"Whoso pulleth out this sword of this stone and anvil is rightwise king born of all England."
- Sir Thomas Malory
The legend of King Arthur pulling the sword Excalibur from the stone is a metaphor for the individual experience of life. It is only for the seekers—those who stray from the oft trodden path of life's formulas, habits and bureaucracies, who can see clearly. Only one man can pull the sword from the stone precisely because it is one man's destiny alone.
What's that got to with investing? Everything.
Investing today is taught as a craft. Many believe that if we study the right books, read the right periodicals, attain the right knowledge, and then simply execute those lessons, we can be successful investors. It's as if investing was similar to an apprenticeship in carpentry or learning the protocol of flying an airplane. Nothing could be more false.
We know that markets are discounters of all widely known information. Therefore, we also know, no matter how much we study a textbook or how intently we peruse the Wall Street Journal, the information inside is widely known and thus priced into stocks. That means—insofar as we are trying to achieve returns in excess of the markets—all that information is essentially useless. It's a basic premise of market theory, yet many ignore it, entertaining erroneous thoughts of parsing out that one tiny nugget of information no one else saw.
"You can't have creativity unless you leave behind the bounded, the fixed, all the rules."
- Joseph Campbell
Does this mean we should abandon all learning and study of markets and their instruments? Of course not. Acquiring the skills and knowledge of markets is a necessity—it is foundational. But that alone cannot grant you success.
Just so, a knight of Chivalry under Arthur's Kingdom must learn the Chivalric code and must be a squire (apprentice) for years before achieving knighthood. But to be a member of Arthur's Round Table, more, much more, is required.
The brain wants repetition, a formula. It wants to learn rules it can adhere to and just keep doing them with success. Repetition delivers the task away from consciousness thought and into subconscious habit. For instance, the first time you drove somewhere new you had to think about where you were going at each turn. But after the 3rd or 4th time, the trip itself probably never even enters your consciousness because the task has become habitual.
What's more, we continually slouch toward the Gomorrah of bureaucracy and repetition because of fear: fear of free thought, fear of lack of control, fear of lawsuits, fear of being different. To take one's own path is a thing of courage.
Open any section from any of the tales of Arthur and his Knights. Always and everywhere you will find a knight's quest occurs in solitude. It's absolutely imperative that the knight go his own way and by himself. In the quest for the Grail, many knights embark on the quest, yes, but they separate from the outset and enter the dark forest alone.
Why? Because to tread upon another's path, a road laid by another, is not the measure of success. Each must take the quest in his own way and enter the woods where it is most dense, where there is no path. That is the only way to attain success for the Knight—he must take all his learned skills, the full measure of his courage, and venture into places yet undefined. This is the prime metaphorical meaning of the Arthurian legends.
And it's no small lesson for the investor. We cannot be craftsman, it won't work. Everything known is already priced in to stocks. We must stride where others have not, seek insights that today are opaque and beyond the frontier. The Arthurian quest for the Grail is tantamount to the quest for success in investing—many try, but who has the fortitude and insight to succeed along the lonely new road? To forge the new road is the only way to know something other's do not; the only way to be a successful investor.
What each must seek in his life never was on land or sea. It is something out of his own unique potentiality for experience, something that never has been and never could have been experienced by anyone else.
- Joseph Campbell
That is why, in part, a healthy and rigorous skepticism is the heart of the scientific mind and the investor alike, because in skepticism and questioning of everything there is information and insight—there is undiscovered country.
"The voice of the intellect is a soft one, but it does not rest until it has gained a hearing. Ultimately, after endless rebuffs, it succeeds. This is one of the few points in which one may be optimistic about the future of mankind."
- Sigmund Freud
The quest of the Knight is kin to the investor's quest to beat the market, and it is a thing of peril and needful courage to stray from the textbook, but…
"…the big question is whether you are going to be able to say a hearty yes to your adventure."
- Joseph Campbell
Have a great weekend.