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Dostoevsky and Investing
The chapter I re-read from The Brothers Karamazov is called ‘The Grand Inquisitor’. In it, Iván (intellectual atheist) tells Aliocha (highly religious) a fictional story about how Jesus resurrected in the 17th century (or something like that) and was being interrogated by a guard in a prison. One of the questions the guard asked Jesus, unanswered, was why did he create us with freedom when that’s not what we want. We hate having options to choose from.

This idea is also discussed in Notes from Underground, the only book I read twice. The main character (no name) starts giving a monologue and he gets to a very deep and curious realization. He believes humans are not designed to be satisfied.

Fyodor evaluates the possibility of scientists coming up with some sort of ‘periodic table’, but for events; a model that predicts events. Then he claims that, even if you gave a person everything, satisfied all his needs so that he has nothing to do but to occupy himself with the procreation of the species, men will do something stupid, just to make something happen. We hate predictability. Furthermore, if this was also calculated in the ‘periodic table’, the man would decide to lose his reason and go crazy, so that he can de-estimate the periodic table and prove himself that he is a man, not a piano key.

Doesn’t this collide with the very nature of long-term investing?


I’m sure you have heard of all the reasons why if you hold stocks for very long periods of time, success is almost guaranteed. Among them, there’s the number and history of bear and bull markets, the actual chance of having a positive return after X time, the theory (but very much practice) convergence of a business price to its fundamentals.

There relies the incongruency of human behavior. A whole case is built around the idea of why holding for the long term is the best way to go for almost all individuals. Arguments are too many to ignore. Therefore, why do we seem incapable of following such ‘secure’ path? Do we act just to make something happen?

Francois theory (the tribal gene) sounds more and more convincing as I learn. There is something that makes outperformers different and it could well be the case that it is a genetic matter. These people could be not wired as human, according to Dostoevsky, are. Perhaps their body allow them to ignore their need of wanting something to happen, or they are simply unaware that such feeling is present in other human beings.

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