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• Our General Philosophy: We particularly like this 750-year-old quote and we try to live by it.  As we understand it, it seems to come from the first chapter of the Gospel of St. John.

“The final happiness of man consists in the contemplation of truth…. This is sought for its own sake, and is directed to no other end beyond itself.”

— Saint Thomas Aquinas, Summa Contra Gentiles

• Our Business Decision Philosophy: We’re often labeled a “quant,” but cringe at that description.  We like this quote from Albert Einstein because it wraps measurement within a framework of common sense. 

  Unfortunately, not everyone shares our perspective; so we see a multitude of silly calculations, particularly in finance.

“Not everything that counts can be counted, and not everything that can be counted counts.”

— Albert Einstein

• Our Working Assumption for Managerial Control & Incentive Issues, particularly within firms, but not limited to only for-profit organizations: From the first man, Adam, to the last baby born this morning, who is crying for warmth, food or his or her mother, we want what we want. and should consider that others aren’t that different.

“Little is gained from becoming indignant about self-seeking behavior by managers.  It is only human for managers to have their own goals and ambitions… A more productive response is to take as given the manager’s aims, and ask how to design institutions that work as well as possible…”

 — John McMillan, Games, Strategies, & Managers, 1992.

• Our Model-building & Model Validation Philosophy: We like this quote, too, from a famous statistician.  It has been reiterated by folks in quantitative finance like Igor Hlivka.  It is good to know that that are sensible people out there.

“…All models are wrong, but some are useful.”

— George Box, 1979

Models are abstractions or simplified views of reality.  They are useful when they help us better understand some aspect of our world.  Their use is potentially dangerous when we ignore the portion of reality that was discarded in the simplification process (and, especially, if we view reality to be just another version of the model).

Just about every number in accounting and finance is based on either a model or a series of assumptions—whether explicit or implied.  That is why judgment and thoughtfulness and common sense are more important than math skills, and it is why when we offer advice our guiding principle is “no unintended consequences.”

• On the issue of economic liberty versus the common good: here is a nice metaphor, not sure if it helps to solve the problem, though.

“Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.”

— John Maynard Keynes

• A keen observation that we like: During a few unpleasant times in our young life, we’ve had the unfortunate experience of dealing with individuals like those described below.  They remind us of nothing more than the orcs and goblins in The Lord of the Rings when they try to make everyone as miserable as they, themselves, are.  The quote below is used to describe St. Paul before his moment on the road to Damascus.  Against present-day Sauls, we advise prayer (for them) and stalwartness (against them), but most importantly, a joyful outlook on life.  It drives them absolutely crazy.  Several of our essays, including Trustworthy? No. Predictable? Yes. and Common Managerial Mistakes in Decentralized Organizations, deal, at least partially, with similar types of folks.

“When a man feels the burden of guilt on his soul, he tries hard to justify himself before his own conscience and before others by increasing his false zeal, and thus he sinks yet deeper into evil.”

— Father Joseph Holzner, author of Paul of Tarsus, 1945, via Magnificat.com.

• A Most Poetic Illustration of Opportunity Cost: Okay, so it is not really a quote, but it is our page; so, we can do what we want and include a poem.  Regardless, is there a better definition of “opportunity cost” than the poem’s title, A Road Not Taken?  Plus, the first stanza reminds us of Buridan’s Ass, and the last two speak of commitment, which is a familiar notion in these pages.

A Road Not Taken

“TWO roads diverged in a yellow wood, 
And sorry I could not travel both 
And be one traveler, long I stood 
And looked down one as far as I could 
To where it bent in the undergrowth;
 
Then took the other, as just as fair, 
And having perhaps the better claim, 
Because it was grassy and wanted wear; 
Though as for that the passing there 
Had worn them really about the same,

And both that morning equally lay 
In leaves no step had trodden black. 
Oh, I kept the first for another day! 
Yet knowing how way leads on to way, 
I doubted if I should ever come back. 
 
I shall be telling this with a sigh 
Somewhere ages and ages hence: 
Two roads diverged in a wood, and I— 
I took the one less traveled by, 
And that has made all the difference.”

— Robert Frost, Mountain Interval, 1916.

• Perspective:

Come now, you who say, “Today or tomorrow we shall go into such and such a town, spend a year there doing business, and make a profit”—
you have no idea what your life will be like tomorrow. You are a puff of smoke that appears briefly and then disappears.
Instead you should say, “If the Lord wills it, we shall live to do this or that.”
But now you are boasting in your arrogance. All such boasting is evil.
So for one who knows the right thing to do and does not do it, it is a sin.
— St. James in his only letter (4: 13 - 17)

• Perspective, redux:
  Here is St. James’s sentiments in another time and another place.  Read it aloud in your best “Willie-the-Groundskeeper’s” voice or “Fat Bastard’s” voice.

To a Mouse, On Turning Her Up in Her Nest with the Plough

Wee, sleekit, cow’rin, tim’rous beastie,
O, what a panic’s in thy breastie!
Thou need na start awa sae hasty,
Wi’ bickering brattle!
I wad be laith to rin an’ chase thee,
Wi’ murd’ring pattle!

I’m truly sorry man’s dominion,
Has broken nature’s social union,
An’ justifies that ill opinion,
Which makes thee startle
At me, thy poor, earth-born companion,
An’ fellow-mortal!

I doubt na, whiles, but thou may thieve;
What then? poor beastie, thou maun live!
A daimen icker in a thrave
‘S a sma’ request;
I’ll get a blessin wi’ the lave,
An’ never miss’t!

Thy wee bit housie, too, in ruin!
It’s silly wa’s the win’s are strewin!
An’ naething, now, to big a new ane,
O’ foggage green!
An’ bleak December’s winds ensuin,
Baith snell an’ keen!

Thou saw the fields laid bare an’ waste,
An’ weary winter comin fast,
An’ cozie here, beneath the blast,
Thou thought to dwell-
Till crash! the cruel coulter past
Out thro’ thy cell.

That wee bit heap o’ leaves an’ stibble,
Has cost thee mony a weary nibble!
Now thou’s turn’d out, for a’ thy trouble,
But house or hald,
To thole the winter’s sleety dribble,
An’ cranreuch cauld!

But, Mousie, thou art no thy lane,
In proving foresight may be vain;
The best-laid schemes o’ mice an ‘men
Gang aft agley,
An’lea’e us nought but grief an’ pain,
For promis’d joy!

Still thou art blest, compar’d wi’ me
The present only toucheth thee:
But, Och! I backward cast my e’e.
On prospects drear!
An’ forward, tho’ I canna see,
I guess an’ fear!

—Robert Burns, 1785, (Courtesy of RobertBurns.org)