Creative Capital

Baron Rothschild and Me

I had passed the bar exam and was working for a very large law firm in Pittsburgh. I was still so new I would get lost on my way to the men’s room. But it was wildly exciting for a working class kid from a dying mill town to be associated with such a prestigious …

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How Sharpe Is Your Ratio?

“The Sharpe ratio is oversold.” — William F. Sharpe If the Sharpe ratio didn’t exist, I swear the financial industry would have to shut down. Originally developed by William F. Sharpe in the 1960s, he called it the “reward-to-variability ratio.” Sharpe first described the ratio in a paper published in the Journal of Business in …

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China Proves the Point

“The founding of the People’s Republic of China marked the end of the humiliation and misery the country has suffered.” — Chinese President Xi Jinping Most people who advocate pacifism do so out of revulsion against the horrors of war, certainly an understandable, if utopian, position. But China’s Neo-Confucians adopted their anti-military stance mainly for …

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China’s De-Militarization

“To enjoy peace, citizens must be ready for war.” — Plato, The Laws, fourth century B.C. “If you want peace, prepare for war.” — Sima Qian in the Shiji, or Records of the Grand Historian, China, 94 B.C. “Si vis pacem, para bellum [If you want peace, prepare for war].” — Publius Flavius Vegetius Renatus, …

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The Real Lessons of the Iraq Wars

“If someone is victorious in battle and succeeds in attack but does not exploit the achievement, it is disastrous.” — Sun Tzu, “The Art of War,” Chapter 12 As we approach the end of this long series on The Art of Peace, let’s take a look at America’s adventures in Iraq. Iraq I Since the …

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Why We Ended the Program That Worked

“There is nothing more difficult than military combat.” — Sun Tzu, “The Art of War,” Chapter 7 In 1966, roughly 6,000 people lived in the village of Binh Nghia, a series of hamlets strung out along the Tra Bong River in far northern Vietnam, near the coast of the South China Sea, a mere 40 …

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Ignoring What We Knew

“One who excels at sending forth the unorthodox [army] is as inexhaustible as heaven.” –Sun Tzu, “The Art of War,” Chapter 5 In the case of Vietnam, we don’t need to speculate about how Gen. Sun Tzu would have conducted the war, for the simple reason that the U.S. military already knew how to conduct …

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How We “Lost” Vietnam

Happy New Year! After all the stupidity, all the lies, all the inflated body counts, all the unnecessary deaths, in spite of it all, by 1968 an American victory in Vietnam was within easy grasp. Even Westmoreland could have managed it. Why? Because the enemy had made a spectacular and unforced error: the Tet Offensive. …

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“True, but Irrelevant”

Speaking of peace, Merry Christmas! As noted last week, some aspects of the domino theory were correct. Following the defeat of the Nationalists in China, South Korea would certainly have become Communist absent U.S. intervention. The same can be said for South Vietnam, although in that case the Communist takeover was only delayed (albeit by …

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The Unknown History of Vietnam

“No country ever profited from protracted warfare.” –Sun Tzu, “The Art of War,” Chapter 2 Now that we’ve Sun Tzu-ized Korea, let’s take a look at America’s most destructive proxy war since World War II—indeed, more destructive than all the proxy wars in American history put together. Vietnam Since the beginning of the American Republic, …

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A Different Outcome in North Korea

“The art of war teaches us to rely not on the likelihood of the enemy not coming, but on our readiness to receive him.” –Sun Tzu, “The Art of War,” Chapter 8 Let’s suppose that President Truman hadn’t had the good sense to put Sun Tzu in charge of Korea until almost too late—after the …

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Matthew Ridgway Turns the Tide

“War is the greatest affair of state, the basis of life and death, the way to survival or extinction.” —Sun Tzu, “The Art of War,” Chapter 1 When we last left the U.S. Army in Korea, it was in a shambles. The sudden and unexpected entrance into the war by the Chinese had shredded the …

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The Art of Peace, Part III: The Korean War

Let’s begin our exploration of the art of peace by applying the lessons of “The Art of War” to America’s many, and mostly disastrous, proxy wars since World War II. Maybe we can identify ideas that will help make future proxy wars—given that they seem to be unavoidable—less ruinous. Korea Following World War II and …

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An Idea Whose Time Has Come

One reason why people haven’t bothered to write “The Art of Peace,” at least in recent decades, might be because, well, who needs it? Why attack the problem of peace intellectually when we’ve already—very successfully—achieved peace by simply muddling through? By “peace” I don’t mean “the total absence of armed conflict”—good luck with that. I …

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The Art of Peace

More than 25 centuries ago, a fellow known as Sun Tzu (an honorific rather than a name—it means something like “Master Sun”) wrote a long treatise on military strategy and tactics that has come to be called “The Art of War.” “The Art of War” is only one of the Seven Military Classics assembled during the Sung …

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Taming Your Investment Committee

“Desperate times call for desperate measures.” —Hippocrates, writing almost 2,500 years ago About a million years ago—in 2003, to be exact—I wrote a long white paper called “Reinvigorating the Investment Committee” (available nowhere). In that paper I discussed the origin of the family investment committee and described a long and discouraging list of problems with …

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Proust’s Longest Sentence

Gilbert de Botton died in the late summer of 2000, only 65 years old. At the end of his life, he was pursuing yet another of his passions. In addition to investing money for rich people and collecting modern art, Gilbert was, amazingly, attempting to recreate Montaigne’s private library, which had been broken up and …

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Trying to Launch the Warhol Museum

When Ms. X and I arrived at GAM in London, Gilbert didn’t meet with us in his private office, where he and I had always met in the past. Instead, apparently in honor of Ms. X’s presence, he ushered us into his conference room. “We just finished rebuilding the conference room,” Gilbert told us proudly. …

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The Mysterious Party

A few years after the events described in last week’s post, something happened that, at first, seemed to have nothing to do with Gilbert de Botton. I was sitting at my desk idly sorting through my mail when I came across an impossibly elegant invitation to a “garden party” being hosted by a very well-known …

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Gilbert

In my entire life I’ve attended one cocktail party in Paris, and on that occasion—this being some years ago—I met a fellow named Gilbert de Botton. (Gilbert, by the way, is pronounced “zhil-BEAR.”) Our first meeting didn’t start out well. The fellow who introduced me to Gilbert did so by saying, “Greg, please meet M. …

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The Fed is Poisoning the Economy

“The Fed can remain irrational longer than you can remain solvent.” –What Keynes should have said. Last week I made two related points: The agonizingly slow economic growth and rapid increase in inequality the United States has experienced over the past decade aren’t the cause of constant Fed intervention; they are a direct consequence of …

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It’s Different This Time

“The four most dangerous words in investing are: It’s different this time.” —Sir John Templeton “The 12 most dangerous words in investing are, ‘The four most dangerous words in investing are: It’s different this time.’ ” —Michael Batnick Whatever, read my lips: It’s different this time. From the time the United States was organized as …

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