Dear valued client,
Markets were on a turbulent ride this week in anticipation of Wednesday’s Federal Reserve decision on interest rates. The Fed is not slowing its campaign to tame inflation, raising rates another 0.75 basis points. It is logical to conclude that the Central Banks of Canada, England, the EU, and others will follow suit.
This will have the most significant impact on families and businesses carrying large debts. Monthly loan repayments are continuing to climb putting more pressure on budgets that are already dealing with higher prices at the gas pump and grocery store. As I have mentioned previously, I anticipate higher numbers of “For Sale” signs in the next 6-12 months as mortgages and loans will no longer be affordable.
Billionaire real estate investor Barry Sternlicht, whose son was a classmate of mine, has indicated the housing market is on the precipice of a major bubble. If the Fed continues its aggressive raising of rates as they have, they are likely to induce a crash that could send shock waves throughout the economy. Many economists disagree, maintaining a more optimistic tone.
Tensions are rising in Russia as President Putin is grappling with the vast amounts of territory Ukraine is regaining. As a result, Putin plans to summon 300,000 more Russian soldiers, a decision the Russian people didn’t exactly take very well. The backlash of the announcement resulted in major protests which saw over 1,400 citizens being arrested for “anti-war” protests. As the pressure is mounting around him, Putin threatened the use of nuclear weapons this week, stating clearly, “This is not a bluff.” Given the chaos in Russia at the moment, Putin’s attention is likely to shift to more domestic-related matters.
I would like to conclude with a (lengthy) passage from the Daily Stoic newsletter, which I believe is well worth reading. We all must find our own “Golden Mean.”
When we hear the word “temperance,” C.S. Lewis observed, most of us in the modern world think of “abstinence.” Even when you look up the definition of abstinence, temperance is a synonym. But temperance, Lewis wrote, is actually about going to the “right length but no further.”
Temperance isn’t about elimination—going without, or removing something “bad.” It’s about moderation—finding the right amount of something, anything. It’s Aristotle’s famous metaphor of the “Golden Mean”—the idea that virtue usually sits between two vices. Courage is somewhere between cowardice and recklessness. Confidence between crippling self-doubt and blinding arrogance. Hard work between workaholism and laziness. Generosity between parsimoniousness and profligacy.
It’s important to realize that virtue, finding the halfway point, is difficult. Reading the Stoics can sometimes only make it more difficult. “Don’t procrastinate,” Marcus tells us, and then with the next breath, he says, “don’t be all about business.” Read, read, read, he says, but don’t forget to close your books and engage with the world. Seneca tells us to be prepared for the worst right before he tells us not to worry about the dangers of the future. Epictetus tells us to acquiesce to fate and embrace our own agency.
It’s not that the Stoics were contradicting themselves. It’s that finding balance, finding the right amount, is a high art. It takes work and study and practice to figure out what is the right thing to do in the right amount at the right time in the right way.
You see, Aristotle was not the only one who spoke of a Golden Mean. The inscription on the Oracle of Delphi is, “Nothing in excess.” In Islam, there’s a saying, “Every praiseworthy characteristic has two blameworthy poles.” And central to Buddhism is the “Middle Way.” In fact, each of the commandments in the Eightfold Path is about finding the right amount in the critical areas of life (right view, right intention, right speech, right action, right finances, right effort, right mindfulness, right concentration).
Indeed, it is impossible to find a philosophical school of thought or religion that does not admonish us to find the middle ground. And when all the wisdom of the ancient world agrees on something, you’d have to be a fool to ignore it.
Have a terrific weekend,
PW
