Time is a lot of the things people say that God is. There’s the always pre-existing, and having no end. There’s the notion of being all powerful—because nothing can stand against time, can it? Not mountains, not armies. And time is, of course, all-healing. Give anything enough time, and everything is taken care of: all pain encompassed, all hardship erased, all loss subsumed.
Ashes to ashes, dust to dust. Remember, man, that thou art dust; and unto dust thou shalt return.
And if Time is anything akin to God, I suppose that Memory must be the Devil. — Diana Gabaldon
These beautifully written lines in A Breath of Snow and Ashes by Diana Gabaldon passionately express how humans are often humbled and awed in front of time—as if time itself were a real entity or a manifestation of Almighty God. When we refer to expressions such as “time will tell” or “time will heal,” we are conscious of the need for patience and perseverance, submitting ourselves to the power of time to allow the beneficial conditions to arise and adverse conditions to cease. In this sense, time is priceless and invaluable.
Time is an important component of economic decision-making, often presented in terms of temporal choices—the decision between consuming today versus tomorrow, saving or investing today versus generating returns in the future. In terms of a simple temporal choice, time could be priced through the concept of opportunity cost or time cost. Interest rates, for example, are a common measurement of the cost of time. If you are given $5 in annual interest for a one-year, $100 fixed deposit, the implied one-year cost for the time deposit is 5 per cent . However, this dollar value of time is not absolute. If you are given the choice of investing the same $100 into the stock market with an annual return of 20 per cent, you could argue that one year is worth $20 instead of $5. Of course, there are also other opportunities in which you can purchase an option—a derivative instrument—with leverage so that you could lose your entire principal if the option fails to materialize. In some extreme cases, you could even lose a lot more than the principal of $100 and hence time through making the wrong decision—it could be worth a negative value to you.
In an age of negative interest rates, one has to pay rather than receive interest when depositing money in banks or lending to central banks. Some argue that time is therefore more valuable because the markets demand a higher rate of return. To the contrary, I argue that the new era of negative interest rates implies that time has become less valuable in monetary terms because the market is anxious for returns within a very short period.
The asset inflation we have witnessed over the last few decades supports the fact that money is less valuable than other assets, hence it has a higher asset price in monetary terms, but the return of the same assets—or yield on assets—has declined over time. When time is undervalued, investors are not rewarded for their patience. The market becomes more short-sighted, looking less at long-term capital and more at “fast money.” Just as the modern era has become more fascinated by high-frequency trading instead of long-term investment, investing time in human development, career, relationships, research, and so forth has become less appealing. There is more speed-dating, job-hopping, and fast food consumption because immediate satisfaction is preferred over delayed gratification.
The Buddhist teachings—and ancient philosophies in general—offer fascinating and complex analyses on the subject of time. Unlike some philosophies, which consider time as “an external, all pervading substance”—a component contributing to other matters or events—Buddhist theories consider time from many different perspectives. As Karunadasa explains (2015), time is “a mental construct with no corresponding objective reality. Apart from the underlying dharmas which do ‘arise and perish in continual succession,’ there is no discrete entity called time.” Time has at least five technical terms in Abiddharma literarure (Karunadasa 2015): kala (an absolute, specific time or season), addhan (length or duration of time), santati (series, continuum, perceptible time, which we experience as “now”), and khana (moment). As opposed to santati, khana is the briefest temporal unit and is, in fact, not perceptible.
Karunadasa (2015) reiterates that samaya may best capture the Buddhist understanding of time. Samaya technically means “the confluence of conditions” or “the coming together of appropriate causes.” It refers to a particular occurrence or, more specifically, a concurrence in which a “multiplicity of conditions gives rise to a multiplicity of effects.” Where kala refers to the exact time, samaya means the opportune time within the confluence of conditions for an event to happen. For the purpose of Buddhist economics, it is perhaps most inspiring to note that time is determined by events. Our common reference to time as past, present, and future are conceptually constructed temporal distinctions. These time divisions refer to dharmas arising, existing, and dissolving (Karunadasa 2015). An interesting example is the long investment holding period before an asset bubble is inflated, reaches its peak, and then ultimately bursts. The absolute time period during which we hold the asset is irrelevant unless the necessary conditions leading to price movements have all come together. It is the underlying conditions supporting the price fluctuations that arise and perish, not time itself. The long holding period before the gradual rally and the sharp and rapid collapse is not caused by time but by the fundamentals of the underlying assets. As an investor, the right question to ask is not which month or year stock prices will rally or collapse, but to understand the opportune time “when” the conditions all come together leading to the rally or collapse. In short, “timing” is more important than “time.”
The distinction between past, present, and future is only a stubbornly persistent illusion. — Albert Einstein
With this profound understanding of time, we can better appreciate the essence of high-frequency trading and long-term investing. The competitive edge of high-frequency trading—the ability to collect trading data from various exchanges and data vendors, analyze the data, and transmit trade executions to exchanges with the support of a high-speed computer networks, is in principle accelerating the occurrence of events ahead of other competitors in the market. While market transactions are supposed to occur in real time at the present moment, a high-frequency trader can in fact benefit from bringing forward his “present” moment a few nanoseconds ahead of his counterparts, as if he can jump ahead into the “future.” Conversely, a long-term investor leverages his holding power—the ability to weather the turbulence of various immediate unfavorable events yet stay long enough for favorable events to arise. He can then benefit from the ultimate fruition of great returns. The comparison between a high-frequency trader and a long-term investor could be similar to that between a fast-fashion manufacturer and an antique collector. High-frequency trading is made competitive by accelerating the occurrence of events, whereas a long-term investor succeeds by allowing all the favorable conditions to gradually arrive over a long period of time. Another example could be that of human-made cement structures, which last for decades, versus natural blocks of marble which can last for centuries—what takes time to come together can foster a stronger and more sustainable existence.
Another reason I argue that time is undervalued is because the value of tranquility, patience, and perseverance is also undervalued in the contemporary world. Over the last few decades, greed and the desire for continuous economic growth means that the only solution to fix any economic crisis is to grow out of the problem with more and more short-term liquidity and leverage. While underlying productivity takes time to recover, flourish, and sustain, the modern economy can no longer wait but needs to borrow money and resources from future generations and their future environment. Whenever there is a crisis, we are no longer interested in addressing the underlying problems, but instead seek to implement immediate band-aid solutions. Just as a patient with a severe fever may need a strong medicine to cool down, the underlying disease causing the fever must also be treated. An economy needs time to truly heal and recover.
At the moment, Hong Kong and the rest of the world are under tremendous economic, environmental, health, and social stressors amid the coronavirus pandemic, yet we seem to be quite insistent on maintaining “business as usual” and refusing to allow sufficient time for the whole of humankind and the planet itself to heal. If we want the pandemic to retreat, the question is not how long it will take, but how long and how patient we are in implementing the measures to prevent the infection from spreading further. It takes time to heal but we must also commit to the treatment.
May we all be safe and healthy.
Gabaldon, Diana. 2005. A Breath of Snow and Ashes. New York: Delacorte Press
Karaunadasa, Y. 2015. The Buddhist Analysis of Matter. Hong Kong: Centre of Buddhist Studies, The University of Hong Kong