Notes in times of quarantine #2

Source: Philadelphia Inquirer

I went yesterday to a blood drive held at St. Patrick’s Church in Rittenhouse Square. Out of all Philadelphia’s squares it’s probably the most beautiful one. Perhaps it’s the combination of old and new architectures, or the grand stone fountain in the middle that’s reminiscent of European towns. The place usually buzzes with people, drinking and laughing inside the many restaurants, bars and small shops huddled in between. This time however it was eerily quiet. The bright shops were closed. Chairs were put over tables, neon lights were off -the air itself was cold and grimy. I passed a few people on the way, careful to reach the widest boundary of the sidewalk and avoid looking into each other’s eyes.

At last I arrived to the church, or rather, the parish hall. The Philadelphia Youth Orchestra usually practices in the main room, which I’ve visited a few times. Their chrome instruments and golden bassoons thunder with epic, sparkling sounds. But that seems like ages ago. I don’t know the last time they practiced here.

Instead, the room’s been repurposed, like a field hospital, with about a dozen platforms scattered around and nurses walking around them. I am greeted by a nurse with a facemask, gloves and a temperature meter. They take my temperature, sign me in, lead me to a table to get my medical information and again take my temperature. I ask my nurse whether people have been donating blood in light of the current crisis. She says they have, and have been very grateful for the outpouring of public support. She’s bubbling with energy and kindly leads me through the process.

The drawing of blood voluntarily is a strangely ancient thing. Romans frequently “opened their veins” to commit suicide. Medieval doctors prescribed “purges” for all sorts of sicknesses. Aztecs pricked their ears with cactus spikes as a blood offering to their gods with the same nonchalance as we might eat cereal in the morning. Nowadays, blood is so common in movies and tv shows that it suffers from a comical tiredness.

As I watched the crimson liquid slowly flow through the tube, I had the vague feeling that I was giving a small, though not unsubstantial, part of my life away -if they drew too much, I could pass out and die. Of course, this was not going to happen, but the fact that people put themselves in these situations is a testament to the strangeness in which people can either hold on to their life, or give it away. A wise man once said that saints love life so much, that they’re willing to give it away for their faith. I still ponder what that means.

I walked back to my car as before, but with increased effort in keeping my stride straight, taking in deep breaths, sipping from an apple juice box. The city remained as silent and cold as before, and I hurried my way to the car in case a policeman were to ask of my whereabouts. I slipped out of downtown into the quiet security of my home. But I realize that that peace has been shattered for too many people in the world today. The war continues against the silent, invisible enemy that’s invaded our shores.

Notes in times of quarantine

Like many people in the world today, I’ve found new time for myself. Dark, grey skies and rain hang over Philadelphia, brooding uncertainty and tremor that mirrors the feelings of its population.

I’ve been reading Will Durant’s Civilizations: Caesar and Christ; admiring, disgusted, amused and elated by the lives of great people that’ve lived before us. With this knowledge comes the realization that we live in a vast universe of expansive and never-ending action. And within it all here I am with my puny agendas and dreams.

It’s humbling.

Through this humility are born kernels of thought that I wish to share here. One: that the modern world, broken in more ways than one, can be recouped by a silent revolution of Christian communities living in solidarity with everyone else. Two: we carry too much material baggage -both in the physical sense and in our psychological attachment to them. Three: that there is virtue and value in seeking to live a quiet life.

The first realization is partly inspired by a talk by Dr. Peterson (below) essentially saying that the world is a complicated place and if you want to change the world try starting by changing your habits, attending to your family’s needs and struggles, slowly growing outwards to your surrounding communities.

But it doesn’t stop there. Once the individual is put in order, he has the capacity to create a family that follows that order. Thus it’s not only one person acting in pursuit of virtue but two, then three, maybe four or more. The family can then grow together and form bonds with similar families, creating a local culture that can support itself and regenerate the culture along the way. I previously used the world solidarity because I don’t believe this change can be done in isolation from the rest of the culture, but rather in accompaniment with it. When yellow paint is poured over blue paint it changes the nature of the paint and becomes green. If the yellow paint had instead been poured in a separate bucket then both paints would never intermingle -societies will live apart and never learn from one another.

I also mentioned how we carry too much material attachment. There is much that I have to say about this, and will probably delve in deeper in another article but suffice to say that I believe our minds and hearts have been hijacked by the propaganda machine of modernism that abhors beauty and spews out ugliness. What we do, what we use, what we create I believe should be a reflection of our own selves. Because the human person is the most beautiful thing in the whole universe, and the product of our labor is a form of creation that makes the world a better place. It’s a curious thing to say in light of all that humanity has done to one another and to this planet. But I believe it’s true, because I’ve seen people do amazing things that bring harmony and greater sense of beauty to a place than nature was able to do. Does this mean that nature should be razed in favor of human inventions? No, I mean that nature and people can co-create together, with people adding to nature when they consider it prudent and wise.

I believe the third point I wish to note follows from the previous. Once we have a proper understanding of nature and our place in it, we can seek a place to make of it our own. One of the greatest Roman legends concerns Cincinnatus, a statesman who became dictator to defend Rome against its enemies, then, in the face of all the people applauding him and wishing to make him king, he retired from public life to live out his days in his farm.

There’s value in living in a city, where incomes are high, events and festivities are commonplace, and where the individual is most free. But there’s also value in “flyover country.” Land that is put apart from the business of urban life. The ruggedness and isolation (two things unfamiliar us moderns) force people to work together to live and prosper. In precisely these conditions the spirit thrives, innovation is encouraged, and culture is established.

There are subtleties and caveats to everything I’ve talked about here. One must find the, “middle way,” that Aristotle described, not indulge in fancy ideals. If you’re interested in diving more into the warm oceans of thought i’m swimming in these days, check out the resources below. I’ll pray, dear reader, that you and your families may be blessed and kept healthy.

The Nicomachean Ethics by Aristotle: https://www.amazon.com/Aristotles-Nicomachean-Ethics-Aristotle/dp/0226026752

Caesar and Christ by Will Durant: https://www.amazon.com/Caesar-Christ-Civilization-Christianity-D/dp/1567310141

Why Liberalism Failed by Patrick J Deneen: https://www.amazon.com/Why-Liberalism-Failed-Politics-Culture/dp/0300223447

What are the origins of mass?

Came upon this excellent lecture by Jim Baggot, english physicist, philosopher and science writer on what our current understanding of mass is. Rarely does one find someone who speaks lucidly about a complex subject such as particle physics, intermixed with humor and softened by the palpable awe which Jim has towards the science.

I will leave you, dear reader, to be the judge.

We need more scientists who philosophize over their research, and ascribe meaning and wonder to the facts of life.

How to Write a Sonnet

The Picnic, by Thomas Cole

A sonnet (derived from the Italian word for “little song”) is a classic form of poetry that’s been used for a long time to convey the sentiments of the heart. It’s structure is simple enough to follow, yet its impact on the reader can be profound and long-lasting. Writing one isn’t too hard as long as you follow the convention – and it’s sure to knock the socks off to whomever you write it to. I’d like to teach you how to write a sonnet by writing one myself, in varying difficulty levels, based on the book, “How to Write Classical Poetry” by the Society of Classical Poets. I won’t be too concerned on making a masterpiece of literature so much as enable you to craft a decent sonnet that you won’t be embarrassed to show off to your friend or loved one.

Before starting to write, you must have something to write about. This seems common sense until you realize that it isn’t that common. In any case, a sonnet can be about anything. It can take on the lofty heights of the cosmos and the deep meanings of our existence, or it can descend into the ordinary, comical or even vulgarity of daily life. Whatever it is you decide to write on, make sure it’s specific. Reflect on this image for a while, see yourself facing the person, situation or object. In my case, I’ll focus on a story from the New Testament, where Peter, the leader of the Apostles is jailed for announcing the Gospel and is due to be executed until an angel visits him and swings all the jail’s doors open, allowing him to escape (Acts 12:3-19). It’s a story that’s had a rich history of interpretation in art and theology, and provides us with some fascinating imagery to contemplate on.

Liberacion de San Pedro, Bartolome Estaban Murillo

Beginner Level: A sonnet is traditionally 14 lines long, where each line conveys a single thought, or image. For this level, we won’t be rhyming. Instead, we’ll focus on jutting down our ideas on the basic form of the sonnet. Try to limit each line to 10-13 words. Below is my first attempt.

Beneath the earth, in Hades’ prison, Peter dwelt in chains.
With guards beside him, and at the door, his sentence for death was sealed.
Outside, with candles and clasped hands, the faithful prayed all throughout the night.
Yet Peter slept in peace, knowing it was all in the Father’s hands.
And so it was, when someone clothed in light appeared to him and said,
“Get up quickly.” The iron chains fell in dismay, yet the guards slept.
Heart racing, he ran up the stairs, with the angel leading the way,
Out of the devil’s den, he reached the surface, the angel went away.
Peter breathed the cool night’s air and gazed at the smiling moon.
He ran again to his friend’s house and knocked at the door,
Everyone was overjoyed and the faithful came together in one accord.
The princes of the world were astounded, Herod’s plans were foiled,
The spirit of God multiplied through the faith of humble men.

Intermediate Level: If you’ve made it this far, great! It’s important not get bogged down with creating the perfect line and simply to get things down on paper (or HTML in this case). The second level can get tricky. Classical poetry is distinctive in its rhyming patterns. Everyone loves songs that rhymes -from Eminem to Tailor Swift, artists recognize the power and catchiness of rhyming. There are a number of ways we can make our poem rhyme. We can use an ABAB scheme (where the first and third lines rhyme, and the second with the fourth and so on) or we can use more exotic schemes like AABBAABBA. You can choose to do what sounds good for you. In my case, I’ll use Shakespeare’s rhyming scheme that follow something like this: ABAB CDCD EFEF GG. Notice that there’s a break in the last two lines, you can think of those as the “punchline.” If you have trouble finding words that rhyme, which you’ll most certainly will as do I, then you can go to this great site I like to use: Rhymezone. Below is my second attempt, this time with a rhyming scheme.

Beneath the earth, in Hades’ prison, Peter lay bounded, cruelly chained,
With guards beside him, and at the door, he awaited the sword,
That claimed James, Stephen and any apostle that remained.
Yet the faithful prayed for his deliverance by the risen Word.

Peter slept in peace, in his Father’s hands he felt concealed.
“Get up quickly!” an angel suddenly declared to him,
The iron chains fell at the power now revealed,
Heart racing, Peter ran up the stairs, following the seraphim,

He reached the surface, the angel went away.
Peter, cloaked in darkness voiced thanks to the starred sky,
He ran to a friend’s house where he could safely stay,
The faithful cried, “the Lord is with us, who could deny?”

The princes of the world were astounded, Herod’s plans defeated,
Another victory was counted, to th’ eternal king now seated.

Advanced level: Iambic pentameter coming soon!

Note on the 2020 Coronavirus stock market drop

It’s safe to say no one saw a drop this big coming. Coming off an all-time high just a few weeks ago, the market has had the lowest percentage drop since 2008. The speed at which this market collapsed is unprecedented. This drop was facilitated by high-frequency trading algorithms running at speeds that sometimes defy common sense -if the drop were coming, one would have had to be plugged in, watching the tell-tale signs of the incoming storm, like seismographs registering earthquakes before a volcanic eruption.

The average investor has no protection from drops like these except in diversification. Yet, little protection is afforded when the entire market drops in unison. Such hive-mind behavior in the market mirrors the single-mindedness of the programs that run them, as well as their human counterparts.

So how can an investor profit off a drop like this? How can the adage, “there’s always a bull market somewhere” survive when the market itself is in bear territory? What’s required is an extraordinarily agile investor -one that has his ear on the ground, listening to the movement of money, thinking critically about how the market responds and reacts and where the places of greatest return on investment can lie. If there’s a war, the intelligent investor, moral questions aside, owns the bullets and the bandages.

In the case of the coronavirus, there are the companies that manufacture face masks, detergents, vaccines, etc. The intelligent investor would note which companies have acquired lucrative government contracts to perform cleanup, which do not have their supply chain exposed to epicenters of contagion. Ordinary things in ordinary times may suddenly acquire extraordinary value -the speed therefore in which an investor moves his positions require him to be attentive and agile, lest the rest of the market plays catch-up.

Case in point, while most of the stock market dropped, a few companies remained in positive territory, these include:
* IBIO Inc. (biotech)
* Altimmune (biotech)
* 3M (general purpose, facemasks)
* Clorox (cleaning products)
As of Feb 28th, 2020.

I am not going to do anything now. There’s not much to do other than to ride out the storm and maintain faith, as it were, that the US stock market will rise again and the economy will recover. However, I recognize that this will take time. I wonder though, if an intelligent investor as I’ve described previously, would have been shielded from the fallout, or perhaps even gained from it. I am not advocating for trading -that’s a pricing strategy which I do not follow. Rather, I wonder if a prudent intrinsic valuation of companies in context of the events that surround them could yield insights that more narrow-minded investors, or programs, have missed.

Intrinsic Valuation

The Banker and his Wife
Quentin Metsys, 1514

According to professor Damodaran, the intrinsic valuation of a business is the “expected cash flows on the asset over its lifetime and the uncertainty about receiving those cash flows.”

The professor calls this, “discounted cash flow valuation.” What’s something that cannot be analyzed with this model? Things that don’t generate cash flows – ie. a painting, a good book, anything whose value is depending on the beholder. There are two ways to come up with a discounted cash flow valuation:

  1. By looking at the expected cash flows and adjusting for risk across all possible scenarios and summing it up. All scenarios means all possible values for risk that the company might face depending on different scenarios. In other words, you are taking the cash flows and adjusting for different risks.
  2. The other scenario is by having a fixed risk and adjusting for cash flows. That is, take different cash flows across time and use the same risk premium.

These can be expressed as such:

Value of an asset =  ∑ E (CFn) / (1 + r )n

Value of an asset =  ∑ CE (CFn) / (1 + rfn

Where E * CF is Expected Cash Flow, r is Risk, CE is Certainty Equivalent Cash Flow and ris Risk Free Rate.

This has a lot of common sense. What is the value of a business that never returns a positive cash flow? zero. Likewise, the value of a business that returns a large cash flow, and conserves a small amount of risk, is likely to be very valuable. A company like Apple comes to mind.

Now, how can we go about valuing companies based on these principles? We can look at their financial statements, specifically at their assets and liabilities.

Assets include investments that the company has already made, and assets that the company hasn’t made yet (this represents the expected growth potential that the company will have in the future). Companies in different stages of growth will have differing levels of asset classes. For instance, P&G will have a lot of investments made, but perhaps won’t have as much growth potential as say, Tesla.

Liabilities represent how a business must fund its operations. It can do it by using its own money (equity), or taking a loan (debt).

 


 

Here’s where we face a fork in the road. There are two ways to value a business, either by valuing their equity, or by valuing the entire business. Simply put, equity valuation is concerned with the cash flow that is returned to its investors. In public markets, this would be dividends (though the professor shows that you can measure a company’s equity value without dividends via their potential, future dividend).

Valuing the entire business takes a broader view by looking at the equity value and the liability value for its lenders, taking them together and calling it, Cost of Capital. You then discount the cash flows to the business at the Cost of Capital and get the value of the entire business.

So we conclude with two ways to value a company. We can value directly the equity of the company and adjusting it for risk, or get the value of the company via the cost of capital and subtracting debt.

First steps in valuation

Valuing companies and taking a calculated risk by investing in them is the basis of a value investor. Although my knowledge in this area is sparse, I’ve found NYU professor, Aswath Damodaran to be enlightening, funny, and sane in his approach to valuation. I’ve posted a link to his website where you can find resources and videos from his Corporate Finance course. What he’s doing is outstanding: creating free content available to all from one of the foremost institutions in the world. Our accident in living in this century where information overflows and overwhelms is a happy blessing! I’ll be taking professor Damodaran’s class, and hopefully advance my knowledge of valuation so I can apply it to my own stock pickings.

Website: http://pages.stern.nyu.edu/~adamodar/

Valuation course: http://pages.stern.nyu.edu/~adamodar/

The more things change the more they stay the same

The title is a direct quote from the initial credits of the 2008 video game, Call of Duty Modern Warfare 2. No kidding. If my patient readers haven’t left the building already, I’d like to elucidate why I believe this rings particularly true with the younger crowds today when it comes to social media.

We, as a species, have been around for about 200,000 years. Agriculture started 10,000 years ago, the industrial revolution ~250 years ago and the first iPhone just over 12 years ago (now I feel dated).  Since then, Silicon Valley companies have hijacked our brains in a way never before possible, by creating algorithms and machine learning models that target our dopamine receptors in a very focused way. Just like the food we have available today, our bodies are not adapted to consume this kind of content. We drown in the good feelings it produces and keep asking for more.

And who doesn’t like that pleasuring vibration that comes from our phone every time somebody “likes” our picture? Who doesn’t enjoy the feeling of hitting “post” and appreciating it like a fresh batch of homemade cookies? The author of this post certainly did! What’s wrong with having our vanities praised in the presence of all to see? What’s so bad about clamoring for attention and obsessively coming back to your phone every 10 minutes to see how many more notifications of likes and comments are being made from your latest vacation trip photo album?

Like Icarus, we fly too high and get burned by the sun.

Now. I am an Econ major, I like to think of things in terms of supply and demand, opportunity cost, and the like. If you give me these sets of facts, my reaction to it would be, “If it’s so bad for people to stay on social media, where’s the incentive for people to get off of it?” The answer is quite complicated, and I haven’t fully understood this question. However, I would briefly like to sketch an answer from the perspective of relationships.

The incentive that social media provides is convenience. It’s easier to text someone than to call them, or even visit them. Some might even say it brings them closer to each other -which might very well true, but that’s not necessarily the experience of the majority of people, I’d wager. The side effect of the convenience social media provides is isolation.

Now that we don’t have to be close to one another, we can be all in our little holes, away from the awkward interactions, inconvenient conversations with smelly, vulgar, strange people. Away from one another, we lose touch of one another. And we drift further apart. The end result is millennials being the most socially isolated generation ever recorded, with the least amount of friends and suffering the highest percentage of mental disorders (according to a 2018 Intergenerational Foundation study).

I don’t think this is a secret among by colleagues.

Gathering from the almost 10 years of my personal experience in trying to create community form scratch, I think I have the answer to this plague, and I have boiled it down to a few key principles that I’ve seen in Church groups, college clubs, sports events, community service groups and countless other units.

The answer is coming up soon so stay tuned.

The Storm

This poem is inspired by the story of Jesus calming the storm present in the gospels (See Mark 4:38-40). There’s a wondrous beauty in how the creator of the world once again speaks to it, and creation obeys. Jesus’ humanity is present throughout all of this scene, and it’s humbling to think he had to endure the same discomforts we do when faced against the elements. Finally, I take to heart the tiny fishing boat as a metaphor for our own soul, and how it battles through the storms of life, with us (the disciples) frantically trying to hold it together. Meanwhile, Jesus is at the stern, asleep –always with us. Sometimes we just have to reach to him to witness His power over our lives.

 

Clap of thunder strikes, winds howl fierce in the dark,

Mountains of water rise, fall from on high and crash.

Swaying side-to-side is the tiny craft of rotting bark,

the fishing boat that carries my precious Lord,

his eleven friends all aboard,

and twelfth who gave him up to sword.

Peter’s curled up in the hull, immovable as stone,

Thomas cries up to heaven, having lost all hope,

Tired, Mathew reefs the main, cold to the bone

James and John descend to the stern,

Asleep on a cushion rested Jesus all alone,

“Master, don’t you care we will die?” they cry.

The word made flesh stirred and rose,

But the waves smash the craft

and throw the King on his back

to the dirty, flooding hull.

Three times he rises—now behold:

Exposed to the ocean’s spray,

The voice that spoke from the beginning

Calls out to the winds gently singing,

“Quiet! Be still!”

The ocean blushes, the winds are shamed,

All is still, being bows and is contained.

loving eyes that see through worlds,

turns to His friends and tenderly asks,

“Why are you terrified? Do you not yet have faith?”

“Lord,” Peter replies, half relived and half aghast,

“The winds were too strong, we would have died,

Why didn’t you quiet the storm before our toil,

When you heard us start to cry?

“My hour’s not yet come, don’t be afraid,

the debt of death is yet to be paid.”

Linear Time in an Eternal Mind

Rushing waters, marking time,

visible to all, yet mystery sublime.

What are the eons to Him Who Is?

What is a second for Him Who sees?

On and on time runs its course,

shattering all with mighty force.

Great kingdoms are reduced to dust,

Towers of pride evaporate with the gust.

Time flattens mountains, dries up oceans,

Blows up suns and ends all motions.

Star-dusted nights with millions,

Are merely a tiny, fragile pinion,

In His mind’s eye, which delights!

What is time but a sign of our smallness?

Who dares to understand its crystal flawlessness?

Beings of time we are, but not for long.

Eternity is waiting, so stay strong!

 

“The river of time” is a common way to think about the passage of time. We commonly think of things occurring linearly-one things lead to another, which leads to another, in a typical cause-and-effect fashion. Unfortunately a conundrum presents itself when we start asking about this linearity’s relationship with foreknowledge and destiny. A question I recently asked myself was how God, having the Christian attribute of omniscience, can have foreknowledge of our decisions? Wouldn’t that conflict with the orthodox premise that we all have free will?

Now, some strict materialist will say there is no such thing as free will, to which I’d reply, that your assumption is itself a manifestation of your free will in believing in such nonsense!

Back to my main point, if God already knows what each one of us will do, wouldn’t that suggest that we’re not really in control of our own actions, and hence, that we don’t have  free will?

I can’t put my finger on who exactly came up with the idea first, but having read Boethius’ The Consolation of Philosophy and St. Augustine’s Confessions, it seems to me that these two extraordinary men arrived at the same conclusion independently from one another: that time (past, present, future) is seen in an eternal present by God, and His actual knowing of what things are to come do not actually interfere with our capacity for free will. Let’s re-trace the steps to see how this can be so.

God, if we are to assume he’s the highest possibility of being, must be eternal. If He (please note that the pronoun is not of concern here) were not, then God would be changeable, finite, and therefore not God. So He must be eternal. As you could probably imagine, an infinite being will see a time-anchored world differently than we’d see ourselves. An ant might see a mountain before it, but to us it’s merely a small stone. Imagine how much more God sees if he has infinite omniscience!

Where were you when I founded the earth?
    Tell me, if you have understanding.
Who determined its size? Surely you know?
    Who stretched out the measuring line for it?
Into what were its pedestals sunk,
    and who laid its cornerstone,
While the morning stars sang together
    and all the sons of God shouted for joy?

Since God is eternal, He sees past and future as an eternal present. God knows what we’ll do, he knows what our decisions will be, not because he actively intervenes in it, but because he sees us taking those actions across the spectrum of time (future and past), all in an immediate present. For example, let’s say I decide on a spur of the moment that I would like to go to the pool. God already knew that. God knew I was going to make that decision, that I was going to the pool, and that I would make myself dinner after. What if I decided instead, however, that I was not going to to the pool. God would still have known that. It’s futile to imagine a life where God doesn’t know what each person’s decisions will be. Even if we “rebel” against God and insist that we are independent of his all-knowing mind, God will know. This is not because God guides our wills like a puppeteer guides his marionettes. As Boethius put it, God doesn’t have so much fore-knowledge as forth-knowledge -everything happens in front of His eyes, in an eternal present.

From this divine perspective, I would like to materialize into words what I believe can be very beneficial for our own flourishing; an idea inspired by how God sees our finite universe: vertical time. If time is usually thought of as linear, with one direction and a single trajectory, vertical time brings out another dimension and extends time outward into the timelessness. This is all a bit strange so allow me to elaborate.

Consider our communication with the timeless -that is, prayer. Prayer extends outwards into eternal heaven, where it’s effects would no longer be tied to a specific point of time which it was initially offered. If you had prayed for the souls of sick people, not only would you be affecting future souls, but, because of the vertical dimension that prayer has, it affects past, present and future souls as well. Your prayer request at a single moment of time, by virtue of its ability to transcend vertically from the linear stream of time, can affect ALL time.

If you think there are other things that transcend to vertical time, feel free to comment below and of course, subscribe.