Daily Speculations
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Daily Speculations |
14-May-2006
"Never Tell Me the Odds" -- Thoughts on Star Wars and the Market, from David Baccile
My children are probably too young at the tender ages of 5 and 4 to be watching the original Star Wars Trilogy, but I let them anyway. (Of course, I also bought them boxing gloves and one of our family bonding moments is when I get on my knees and don the gloves. I mention this so that you can place the rest of what I say in some context.) There are a couple of scenes in which my 5yr old son, Gabriel, will excuse himself from the room because he thinks it too much. My daughter, Mira (4), has no problem with any of it as long as dad sits with her. They both really like the episodes and play with small Star Wars action figures constantly.
The cinematography of the original Star Wars Trilogy is truly amazing. These works by George Lucas and Gary Kurtz were light years (my wife loves my puns) ahead of anything produced at that time and for many years thereafter. It is no wonder that Star Wars will survive the ages. In addition to the beautiful cinematography and special effects, the story of good prevailing over the Goliath of evil is universally popular.
Having watched these movies a couple of times recently, I found myself picking at some of the storyline - and the underlying themes.
Historically, Wall Street has been known for the testosterone based bravado that is supposed to pervade the big (and small) houses on The Street. From at least the late 1970s through the 1990s, the sexy, gunslinger personalities were revered in the media and press. It took a long time for nerdy computer geeks to gain any recognition in the brokerage houses and trading desks. These thoughts came to mind as I listened to Han Solo tell C3PO to "never tell me the odds" as Han plunged the Millennium Falcon into an asteroid shower against the counsel of his droid. And who was more sexy than Han Solo, that Scoundrel! We grew up worshiping that bravado - and it was cool to go against the odds, to rebel.
But rebels don't last long in the markets. The Mistress may encourage those that try to defy the odds. She will look longingly as you throw caution to the wind and as you shout "never tell me the odds!". We rarely hear of the hundreds, no thousands, that have succumbed to Mistress after going against the odds. In fact, most Wall Street failures that gain notoriety seem to be those that at least attempted some science and probability to their the analysis and processes. Long-term Capital Management was a great example in which the "lesson learned" was that no statistical models, no matter how smart or sophisticated, are good enough to succeed in the Market.
As a youngster, I definitely never picked up on the mystic qualities of the Star Wars Trilogy. But now, you can't miss it. In "The Empire Strikes Back", Yoda tells a young Luke Skywalker in training to "feel the energy of the force all around" and that you "must let the force flow through you". George Lucas places far less importance on intelligence and the mind (sorry for getting a little Randy) and, instead, makes the fate of the Rebellion depend on chance and "the Force". The important traits of determination and courage are rightly celebrated. In training, Yoda tells the young Skywalker "Do or do not, there is no "try"." Some of these themes are wonderful lessons for my children but I also think it necessary to point out the weak areas too, for I do not want my children to have to spend time and effort unlearning what I may have unwittingly taught them.