There is almost no good news being neutral. Nature does not make a difference. It hits blindly. It does not remember the neutral guy (the good guy). Almost in every catastrophic event, nature fails to save the neutral guy, in particular. If it does, not in the name of neutrality. Anyway, even when we are neutral, we are not really neutral because we are part of a much bigger system of things and thoughts. We are as individuals too small to be really neutral in life. Many people suffer losses not because they have done something wrong.
A country like Switzerland is politically neutral on the international arena. However, if you consider the time when the world was clearly divided in two blocs, Switzerland did choose a bloc to belong to. Switzerland was not neutral by being in the middle of the two blocs. Switzerland was neutral in the Western bloc, which makes a difference. Neutrality in the case of Switzerland means that the country did not choose the most active role in its bloc of influence. Being neutral does not mean you do not belong somewhere, you do not share something, you do not take action of some sort, and you do not take part of something bigger than yourself.
People try also to be neutral economically. You hear people saying that they prefer to keep their savings under the madras than earning an interest on it. They are too afraid to lose their savings. They think they have a neutral investing position by keeping it home. Actually they have a negative investing position. A neutral investing position is only at the point where positive outcomes are counterbalanced by negative outcomes. Not investing is by no means safer.
Take a booming economy. People who chose to invest make up for possible past losses. They have the opportunity to put some money aside. With a booming economy, a larger number of projects are undertaken as the opportunity cost of capital is lower. If someone choose to be however neutral, he/she will not make any extra income. Nature will not recognize the person as being extra careful.
Now take an economy in recession. People who chose to invest may make some losses. The risk is higher, the opportunity cost of capital is higher, and fewer projects are undertaken. Unemployment is higher. Guess what? Neutral people are not better off. They are even worse off. Nature does not again reward them for being wiser. She hits them badly.
So, it does not pay being neutral. You can lose by investing, but the likelihood of losses are lower than the likelihood of not investing. If you do not invest, you are not making a wise decision. This goes beyond the simple fact that inflation eats away some of your idle savings. The dollar you make in good times should help you in bad times. This is the profound sense of being neutral. Neutralizing negative forces by positive forces.
A country like Switzerland is politically neutral on the international arena. However, if you consider the time when the world was clearly divided in two blocs, Switzerland did choose a bloc to belong to. Switzerland was not neutral by being in the middle of the two blocs. Switzerland was neutral in the Western bloc, which makes a difference. Neutrality in the case of Switzerland means that the country did not choose the most active role in its bloc of influence. Being neutral does not mean you do not belong somewhere, you do not share something, you do not take action of some sort, and you do not take part of something bigger than yourself.
People try also to be neutral economically. You hear people saying that they prefer to keep their savings under the madras than earning an interest on it. They are too afraid to lose their savings. They think they have a neutral investing position by keeping it home. Actually they have a negative investing position. A neutral investing position is only at the point where positive outcomes are counterbalanced by negative outcomes. Not investing is by no means safer.
Take a booming economy. People who chose to invest make up for possible past losses. They have the opportunity to put some money aside. With a booming economy, a larger number of projects are undertaken as the opportunity cost of capital is lower. If someone choose to be however neutral, he/she will not make any extra income. Nature will not recognize the person as being extra careful.
Now take an economy in recession. People who chose to invest may make some losses. The risk is higher, the opportunity cost of capital is higher, and fewer projects are undertaken. Unemployment is higher. Guess what? Neutral people are not better off. They are even worse off. Nature does not again reward them for being wiser. She hits them badly.
So, it does not pay being neutral. You can lose by investing, but the likelihood of losses are lower than the likelihood of not investing. If you do not invest, you are not making a wise decision. This goes beyond the simple fact that inflation eats away some of your idle savings. The dollar you make in good times should help you in bad times. This is the profound sense of being neutral. Neutralizing negative forces by positive forces.
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