The sad story of American Home Mortgage

Last week, I lost $14,000 in the stock market. I didn’t do anything wrong—it was just a bad few days. Still, $14,000…. I pick up pennies from the sidewalk. If someone gave me $14,000 to actually spend, I would be stumped.

I gain and lose money all the time in the stock market (I surely lost several thousand more today), but I don’t normally track my investments. I simply look at my monthly statements, groan or smile, and file them away.

My investment style is a combination of whatever looks good at a particular time (I buy but seldom sell), and my desire to protect Peggy from volatility. When we got into the market, she worried about how I would react to losing money, but I soon realized that she was more grieved by it than I. She interpreted every up as a fluke and every down as the start of Great Depression II. I accepted both as normal, and held to the belief that, over time, the market would go up more than it went down. The worst down we saw was 40%, and that was okay. It wasn’t something to sneeze at, but it wasn’t tragic either.

My first thought upon investing in stocks was to buy low and sell high. Everyone thinks that, only it’s harder than it looks—a bit liking throwing rocks at darting night birds. That’s why I mostly stopped selling, that and the tax liability.

Over the years, I felt like I should study investing more, but the subject didn’t interest me so I kept putting it off in favor of work that I could stand back and look at. Things like remodeling projects. In the last month, I’ve been making up for lost time. The main thing I’ve learned is that even knowledgeable investors have trouble making a significant amount of money in the market (although losing a significant amount is easy enough). Finding a way to beat the market is like finding a cure for the common cold. If scientists can cure a rare cancer, surely they can cure a common cold, or so it would seem, but after decades of work and millions of dollars, colds remain defiant. This gives my market studies a dismal air because, there being no one to tell me what will work, I might do really well, or….

The impetus to today’s sell-off was the fall of American Home Mortgage Corporation. This evening, I saw a graph of its demise that was updated every five minutes throughout the day. A year ago, AHM was selling for $36 a share. Today, it opened at $10.47. At 2:00, it was still at $10.47. By 3:00, it was $1.14. Picture that graph. First, a long horizontal line. Then a sharply descending vertical line. Then a slightly wobbly horizontal line. Then nothing. Like a heart monitor on a dying man.

Imagine that you woke up this morning in Houston or Milwaukee, and went to your job at AHM expecting an ordinary day, and then top management announced to Wall Street that bankruptcy was looming. Bang! By mid-afternoon you’re out of your job and possibly your savings. That’s drama. I once heard about an economist who was so moved by graphs that he sometimes cried. I can see that now, and it makes studying the market a lot more interesting.

The whys of organizing

I’ve spent the week organizing, or rather reorganizing, our finances and file cabinets. One of the traits Peggy and I share is that we are born organizers. The difference is that I organize everything—socks, tools, pantry shelves, even the kitchen junk drawer, whereas she is a selective organizer. She’s content to let things overflow in her purse, desk, and closet; but her checkbook is an accountant’s envy, and her button collection is displayed so symmetrically that a flea couldn’t crawl through the margin of error. I stop short of such perfection, though I still qualify as neurotic by most standards, my garage being tidier than other people’s living rooms.

Well, anyway, I organized this week. It was such fun that I had to force myself to go to bed at night. Organizing is, of course, an attempt to control reality—to make it safer, tidier, more predictable. The problem is that reality is inherently dangerous, messy, and unknowable. The harder I try to tame it, the more aware I become of its dangers, and the greater my need to eliminate those dangers.

The most frightened man I ever knew carried a .45 everywhere, even into the shower (he put it in a baggie). I visited him once. He had a yard alarm, and every time a squirrel walked by, that alarm would go off, and my friend would run to the window with his .45. So it is that prudent watchfulness can grow into full-blown paranoia. On the other hand, the world really is a dangerous place, and it makes sense to try to avoid the most likely dangers.

The trick here, as in all things I suppose, is balance. But where is the fulcrum? I don’t see it. Do you see it?

The whys of organizing

I’ve spent the week organizing, or rather reorganizing, our finances and file cabinets. One of the traits Peggy and I share is that we are born organizers. The difference is that I organize everything—socks, tools, pantry shelves, even the kitchen junk drawer, whereas she is a selective organizer. She’s content to let things overflow in her purse, desk, and closet; but her checkbook is an accountant’s envy, and her button collection is displayed so symmetrically that a flea couldn’t crawl through the margin of error. I stop short of such perfection, though I still qualify as neurotic by most standards, my garage being tidier than other people’s living rooms.

Well, anyway, I organized this week. It was such fun that I had to force myself to go to bed at night. Organizing is, of course, an attempt to control reality—to make it safer, tidier, more predictable. The problem is that reality is inherently dangerous, messy, and unknowable. The harder I try to tame it, the more aware I become of its dangers, and the greater my need to eliminate those dangers.

The most frightened man I ever knew carried a .45 everywhere, even into the shower (he put it in a baggie). I visited him once. He had a yard alarm, and every time a squirrel walked by, that alarm would go off, and my friend would run to the window with his .45. So it is that prudent watchfulness can grow into full-blown paranoia. On the other hand, the world really is a dangerous place, and it makes sense to try to avoid the most likely dangers.

The trick here, as in all things I suppose, is balance. But where is the fulcrum? I don’t see it. Do you see it?

Alan Wheelis and the absence of meaning

On June 16th, I checked out a library book by the psychoanalyst Allen Wheelis. I had never heard of him, but I always peruse the new book section, and The Way We Are intrigued me. I finished my second reading this morning, and looked the author up on the net. He died the day I got his book.

“There are two essential categories: that unchanging backdrop, the raw nature of existence, unadorned, unmediated, overwhelming us with dread, the way things are; and that changing succession of stage sets we put in front of that backdrop, blocking it from view, the schemes of things, the systems of meanings within which we live. The backdrop is a constant, too awful and too fearful to be endured; the sets change over the course of history, though they may seem fixed over the course of a lifetime.”

But what of those who can no longer believe in the sets?

“Do you know? Do you feel it, this losing of grip? The received interpretations no longer work, don’t fit, don’t take hold…

“Some people don’t hear the screaming; the old fictions still work. Some hear it keenly: The chalk has worn down, the fingernail drags across an endless blackboard, the sky is empty.”

What is there for the latter?

“When the ruling scheme of things comes to seem untrue or unimportant, one’s efforts within it become meaningless. One’s whole life becomes meaningless…. One seeks distraction…”

He sought distraction through women.

“…I remind myself that my papier-mΓ’chΓ© angel will turn into a witch or a drab. Yet this passion for a falsified other may be the only thing in life really worthwhile.”

But why not improvise a meaning?

“Free to choose how to live, the way we choose is meaningless; living in the certainty of meaning, we live a life that is imposed.”

An improvised purpose is just that—improvised, shot on the fly, made with limited—and possibly inaccurate—knowledge. The shooter can neither see his target nor know the nature of his target. I very much doubt that we are even able to think outside of the scheme of things, because we are the products of that scheme; we are contained within it. Even when we reject it, we reject it from within, using its terminology, its images.

When people explain to me their core beliefs, the thoughts that keep them going, that make their lives worthwhile, I can scarcely take them seriously. Still others have nothing to explain because they don’t feel compelled to look for an explanation. I am likewise challenged to take them seriously. I can flatter myself about why I am different (“I am more intellectually courageous,” or “I possess greater depth”), yet I would trade places if I could. I neither take comfort in religion, nor acknowledge human authority. The most I can ever know is but a guess. I am limited by my senses, my intelligence, and my culture.

I think of my species as I think of my dogs. Bonnie is smart, Baxter not so smart; yet even Bonnie couldn’t master long division. The most brilliant dog that ever lived—the Einstein of dogs—could not have mastered long division. My race is likewise limited. Some of us know things that astound the rest, but all of us together know very little in proportion to the totality of knowledge, and we probably lack the capacity to understand many things. Like dogs, our intellectual ceiling is not only low, we are too unintelligent to know how low it is. Or so I suspect.