The Odyssey
I started writing an essay about the lessons learned running a paper portfolio these last 2 years, but I don’t think anyone reading this needs to hear more about the importance of Bayesian updating and the principles of value investing. I bored myself while writing it!
Instead, I am just going to write about what’s been on my mind.
If you don’t live here, you probably can’t understand how unbelievably rainy it has been this summer in Tokyo. In September we received nearly 700mm of rain. It has rained every day since August 27th, a record 37-day streak! It hasn’t rained this much in a single month since July 1941. That put a serious dent in my tennis game and kept me indoors much more than I would like.
One consequence is that my consumption of streaming content has gone through the roof. “The Count of Monte Cristo,” based on one of my favorite novels, was a pleasure. My only point of contention is that they neglected to include one of the all-time great lines in literature: “And now...farewell to kindness, humanity and gratitude. I have substituted myself for Providence in rewarding the good; may the God of vengeance now yield me His place to punish the wicked.”
Too baroque?
I have also been rewatching “Suits,” which many readers are probably familiar with. I loved the series when I first watched it 15 years ago, but while the show has not changed, I am not the same person. I now find it trite.
It strikes me as a particularly American conceit: Mike and Harvey are constantly getting into trouble due to their elaborate deceptions, but because of their brainpower and ingenuity, they always come out on top. Even impossible situations are solvable by superior tactics. Those dynamos can Kobayashi Maru anything. All roads lead to victory.
I also recently watched Christopher Nolan’s “The Odyssey.” In my interpretation, the movie deals largely with choices and their consequences. Sometimes Odysseus chooses kindness, sometimes treachery, sometimes forbearance, sometimes loyalty, sometimes vengeance and sometimes self-indulgence. Each choice leads to death or suffering. It is the polar opposite of the world of “Suits.” There are no good choices, only varying degrees of suffering. Even his own Kobayashi Maru moment of using the Trojan Horse to break war's stalemate turns into a pyrrhic victory as he sacrifices his humanity in the process.
Odysseus’ world is not particularly pleasant, but it might be closer to the one we actually live in. Each choice we make is both in favor of one thing, and against the thing we did not choose. We can also make good choices that have bad outcomes.
As an investor, I am trying to build the best portfolio I can. But investing in 14 Japanese companies is also a decision not to invest in 3,800 others. Undoubtedly some companies not in my portfolio will do extraordinarily well, which I must simply abide.
In the end, Odysseus succeeds by giving up his struggle against the will of the gods. But to be an engaged investor is the very definition of struggling against the status quo under the belief that the locus of control lies within, at least to a degree.
Is this hubris? Yes and no. I believe we should accept that most things are out of our control, but it is also our duty to struggle, to strive, to push forward.
Someone once told me that the act of starting a fund is itself a supreme act of hubris. I don’t disagree. But I went ahead anyways. Still, I will strive for humility on this journey and seek your support along the way.
There is still so much value waiting to be unlocked in Japan, but it will not happen naturally. Pearls are created when an irritating grain of sand is trapped within an oyster’s shell. I am no pearl, but I aspire to be a bit of sand.
