posted on 11 November 2015
by Chris Mayer
Fall has fallen here in Maryland. And the leaves have turned. Many have fallen.
The market's seasons change too. But not so predictably. There is a lot of uncertainty over when the next winter will descend on Wall Street. People are sure worried about it.
I read in a Bloomberg piece recently about how a Credit Suisse banker flew all over the place to meet with clients. He reported:
People cash out now because they want to wait until things are "clearer." (What's odd is that the market is just a few percent off its all-time high. It would be a strange bull market where so many people cashed out at the top. Normally, people rush to cash out at the bottom.)
As the Bloomberg piece noted, there is a long list of worries and unresolved questions:
The list goes on...
Well, those who are waiting for more certainty will be waiting a long time. Certainty is not part of the game.
I read through Jason Zweig's The Devil's Financial Dictionary over the weekend. Here's what he has to say about uncertainty:
I enjoyed Zweig's book, despite the fact that I have a defective first-edition copy with the last 28 pages missing. Zweig wrote his book in the spirit of Ambrose Bierce's classic The Devil's Dictionary. I like Bierce, and I want to share a little something about him.
Ambrose Bierce (1842-1914) was the author of some of the greatest short stories and essays about the Civil War. He fought at Shiloh, Chickamauga, Missionary Ridge and other places - on the Union side.
Shiloh was particularly horrifying. It was the bloodiest battle in U.S. history up to that point. And years later, Bierce wrote one of his most famous essays about it, "What I Saw of Shiloh." At the Battle of Kennesaw Mountain (1881), Bierce had his head "broken like a walnut" and received a furlough.
After going through that, you can see where Bierce might lose patience with the foolishness of his fellow human beings. Bierce was a great enemy of euphemism, hypocrisy and mealy words used to cover up softheaded thinking.
One of his own dictionary entries probably best describes Bierce himself:
As a journalist, he cut down many a reputation often with razor-sharp invective. It earned him the nickname "Bitter Bierce.
Bierce would ride off into old Mexico one day in 1913, and no one ever heard from him again. Quite a way to go out. To this day, no one knows what happened to him.
For more, I'd recommend the biography Ambrose Bierce: Alone in Bad Company by Roy Morris Jr. And the Library of America has a handsome one-volume edition that collects his best work - including the famous Devil's Dictionary.
Anyway, Zweig takes his inspiration from Bierce to skewer Wall Street, as in the definition for forecasting above. Sometimes he works in other wits, such as Samuel Johnson's definition of a broker:
Sometimes the definitions are short:
And sometimes he digs up historical origins for words to gain some insight. I like the discussion under the word bear. It includes the anecdote about an English proverb "to sell the bear's skin before one has caught the bear," which is an apt description of selling a stock short. (You sell the stock first and hope to buy it back later at a lower price.)
He also finds obscure words that describe a reality particularly well:
A lot of people suffer from pareidolia.
If there is a theme, it is that luck and surprise are indelible and important shapers of events and outcomes in markets. These are powers that most everyone tries hard to deny.
Another theme is that fancy words are a coverup. They hide thefts, lies, cons and ulterior motives. Speak plainly and seek those who speak plainly to you.
As Zweig says,
This book will help you see a little more clearly through the wordy shroud that hangs over Wall Street. Bierce would approve.
Read on to see why investors in the U.S. oil industry could have used a bit more cynicism and been a lot less certain about its prospects. The industry faces one major problem, as you'll see below.
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