Egoism, Capitalism and Self-Trust
Creating the Vision
Because great authors highlight the essentials of man’s relationship with reality and man-made systems, literature is a fine way to learn the ideas and habits of heroic characters. In the previous article, I made the connection between the ethics of individualism and the social system of capitalism in Victor Hugo’s Les Misérables. That was in the character Monsieur Madeleine who had been born Jean Valjean. Yet, the Western canon is little more than inspiring entertainment unless we put its ideas to work in our own lives.
And a good place to begin are the character traits I discovered in Hugo’s protagonist: the virtues of independence, justice, integrity and pride. Valjean had to take responsibility for his judgment and actions, reward or disregard others on that standard, have the courage to act consistently on rational principles, and regard his life as the standard of value. Taken as a whole, they are the building blocks of both the self-made man and a benevolent society.
Of course, none of us are destitute, hardened criminals running from the law in feudal, aristocratic Europe. More likely, you were born into a society paying the dividends of millions of unsung capitalist heroes. But we all start somewhere – and you can be one of them.
Reason
It begins with the individual - with me and with you. But a spark is needed for anyone that has not thought deeply about their highest values or their responses to success, milestones, stress, disappointment or loss. To that end, I believe the Site Map in Chapter Eight of The Moneyball Method may be that catalyst.
A Site Map stores information about the pages, videos, images, files and the relationships among them for that one website domain. For an investor’s goal-directed action, we need the same tool — a map of our domain.
This means taking an inventory of your life and doing it with the thinking process of an entrepreneur. Psychologist Gena Gorlin puts it this way, “The thinking habits that distinguish the world’s most ambitious entrepreneurs reveal that they are, if anything, obsessively truth oriented.” That thinking process begins with reason as the absolute for survival and applied to the orderly nature of reality.
Certainly, few of us are ambitious entrepreneurs, but we all have the capacity for being sovereign individuals who can live with confidence, and the entrepreneurial mindset is the best one to adopt: create the vision, take calculated risks, learn from experience and measure success.
Individualism
This is A Middle-Class Manifesto for Objective Investing, and it is intended for a broad audience of finance professionals, their clients and autonomous investors. Because of that diversity, it is necessary to define important concepts - and two of those are individualism and pride.
Individualism means each person is a sovereign entity, their rights are unalienable - and it is not doing as I please at the expense of others. Pride means living for life affirming values, being true to those moral principles - and it is not stubbornness in favor of tradition for its own sake.
Specifically, the Site Map focuses on you as a sovereign entity and being true to your life-affirming values. It begins with the four value domains of Relationships and Family, Business and Career, Health and Recreation, and Wealth Building. These broad categories do not define you as an individual, but they serve two important purposes: they begin the process of focused thinking and they are integrated.
And because “work” and “life” should not be treated as competing forces, the Site Map will help you create a “whole life” attitude toward money and investing. That is essential. Gorlin explains there will be difficult choices to make for the values to pursue and their costs in terms of time and money,
The builder honestly faces those costs and asks: is it worth it? But is it worth it… on what standard? The standard, again, is your life as a whole. When you are changing projects or major project-like aspects of your life, you are changing the shape of your life as a whole.
That is what it means to create the vision - and the objective investor will then apply that to virtues of money, the information of prices, the elegance of markets, and the justice of earned profit.
Capitalism
With this obsessive orientation to truth, Gorlin suggests it is now possible to calculate risks with the most reliable information available,
One of the most oft-cited differentiators of today’s most successful founders . . . is “first principles” thinking characterized by an active questioning and checking of all assumptions by reference to what one directly and independently knows to be true.
What are those assumptions? In the traditional advice model, they are contained in economic analysis, market forecasts, earnings projections, manager performance, risk tolerance, technical charts, monetary policy, election outcomes, and social justice best practices. Yet, they produce a countless number of assumptions, nearly all of them are faulty, and none of them make the third leg of Gorlin’s stool: “bias for action” which amounts to maintaining a tight, efficient feedback loop between one’s judgments and reality.”
And what is the most reliable information? It is the relevant personal data, the most reliable capital market data by asset class, and the integration of those with the fewest assumption errors possible. Self-trust is where your efficient feedback loop begins. The prime mover is your decision to think about your most important needs and aspirations, define them as explicitly as you can, ask why they are important, and learn how the relate to each other.
The next arc of the loop can be found in the integrity of sound money and free markets. And the circle closes with the mutual profit of the trader principle. Only then does the term “financial independence” have deep meaning. To better understand the concept of self-trust, I return to literature, and Emily Bronte’s Wuthering Heights:
I am sure you have thought a great deal more than the generality of servants think. You have been compelled to exercise your reflective faculties, for want of occasions for frittering your life away in silly trifles. Mrs. Dean laughed . . . I have undergone sharp discipline which has taught me wisdom; and then, I have read more than you would fancy, Mr. Lockwood.
Market forecasts create silly trifles. Reflective faculties create wisdom. And the next essay will pick up where I left off - taking calculated risks.