I gave a presentation on China/Japan at the “Rethinking Seminar” at Johns Hopkins University Applied Physics Lab. My presentation was videotaped; video (both streaming and download), audio, and even cliff notes may be found here (by the way, make sure to take a look at other presentations on their website). Also, I updated my slides on China/Japan; you can download them here.
It was a slightly surreal experience, because the presentation was right across the street from the Pentagon. So the Russian immigrant who until 1987 believed Americans were horrible people (read the story of how my family emigrated from Russia) was lecturing Americans on the virtues of capitalism at the doorstep of the Pentagon!
Here are some random thoughts on subjects unrelated to investing.
DC, Wright Flyer, Blackbird…
I had been in DC a few times before but never really had time to see the city. I took my almost-ten-year-old son Jonah with me on this trip, and we had an amazing experience. It was father-and-son, embrace history, see new things, eat donuts every morning for breakfast at Dunkin’ Donuts time (mother was not there to set us straight). Here are some pictures from this trip.
We spent a lot of time browsing Smithsonian museums – Air and Space, American History, and the Air and Space Udvar-Hazy (giant hanger with over a hundred planes, by Dulles Airport). The Wright brothers’ first plane (the Wright Flyer) was really a shocking exhibit. The Wright Flyer looks like an oversized wooden kite, with strings and a few levers. It barely looks like a plane. In its first flight it only went 120 feet – that was it! If you look at the planes that came out a decade or two later, they were real planes – metal wings, wheels, a pilot’s seat, etc. But the Wright Flyer was the paradigm breaker, it proved that an object heavier than air, powered, and operated by a human, could fly. It unleashed the imagination of the generations who followed.
Fast forward six decades, and you find us standing in front of the plane that impressed the most: the Blackbird. The Blackbird is a reconnaissance plane; it has no weapons, just cameras. It was the first plane to use stealth technology, though it wasn’t until decades later that that technology was perfected. The Blackbird’s engines are each the size of a small plane. Despite being developed 47 years ago, it is still the fastest plane today, flying at Mach 3, over 2,100 miles an hour! It flew from LA to DC in 64 minutes. It flew so high, at 80,000 feet, and so fast that if it was detected by radar the pilot’s strategy was not to go to evasive maneuvers but to push on the throttle. Not a single Blackbird was ever shot down. What’s ironic about Blackbird is that it was discontinued not because the US came out with a better or faster plane, no, but because of the development of satellites. Satellites don’t cause international incidents, don’t put pilots at risk, and don’t cost $85,000 an hour to operate.
Productivity is very difficult to observe in the short run, but in the long run it is really incredible how we manage to do ever more with ever less. In the American History Museum there was an exhibit on ports and ships, where I found this remarkable statistic: “1960: 25 million tons handled by 15,000 longshoremen at the West Coast ports. 2000: 250 million tons handled by 10,000 longshoremen at the West Coast ports.” Two-thirds of the people did 10 times more – that is productivity!
I was really reluctant to go to the Holocaust museum, as I did not want to subject myself to the pain I knew would come with it, but my wife convinced me and Jonah to go. I am glad we listened to her. There are two things that stuck with me.
There was a wall of photos, five hundred or so family pictures and portraits from a small Lithuanian town that was home to 4,000 Jews for 900 years. I was magnetically attracted to the photos, but it took me a few minutes to figure out that these people looked like my relatives. A young fellow in his thirties looked just like my uncle at that age, a 15-year-old kid looked like Jonah will look five years from now, a Hassidic gentleman looked just like my cousin who is a rabbi in Rego Park, Queens, and so on. These pictures impacted me a lot more than the pictures of dead bodies, pictures from the concentration camps, that I’ve seen so many times over the years, which my brain has learned how to dehumanize. I could relate to these photos a lot more. Nazis killed ALL the Jews in that village, including women and kids, in two days. 900 years of history and tradition were wiped from the face of the Earth in just two days! I have to admit I could not keep my eyes dry after.
A quotation on the wall at the very end of the exhibit really underlined why this museum is so important. It was written by a German pastor, Martin Niemoller:
First they came for the Socialists, and I did not speak out —
Because I was not a Socialist.
Then they came for the Trade Unionists, and I did not speak out —
Because I was not a Trade Unionist.
Then they came for the Jews, and I did not speak out —
Because I was not a Jew.
Then they came for me — and there was no one left to speak for me.
As a parent you try to instill values into your kids that you may not always possess; but you want your kids to have them, and your children inspire you to be better people. Jonah and I had a long discussion about how, when we see injustice that doesn’t really touch us, we should not sit still.
Jonah had a blast in DC, but the culmination for him was our trip to the Pentagon. I had a meeting at the Pentagon, and to keep Jonah occupied while I was busy, he received a private tour of the place from a lieutenant colonel. Jonah was absolutely stunned – a few days later his eyes are still glowing when he talks about it.
Vitaliy N. Katsenelson, CFA, is Chief Investment Officer at Investment Management Associates in Denver, Colo. He is the author of The Little Book of Sideways Markets (Wiley, December 2010). To receive Vitaliy’s future articles by email, click here or read his articles here. .
Copyright Vitaliy N. Katsenelson 2011. This article may be republished only in its entirety and without modifications.