The good investor in times of madness

Millions of years of evolution have conditioned us to flee from complexity and take refuge in simple models that allow us to understand in seconds what is happening and determine what the best course of action to follow is. Uncertainty paralyzes us and fills us with anguish. If we do not quickly find an explanation for an unexpected situation that threatens to harm us, we often feel compelled to do anything to alleviate that unbearable discomfort. Under certain circumstances, it seems that we prefer to adopt an erroneous model hastily to recognize our ignorance and the measure of our impotence. Hence the success of ideologies - and tarot.

This is how we are wired. It is useless to rebel against our most primitive impulses; all we can do is become aware of their nature and try to put them at our service, as we would do with a wild horse that fiercely resists dressage. But that requires patience and discipline.

The most severe sin that an investor can commit is not to ignore the numerous variables that he is not actively monitoring, but to ignore the existence of variables outside his visual field, and then act as if there was not a full margin of uncertainty permanently besieging the improvised fortress of his certainties; as if it were possible to accurately predict the "behavior of the market" to squeeze it thoroughly with no other tool than an elegant and all-encompassing theory.

The evil investor dresses in pure silk the typically anthropoid bias that drives him to act by mere pieces of information. When reality contradicts him, he tends to redouble the bet in a desperate attempt to save his confidence in the model. And so it is sinking, in the same mud in which all the theories that treat human beings as pure particles in motion sink. Although he pretends to distinguish himself from the crowd, ironically he is the one who, possessed by his emotions and unaware of his loss, becomes predictable.

When fate favors it, the lousy investor feels a god of finance; when luck plays against him, he believes he sees occult powers in every corner, which apparently conspire to impoverish him because they do not tolerate his divine clairvoyance. It is easy to see how this superstitious conception of the market-according to which every movement has a particular trigger, all fortuitous success an accurate explanation, all reverse a guilty in the shadows-reinforces the manic-depressive propensity of the investor masses.

When all the wrong investors finished buying everything they wanted to buy, they reclined comfortably to see how the price of their favorite cryptocurrencies continued to climb to infinity. But there was no longer anyone who maintained the illusion of wealth that seemed to multiply magically. Then the mood changed: there was no longer a buyer panic -the fear of being left out-, but the seller's panic -the fear of staying inside-, and the bloodbath began.

The excellent investor does not win because he is right, but because the flock is wrong. And the crowd is always wrong: in 2010/2011 it was wrong to see in Bitcoin a scam or a novel toy; in 2017/2018 it still does not understand how the original Bitcoin design (BCH, Bitcoin Cash) makes possible the existence of a decentralized digital currency, secure, resistant to inflation and censorship, on a universal scale.

The excellent investor receives this bloodbath as a gift from Satoshi because he never loses sight of the immutable principles of the economy - those that guarantee the failure of state money. His certainties are scarce but firm enough to keep him sane in times of madness.