Economic Analysts, Fund Managers and Academics Worth Listening To

So I was recently asked who was worth listening to so I thought I’d share my thoughts on the guys that I follow regularly.

Economic Analysts

So over the years there have been quite a few economic analysts I have listened to but there have been a few that have stood out.. They have tended to be able to think outside of the consensus and managed to been right often enough that I decided they were worth listening to regularly. That doesn’t mean I always agree with them, but they are generally always worth listening to:

• Gary Shilling
• Martin Armstrong
• Marc Faber
• Jim Rogers
• John Mauldin
• David Rosenberg

Big Fund Managers

I often thing the guys that are at the top end of the biggest managed funds are often worth listening to first and foremost because they have worked there way to the top of these organisations through good performance over a long period of time. The top guys of these organisation also think very strategily, rarely have a short term focus, which appreciate mainly because they manage such a large pool of funds nothing they do can be very short term because their investments move markets. Also I feel like most of the time the guys at the top don’t have a big vested interest in bullshitting the market, once again because they manage huge portfolios that aren’t capable of manoeuvring in and out of position quickly. The other benefit of being a large fund manager is that they often invest a lot of money in research and market insight. So they can often be the best source of comprehensive insight. Of course the downside is that they don’t often speak publicly.

• Larry Fink
• Jeremy Grantham
• Kyle Bass
• Ray Dalio
• Warren Buffett
• Jim Chanos

Academics

Academics are often accused of being too theoretical rather than practical, but I think these few have earned their stripes. I particularly like that most of them have  a deep appreciation for histroy, which allows them to be more practical about the possibilities of the future.

• Niall Ferguson
• Ken Rogoff
• Joe Stiglitz
• Robert Shiller
• Nouriel Roubini

Other Potentials

• David Blanchflower
• Jim Rickards

Response on Financial Reality

I made this massive post on the financial reality blog. I thought I’d copy it here for future reference:

I’m sensing that you are feeling upset with some of the stuff I’m mentioning. So I’ll start by saying that I’m sorry if my previous posts have come across as confrontational – I really don’t want them to be (that’s just me not choosing my words well because I don’t have HUGE amounts of times for these sorts of things).

What I really think is that I love seeing an 18 year old Aussie get out there wearing his heart on his sleeve and saying “guys I think we have a problem”…

I honestly do!

However I’ll also just preface by saying that these days I don’t like arguing too much because nothing is gained by it and if I ever really engage in an argument I’m only doing it to serve my ego and it’s not worth serving. So please KNOW that all responses I make here come from a place of helping not humiliating. So this will be the last post I make on this topic.

With that said. I think it is awesome that you have taken the initiative to make a video and I’d love to see you make more, but I’d also like for you not to become the next doom and gloom merchant (they mostly sell hype) and realise that there is MULTIPLE sides to this story and it WON’T play out exactly to anyone’s script because there are WAY too many variables. So if you want to play this game your have to know the difference variables and be ready to dance in and out of positions.

I’ve had a quick look through your site and looking at most of the sources you cite there is a good chance I have come across almost all of them.So I honestly understand your perspective, I have read, watched, studied it all before.

So your question shouldn’t be whether I understand or not, it should be WHY I disagree with you, if I have watched the same guys, listened to the same podcasts, read the same blogs, do I still differ with your perspective…

Anyway, moving on…

The most important thing that all doomer and gloomers forget to talk about is the fact that the sun will rise tomorrow…

These things we have built will still be here even if the financial system is not, the factories, the cars, the planes, the houses, the farms, our mines, our doctors, our engineers, etc – these things will all still have utility even if money does not. Yes times will get messy and complicated for awhile while some new medium of exchange is created, some people will lose a lot of wealth, but some people will gain a lot, but at the end of the day it won’t DRASTICALLY change a countries productive capacity if you look at it from a longer term perspective. I mean doctors will still know how to perform operations, farmers will still know how to grow wheat, builders will still know how to build – life will go on.

Loads of countries have quickly bounced back from defaults or hyperinflation events. So you don’t need to worry too much about that.

More importantly, just because the Western world has a debt problem doesn’t mean the Asia does (to have a debtor requires a creditor and at the moment that is Asia). A lot of people have the nieve viewpoint that as a creditor that they will lose out when the west defaults as well, but they miss the point. For Asia to have become the creditor of the world they had to bust their asses over the last couple of decades by working hard, investing in infrastructure, building factories, making goods and services the world wanted, then lending the money they made from those initiatives back to the westerners. In the process they pulled a LOT of their citizen out of poverty and have brought many to the living standards of your average westerner. So in the event of a western collapse all that will really happen is an Asian currency revaluation. All the factories and workers will still be in Asia, granted western countries will become competitive with Asia again, but for the most part it will just mean that Asia will finally get to reap the fruits of their labour.

Yes they may have some write-offs, but investments come with risk, and nothing goes up or down in a straight line (including growing Asian economics) and I’d say the vast majority of their investments have paid off handsomely and it looks like despite the future bumps they will continue to do well in the next couple of decades.

So don’t confuse the problems of the west as a problem with the world – this Global financial crisis is really a WESTERN problem.

As for hard assets not being equal, I beg to differ – a house doesn’t produce more houses, gold doesn’t produce more gold, oil doesn’t produce more oil – the future productive capacity of each of these commodities is ZERO. What changes is the demand of these goods. Now your argument for gold and silver is based around the notion that in the event of a financial collapse people would increase their demand for gold and silver (that’s a fair argument assuming that there is no other alternative that is more attractive) and I think you SEVERELY underestimating the potential for a viable alternative will come along.

And I think you will find that the VAST majority of western countries have no desire to revert back to a gold standard and as such alternatives will be far more attractive than a commodity back currency.

Now I’m not saying it isn’t prudent to have some money in gold and silver (I do) however I think it is extremely foolish to have a portfolio that is largely in gold or silver rather than real income producing assets.

What really makes money in this world, is those that produce good and services of value. Gold and silver add exactly ZERO to society – and therefore they are not “investments” they are “insurance” against financial or social collapse. They will never be what really makes people money or what even “protects” people. What really protects people is their ability to produce value for society.

Now if an 18 year old with $20,000 asked me today what was a smarter investment, buying $20,000 of gold or spending $20,000 on a degree in agricultural science – I’d tell him to get the degree, because at the end of it he’ll be able to provide real value to someone who produces real goods in an ongoing basis and that is what produces REAL wealth.

As for psychological ramifications – yes negativity can hurt markets just as it paralyses people, but rest assured that 95% of the population generally just gets on with their days regardless of what the stock market is doing and people don’t stay paralysed forever. I’m not saying there won’t be short term effects, but you got to remember that people move on. The Great Depression didn’t last forever, people got over it (yeah it scarred a few people, but at its worst 25% unemployment still means 75% of people had a job!).

I live in Brisbane and within a month of the floods going through – people had almost forgotten that it had even happened. Life goes on. The sun will rise tomorrow. Planning doom is prudent, but you will be far better served spending the majority of your time planning for the recovery.

As for house prices falling, while gold rises, yes that can happen, and probably would happen in the SHORT RUN, but what happens in the short run isn’t going to be important for 95% of people because they are not traders – they are every day mum and dads who just want to live their lives.

The only reason why gold would go up while other commodities went down would be a situation where we had deflation coupled with financial collapse (without money printing – which is usually how a currency is destroyed), but without the destruction of the financial unit of account (money) via hyperinflation it’s unlikely people would attempt to revert to other forms of currency. If anything they’d try and horde currency due to deflation in which case gold might fall faster than regular commodities.

Alternatively in the case that you projected where a currency collapses due to central planning debasing the currency where gold goes revert to say $10000+/oz other real assets like houses, factories, oil, agricultural commodities will also go through the roof because the currency will have been devalued relative to them (in a nominal sense they may not go up as much as gold but they will still offer protection – so what I’m saying is that there is no point in someone selling their family home or stock portfolios to buy gold to protect themselves from hyperinflation).

As for China buying gold – I didn’t mean to imply that they are not. They are definitely “accumulating” gold, but that needs to be kept in perspective in that they are accumulating EVERYTHING. They aren’t only focussed on gold, they are buying international bonds, commodities, companies, everything. They are soon to be the largest economy in the world and they have a lot of money to spend – of course some of it is going to be spent on procuring gold. That said, I think you will find that the Chinese government has spent far more money and effort of securing commodities and companies to ensure the continuation of their economy than gold.

Also, I acutely aware that it’s not just China either, it’s EVERY Asian country from India to Korea to the Phillipines is looking to get their hand on some more gold – but if you look at it objectively you’ll see that gold accumulation isn’t their PRIMARY focus either.

Seriously go have a look at sugar, coal, oil, copper, wheat prices – they have gone up 300% – 600% over the last 10 years just like gold. Yes gold is a good investment, but it’s not the only thing worth investing in.

As for me making videos – mate honestly I’d love to but unfortunately I have a business to run and employees to keep employed.

I know that sounds like a bit of cop out, but I did spend a lot of time a few years back making an big effort to try and explain a few things to people (also I do have over 1000 posts on Invested that’s got to count for something – including a 10,000 word post about debt and leverage – http://www.invested.com.au/85/leverage-strategy-37587/ – I’m even spending time writing this response for YOU).

But ultimately, I have somewhat resigned myself to the fact that the best way to make a difference is to just get out there and lead by example, work hard, add value, and put myself in a position where I can actually effect change.

But if I was 18 all over again and if I knew what I know today I’d be doing exactly what your doing – trying to spread the word. So stick with it if you think it is making a difference, but know this (and it applies in business too) it’s not just about letting people know there’s a problem, you got to have a REAL solution – and reverting back to the gold standard doesn’t solve people’s problems TODAY.

Anyway best of luck with it. If you ever want to chat you can always swing me an email and I’m always more than happy to offer some feedback on any future videos if you want it.

Keep up your good work.

Why Doom And Gloom Doesn’t Really Help

This post was a response I made on an investment forum I chat on where a well intentioned 18 year posted his interpetation of the debt crisis:

Thanks for your response. I’m merely regurgitating the research I’ve done from people who know what they’re talking about.

Firstly thanks for spreding the word about people needing to take a greater interest in their finances – a lot of Australian are financial illiterate. I also really appreciate that you are young and passionate – I’m only 26 and I have been posting on these forums years because I am also passionate about economics like yourself.

I actually got so sick of trying to explain the situation that I just collated a lot of my posts – I think it’s worth a read:

http://www.invested.com.au/85/leverage-strategy-37587/

You mentioned in your video that you are only 18 and that you have only been researching this stuff for a couple of months and that you don’t have a background in economics or anything. Firstly, that’s 100% fine – I graduated in economics and not having studied economics may be for better at looking at the world with no preconceived notions (because I definitely have friends who I graduated with who are so caught up in what we were taught being right that they can’t see that some “mainstream” economics theories are just that – “theories”).

That said, it’s not like academics aren’t aware of this – more and more time and energy from modern day economics is being spent on areas like behavioural economics which probably explains a lot of the deviations we make from rational economic thinking – which most economics is based on.

So in light of this can I recommend you continue to read, listen and learn (broadly) about the crazy world we live in because the message you are spreading, whilst not wrong, isn’t really complete (not that anyone’s is) and the world whilst simple at a micro level, if you have enough simple decision being made independently of each other then things get extremely complex. That also includes knowing as much as you can about mainstream economics belief (Keynesian) will be SUPER valuable over the course of life.

Peter Schiff, Max Keiser etc. These are the people who have been right about absolutely EVERYTHING so far. They predicted the housing collapse, the 2008 global financial crisis and everything in-between.

LOL – old Peter Schiff and Max Keiser – they definitely have NOT been right about EVERYTHING – yes they have been right on occasions, but they have also been wrong. Trust me, I have been listening to them for YEARS (as in watching their videos and reading their articles weekly for years). They are more “entertaining” than they are “right”, but that definitely makes them better than most economic pundits who aren’t entertaining but are just as frequently wrong.

I suspect you will find this out for yourself over time – their sensational antics get boring after awhile. Please note they definitely are worth listening to from time to time, though they are definitely not accurate enough in their predictions to not take their opinions and put them on the spectrum of the other opinions that other pundits are making.

They understand what’s going on unlike our politicians and the fools in the mainstream media.

The other thing that Max and Pete lack is a sense of timing – knowing “what” is going to happen is not the same as know “what” AND “when”. That’s what makes you really smart in this game. ALOT of people forecast this debacle – mass media didn’t and therefore they are always saying  “no one saw this coming” otherwise they look stupid – even people on these forums were talking a lot of this back in 07 – look into 02bsure’s posts…

http://www.invested.com.au/members/02bsure/

If you look through the posts I have made on these forums over the last few years you’ll get a sense of the ups and downs and insights I have made along the way -I have been wrong a number of times but I’m glad I was because being wrong is when you learn best… and I suspect your insight will evolve over time to become more complex than “the world is screwed and the system is broken we are doomed”.

I see this as the end of the FIAT money system and back to a gold/silver standard where our money is actually worth something – not just what the government tells us. Back to honest money. Afterall, we’ve only being using the current FIAT money system for 40 years. Silver/Gold has been money for thousands of years.

You’ll see that I have have had significant positions in Gold and silver for the last few years and I have done reasonably well as a result – but that doesn’t mean I believe fiat currencies are going to end.

From a practical perspective gold isn’t a perfect currency either – I’m not saying fiat currencies are great (though they can function perfectly fine if they are managed properly – of course that is the problem – it’s not the idea of fiat currency – it’s the people managing it). The truth is the system is never going to be “perfect” – human nature will make sure of that.

Probably most important here is your need to realise whilst you are right that the system will need to contract because debts that can never be paid have been borrowed by most developed nations – at this point there is nothing you can do about it – the collapse is going to happen it’s simple maths, so the “how much” things will lose value is reasonably knowable, the “when” seems to becoming more obvious “think years not decades”, the only uncertainty is “who” has already made it to a life raft when the ship goes down – and unfortunately there are no where near enough for everyone…

As soon as you realise the only REAL variable is “who” exits first you realise that it doesn’t really matter what you say or do – and preaching that world is ending may make people more aware of their reality – but it doesn’t change the outcome it only hastens the day of reckoning.

My belief system is Nobody can predict the future. What will Australia be like in 10 years time? I do not know! It is easy to say that the sky will fall. Lots of people are saying this at the moment.

Well I definitely think people should be aware of reality and not live in denial. Denial of reality got us into this mess…

Negativity begets more negativity. If someone has an inkling of vision for the future, I listen to those who give me hope. I support those investors who can give me direction. Not the ‘collapse of society’ type.

100% agree – telling people theyare boned doesn’t fix anything – you need to tell them what they can do about it. And I’m not talking about telling them what investments will insulate them- because that is a zero sum game (ie people jumping for life rafts).

I know I often forget to do this with people that I talk to about these things – it’s easy to paint the picture of doom and gloom and they feel totally disempowered after a spiels about the reality of things, but they also wonder why I’m so chipper and positive – and that is because the REAL financial laws that the world lives by are still valid even in recessions – ie those that work hard and smart and provide lots of value to people will always make money… so I just focus on doing that.

Ie – if you used to make money flipping real estate you go ass up, but if you’re busy building the next Google or solving Global Warming (ie solving REAL problems) you are still going to make bank no matter what the financial world is doing.

I want to know: where to put my money, when to put it in, when to take it out, where to store it in-between investments. Anyone who can’t provide this information is just another fortune teller.

People that want people to tell them what to buy, when to buy, when to sell, etc will generally lose in the long run – normally for no other reason that no one has a large incentive to give you that information for free, brokers have a large incentive to just get you to buy or sell, traders have an even larger incentive to get you to buy the junk they can’t get rid of and most importantly because most people giving the advice have just as many blind spots as the next bloke offering free advice PLUS they don’t know or care what your personal circumstances are…

99% of people will make more money over their lifetime buy parking their money in a diversified, low cost, portfolio and focussing on providing more value in their day jobs.

People aren’t worried because others are worried, it’s because things are actually really bad at the moment. Although I’m not asking you to be worried. In fact, you don’t need to be worried if you prepare accordingly.

Actually most people on these forums have no reason to be worried – in the rush for the exits most people on these forums will already be in a life raft, paddling away from the sinking ship by the time Joe Blogs works out the ship is sinking and that he doesn’t even know where the life rafts are kept…

45 Lessons Life Taught Me

Written by Regina Brett, 90 years old, of The Plain Dealer, Cleveland, Ohio

“To celebrate growing older, I once wrote the 45 lessons life taught me. It is the most-requested column I’ve ever written. My odometer rolled over to 90 in August, so here is the column once more:

1. Life isn’t fair, but it’s still good.

2. When in doubt, just take the next small step.

3. Life is too short to waste time hating anyone.

4. Your job won’t take care of you when you are sick. Your friends and parents will. Stay in touch.

5. Pay off your credit cards every month.

6. You don’t have to win every argument. Agree to disagree.

7. Cry with someone. It’s more healing than crying alone.

8. It’s OK to get angry.

9. Save for retirement starting with your first paycheck.

10. When it comes to chocolate, resistance is futile.

11. Make peace with your past so it won’t screw up the present.

12. It’s OK to let your children see you cry.

13. Don’t compare your life to others. You have no idea what their journey is all about.

14. If a relationship has to be a secret, you shouldn’t be in it.

15. Everything can change in the blink of an eye. But don’t worry; God never blinks.

16. Take a deep breath. It calms the mind.

17. Get rid of anything that isn’t useful, beautiful or joyful.

18. Whatever doesn’t kill you really does make you stronger.

19. It’s never too late to have a happy childhood. But the second one is up to you and no one else.

20. When it comes to going after what you love in life, don’t take no for an answer.

21. Burn the candles, use the nice sheets, wear the fancy lingerie. Don’t save it for a special occasion. Today is special.

22. Over prepare, then go with the flow.

23. Be eccentric now. Don’t wait for old age to wear purple.

24. The most important sex organ is the brain.

25. No one is in charge of your happiness but you.

26. Frame every so-called disaster with these words ‘In five years, will this matter?’

27. Always choose life.

28. Forgive everyone everything.

29. What other people think of you is none of your business.

30. Time heals almost everything. Give time some time.

31. However good or bad a situation is, it will change.

32. Don’t take yourself so seriously. No one else does.

33. Believe in miracles.

34. God loves you because of who God is, not because of anything you did or didn’t do.

35. Don’t audit life. Show up and make the most of it now.

36. Growing old beats the alternative — dying young.

37. Your children get only one childhood.

38. All that truly matters in the end is that you loved.

39. Get outside every day. Miracles are waiting everywhere.

40. If we all threw our problems in a pile and saw everyone else’s, we’d grab ours back.

41. Envy is a waste of time. You already have all you need.

42. The best is yet to come.

43. No matter how you feel, get up, dress up and show up.

44. Yield.

45. Life isn’t tied with a bow, but it’s still a gift.

Marcus Padley’s Thoughts On The Stock Market

I thought I’d quote some humours titbits from Marcus Padley’s Stock Market for Dummies:

• Set and forget is a great excuse for doing nick all and trusting to luck.
• “The average stock market return is about 9 per cent plus dividends. ” No it’s not. The average annual real return from the stock market after inflation, tax, management fees, trails, commissions and the index fudge is close to zero before dividends. Not 9 per cent.
• Every industry sells transformation. Anyone in the finance industry selling anything other than transformation through long-term dedication, sacrifice, education, attrition, error and experience is lying.
• Basically all investment products sell certainty and the more certainty we are sold the more we buy. Certainty sells and the salesman who says “Definitely” earns more than one who says “Maybe”.
• Making money comes down to working out what the market doesn’t know, not what it knows. Poring over consensus PEs and yields of no value unless you can see the errors not the genius. Focus on inaccuracy, not accuracy.
• The amount of really informed inside trading that goes on is infinitesimal and the amount of uninformed, incorrect, ”you’re being manipulated” inside trading that goes on is huge. Inside tippers almost always have an agenda. Which is to get you to buy, not to make you money.
• Bottom line, you have to factor in once in a lifetime events, because they happen twice a week.
• A lot of private investors operate in the belief that the markets are some big Machiavellian conspiracy that is out to get them. The only thing that will get you is your own ignorance. Work on that before you start worrying about “The Man”. And let me tell you something that’ll hopefully give you a bit of a glow this weekend. It’s this. “The Man” doesn’t know his arse from his elbow either.

The Onus Is On The Learner To Listen

This post was taken from a comment I responded to on a forum I chat on in regards to life being more fruitful if it’s the learner who takes responsibility for learning rather than the teacher needing to be responsible for being a good communicator given that the majority of people in life are not great communicators yet still have valuable knowledge to share.

But at the same token I think it’s a bit rough for snoopy to say such things on a public forum where he’s trying to sell them.

Snoopy was blunt, but we live in a world where so often people are too politically correct when people really need someone to be blunt with them so they can actually make a difference in their own lives. Living in delusion doesn’t help anyone and the sooner someone comes back to reality the sooner they can get on with living in reality.

Through life I have learned at some point you need to accept that not everyone is great at communication. Actually 99% of people generally suck at it (myself included – I don’t have the patience and don’t tolerate fools).

Yet when it comes to learning so many people demand that their egos not be hurt through the process, but when those that are doing the teaching have little to gain from teaching (eg snoopy) you can’t expect them to invest large amounts of their time, energy and knowledge into delivering their lesson with perfect communication.

Therefore from my perspective the onus is on the learner to accept that perfect communication is not a skill that most have, therefore attentive listening that is capable of hearing the value in what is being said without feeling devalued by how it is being said is critical.

Anything short of this will mean that you’re left wandering through life unable to learn from the critical feedback that people offer.

In Praise of thy Self – The Fountainhead – Ayn Rand

This is a great passage from teh book teh Fountainhead about how serving oneself often the best way to serve others.

“Thousands of years ago, the first man discovered how to make fire.
He was probably burned at the stake he had taught his brothers to light.
He was considered an evildoer who had dealt with a demon mankind
dreaded. But thereafter men had fire to keep them warm, to cook their
food, to light their caves. He had left them a gift they had not
conceived and he had lifted darkness off the earth. Centuries later, the
first man invented the wheel. He was probably torn on the rack he had
taught his brothers to build. He was considered a transgressor who
ventured into forbidden territory. But thereafter, men could travel past
any horizon. He had left them a gift they had not conceived and he had
opened the roads of the world.

“That man, the unsubmissive and first, stands in the opening
chapter of every legend mankind has recorded about its beginning.
Prometheus was chained to a rock and torn by vultures — because he had
stolen the fire of the gods. Adam was condemned to suffer — because he
had eaten the fruit of the tree of knowledge. Whatever the legend,
somewhere in the shadows of its memory mankind knew that its glory began
with one and that that one paid for his courage.

“Throughout the centuries there were men who took first steps down
new roads armed with nothing but their own vision. Their goals
differed, but they all had this in common: that the step was first, the
road new, the vision unborrowed, and the response they received —
hatred. The great creators — the thinkers, the artists, the scientists,
the inventors — stood alone against the men of their time. Every great
new thought was opposed. Every great new invention was denounced. The
first motor was considered foolish. The airplane was considered
impossible. The power loom was considered vicious. Anesthesia was
considered sinful. But the men of unborrowed vision went ahead. They
fought, they suffered and they paid. But they won.

“No creator was prompted by a desire to serve his brothers, for
his brothers rejected the gift he offered and that gift destroyed the
slothful routine of their lives. His truth was his only motive. His own
truth, and his own work to achieve it in his own way. A symphony, a
book, an engine, a philosophy, an airplane or a building — that was his
goal and his life. Not those who heard, read, operated, believed, flew
or inhabited the thing he had created. The creation, not its users. The
creation, not the benefits others derived from it. The creation which
gave form to his truth. He held his truth above all things and against
all men.

“His vision, his strength, his courage came from his own spirit. A
man’s spirit, however, is his self. That entity which is his
consciousness. To think, to feel, to judge, to act are functions of the
ego.

“The creators were not selfless. It is the whole secret of their
power — that it was self-sufficient, self-motivated, self-generated. A
first cause, a fount of energy, a life force, a Prime Mover. The creator
served nothing and no one. He lived for himself.

“And only by living for himself was he able to achieve the things
which are the glory of mankind. Such is the nature of achievement.

“Man cannot survive except through his mind. He comes on earth
unarmed. His brain is his only weapon. Animals obtain food by force. Man
has no claws, no fangs, no horns, no great strength of muscle. He must
plant his food or hunt it. To plant, he needs a process of thought. To
hunt, he needs weapons, and to make weapons — a process of thought. From
this simplest necessity to the highest religious abstraction, from the
wheel to the skyscraper, everything we are and everything we have comes
from a single attribute of man — the function of his reasoning mind.

“But the mind is an attribute of the individual. There is no such
thing as a collective brain. There is no such thing as a collective
thought. An agreement reached by a group of men is only a compromise or
an average drawn upon many individual thoughts. It is a secondary
consequence. The primary act — the process of reason — must be performed
by each man alone. We can divide a meal among many men. We cannot
digest it in a collective stomach. No man can use his lungs to breathe
for another man. No man can use his brain to think for another. All the
functions of body and spirit are private. They cannot be shared or
transferred.

“We inherit the products of the thought of other men. We inherit
the wheel. We make a cart. The cart becomes an automobile. The
automobile becomes an airplane. But all through the process what we
receive from others is only the end product of their thinking. The
moving force is the creative faculty which takes this product as
material, uses it and originates the next step. This creative faculty
cannot be given or received, shared or borrowed. It belongs to single,
individual men. That which it creates is the property of the creator.
Men learn from one another. But all learning is only the exchange of
material. No man can give another the capacity to think. Yet that
capacity is our only means of survival.

“Nothing is given to man on earth. Everything he needs has to be
produced. And here man faces his basic alternative: he can survive in
only one of two ways — by the independent work of his own mind or as a
parasite fed by the minds of others. The creator originates. The
parasite borrows. The creator faces nature alone. The parasite faces
nature through an intermediary.

“The creator’s concern is the conquest of nature. The parasite’s
concern is the conquest of men.

“The creator lives for his work. He needs no other men. His
primary goal is within himself. The parasite lives second-hand. He needs
others. Others become his prime motive.

“The basic need of the creator is independence. The reasoning mind
cannot work under any form of compulsion. It cannot be curbed,
sacrificed or subordinated to any consideration whatsoever. It demands
total independence in function and in motive. To a creator, all
relations with men are secondary.

“The basic need of the second-hander is to secure his ties with
men in order to be fed. He places relations first. He declares that man
exists in order to serve others. He preaches altruism.

“Altruism is the doctrine which demands that man live for others
and place others above self.

“No man can live for another. He cannot share his spirit just as
he cannot share his body. But the second-hander has used altruism as a
weapon of exploitation and reversed the base of mankind’s moral
principles. Men have been taught every precept that destroys the
creator. Men have been taught dependence as a virtue.

“The man who attempts to live for others is a dependent. He is a
parasite in motive and makes parasites of those he serves. The
relationship produces nothing but mutual corruption. It is impossible in
concept. The nearest approach to it in reality — the man who lives to
serve others — is the slave. If physical slavery is repulsive, how much
more repulsive is the concept of servility of the spirit? The conquered
slave has a vestige of honor. He has the merit of having resisted and of
considering his condition evil. But the man who enslaves himself
voluntarily in the name of love is the basest of creatures. He degrades
the dignity of man and he degrades the conception of love. But this is
the essence of altruism.

“Men have been taught that the highest virtue is not to achieve,
but to give. Yet one cannot give that which has not been created.
Creation comes before distribution — or there will be nothing to
distribute. The need of the creator comes before the need of any
possible beneficiary. Yet we are taught to admire the second-hander who
dispenses gifts he has not produced above the man who made the gifts
possible. We praise an act of charity. We shrug at an act of
achievement.

“Men have been taught that their first concern is to relieve the
sufferings of others. But suffering is a disease. Should one come upon
it, one tries to give relief and assistance. To make that the highest
test of virtue is to make suffering the most important part of life.
Then man must wish to see others suffer — in order that he may be
virtuous. Such is the nature of altruism. The creator is not concerned
with disease, but with life. Yet the work of the creators has eliminated
one form of disease after another, in man’s body and spirit, and
brought more relief from suffering than any altruist could ever
conceive.

“Men have been taught that it is a virtue to agree with others.
But the creator is the man who disagrees. Men have been taught that it
is a virtue to swim with the current. But the creator is the man who
goes against the current. Men have been taught that it is a virtue to
stand together. But the creator is the man who stands alone.

“Men have been taught that the ego is the synonym of evil, and
selflessness the ideal of virtue. But the creator is the egotist in the
absolute sense, and the selfless man is the one who does not think,
feel, judge or act. These are functions of the self.

“Here the basic reversal is most deadly. The issue has been
perverted and man has been left no alternative — and no freedom. As
poles of good and evil, he was offered two conceptions: egotism and
altruism. Egotism was held to mean the sacrifice of others to self.
Altruism — the sacrifice of self to others. This tied man irrevocably to
other men and left him nothing but a choice of pain: his own pain borne
for the sake of others or pain inflicted upon others for the sake of
self. When it was added that man must find joy in self-immolation, the
trap was closed. Man was forced to accept masochism as his ideal — under
the threat that sadism was his only alternative. This was the greatest
fraud ever perpetrated on mankind.

“This was the device by which dependence and suffering were
perpetuated as fundamentals of life.

“The choice is not self-sacrifice or domination. The choice is
independence or dependence. The code of the creator or the code of the
second-hander. This is the basic issue. It rests upon the alternative of
life or death. The code of the creator is built on the needs of the
reasoning mind which allows man to survive. The code of the
second-hander is built on the needs of a mind incapable of survival. All
that which proceeds from man’s independent ego is good. All that which
proceeds from man’s dependence upon men is evil.

“The egotist is the absolute sense is not the man who sacrifices
others. He is the man who stands above the need of using others in any
manner. He does not function through them. He is not concerned with them
in any primary matter. Not in his aim, not in his motive, not in his
thinking, not in his desires, not in the source of his energy. He does
not exist for any other man — and he asks no other man to exist for him.
This is the only form of brotherhood and mutual respect possible
between men.

“Degrees of ability vary, but the basic principle remains the
same: the degree of a man’s independence, initiative and personal love
for his work determines his talent as a worker and his worth as a man.
Independence is the only gauge of human virtue and value. What a man is
and makes of himself; not what he has or hasn’t done for others. There
is no substitute for personal dignity. There is no standard of personal
dignity except independence.

“In all proper relationships there is no sacrifice of anyone to
anyone. An architect needs clients, but he does not subordinate his work
to their wishes. They need him, but they do not order a house just to
give him a commission. Men exchange their work by free, mutual consent
to mutual advantage when their personal interests agree and they both
desire the exchange. If they do not desire it, they are not forced to
deal with each other. They seek further. This is the only possible form
of relationship between equals. Anything else is a relation of slave to
master, or victim to executioner.

“No work is ever done collectively, by a majority decision. Every
creative job is achieved under the guidance of a single individual
thought. An architect requires a great many men to erect his building.
But he does not ask them to vote on his design. They work together by
free agreement and each is free in his proper function. An architect
uses steel, glass, concrete, produced by others. But the materials
remain just so much steel, glass and concrete until he touches them.
What he does with them is his individual product and his individual
property. This is the only pattern for proper co-operation among men.

“The first right on earth is the right of the ego. Man’s first
duty is to himself. His moral law is never to place his prime goal
within the persons of others. His moral obligation is to do what he
wishes, provided his wish does not depend primarily upon other
men. This includes the whole sphere of his creative faculty, his
thinking, his work. But it does not include the sphere of the gangster,
the altruist and the dictator.

“A man thinks and works alone. A man cannot rob, exploit or
rule—alone. Robbery, exploitation and ruling presuppose victims. They
imply dependence. They are the province of the second-hander.

“Rulers of men are not egotists. They create nothing. They exist
entirely through the persons of others. Their goal is in their subjects,
in the activity of enslaving. They are as dependent as the beggar, the
social worker and the bandit. The form of dependence does not matter.

“But men were taught to regard second-handers — tyrants, emperors,
dictators — as exponents of egotism. By this fraud they were made to
destroy the ego, themselves and others. The purpose of the fraud was to
destroy the creators. Or to harness them. Which is a synonym.

“From the beginning of history, the two antagonists have stood
face to face: the creator and the second-hander. When the first creator
invented the wheel, the first second-hander responded. He invented
altruism.

“The creator — denied, opposed, persecuted, exploited — went on,
moved forward and carried all humanity along on his energy. The
second-hander contributed nothing to the process except the impediments.
The contest has another name: the individual against the collective.

“The ‘common good’ of a collective — a race, a class, a state —
was the claim and justification of every tyranny ever established over
men. Every major horror of history was committed in the name of an
altruistic motive. Has any act of selfishness ever equaled the carnage
perpetrated by disciples of altruism? Does the fault lie in men’s
hypocrisy or in the nature of the principle? The most dreadful butchers
were the most sincere. They believed in the perfect society reached
through the guillotine and the firing squad. Nobody questioned their
right to murder since they were murdering for an altruistic purpose. It
was accepted that man must be sacrificed for other men. Actors change,
but the course of the tragedy remains the same. A humanitarian who
starts with declarations of love for mankind and ends with a sea of
blood. It goes on and will go on so long as men believe that an action
is good if it is unselfish. That permits the altruist to act and forces
his victims to bear it. The leaders of collectivist movements ask
nothing for themselves. But observe the results.

“The only good which men can do to one another and the only
statement of their proper relationship is — Hands off!

“Now observe the results of a society built on the principle of
individualism. This, our country. The noblest country in the history of
men. The country of greatest achievement, greatest prosperity, greatest
freedom. This country was not based on selfless service, sacrifice,
renunciation or any precept of altruism. It was based on a man’s right
to the pursuit of happiness. His own happiness. Not anyone else’s. A
private, personal, selfish motive. Look at the results. Look into your
own conscience.

“It is an ancient conflict. Men have come close to the truth, but
it was destroyed each time and one civilization fell after another.
Civilization is the progress toward a society of privacy. The savage’s
whole existence is public, ruled by the laws of his tribe. Civilization
is the process of setting man free from men.

“Now, in our age, collectivism, the rule of the second-hander and
second-rater, the ancient monster, has broken loose and is running
amuck. It has brought men to a level of intellectual indecency never
equaled on earth. It has reached a scale of horror without precedent. It
has poisoned every mind. It has swallowed most of Europe. It is
engulfing our country.

“I am an architect. I know what is to come by the principle on
which it is built. We are approaching a world in which I cannot permit
myself to live.

“Now you know why I dynamited Cortlandt.
“I designed Cortlandt. I gave it to you. I destroyed it.
“I destroyed it because I did not choose to let it exist. It
was a double monster. In form and in implication. I had to blast both.
The form was mutilated by two second-handers who assumed the right to
improve upon that which they had not made and could not equal. They were
permitted to do it by the general implication that the altruistic
purpose of the building superseded all rights and that I had no claim to
stand against it.
“I agreed to design Cortlandt for the purpose of seeing it
erected as I dedigned it and for no other reason. That was the price I
set for my work. I was not paid.
“I do not blame Peter Keating. He was helpless. He had a
contract with his employers. It was ignored. He had a promise that the
structure he offered would be built as designed. The promise was broken.
The love of a man for the integrity of his work and his right to
preserve it are now considered a vague intangible and an inessential.
You have heard the prosecutor say that. Why was the building disfigured?
For no reason. Such acts never have any reason, unless it’s the vanity
of some second-handers who feel they have a right to anyone’s property,
spiritual or material. Who permitted them to do it? No particular man
among the dozens in authority. No one cared to permit it or to stop it.
No one was responsible. No one can be held to account. Such is the
nature of all collective action.
“I did not receive the payment I asked. But the owners of
Cortlandt got what they needed from me. They wanted a scheme devised to
build a structure as cheaply as possible. They found no one else who
could do it to their satisfaction. I could and did. They took the
benefit of my work and made me contribute it as a gift. But I am not an
altruist. I do not contribute gifts of this nature.
“It is said that I have destroyed the home of the destitute. It
is forgotten that but for me the destitute could not have had this
particular home. Those who were concerned with the poor had to come to
me, who have never been concerned, in order to help the poor. It is
believed that the poverty of the future tenants gave them the right to
my work. That their need constituted a claim on my life. That it was my
duty to contribute anything demanded of me. This is the second-hander’s
credo now swallowing the world.
…

“I came here to say that I do not recognize anyone’s right to one
minute of my life. Nor to any part of my energy. Nor to any achievement
of mine. No matter who makes the claim, how large their number or how
great their need.

“I wished to come here and say that I am a man who does not exist
for others.

“It had to be said. The world is perishing from an orgy of
self-sacrificing.

“I wished to come here and say that the integrity of a man’s
creative work is of greater importance than any charitable endeavor.
Those of you who do not understand this are the men who’re destroying
the world.

“I wished to come here and state my terms. I do not care to exist
on any others.

“I recognize no obligations toward men except one: to respect
their freedom and to take no part in a slave society.

Business and Life Mission Statement

To effectively and sustainably maximise the value I offer to those whom I serve with both integrity and consideration for first serving our society and our customers, then myself.