In the heady 1960s, students demanded an injection of culture into the narrow training of economists, engineers and other technocrats. Courses such as Poetry for Physicists flourished as part of a utopian vision that humanities would sensitise future leaders, a vision whose minimal expectation was that technocrats will at least have read a novel.
Even by that low standard the movement failed as almost none took it seriously, neither physics students nor their teachers nor administrators. And today in a world where that ugly notion ‘relevance’ dominates institutions of supposed higher learning, the gap between the two cultures, the technical and the humanities, has widened, such as reported here.
Today, unfortunately, Finance is the prime path to financial success, a path that values culture even less than did engineering 50 years ago. One investment professional proudly declared his studied ignorance of any history because what happened in the past is “boring, irrelevant and would clutter my mind.” Pity he hadn’t listened to the Roman orator and writer Cicero (106-43 BCE) who understood the incipient dangers of historical ignorance, “To not know what happened before you were born is to be a child forever.”
I hesitate to promote poetry on the grounds of relevance, nonetheless the following poetic statements do offer insights and provocations that can make for wiser investors. Hear how poetically the German thinker Wolfgang Goethe (1749-1832) hints at our (investment) biases, “We know for certain only when we know little. With knowledge, doubt increases.” The notoriously difficult American/English poet T S Elliot (1888-1965) further captured the epistemological challenges investors face: “Where is the wisdom we have lost in knowledge? Where is the knowledge we have lost in information?”
The English sometime poet G K Chesterton (1874-1936) does seem to appreciate investing’s central challenge, as evident by the sting in the tail, “the real trouble with this world of ours is not that it is an unreasonable world, nor even that it is a reasonable one. The commonest type of trouble is that it is nearly reasonable, but not quite. … It looks just a little more mathematical and regular than it is; its exactitude is obvious, but its inexactitude is hidden; its wildness lies in wait.”
With greater specificity the Russian Boris Pasternak (1890-1960) also warned of over-emphasising rigour, processes and (risk) measures, “what is laid down, ordered, factual, is never enough to embrace the whole truth: life always spills over the rim of every cup.”
In a not dissimilar vein the prolific Greek C P Cafavy’s (1863-1933) poem Things Ended reminds us of the limits and dangers of stress-testing,
“Engulfed by fear and suspicion,
mind agitated, eyes alarmed
we try desperately to invent ways out,
plan how to avoid the obvious danger
that threatens us so terribly.
Yet we’re mistaken, that’s not the danger ahead:
the news was wrong
(or we didn’t hear it, or didn’t get it right).
Another disaster, one we never imagined,
suddenly, violently descends upon us,
and finding us unprepared – there’s no time now –
sweeps us away.”
Herding, that most human of responses, offers a false sense of protection from those “dangers ahead”. To be like others is the default strategy of (almost) all managers, consultants and super funds, and one that ineluctably results in following fashion. The wonderfully cynical Irish poet Oscar Wilde (1854-1900), captured the inherent short-termism in that behaviour through his aphorism, “fashion is a form of ugliness so intolerable we have to alter it every six months.”
To avoid excessive herding requires sometimes choosing the road less travelled, as did the American poet Robert Frost (1874-1963) in his beautifully lyrical (almost) eponymous poem,
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.
And when that path less travelled does lead to success (as surely it sometimes must) and when we then suffer from hubris (as surely we will) we should be reminded of the fate of Ozymandias (as surely we won’t) so powerfully captured by the absurdly young English poet Percy Bysshe Shelley (1792-1822),
“I met a traveller from an antique land
who said: `Two vast and trunkless legs of stone
Stand in the desert. Near them, on the sand,
Half sunk, a shattered visage lies, whose frown,
And wrinkled lip, and sneer of cold command,
Tell that its sculptor well those passions read
Which yet survive, stamped on these lifeless things,
The hand that mocked them and the heart that fed.
And on the pedestal these words appear —
“My name is Ozymandias, king of kings:
Look on my works, ye Mighty, and despair!”
Nothing beside remains. Round the decay
Of that colossal wreck, boundless and bare
The lone and level sands stretch far away.”
Perhaps in some small way poetry can help us transcend the accusation, “what do they of investing know who only of investing know?”
Dr Jack Gray is a Director at the Paul Woolley Centre for Capital Market Dysfunctionality, Faculty of Business, University of Technology, Sydney, and was recently voted one of the Top 10 most influential academics in the world for institutional investing.