Investing Haiku

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abstract art, Basho, existentialism, fear and greed, Guy Spier, haiku, investing, Jean-Paul Sartre, Samuel Beckett, The Checklist Manifesto, The Education of a Value Investor

So, I was reading Basho the other day – as you do…

He is, of course, the most famous of the four great haiku masters. Haiku were originally hokku, the opening stanzas of collaborative linked verse poems (haikai no renga, or renku), which gradually evolved into independent poems – in the late 19th century, Shiki renamed them haiku. They have 3 main characteristics:

– Their essence is ‘cutting’ (kiru) – the juxtaposition of two images, separated by a kireji, a Japanese form of verbal punctuation. [There’s no specific English equivalent – a caesura is functionally similar, while Western haiku writers usually employ a dash or ellipsis]. This two-part structure, with the kireji prompting a mental leap, ideally links and contrasts two distinct (but related) images or ideas.

– They consist of 17 on, arranged in three phrases of 5, 7, 5 on. On are (uniformly short) Japanese sounds, which Western writers interpret as syllables. Since English syllables are generally longer & more varied, 12 syllables are about equivalent. Despite this, many English haiku writers adhere to a traditional 5, 7, 5 syllable format, while using three lines to reflect the three phrases of a haiku.

– They include a kigo. Again, this doesn’t translate easily – Western haiku writers often focus on nature, but won’t necessarily include a specific seasonal reference. Ultimately, the intent is to use objective imagery (show, don’t tell) to illuminate a feeling, a scene, or even the human condition…

Following in the footsteps of Ezra Pound, the mad old fascist himself, I decided to tackle some haiku – in English obviously, but otherwise in (fairly) traditional format. And just to complicate matters, I also chose to focus on investing as an underlying theme – arguably, just another reflection on the human condition:

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Fear & Greed (I)

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biofeedback, black box, fear and greed, home bias investing, investment checklists, literature, Nudge, portfolio allocation, The Checklist Manifesto, trading, value investing, value-trap

Great traders don’t necessarily have to be that smart, but mastery of their emotions – specifically, fear & greed – is absolutely essential. The same is equally true of great investors, except it just happens in slow(er) motion… But most people end up choosing investing over trading. Which is pretty fortunate – the trading gods delight in seeing meticulous logic & analysis abruptly savaged by fear & greed.

Many would-be traders never recognize this, and fail accordingly. Others grasp it, but remain trapped in a never-ending struggle. Only the brave few ever learn to fully master these emotions. Investing, on the other hand, seduces you with the luxury of time & positive long-term equity market trends. Which often makes it far more difficult to recognize the corrosive impact of fear & greed on your portfolio returns. The fact many of us shy away from any kind of critical self-examination doesn’t help either. But there are two solutions available to us:

The first is reading. In my last post, I argued for an important alternative to most investors’ non-fiction diet – literature, and lots of it. The great novels, plays & poetry are windows into the hearts & minds of other people – and in turn, yourself. Learning to actually recognize emotions like fear & greed in yourself, and their potentially disastrous impact on your investing, is the first & likely most difficult part of the battle you face.

Now, I didn’t cover the second solution – how to actually conquer those emotions. Because unfortunately, when it comes to that challenge, we are all truly alone…