Many investors look to “Counter Signals” in the market to tell them when to fade the crowd.
The examples tend to be from media that is “Supposed” to be intelligent: Time Magazine, or The Economist.
For lack of a better term, there is the idea of the IYI that Nassim Taleb writes about, the “Intellectual Yet Idiot,” who miss what is happening on the street because theoretically something “should be” a way that it is not.
“The IYI pathologizes others for doing things he doesn’t understand without ever realizing it is his understanding that may be limited. He thinks people should act according to their best interests and he knows their interests, particularly if they are “red necks” or English non-crisp-vowel class who voted for Brexit. When plebeians do something that makes sense to them, but not to him, the IYI uses the term “uneducated”…
Typically, the IYI get the first order logic right, but not second-order (or higher) effects making him totally incompetent in complex domains.”
So when you see The Economist speaking about the market crashing, or TIME speaking about never-ending inflation, it’s possible that this is the peak fear/envy and things are headed for a reversal.
The way that I deal with complexity is to seek symbols that represent themselves for their own sake.
If you can isolate the right symbolic moments, maybe they provide us with signposts.
If The Economist is sending us “counter-signal” what sends us a proper signal?
If overthinking is the curse of the IYI, maybe seeing the obvious is the zen practice that I must follow to understand the world.
Here are some “symbolic” moments from the recent past:
January 6th Mob Enters the White House
The U.S. Evacuates Afghanistan
Beeple sells his NFT for $69M to a pseudonymous buyer from India.
The point is to not interpret the symbol through your lens of bias or opinion. The point is not to color the symbol at all. The point is to simply see the symbolic moment, and ask yourself “What might this mean about the underlying system?”
If the IYI is judgemental to those things they don’t understand, this process is about removing judgement and analysis and seeing things for what they are.
Symbolic events act as signposts – they compress a huge deal of information about what is happening at the layer of complexity below the surface.
Why January 6th happened, when it happened, is very complex.
The fact that it did happen, though, speaks volumes as a representation of the state of the complex system.
May we be present to the symbols that are shown to us, and seek to understand the omens they provide.
Stay in touch, and as always let me know how I can help,
XX I’m David Sherry, I coach early-stage founders, invest in crypto, and write on the overlap of investing, crypto, and the creator economy.
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