BLACK SWANS

On December 27 I found myself hitchhiking in Tierra Del Fuego at the tip of South America, on the Argentine side oft the border with Chile, hoping for a ride to take me the remaining 190 km to the Magellan Strait ferry.

A few days earlier I had completed a 7 day trip in one of Chile’s national parks, “Torres del Paine”, hiking with a group of eight strangers from far flung places, in the majestic world of glaciers and snow capped mountains, the home of pumas, condors, foxes, and a variety of wild llamas. It is a wonderful place and I was very happy to fulfill an old ambition to hike in this part of the world.

To complete another lifelong ambition I flew, on Christmas Day, from Punta Arenas on the western shore of the Magellan Strait, to Ushuaia, the southernmost town in the world, just 80 km north of Cape Horn. Ushuaia, with its’ fine harbor, is the last port of call for the many cruise ships that now visit Antarctica. It houses a population of 50,000 in low rise buildings that perch on the mountain slopes that rise steeply from the harbor. Many of the buildings are painted in pastel colors, and they are all built low to protect the population from the incessant strong cold winds that roar unimpeded around the southern oceans.

Hitchhiking the 650 km from Ushuaia back to Punta Arenas allowed me to relive a little of the experience of “thumbing” my way around the world as a young man. Vehicles are infrequent, but people were very friendly and I could see them coming from miles away by the plume of dust that was thrown up by their wheels on the gravel road. Being out on my own, with the land and the people, I found the three days of hitchhiking to be just as rewarding as the hiking in “Torres del Paine”.

While in the National Park, we hiked up to the Grey Glacier, the shrinking of which, was noted in Al Gores’ recent documentary “An Inconvenient Truth”. When we were shown how it was receding at 30 meters a year I was taken with a series of thoughts about unintended consequences. In the quest for warmth, wealth, mobility and technological progress we have exploited fossil fuels to the extent that we are now facing unprecedented climate change. The future is uncertain for all mankind and many people are already suffering drought, flooding and violent weather that likely results from the unintended consequences of our ignorance and lack of restraint.

Thinking about all this, a metaphor popped into my mind that I had encountered for the first time, a few months earlier. Last summer, Amaranth, the six billion dollar futures fund imploded overnight and disappeared. It seems that, while no fraud or self dealing was involved, the fund managers had sought to replicate their 2005 success when they had made a killing from oil and gas futures following the disruption wrought by hurricane Katrina. They had figured that a hot hurricane season in 2006 would present another opportunity to repeat the trick. Contrary to predictions the season was quiet and no hurricanes hit the US Gulf coast, with the result that prices failed to shoot up as they had expected. They then had to liquidate other holdings to meet the oil and gas losses. I happened to see an interview on TV with the Amaranth president. When asked to explain the catastrophic failure of the fund he had replied that it was simply a case of “Black Swans”.

Outside of Australia, black swans are rare and the point of the metaphor was to say that, while most of us think of swans as white, you will occasionally encounter a black one. It reminds me that we all make unfortunate decisions from time to time that can cause setbacks and disruptions in our lives. Of course we are also subject to unforeseen calamities, financial and otherwise, that are natural, or at least not the result of personal error. We can however, take prudent steps to reduce some exposures to risk. There’s lots of advice out there advocating exercise and better eating habits and we can also seek out the knowledge and advice we need to better manage our financial resources.

However, I do not want to dwell on negative possibilities at the beginning of a new year. This is a good time to reflect on the year that has passed, to ponder what we can be grateful for, and to choose an inspiring objective or two for the year ahead. If you feel the need for more inspiration, I recommend you download the documentary “The Secret” from the link found below.

If you have not yet seen “An Inconvenient Truth” you may want to consider renting the DVD. It helps us to realize that the environmental, and other troubling issues of our time, require us to participate and collaborate in the development of solutions.

On a personal level I very much appreciate that all of you, my clients, have helped me along the way. Thank you for rewarding me with your business when you had the opportunity to go elsewhere, and for recommending my service to your family, friends and neighbors in 2006.