Friday, October 05, 2007

Models We Build and Use to Interact with our Enviroment.

Reprinted from June of 2006. I apologize, but of the three essays I've written in the last two weeks, they were too unfocused to publish.

A rather long title, and a concept that is almost transparent unless you look for it. Lets start with an example or two.

Clapping your hands keeps the elephants away. Its a valid model as long as no elephants show up.

A rabbit foot is lucky to hold. Also a valid model unless you are having a bad run of luck.

Stocks will always go up and we will get rich. Valid but more like a wish.

Gold is where to put your cash. Valid but arguable.

Mother-in-laws are good cooks. Arguable, but it is your world that you are viewing.

Real estate is a good investment. If it works, you will keep on doing it.

Now when you build your model that you use to interact with the outside world, it might include views on gun control, abortion, the environment, politics, religion and what ever.

In our thinking, (or lack of) each of us is unique. It is from this perspective that we are trying to live out our existence comfortably with the least amount of excess effort.

Some of us, because of the models we use, are becoming more aware of problems that may or may not be of concern anyone else.

Right now, the financial world (to me) seems poised to fall off of a cliff. The models and my perspective suggest that. But just as mine suggest that, another person's model may suggest a different perspective. The one thing that I can guarantee, is that every perspective will differ, some more than others.

Right now we are at a point in time where some of these models are starting to fail. For example, "Real estate is a good investment." This model worked for years, and now it doesn't sound so enticing.

There are two reasons for failure, the model has stayed the same and the environment has changed, or an elephant has appeared and hand clapping doesn't seem to validate the model. If your thinking has failed to recognize the change or your thinking has always been out of whack then the model was never really tested.

What really needs to be realized, what ever model you use, your goals are probably the same, to survive and exist comfortably. The way you go about it can be quite different than everyone else.

We may, or may not be, aware of the present possible failure of our model in the real world. This is just what happened in 1929. People were not stupid, they knew how to "turn a trick," the trouble was the game changed and their model fell apart

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