The Flow and Eddies

Plus year-end market thoughts

If you enjoy this, forward it to your friends and colleagues. To the hundreds of new subscribers this year, if you have questions, ask. You can see more about me in the bio section. My next post will be in 2023.

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This year’s posts began with The Barbell as Medicine and will end on a metaphor—we are all in a river with eddies. The goal is to get as much out of the ride down the river as we can and do our best to avoid those eddies. The river flows at a fast clip, there is a waterfall at the end. That’s true in our own lives but also for countries and investing.

Photo: Paul Fetters

LIfe

When we start off down the river, it looks pretty straightforward. You go to school, play a sport, hang out with your friends. There are choices—hockey vs. basketball—but no major forks in the river, yet. Because of this, there is a strong sense of community, many people are paddling right next to you.

The first fork in the river is work. What type do you pursue? Do you prioritize service or money or art? You can’t do it all. My conversation with Congressman Jim Himes and Rabbi Friedman touch on the service path; my conversation with Eileen Murray and Ray Dalio the money fork. Harold Lopez-Nussa talks about the artistic path. Whatever the choice, the river tugs you downstream.

Within phase two, there is a fork of work with kids and without. A woman’s peak fertility is around 24 and drops steadily and relentlessly until it is zero at around age 50. The river is rushing down, you either take the fork with kids or you don’t.

After education and work and maybe kids, there is now a third phase. This third phase can either be one of growth or stagnation. If I lived 100 years ago, my life expectancy would be 58, meaning I’d be facing the waterfall’s edge in just a few years. Instead, I’m hopeful my third phase lasts. I’ve got a lot of books I want to write and people I want to befriend.

Eddies

Along the way, there are lots of eddies. The eddies are the self-reinforcing, self-defeating whirlpools we all get stuck in. Sometimes you don’t know you are in one until you are out.

Photo: Paul Fetters

Some of the eddies are from the Old Testament. Sam Bankman-Fried is now in a nasty eddy likely caused by greed and pride. If you look at what lands a person on the front page of a newspaper, often it is some form of giving into temptation.

A difficult upbringing can shunt you into an eddy. I talked about that with my wife Marina and also Roger Johnson, who served time at a young age. To Roger’s immense credit, he got out of the eddy.

The third phase of life can be an eddy, if stagnation sets in. In the third phase, there is less structure. The exigencies of kids and school are long in the past. To create meaning, widening relationships and some form of service to others seem critical. No matter what, the river flows on.

At some point, you become conscious of the waterfall, death. In Raising a Thief, I wrote about watching my mother go over the waterfall when I was six. Master, Minion opens with the main character finding out an acquaintance was murdered. I put that in there because it puts everything that follows into perspective.

Nations and Regions

Countries and regions face flow and eddies. In the US, slavery was a deep, swirling eddy. The big lesson I shared in Letter from Mississippi was that once you enslave a population, shedding that legacy and turning toward education and wealth accumulation is a long, long road.

This year, Russia went into an eddy. Russia is spinning backward in time and mentality, exactly what you’d expect a whirlpool to do. In February, I visited Turkish-held northern Cyprus. That’s also an eddy, one that has swirled for 50 years.

The US, for all its flaws, has a history of getting out of its eddies. From the Civil War to Trumpism, the US gets wildly off course but eventually gets back on. The US population grew this year, solely through immigration. That people are willing to risk their lives to come to the US is significant. People flow to areas that are safe from ones that are dangerous.

Money

The river metaphor holds true for managing money, too. Asset prices are in constant motion, a flow of money from savers to borrowers. The trick is looking downriver and seeing the flow, the eddys and tricky currents. Subscribers watched me do go into an eddy when I tried to short a stock market that went sideways. In that regards, a question for you.