Natural Law is any system of law which is purportedly determined by nature, and thus universal (Wikipedia). This definition is a bit vague, so I will take from it what I determine to be the Natural Law.
I've always had this idea in my head about what I considered to be my "Law of Universal Truth". This is the way that I named it. What I mean by it is this:
I've noticed again and again that systems of nature often show themselves repeatedly, in slightly different forms, across all forms of life. These forms of life can be biological, economical, social, etc. Let me explain by way of example. Plants need roots to grow. These roots go out, anchor the plant into the ground, and provide a system for the plant to harness nutrients from the soil. Without these roots, the plant will be malnourished and will surely die. This same system can be observed across many different biological forms, and also transcends into social and economical interactions. Let me explain another biological example in which this is observed. Let's think about cancer growth. Recent cancer research has revealed that in order for cancer to proliferate it needs to grow its own blood vessels which feed the cancer. This process is called angiogenesis. Similarly to the plant example, without these blood vessels (roots) to feed the cancer, it dies. It makes sense then that anti cancer drugs are being developed to stop the process of angiogenesis. (A quick lesson here in anti cancer eating habits. Green tea, red wine, and turmeric have all been shown to have angiogenesis inhibiting properties).
This process can be observed socially as well. Think about it. If you don't plant your roots into relationships in life you will never fully be nourished to the extent that you could be. Grow these relationships, and you will be nourished. Cut off these relationships and your happiness as a human being will surely decrease.
How about economically? Immediately I think about trade agreements. These agreements enrich the economies of the world without a doubt. Cut off these agreements, and exports will decrease and GDP will take a hit. Increase trade agreements and GDP shall rise. (Obviously this is a simplified discussion).
So what is the point of all of this? I had an interesting thought recently that this "law of universal truths," as I call it, could help an investor. What triggered my thought process and led me to this was the thought of the United States' and the European countries' debts. How can we liken this to a biological/natural process? I believe that if a good analogy can be constructed, that one could predict with accuracy how the situation will unfold. As they say, history repeats itself, and natural laws repeat themselves as well. Not only do they repeat themselves, but they are so efficient, that they have been adopted across many aspects of life, as explained earlier. Anyway, what is a good analogy for the debts of the United States and the European countries? I'm convinced that a better analogy exists, but for now let's think about consumption of food to keep our bodies moving. This is like debt, right? Countries need debt to maintain their operations. (Especially those that are now already over their heads in debt). We consume food, use it to operate, and then pass the food on as excrement. That is like paying back the debtholders. (Haven't figured out the interest part yet). Now, lets assume that we consume more food than we pass (pay back). One of two things may happen, you stop eating, or you vomit and start fresh. I believe, based on my "law of universal truths" that this situation is somewhat analogous to the debt issue and therefore can help me predict the outcome of the debt crises across Nations presently. We can stop consuming, and this is possible but not likely given our unwillingness to suffer now for the greater good later. Or we can vomit(default) and start fresh. If the latter case happens that would be quite a mess. (It's sort of like a forest needing a forest fire to replenish the nutrients to the soil.)
What the effects of a default would be is unclear. But, hey, at least we can say we predicted it. And if you are a big shot hedge fund guy or banker you might be able to purchase credit default swaps and cash out just in time before the insurer of the credit default swaps also goes bankrupt. Good luck with that.
So the point, after all of that, is that I believe that in all situations one can utilize this natural law to predict outcomes. Think of analogies that pervade throughout life all the way from the biological to the social, as these are probably universal truths that will hold true throughout all circumstances. They are tried and true by evolution and time.
Do I suggest using this to invest? Probably not, but it may just provide you with some killer insight and foresight.
Nobody comments on my blog, please let me know if I am completely insane or not!
BTW, I hope you all had a nice green day today, as I suspected we would have in yesterday's post. I know I did :)
Cheers,
EZ
P.S.- I'm going to try and put together some research piece tomorrow and from it pick a virtual portfolio. Who knows though my track record so far has been awful when it comes to promises. Sorry! School is hectic!
Erik, you're nuts!
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