With family in town for the holidays, you may find that the discussion turns to markets and politics at some point. The discussion may even get heated as common ground seems harder to find these days. In these moments, it’s helpful to remember Sayre’s Law. Sayre’s Law dictates that: “In any dispute, the intensity of the feeling is inversely proportional to the value of the issues at stake.” Here’s more:
In the Heat of Academic Debate
Named after Columbia University political science professor, Wallace Stanley Sayre, the law points to the epicenter of heated debates: political discussions in academia. Sayre is quoted as saying, “Academic politics is the most vicious and bitter form of politics because the stakes are so low.” While think tanks are crucial in defining the sides of the debate, they don’t decide the issues. They don’t get to enact, amend or repeal the laws themselves. Their goals are to change minds and to be proven right.
You’re likely to see the same dynamic around the family table.
In the Heat of Markets
Everything changes when the money is real and the money is yours. Declaring that the market is due for a correction is not the same as selling your investments because you believe the market is really going to crash. Whether it’s bitcoin, emerging markets, the US stock market or private equity, real votes are cast in dollars.
An extrapolation of Sayre’s law says that the less money someone has in a given asset, the more aggressively they will argue their views on that investment. We don’t have to change anyone else’s mind to have a healthy debate. When the time comes to invest, you will remember what was said and weigh it with all other information available to you. If you’re looking for a way to cut through the noise, Ray Dalio, billionaire founder of Bridgewater and recent self-help guru, says to follow the person with the best track record. At Osbon Capital, we love a lively debate. Sayre’s Law helps us keep our perspective in check and the focus on the sharing of thoughts and opinions.
Happy Holidays from Osbon Capital Management!
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