Politico reported that Treasury and Federal Reserve officials were monitoring the situation closely, prepared to take extraordinary action, if needed, to save the U.S. economy from free fall.
.. Pharmaceutical companies and private prisons saw their values rise, presumably rooted in a belief that President Trump will abandon efforts to rein them in. Gun stocks fell—a sign that Americans no longer fear a gun-control advocate in the White House.
.. Or, as John Maynard Keynes wrote, “We devote our intelligences to anticipating what average opinion expects the average opinion to be. And there are some, I believe, who practice the fourth, fifth and higher degrees.”
.. Trump has attacked every one of these foundations. How much should you pay for Apple stock, say, if we have to worry about the dollar plummeting in value and the President declaring a trade war on China, which is both Apple’s chief supplier and its fastest-growing market? There is no financial model, right now, for that many levels of structural uncertainty.
.. Markets are designed to make relatively minor adjustments on a fundamentally sound base. They never perform well when the base itself is under assault, as it was during the financial crisis of 2008.
.. Donald Trump’s proposed policies are, in this technical sense, toxic.
.. The repeal of Obamacare, alone, would force many people to forgo their riskier, entrepreneurial ambitions for the safety of a job with a health plan. Curtailing immigration will redirect the world’s most ambitious citizens elsewhere. A trade war with Mexico and China would be damaging in ways that are hard to fathom or measure. Trump’s tax plan will turn America’s serious but manageable debt burden into a crisis weighing on future generations.
The Benefits of Getting Comfortable With Uncertainty
“My experience suggests,” Noesner told Holmes, “that in the overwhelming majority of these cases, people are confused and ambivalent. Part of them wants to die, part of them wants to live. Part of them wants to surrender, part of them doesn’t want to surrender.” And good negotiators, Noesner says, are “people who can dwell fairly effectively in the areas of gray, in the uncertainties and ambiguities of life.”
.. Noesner thinks Koresh was of two minds about surrendering, and Holmes suggests that if the FBI had been more cognizant of that, it might not have rushed to attack the compound.
.. I think comes from [the social psychologist] Travis Proulx, that there is a sort of unified theory of uncertainty that can explain all kinds of different things—willpower depletion, the way people tend to defend their beliefs when they’re thinking about death, all these things.
.. his construct is the need for closure, which is our need for definite answers over confusion and ambiguity.
.. We need to establish order after experiencing disorder, and yes, it’s driven by the need for closure.
.. There was a Nazi psychologist who was saying—this is Erik Jaentsch in 1938—he was saying a healthy personality is characterized by certainty and order and an unhealthy personality is characterized by a tolerance for ambiguity. Extremism of any kind is characterized by a very high need for closure and a distaste for ambiguity.
.. After the war there was a psychologist, Else Frenkel-Brunswik, and she basically reversed Jaentsch. She suggested that actually it’s the intolerance for ambiguity that characterizes the unhealthy mind.
.. There has been some suggestion that there are certain professions where you have to deal with ambiguity under a high degree of stress and one of them is negotiation. There’s a lot of literature that says business negotiations require dealing with ambiguity under pressure, which is going to naturally raise everyone’s need for closure. So Kruglanski says, look, one way to combat this is just hire people who are low in need for closure.
.. If I can put my past into a story, then [I feel like] I was more in control of it than maybe I was. And also if it’s a story than [I think] I can predict where it’s going more than I can. I think that’s a very comforting idea, to be able to say, “I know where I’m going,”
.. “The arc of the moral universe is long, but it bends towards justice.” Are you sure? I think part of that neatening of the past is about control and the comfort of being able to predict where you’re going.
.. fiction lowers people’s need for closure, and thinking about multicultural experiences that you’ve had lowers people’s need for closure.
How a professor of finance seeks to outperform the market
In his view, it is difficult to have an edge in an environment of certainty. For companies “with profit-making histories and a well-established business model in a mature market,” it’s easy to build valuation models – but this ease also means many more investors are in the hunt, making it hard to find true bargains before they are captured by others.