Monday, July 19, 2010

The Power & Purpose of Volatility

Volatility is not to be feared, but respected, as one should all the most powerful forces of nature. For to understand the nuances, power and purpose of volatility is to master the very essence of life itself.

The motto of Pashfiata Strategies is "...action conceived in balanced thought..." and the reason that I described volatility as I have in my opening entry is that in order to even begin the process of "balanced thought", one must acknowledge and learn to control their primal response to volatility. Volatility is not "wrong", "bad", "crazy" or "unhealthy." It is the necessary by-product of evolution, progress, creativity, and if observed from the correct perspective, it is one of the greatest aspects of life for it provides new opportunities, new insights and an opportunity to "re-tune" our personal values around what is truly important. Historically, and presently, scarcity drives value, and volatility is a constant reminder that all things are in constant peril, subject to obsolescense and/or decay. So, it is through volatility that all things gain value in the current paradigm. (Note that I said "volatility", not "death". This blog will serve as a companion to my website , which deals with nanotechnology and the Singularity which are intertwined with issues surrounding radical life extension and Transhumanism. I do not believe death is necessary to give value/purpose to life. I will address in future blogs the impact of a possible reduction/elimination of scarcity and how that will change the nature of volatiltity in both the pre- and post- Singularity eras).

Much has been written about the fall of great empires and how the US is appraoching its final curtain call, but I don't believe that that is true. In fact, I believe our current sources of political, economic, capital market, energy/environmental and cultural volatility are what are going to allow the US to continue to exist, and dominate, not only as a global power, but as a continually self-adjusting/correcting ideal.

The Obama administration offered something new. Our political system allowed those ideas to be introduced, debated and to a certain extent implemented. It appears that some of the new approaches are "too new" for a large segment of the voting public and even before the national mid-term elections, state level elections moved the political power dial back in the other direction and slowed the speed towards the new vision. I don't think that this "balance of power" volatility is a bad or unproductive process. If this shifting of power back & forth had not occurred, would we have:

1) Such vigorous debate around what type of healthcare system we really want.

2) Would we have seen the significant rise in political will to address our longer-term fiscal challenges.

3) Would there have been as many people going back and asking "What did the Founding Fathers really try to weave into the Constitution? Is it still relevant?"

4) The rise of new political voices on both sides.

5) A resurgence in people's interest in our political process.

Whether through revolution, civil war, protests, economic crises, natural/man made disasters, culture clashes or hotly debated political campaigns or issues, we have adapted to/overcome many challenges and have been the better for it.

This is not a blog dedicated to addressing political issues, but rather the interplay between business, capital markets, innovation and life. Politics just happens to be the process by which we resolve our differing, oftentimes conflicting, selection of goals within each of those categories, as well as the weights we place on them with regards to importance.

May America continue to experience and learn from volatility in all its many forms, and from that, continue to earn its place in history.