Where to retire, When to retire? How much money do I need? How to survive the early retirement? Should I retire or work longer? Should I withdraw my Social Security now or wait?
Monday, October 10, 2011
The Laws of the Cartoon World
Remember Saturday mornings, cartoon, pajamas and a bowl of cereal. We entered into a world of animation that had rules in play we knew only existed there. Boomers may have forgotten those laws and have grown up thinking that was then, this is now. But perhaps...
It all seems so otherworldly these days. As if everything that seems familiar isn’t and the laws the govern rational – and often irrational behavior no longer apply. Markets are up then down and then post the worst third quarter in recent memory – and we’re not sure what that means. Does it indicate something wicked this way comes or perhaps the end of the episode? So I turned to some laws that explain the world of finance, retirement and just getting-by in a world gone wacky.
Cartoon Law I.
“Any body suspended in space will remain in space until made aware of its situation.” We basically have two things to focus on: our future and what will happen next. We are continually being told to invest, max-out that 401(k), do everything you can now, pain equals pleasure which has replaced risk equals reward. That is until we chance to look down. And you know what happens next.
Cartoon Law II.
“Any body in motion will tend to remain in motion until solid matter intervenes suddenly.” Our retirement goals have experienced this law firsthand. Hitting the cartoon telephone pole at full speed is, as this Law II suggests, the only way to stop forward motion with any success. There is the comic slide down the pole immediately following the impact which can only mean two things: we will sit as the cartoon stars whirl around our collective heads, trying to regain our reason for moving forward. Once our heads are cleared, Law II is waiting with the next pole a little further down the road.
Cartoon Law III.
“Any body passing through solid matter will leave a perforation conforming to its perimeter.” If you follow the markets, any markets, no matter how much information you think you have, now matter how timely it seems to be, the person in front of you will create their own cookie-cutter hole, exit, leaving you to get ahead of the problem that no one, including you is sure is a problem. So instead of leaving by the door, they exit through a wall, evidently not a solid enough surface to allow Cartoon Law II to come into play. We are at the mercy of speculators it seems who apparently have little regard for laws of supply and demand but understand two things: your predictable behavior and the ability of cartoon physics to protect them.
Cartoon Law IV.
“The time required for an object to fall twenty stories is greater than or equal to the time it takes for whoever knocked it off the ledge to spiral down twenty flights to attempt to capture it unbroken.” This is my favorite axiom of all. Who among us has not seen the Federal Reserve try and do this? We are watching this occur as we speak as Fed chairman Ben Bernanke races down the stairs with his latest effort in Operation Twist. Only Cartoon Law IV is a waste of time. The priceless nature of the economy, the object hurtling through global space in this instance, falls victim to the inevitable comic result: it might be too big to fail but the attempt to catch it will prove unsuccessful as well.
Cartoon Law V.
“All principles of gravity are negated by fear.” I offer last quarter’s frenetic trading as proof that investors can spin their feet so quickly that they do not touch the ground while any news good or bad propels most of them straight up a flag pole. These days many average investors are left scratching their heads as they realize that just the sound of the unknown can change the direction of the market dramatically.
Cartoon Law VI.
“As speed increases, objects can be in several places at once.” You know this one as the cloud of dust and debris brawl, to be witnessed as the candidates begin their battle for the White House. With the economy hanging in the balance or at least by their telling of the tale, the next year should provide numerous occasions of spinning and throttling as no candidate so far can pinpoint where the nation is right now and offer a plan of where we should be.
Cartoon Law VII.
“Certain bodies can pass through solid walls painted to resemble tunnel entrances; others cannot.” This inconsistency has played itself out to great effect in housing. The folks who stand at the helm of the economy have painted an imaginary tunnel and allowed millions of Americans to pass through but when those that needed help the most attempted to follow, the surface was once again solid. This trick surface has left many wondering why something cohesive can’t be done. Housing may never recover if recovery is gauged by where it was. Yet so many people are wondering why the supposedly smart financial people who aided and abetted in this financial crime won’t simply understand that they have an option – and it isn’t achieved by raising ATM or debit card fees.
Cartoon Law VIII.
“Cartoon cats have more than the traditional nine lives.” They become like water snapping back to whatever they were prior to their mishap, even assuming the shape of the container if they happen to find themselves in one. Seems that we alone know this to be true and no matter how many times the economy can be “decimated, spliced, splayed, accordion-pleated, spindled, or disassembled, it cannot be destroyed.” It becomes the equivalent of a cartoon mulligan. Someone please tell those in Washington. They think that what the economy needs is simple: more self-regulation and perhaps a little agency consolidation, a trillion dollar cut in spending here and an entitlement cutback there. We’ve seen it before and it gives us hope. We know that after the economy regains its shape, these set-backs (weak dollar, global slowdowns, market volatility and commodity speculation) will prove there are lessons we haven’t really learned and why should we have. We are pretty confident as a group that we will have another life to do it over again. At least we hope that this cartoon law is real.
Cartoon Law IX.
“Necessity plus Will provokes spontaneous generation.” This opens the door to the “controversial pocket theory” which “suggests objects can be drawn from unseen recesses of a character’s costume, or from a storehouse immediately off-screen” or can be borrowed directly from what you will owe at some point in the future. And then, as if by magic, this future they tell us will just show up as if it “merely defers the question of how any absolutely apt object is instantaneously available”. Of course, you do need to believe in magic and if magic is the suspension of disbelief, saving will help – a lot.
Cartoon Law X
“For every vengeance there is an equal and opposite re-vengeance.” This is the one law of animated cartoon motion that also applies to the physical world at large. The bottom line is that we are not to blame. Each time I talk to an expert on my radio show we are told is our behavior that is the reason we are in the mess we are in. Every nuance we have is examined and studied and plans for re-vengeance are hatched. It has become us versus them. Instead of financial products getting simpler and more easy to understand, they ultimately become more nuanced, more layered with possibilities and as they get less expensive, they don’t become less expensive. It seems that all we want is to fall on the right side of cartoon law.
These laws were borrowed liberally from “Elementary Education” by Mark O’Donnell (Knopf (1985) in the hope that when you encounter these situations, you may fall on the right side of cartoon law.