In one way or another, many of my commentaries discuss
how the so-called fabric of time is the most important thing in finance.
Time moves in strange ways in financial markets and better our
understanding is of how time works, the better we can understand financial
Both this commentary and next month's are about how we
perceive the past. Those elements of the past that survive into the
present and then on into in the future are the ones that have the most
impact on financial markets. Human memory at both an individual and
collective level is highly selective and what we select to remember about
the past determines our future. Big-time nonlinearities affect both how
financial time passes and how its passing is perceived.
Over the past year, it has become increasingly clear
that the world is becoming more past-oriented than future-oriented. The
first time that I saw this happen was in the 1960s. The twin horrors of
JFK's assassination and the Vietnam War lead to a nostalgia boom that
began toward the end of that decade and extended well into next. World
events were erasing the future was and the present was not especially
worth living in, so many of those who did not obliterate the present with
drugs retreated into a presumably happier past.
Jean Shepherd, who expressed displeasure upon being associated with
the nostalgia craze, nonetheless was one of its prime beneficiaries. Ronny
Howard, as Ron Howard was known in his prepubescent days, also cashed in.
As Opie of Mayberry, he hailed from a North Carolina town trapped in a
more innocent, pre-Mellencampian past. In American Graffiti and Happy
Days he would escort America back to the safer, happier, and
infinitely more boring 1950s.
The current retreat into the past has been brewing from
some time and appears less focused than the last major journey back in
time. Although That '70s Show is still big in reruns, it is not a
part of the emerging nostalgia boom; rather, it hails from to the Irony
Boom of the 1990s. At the height of the Irony Boom people would add an
to the end of sentences, something one does not heard much these days. No
one seriously longed for the 1970s; they were an easy target for ridicule
because of their atrocious taste and wanton hedonism.
Now we are in an early phase of a celebration of the
1980s. The music of that time is leading the comeback. KROQ in Southern
California has dedicated its entire second HD radio slot to the "Roq
of the '80s." I eagerly await the first New England Journal of
Medicine article on the adverse effects of too much Depeche Mode and
New Order on the human brain.
And that brings us to the title of this commentary. In
the last few months I have noticed an upswing in the use of the phrase
"back in the day" or sometimes just "in the day." A
quick Googling reveals that this phrase is of hip-hop origin and has taken
several years to make it to my eyes and ears and now I see and hear it
everywhere. The phrase, for those even more clueless than I am, simply
means sometime in a pleasantly remembered past, such as the 1980s.
The problem with the 1980s is that in order to get to
the enjoyable part of the decade one had to survive the first four years,
which gave those of us around a few years of double-digit inflation
followed by the double-digit unemployment that were required to vanish it.
The secret to the '80s was that while everyone was distracted during '70s
many good things were going on that finally took off once the economy was
back on track. Caltech was awash in microprocessors when I got there in
1971; my freshman computer architecture project (on paper only, I never
bothered to build it) was a microprocessor-based machine dedicated to
playing Conway's game of life. More practical applications of this
technology were forthcoming and everything came together in the 1980s.
Some early 1970's breakthroughs had a longer gestation period, such as the
Internet, which was called ARPANET back then.
Undoubtedly, all of the important things about our
current dismal decade will take years to come to light. Genetics and
robotics are two areas were a lot of important groundwork is being laid
that will play out over the rest of the century. I, for one, welcome our
future genetically-engineered cyborg overlords.
During the early 1970s, the high-tech world of the
future inside Caltech and select locations in California, Massachusetts,
New York, New Jersey, and a few other states, was nothing like the world
outside. From the second half of my undergraduate stay at Caltech I had
access to tiny black-and-white television known affectionately as
"Walter." Why would anyone call a television Walter? Because the
"killer app" that he provided was the CBS Evening News hosted
by "Uncle" Walter Cronkite. The World of Walter was a
frightening and hideous place, yet Walter's demeanor almost made life
worth living back then.
What fascinates me is how much of the past makes it into
the present. Within popular culture, most of the past is filtered out.
Moreover, which aspects of the past are "in" and "out"
change over time. For example, the Stealers Wheel song "Stuck in the
Middle with You" from 1973 sunk into virtual obscurity until 1992
when it was featured in ReservoirDogs. Many other songs
have been resuscitated in a similar manner. Most songs, however, languish
in seemingly perpetual obscurity. Take, for example, the name of the first
television that I personally owed. I bought it used as a grad student and
it was a vintage RCA "portable" television—portable in the
sense that it had a leather handle attached to the top of it. It was
shockingly red and, accordingly, I named it "Crimson Dynamo."
(In case you are wondering, naming inanimate objects was all the rage in
the '70s.) I got the name from the lyrics of a Wings song that only insane
McCartney fans would even know exists but which got a lot of airplay back
in the day. Crimson Dynamo, who it turns out is a comic-book villain,
lives on in my basement and has not been plugged in for nearly 28 years.
Thanks to XM Radio, we now have a laboratory for
re-experiencing the musical past. Next time, I will examine the past as it
really was by dissecting the American Top 40 from the '70s and '80s,
long-distance dedications and all.
Copyright 2008 by Miller Risk Advisors. Permission granted to
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provided a citation is made to www.millerrisk.com.