The End of America

I had to laugh at this ad (at the bottom) that’s been playing on the site here in the last few weeks.  It says:

“THE END OF AMERICA – Blah, blah, some guys will sell you doom and glooom, sign up here so he can separate a fool from his money.”

Regulars know that I am a pretty optimistic person over the long-term.  That is, I am a big believer that there are more people waking up in the morning saying “I want to be smarter and better than I was yesterday” than there are waking up saying “the world is doomed, I should build a bunker and hide out”.  That’s just my general view of things.  Maybe I am wrong, but I don’t think so.

More importantly, this is an incredibly powerful macro trend at work.  It’s a trend that drives progress and output going forward.  Obviously, there are more pieces to the puzzle than that, but you get the general trend.  The Neanderthal who shorted Cro-magnon Man stock 30,000 years ago is sitting on hefty losses.  Not just because he was dumber than Cro-Magnon man, but because Cro-Magnon man continued to progress at a faster rate due to this inherent desire to wake up in the morning and learn and grow within his/her surroundings (I just made a mockery of human evolution so feel free to lay into me if you have any historical expertise here – and yes, I know there is some historical record of Neanderthal and Cro-Magnon man intermingling, but my example doesn’t sound as emphatic if I say that).

Of course, betting all-in very aggressively on on progress over the long-term can be irrational.  Yes, the Cro-Magnon man long bet turned out well, but no Cro-Magnon man lived the 30,000 years to cash in his/her bet.  And there have been some pretty dicey times for our species over the course of this bet.  Some lasting entire lifetimes or longer.  So it makes it very difficult to plan for life around this uncertainty since we can’t know precisely how this powerful long-term trend will impact us in the short-term.  There have been clear cases where persistent hard times last throughout our lifetimes.  Unfortunately, the macro trend at work in these timeframes doesn’t always play out perfectly over the course of time when you actually need it to.

This makes it highly imprudent to wander through life just assuming that everything is going to turn out for the best.  There’s a chance of pro-longed hardship and trouble over the course of much of your lifetime.  And designing a portfolio and planning for the future has to take this into account.  That doesn’t mean you turn into a permabear or build your portfolio around the end of the world and positions in gold, guns and bunkers, but it does mean you have to approach the world in a prudent manner that takes these risks into consideration.  I say, be a pragmatic optimist.  You don’t want to be the irrational bull or the irrational bear.  But if you’re constructing a portfolio with an overweight against human ingenuity and progress then you’re likely to lose out over the long-term.


Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

More Posts - Website

Follow Me:


  1. Doom sells. I’ll Pragcap would be much more popular if you were always talking about the end of the world.

  2. People are easily scared by things they don’t understand so finance is the perfect place for people to get suckered into fear mongering tricks.

  3. Pragmatic optimist! I love it. I am also a long term optimist, which works out great since I’m surrounded by permabears all day at work. :)

  4. I’ve come to realize that the world is filled with pessimists, but is ruled by optimists.

    Show me a fortune 500 CEO that isn’t bullish on long term global growth, or a politician that isn’t widely optimistic about the future just as long as the government follows his or her particular plan.

    Can’t find the exact quote, but I really like when Mark Cuban said: “When I started me first company, I didn’t know we were in a recession. I didn’t even know what a recession was.” I wonder how many kids out in California programming 18 hours a day know where Spanish bond yields are trading at?

  5. Cullen,

    The ads are based off of browsing history, have you been reading all the gloom and doom reports? =)


      • Hey, Cullen. How would you characterize my writings? For 3 years, I’ve been posting compelling stats, charts, graphs in my articles on why there is no housing bottom in sight. I’ve appeared on Bloomberg TV, WSJ radio and Yahoo’s “Daily Ticker” making my case. Does that put me in your doom and gloom camp? I prefer the realist camp since I’m trying to prepare your eternal optimists for the debacle that’s coming throughout the real estate space. Doubters can check out my new report at

  6. I’m an optimist, too, but isn’t this a sign of a market top that people who are advising caution are told they ‘suck.’

    • I think there’s a difference between advising caution or prudence (as I almost ALWAYS do) and being a permabear or someone who sells a constant state of fear.

      • Portfolios are only one aspect of people’s lives, and a small segment of people at that. Perspective is what is needed. One can make the argument that fear not only caused by ignorance or a lack of information, but also a lack of confidence in our institutions. Sure there are con men who will play on those fears, but the fears are real nonetheless. Just a short time ago, we were all told that without massive bailouts, our economy would collapse – not by con men, but by those in power on both sides of the aisle. For the person whose portfolio is now exploding, it is easy to remain optimistic, as opposed to say the person who has been out of work for several months/years.

  7. A flood of sunshine in these posts but it wasn’t that long ago that the US Secretary Of Treasury Hank Paulson uttered the famous words…Madame Speaker if we don’t have 700 billion today you have no economy tomorrow.
    Interesting how easily all is forgotten… Enron ingenuity, Goldman Sachs Abacus deal ingenuity, AIG ingenuity, Lehman ingenuity, GM bankruptcy ingenuity, and ingenious visionary thinkers like Ken Lay, Bernie Ebbers and Madoff…just to name a few.

  8. You realize that the post immediately preceding this one is titled “In the long run we are all in trouble”, right??

      • Which is much appreciated BTW. Love how you have your views but are willing to consider and back check your against contrasting one.

      • A bit of unsolicited constructive criticism then I guess: If you post an article like that to your own website how are we supposed to know that you don’t necessarily hold those views unless you preface the piece with some commentary of your own (i.e. “I don’t necessarily agree with all of this but a good read nonetheless”, etc…)? It clouds the reader’s understanding of where you stand, especially if you follow up the post with one that basically takes the opposite point of view.

        • If you read the website enough and read his comments on the articles, i think it is pretty clear….JMHO…YMMV…

          • Also, I don’t think his goal is to lead you anywhere. it to present you with relative and accurate information for you to form your own opinions which may or may not vary from his own. One Thing I like about Cullen is he never claims to be a know it all lord of finance.

  9. I guess the one thing that worries me about having a super bullish portfolio is that in a serious recession/depression your main source of income (for most of us a job at a corporation) dries up at the exact moment that your savings portfolio (see what I did there) plummets. Most savers don’t fully take into account the covariance between their primary source of income and their investment portfolio. In many ways a job is like an illiquid junk bond, you can count on the payments until things get really bad!

    • It’s not about having a “super bullish portfolio”. My view is more about not falling into the persistent negativity trap. There’s a huge wave of progress coming in and we can choose to ride it right down the middle in a straight line (super dangerous, but fast), carve it out slowing our speed and veering towards the edges away from the center of risk OR we can try to ride against the wave (good luck!). I say carve it out.

      • I am also excited about human progress but I think the big elephant in the room is human capital. When folding in human capital to the asset allocation, most people truly have a quite bullish portfolio when they might not realize it. We can’t see the PV of human capital get quoted every day, but its value fluctuates and for many of us probably has a decent correlation with the stock market. Of course everyone is different, I just have seen so many people get burned trying to capture that long run equity risk premium. With all that said, I can’t argue with the idea of human progress. I just think a lot of smaller working class investors get way to aggressive about trying to capitalize on it.

        • I completely agree. I think the concept of proper portfolio construction is woefully lacking in most people’s portfolios. Part of why I started Orcam so I could teach individuals and institutions how to think about this stuff differently….

          • Well if you are roughly folding in human capital into the client’s plan than I think you are doing them a huge service! The traditional life cycle funds automatically assume that one’s income is like a bond (therefore holding more stocks at younger ages) strikes me as a dangerous solution to apply to the masses. I believe you have highlighted the links between employment numbers and the stock market so I think that the idea of human capital generally being more equity like than bond like makes a lot of sense.

  10. It seems to me that people that are fortunate to have money (in all its forms) are still very weary given what happened during the 2008 financial crisis. People want to protect what they have worked hard to achieve. It seems to me that the hard working, creative individuals that you celebrate, are exactly the individuals who are asking themselves where can I safely invest my money.

    I don´t think its about pessimism or optimism, but is about being realistic and understanding that there are more questions than answers regarding where we stand post 2008. Your site does a great job in offering a framework from which to understand these systems, but I don´t think anybody can confidently insure us that the worst is behind us. At best, we are somewhere in the middle of a monetary experiment that has yet to fully play itself out.

  11. I’m a long term optimist but what the connection between a better world and a great financial portfolio ? For me a better world can be a world with much less economical activity and much more brain activity. Much less atoms moving from here to there and much more immaterial knowledge and wisdom. Believing that a better world is just a perpetuation of this one is completely stupid, mankind is evolving and we don’t know where we’re going and how.

  12. Cro-magnon man now has the ability to nuke himself and is toying around with particle colliders. He has also found out he is overheating his own planet and not doing something about it. Meanwhile he is rapidly destroying the biodiversity of his planet that he may at some point depend on for his survival. We have seen cro-magnon man succeed while he was too small and insignificant to impact his eco-system. The thesis that he can survive while he is neither of these things is entirely untested.

  13. I read some commenters here and I see that optimism is often thrown together with things like:

    - optimism of the stock market advancing
    - optimism about the economy
    - optimism that the current economic / financial system is a sound one
    - optimism about the human progress

    And what is mostly forgotten is optimism about one’s own abilities and fate. I am a strong optimist regarding the latter two.

    I have different views on each of the other points:

    - Stock market seems bubbly to me, but as long as the QE misunderstanding as printin money persists it will go on a bit longer; over the long-term it moves in valuation cycles
    - The economy in the West looks like “business as usual” on the surface, but it is a “slow motion train wreck” beneath that will play out over 10-20 years like in Japan (and Japan is not finished yet). My optimism is that i) all things mean-revert earlier or later; ii) the leverage in the system is such that a much swifter correction (say for 3 years) may open people’s minds to the problems or at least we get a reset at more attractive asset valuation levels to build a more stable basis for advance
    - I think the current system is too distorted (and America leads the charge) in favor of the crony capitalists and politicians for sale. I am as optimistic about it as one can be about the Soviet Union (it lasted about 75 years, longer than many expected). Actually the current system can last even longer because the wealth level it is starting off is much higher
    - Human progress: on the one side I am absolutely optimistic about the ability of humans to develop tools and technologies to deal with problems; on the other hand I am a bit diappointed by the strong dominance of materialism that has engulfed all spheres of life and very little energy is spent on philosophical or spiritual matters or things like togetherness, harmony of relationships and joy of life