Life Is a Dragon We Can Tame

“Life is… (fill in the blank).”

This was a most interesting and quite revealing question posed to the participants of a recent dinner party I attended.

The question was asked by an extremely learned and wise man who my readers likely know; however, I will refrain from mentioning any names other than my own in this story in order to, as they say, “protect the innocent.”

I love this question because it goes to the essence of how one feels about his/her place in the universe. And, based on one’s answer, you can tell a lot about that person.

For example, one guest responded to the question “Life is…” with a reference to the classic film, “Forrest Gump.” That response was… “Life is like a box of chocolates. You never know what you are going to get.”

By this answer I could tell the person was heavily influenced by pop culture. More importantly, I could tell they viewed life as a series of events that happen to them in which they are forced to react. Now, while it is true that events beyond our control happen to everyone every day, the essence of life is not, in my view, a series of events that we are forced to react to.

In my view, man is a being of self-made soul, and we can choose to react to events and make the world our own — if we have the mettle to do so.

This attitude was reflected in my own response to the probing “Life is…” query, which I will reveal right now: “Life is a dragon we can tame.”

Admittedly, this response came to me via a flash of self-plagiarism, as it bears a close resemblance to a lyric in a song that I wrote that says, “The world’s a dragon we can tame.”

But what does this actually mean, and what does it say about me?

It means the recognition that life is by nature a struggle and that existence is not a spectator sport. In order to survive, and especially to prevail, one must recognize first that life requires purposeful action directed via the only tool of survival man is equipped with, and that is his reason.

You see, it is only through reason that we can know what the world is made of, how it works, why things happen, how we can affect things and how we can, if you will, tame the dragon.

The dragon is, I think, an apt metaphor for life. Think about what a dragon represents. It represents all of mankind’s most primal fears wrapped up in one mythical creature. A giant serpent that flies, and that also breathes deadly fire!

Indeed, humans have long been inculcated with fear of the serpent, and it’s no surprise that one makes such a dastardly appearance as the deceptive trickster who promotes what God has forbidden in the Book of Genesis.

Then there’s the fire factor, of which humans are deathly afraid, and whose destructive powers must at all times be guarded against. Then, there is the flight element, a factor that humans have long marveled at, but that until very recently in our history could neither comprehend nor harness.

So, life is indeed a dragon — but it’s one we can tame, and we can tame it because we have a tool, i.e., our rational faculty, that allows us to study our primal fears, unpack the reality of those fears, figure out solutions to the problems creating those fears — and then to take the kind of human action needed to conquer those fears.

I think what this says about me is that I am a man directed by rational action, and one who sees the world as a place where the achievement of values is possible despite the struggle.

Or, stated more poetically, I’m a man who knows that life is a dragon we can tame.

Ok, now it’s time for you to weigh in.

So, please send me an email with your answer to the question: “Life is…”

I am very eager to discover what you have to say to this probing question, and you can bet that I will be presenting my favorite answers in a future issue of The Deep Woods, so make your response count!

ETF Talk: AVUV Active Strategy May Benefit from ‘January Effect’

Small-cap companies are stealing the spotlight in the world of long-term investments.

With the tantalizing “January Effect” tailwind possibly around the corner, there’s an opportunity for investors to swim in the high-growth pool. Stocks, especially those of small-cap companies with a market capitalization ranging from $250 million to $2 billion, tend to rise in the first month of the year. So, why not kick off 2024 by not just trying to grow personally, but also financially?

Small-cap stocks have many advantages: they offer more room for growth for investors, lower share prices, greater diversity of businesses and lower popularity. Yet, be aware that small-cap stocks can be riskier and more volatile than large ones.

Now, let’s look at a small-cap exchange-traded fund (ETF) that is worth considering, Avantis U.S. Small Cap Value ETF (AVUV). AVUV doesn’t just pick stocks; it actively manages a portfolio of highly profitable U.S. small-cap companies, aiming for long-term capital appreciation. It is also an open-ended fund that can issue unlimited new shares, priced daily on net asset value — flexible, dynamic and ready to roll.

What adds an extra layer of excitement to this portfolio is its broad coverage across sectors and industries. From energy to industrials, financials to health care, information technology to utilities and real estate, AVUV is like a buffet of opportunities for every investor.

Despite the U.S. equities rally experiencing a lull, with the Russell 2000 Index showing a decline of 3.7% in the first week of 2024, the “January Effect” provides hope for reversing this trend. AVUV and other small-cap active strategies can mitigate this and provide flexibility in fluctuating market conditions.

AVUV doesn’t just stop at flexibility; it throws diversification into the mix. Investing in a diverse group of U.S. small-cap companies from various sectors, the fund ensures at least 80% of its assets are in play under normal market conditions. Geographically speaking, this ETF is a red, white and blue affair with all its holdings proudly based in the United States. As a former U.S. Army paratrooper, I can appreciate faith in American ingenuity. And don’t forget, this ETF uses a discerning value screener, which makes it suitable for current macroeconomic uncertainty.

The top 10 holdings in the portfolio include Boise Cascade Co. (NYSE: BCC), Alpha Metallurgical Resources Inc (NYSE: AMR), Ryder System Inc (NYSE: R), KB Home (NYSE: KBH), Mueller Industries Inc (NYSE: MLI), Air Lease Corp Class A (NYSE: AL), Matson Inc. (NYSE: MATX), Goodyear Tire & Rubber Co. (NASDAQ: GT), Taylor Morrison Home Corp. (NYSE: TMHC) and Meritage Homes Corp. (NYSE: MTH). These constitute 8.55% of total assets, according to Yahoo Finance. Overall, there is a total of 749 holdings in the AVUV portfolio.

As of January 2024, this fund is down by 1.38% over the past month, up 14.66% over the past three months and down by -3.70% year to date (ETF.com).

The fund has $8.48 billion in net assets under management, and it has an expense ratio of 0.25%, according to ETF.com. The yield amounts to 1.66%, while the price-per-earnings (P/E) ratio is 7.36 as of January 17, 2024.

Source: StockCharts.com

Still not convinced? Small-cap stocks might just reward you with growth and returns that can make your financial heart race. However, it is a risky and volatile investment; therefore, it is important to consider and carefully analyze the ETF before making any investment decision.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to email me. You may see your question answered in a future ETF Talk.

In case you missed it…

This Moment, and This Moment, and This Moment

Life can be a cruel mistress. You can love her, take care of her and be truly good to her, but the next thing you know, she delivers you a heart-crushing blow.

If you are an adult (and I know nearly all my readers are, despite the cadre of high school students in Southern California I know who are avid enthusiasts of The Deep Woods), then you already know that life is replete with pain, sadness and struggle. These formidable foes are an inextricable part of existence, and they’re part of nature.

There’s a great line in the novel “Fight Club” by Chuck Palahniuk that says: “On a long enough timeline, the survival rate for everyone drops to zero.”

Well, on a long enough timeline, no matter who we are or how well we’ve managed to organize our lives, all of us will experience profound sadness, crushing loss, deep disappointment and likely intense physical pain that becomes both all-encompassing and debilitating. Again, this is just part of nature.

Not to get morose, but every one of us, if we haven’t already, will likely have to deal with the pain, hurt and loss associated with the death of a parent, a favorite aunt or uncle, a brother, a sister, a close friend or even what is said to be the most difficult loss to bear, the loss of a child.

What’s even more intense is that, as humans, we know that we are mortal. We know we are going to die, and we know that everyone we know living today also is going to die. And once again, this reality is just part of nature.

Yet, as Sir Francis Bacon famously proclaimed, “Nature, to be commanded, must be obeyed.”

But how does one go about commanding nature in an effort to ease the pain that living brings?

For me, knowing the nature of existence allows me to focus on what I am doing right now — in this very moment. Because all we are sure of is that we have this moment, and this moment, and this moment.

This realization that life is now prompts me to ask myself why anyone would ever want to squander the now.

Why would you ever allow yourself to consciously live in a state of negativity, one replete with unhappiness, anger, distress, discontent and malaise over trivial things you have no control over? And let’s face it, nearly everything in our lives we have little to no control over.

Now, that’s not to say we should feel something other than deep sadness over pain, loss and other adverse circumstances. It is proper to feel these emotions, and you do not want to shut them down or cut them off, as that also would be a form of squandering the now. Yet, think about all the times we do squander the now by not paying close enough attention to our own minds.

We get mad when someone cuts us off on the freeway. We get upset if the barista gets our coffee order wrong. We become angry because one of the stocks we own slides after the company announces downbeat earnings guidance. But, if you realize that it is your reaction to these things which is the cause of your sadness, and not the actual events themselves, you realize that with a little effort, you can command nature by altering your mental state.

The first step in doing this is to recognize that thoughts are the root cause of all our emotional states.

Indeed, the ideas you have in the now are what is affecting you right now. So, if you can consciously identify those thoughts, process them and either let them go, change them or integrate them for future use, you will be much better off when the inevitable wave of life’s sadness slams onto your shore.

By knowing your own mind, and by cultivating a self-awareness capable of identifying thoughts as the root cause of all discomfort, pain and pleasure, arousal and peak experience, you can avoid squandering the now.

Instead, you can embrace the now for what it is, and you can become better at dealing with the good, the bad and the ugly — because life is replete with all of these elements, and that reality isn’t going to change.

So, do not let your head wander its way into despair.

Take control of your thoughts, which one can do via practices such as mindfulness meditation and other active efforts to recognize the content of one’s own mind.

By recognizing the “you” in there, and the content of your inner life, you will put yourself on the path to making sense of the sad, happy, debilitating and glorious days — and everything in between.

Finally, consider that while the world can at times be a very scary dragon — it’s a dragon we can tame, as long as we understand what’s in our own frame — and as long as we obey nature.

*****************************************************************

Don’t Fear the Reaper

All our times have come
Here but now they’re gone
Seasons don’t fear the reaper
Nor do the wind, the sun or the rain
We can be like they are

Come on, baby, don’t fear the reaper

— Blue Oyster Cult, “(Don’t Fear) The Reaper”

We live our lives each day, and while we may know a lot about how to navigate our world, we also know there’s going to come a day when that navigation process ends. This is guaranteed for all of us. The only thing we don’t know is when that day will be, or just how it’s going to go down.

Now, because we don’t know the “when” or the “how,” we get scared. But when you think about it, there really isn’t anything to be scared about. I mean, how are you going to be scared about something you know is going to happen?

Wisdom about money, investing and life can be found anywhere. If you have a good quote that you’d like me to share with your fellow readers, send it to me, along with any comments, questions and suggestions you have about my newsletters, seminars or anything else. Click here to ask Jim.

In the name of the best within us,

Jim Woods