Mostly original content that examines financial surreality in equity markets in general, and the Japanese Stock Market in particular.
Monday, February 06, 2012
It's [Still] a Shame There's No More Shame
Ask a German about his skiing ability, he might unassumingly suggest that he "can get down the mountain alight". Ask an American, and he is likely say he is an expert, and boast about the ease of which he conquers near-vertically-faced triple-black diamonds with names like "Widow-Maker", "Knee Shredder" or "Sonny Bono's Lament" Ask a Japanese Fund manager who has had a good year, and he will self-effacingly attribute it to a conspiracy of luck. Ask an American, and he will be unashamedly attribute it to his superior intelligence and skill. Ask the same Japanese Fund manager why he did poorly, and he will culpably volunteer that he didn't work hard enough, whereas his American counterpart - someone like Fairholme's Bruce Berkowitz - will (or did) hold to his Martingale-like near-death that it was the market that was wrong - NOT him.
Confidence is a wonderful thing (at times). It is the stuff that provided the inspiration to deposit men on the moon, cure previously incurable diseases, allow Shackleton to set out for South Georgia Island in a duct-taped dinghy, and help our forefathers make Hitler and his cohorts Shut The Fuck Up, permanently. But when it goes awry, it also leads to such things as the invasion of Iraq, New Coke, The Rainbow Warrior debacle, Ishtar, a $50bn++ markcap for JDS Uniphase, and an errant belief that one might be above the law.
Confidence from within often begets confidence from others. This is frequently a trait of strong leadership, inspiring others to overcome obstacles hitherto insurmountable. But this confidence from others in oneself, should not be taken for granted, for it is fickle and easily (and quickly) squandered. Indeed it takes little more than the discovery of but a few lies, being caught with one's trousers around one's ankles cigar-in-hand, or failure to admit that you're culpable when caught on tape to alter one's reliability factor in the eyes of the public from the green zone of "Abraham Lincoln" to the red zone of "Radio Pyongyang". Such miscalculations can spell the near instant death of credibility, or worse. How one behaves in the face of adversity is often, as Sidney Poitier put it, the measure of a man.
So it curious to see David Einhorn's reactions to his own misfortune. In somewhat stereotypically-American fashion, he appears to have launched himself down that triple-black diamond run called "Denial", clinging to the utmost of truth-stretching and verbal contortions to avoid the rocks of culpability, to such an extent that observers are left wondering whether he will make it down the proverbial piste at all. It is precisely this attitude, this lack of humility, or sense of shame that one's truth may be far from more widely accepted perceptions of truth, that has led to extreme polarization of American politics: a result of digging in one's heels into an often-indefensible position by lack of willingness to concede that truth and reality lay somewhere in between the parochially beneficial ideal, and that sought by the opposition - or in Mr Einhorn's case, the law. The result: a caricature of self-righteousness and a hollowing out of trust which for a public political figure, or, in this case, a large investor can result in a less-than-intentional, though no less self-inflicted death.
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