A New Year's Message From The Trefz Family - December 2013
In late 2008, as the global financial markets were crashing and our family's real estate business came to a grinding halt, I started on an intensive educational journey to fill in the missing pieces of what had gone wrong not only in our personal finances but in the global economy.
That journey led me through the works that the finest minds had laid out over hundreds of years on the topics of money, global finance, macro-economics and the technical structure of markets, currencies and banking.
After hours of daily study for almost four years, I achieved a working technical understanding of the modern global financial system. My attention then turned to attempting to understand what causes movement in markets, such as what was experienced in the 2008-2009 crash. This, I realized was far more subjective and is closely related to the mood of the people that make up the market.
The saying goes, “Time Is Money”. All market movements are in reference to time. From computer algorithms used by high-speed traders to enter and exit trades in milliseconds, to the investing approach of Warren Buffet who invests beyond his lifetime, time clearly plays a central role in markets.
But, what is time? It turns out that time is a construct of the human mind that helps us organize our lives. Albert Einstein discovered that each person perceives time differently. Scientists have found a specific area of the brain that is responsible for our sense of time. Chemicals produced in the brain alter our sense of time.
This is why time can seemingly stand still when we are involved a traumatic event like a car accident. And, we can't forget the time-honored saying, “Time Flies When You're Having Fun”. Obsessing over the past causes a person to feel time moving slowly and thus can lead to feelings of boredom. The opposite is also true, worrying about the future causes us to feel that we cannot keep up and that time is moving far too quickly for our comfort.
The understanding of human beings' perception of time is key to understanding market movements. It is easy to see that when enough people are fearing the unknown future and panic, they make rash decisions and take drastic action which can cause wild swings in the markets. On the other hand, concern over the past has the tendency to cause stagnation in markets and lack of healthy risk taking and investment.
What does all this have to do with love? The next leg of my educational journey led me to gain a scientific understanding of how a person's decision making process is affected by their mindset and perceptions. Since market movements are caused by the decisions of people, it is important to understand what affects those all-important decisions.
Science has shown that our DNA is activated by our emotions. The two most basic emotions are love and fear. These create very different sine wave frequencies. Love produces a higher frequency, while fear produces a lower frequency. The higher frequency of love activates more DNA than the lower frequency of fear. The higher frequency of love allows us to use much more intelligence in making decisions, while the lower frequency of fear operates our basic fight or flight instincts.
What about greed? Clearly greed is a powerful market force. Greed is nothing more than the other side of the fear coin. Fear that we will not get what we need soon enough. Again, fear of running out of time.
These lessons go far beyond markets, as markets are simply a reflection of the aspirations and fears of the people.
I am very grateful to my family and especially my wife as she has passionately and patiently taken this journey with me. As we reflect on the year that has past and look forward to the New Year, we hold the thought that God loves all of us enough that He showed us that we do not need to fear time but rather can freely and abundantly enjoy what is given us.
The Trefz Family
Merry Christmas and Happy New Year!
Thoughts and Bites From Articles
Had a talk with our 7 year old son, Tristan, this morning about making decisions. He was a touch hazy on the concept so we went over some ideas to understand the importance of making decisions. Read more...
Scientists at Duke University did a study to determine how cocaine and marijuana can alter the perception of time. Read more...
The Federal Reserve has admitted on numerous occasions that the stimulus programs they are engaged in are not tested and are essentially an experiment. The tactics of the Fed are such that they operate strictly in the hard-edged Newtonian understanding of physics and expect such a response. This ignores the dramatic changes in the nature of money itself--from hard objects (gold, silver and paper) to quantum wave packets of energy and information moving at the speed of light through fiber-optic cable. Read more...
Albert Einstein discovered that each individual experiences time differently...this gives added meaning to the common saying, "take YOUR time". --LT
The greatest quantum physicists struggle to define what time is. If one worries about the future, time seems to go by so quickly that you cannot keep up. If one obsesses over the past, time has the feeling of dragging by painfully slowly. It is only by living in the present moment, neither struggling with the past nor worrying about the future and trusting to the creative intelligence beyond our brain that we find the perfect balance of time that was designed for us. --LT
Ego and fear go together. Generally, fear that the image we present of ourselves to others will not be taken seriously. The fear that our carefully crafted image may be seen through leads to acting cocky and aggressive to protect the image. Read more...
For non-judgement to make sense in the practical world, we need to understand that there will always be a disparity, to a greater or lesser extent, between a person's core motivation (heart) and their actions. If we are judging a person's heart based on how that person's actions appear, we will never be accurate. This is why it is important to let our heart guide when it comes to understanding another's core motivation. Read more...
...The difference between being raised in a deflationary environment vs. an inflationary one caused a significant difference in the perceptions of and attitudes toward the relationship between money and buying power. The argument could also be made that materialism was perceived very differently by the two generations. The parents saw materialism as the profligate spending of money on stuff, while the Boomers saw materialism as the hoarding of money. Read more...
...As the market is largely unbounded by physical restraints and instead operates in the realm of money and time, the potential to discover or create new dimensions is unlimited. Read more...
...Genetic engineering of plants takes place in a laboratory and generally involves adding a gene or several genes to a plant's genome. The actual process is usually carried out using a "gene gun" to fire a gold bullet covered with genetic material into a petri dish that contains the "callus", or the tissue of the plant to be modified. The first version of a gene gun was a Crossman air pistol that was modified for the task at Cornell University in the mid 1980s. Read more...
...The intent is that the cash given to the banks by the fed, in exchange for the assets bought by the fed, will be loaned out at attractive rates in order to spur economic growth. Instead, the majority of this new money gets trapped in the financial system propping up the prices of assets and commodities and very little of it actually makes it all the way down to the average person on the street. The reason for this is that when the economy is struggling there are few business people who feel like borrowing to grow their companies because they see a lack of demand. Also, after the financial crisis many people had damaged credit, which effectively shut out a large segment of the population from access to the new money. Read more...