Welcome to another edition of the Mueller Report!
It’s amazing how time flies when you are busy! That’s my excuse for not getting the newsletter out last week at least.
We just finished a grand trip across country from NJ to MI to IN to MO to KS to CO and a few states in between. It was over two thousand miles in the car with five young children. Our travel days usually ranged from a 2 out of 10 to an 8 out of ten depending on how many children were sleeping.
But we got through it - that’s how children learn to be good travelers too. Maybe it is wisdom, maybe it is unconscious masochism, but we do not entertain our children with screens of any kind while we travel - even when we are 10+ hours on the road.
If traveling weren’t enough, we arrived at The Abbey a few days ago and have jumped in to running it ourselves as our current manager has been transitioning out over the last couple months. Describing jumping into running the place after traveling for a week with the kids deserves its own newsletter.
Before sharing some excerpts from Tocqueville, let me comment on the wild volatility of crypto-currencies over the past two weeks.
Crypto-currencies
I wrote two weeks ago:
One more quick note I want to make here about avoiding FOMO is that making decisions out of a fear of missing out tends to distort our thinking. We rush to jump in before it is too late. We think more about the potential upside than the potential downside, and we don’t understand what we are doing as well as we should.
As well as:
Buying tech stocks in the middle of the dotcom bubble was a bad idea and many people lost a lot of money. But tech was not a bad idea. Nor would investing money in the years after the bubble burst in tech companies, especially FANG (Facebook, Apple, Netflix, Google), have been a bad move.
Not to say I told you so (if I had really known, I would have sold just before writing this last week), but let me tell you why it was an especially bad time to rush into crypto currency when I wrote about FOMO two weeks ago:
Prices two weeks ago when I sent the newsletter:
(1 Bitcoin = $50,244; 1 Ethereum = $3,800; 1 Monero = $395 ; 1 dogecoin = $0.53)
Prices trough:
(1 Bitcoin = $33,800; 1 Ethereum = $1,730 ; 1 Monero = $177 ; 1 dogecoin = $0.27)
Prices midday Tuesday (5/25) were:
(1 Bitcoin = $38,000; 1 Ethereum = $2,585 ; 1 Monero = $244 ; 1 dogecoin = $0.34)
Prices late Saturday (5/29) were:
(1 Bitcoin = $34,500; 1 Ethereum = $2,347 ; 1 Monero = $242.3 ; 1 dogecoin = $0.27)
If you are “long” on crypto, that means you want to hold it for a long time and expect it to rise in value over time, even with a lot of volatility.
If you are “short” on crypto, you think the price will fall and you want to sell what you have.
Most crypto currencies are much cheaper than their peaks (most are down 35% - 70%), which means it is a better time to buy some if you are “long.” But as I said, the risk and volatility is high. It’s certainly possible some of these currencies could fall another 50%, some maybe more. I am “long” on crypto currencies in general and cautiously “long” on Bitcoin, Bitcoin Cash, Ethereum, Litecoin, and Monero.
There are a ton of unknowns regarding how these currencies are used and whether demand for them will continue to grow. The declines of the past month have been driven in large part by government hostility (especially in China) and some public push-back on the energy usage and workability of bitcoin in particular (I think Elon Musk is the biggest individual affecting public perception about bitcoin at this point).
I think that demand will continue to grow and that over time cryptocurrencies will represent a compelling, though riskier, alternative to storing value than putting money in a savings account at a bank or in a CD - and maybe even a reasonable alternative to stocks and real estate, at least in a diversified portfolio.
Tocqueville’s Democracy in America
I wish I had more time to curate and comment on these quotes - maybe I will in the future. But perfection is often the enemy of the good. So without further adieu, here are some fascinating quotes I came across as I read sections of Tocqueville’s great work for a conference about a month ago.
Perhaps the most intriguing were these comments about the body politic and despotism:
But sometimes, in the life of peoples, a moment occurs when ancient customs are changed, mores destroyed, beliefs shaken, the prestige of memories has vanished, yet when enlightenment has remained incomplete and political rights poorly guaranteed or limited. then men no longer locate it either in the soil, which in their eyes has become an inanimate land, or in the customs of their ancestors, which they have been taught to regard as a burden; or in religion, which they doubt; or in the laws, which they do not make, or in the legislator, whom they fear and scorn. So they see it nowhere, not under its own features any more than under any other, and they withdraw into a narrow and unenlightened egoism. These men escape prejudices without recognizing the empire of reason; they have neither the instinctive patriotism of monarchy, nor the thoughtful patriotism of the republic; but they have stopped between the two, in the middle of confusion and misery.
What is to be done in such a state? Go back.
I would pardon [despotism] for tormenting men if it did not corrupt them. Despotism creates in the soul of those who are subjected to it a blind passion for tranquillity, a kind of depraved taste for obedience, a sort of inconceivable self-contempt that ends up making them indifferent to their interests and enemies of their own rights. pg. 386
The idea of rights is nothing more than the idea of virtue introduced into the political world.
There are no great men without virtue; without respect for rights, there is no great people. pg. 389
On religion:
So men have an immense interest in forming very fixed ideas about God, their soul, their general duties toward their creator and toward their fellows; for doubt about these first points would leave all their actions to chance and would condemn them in a way to disorder and impotence. (pg. 743)
General ideas relative to God and to human nature are, therefore, among all ideas, those most suitable to remove from the habitual action of individual reason, and for which there is the most to gain and the least to lose by recognizing an authority.”
…it must be recognized that, if religion does not save men in the other world, it is at least very useful to their happiness and to their grandeur in this one. This is above all true of men who live in free countries. pg. 744
Marx would beg to differ. He famously said that religion was the “opiate of the masses.”
I am led to think that, if he does not have faith, [a man] must serve, and, if he is free, he must believe. pg. 745
So religious peoples are naturally strong precisely in the places where democratic peoples are weak; this makes very clear how important it is for men to keep their religion while becoming equal. pg. 746
Religions will not succeed in turning men away from love of riches; but they can still persuade them to enrich themselves only by honest means. pg. 751
…it is when religion is not speaking about liberty that it best teaches the Americans the art of being free. pg. 472
In England and Scotland during the Enlightenment (especially the 1600s), there was concern about the problem of fidelity for the atheist. Could you trust the promises of someone who didn’t believe in God? Locke and others wrote about this and, for the most part, concluded that you couldn’t.
That’s it for this week (and last week). Thanks for reading! Talk to you next week.
Paul