safety"), so check out the wisdom from Seth Klarman and other investing greats in our related posts below. You can also go straight to Ronald Redfield's Margin of Safety book notes .    Related posts: 1. Seth Klarman interviews and Margin of Safety notes     2. Seth Klarman: Lessons from 2008 3. Investing Lessons from Sir John Templeton 4.

Clean Money - John Rubino: Book review

Clean Money by John Rubino 274 pages. Hoboken, New Jersey John Wiley & Sons. 2009. 1st Edition. The bouyant stock market environment of the past several years is gone, and the financial wreckage of 2008 is still sharp in our minds as a new year starts to unfold. Given the recent across-the-board-declines in global stock markets (and most asset classes) that have left many investors shell-shocked, you might wonder if there is any good reason to consider the merits of a hot new investment theme, such as clean energy. However, we shouldn't be too hasty to write off all future stock investments. After all, the market declines of 2008 may continue into 2009, but they may also leave interesting investment opportunities in their wake. Which brings us to the subject of this review. John Rubino, author and editor of GreenStockInvesting.com , recently released a new book on renewable energy and clean-tech investing entitled, Clean Money: Picking Winners in the Green Tech Boom . In Clean

Slate profiles Victor Niederhoffer

Slate's recent profile of writer/speculator, Vic Niederhoffer has been getting some attention from traders and finance types in recent days. I thought we'd take a look at it here too, to offer up some possible educational value from Vic's experiences with trading and loss. Here's an excerpt from Slate's profile of Victor Niederhoffer : " I've enjoyed getting your e-mails. It sounds like you've thought a lot about being wrong. Well, the reason you contacted me, to call a spade a spade, is that I'm sort of infamous for having made a big, notorious, terrible error not once but twice in my market career. Let's talk about those errors. The first was your investment in the Thai baht, which pretty much wiped you out when the Thai stock market crashed in 1997. I made so many errors there it's pathetic. I made one of my favorite errors: "The mouse with one hole is quickly cornered." That is key. There are certain decisions you make in li