Last Friday we looked at a famous poem by William Blake and quizzed what it had to do with investing. The poem goes:
To see the World in a Grain of Sand
And a heaven in a Wild Flower
Hold Infinity in the palm of your hand
And Eternity in an hour.
The quiz question was “What does this poem have to do with investing?”
The answer to this quiz can help us understand why few investors succeed continuously and almost always fail.
This is because most investors don't see a whole picture. The few winners realize that we live in a connected world. Let's look at bit at quantum mechanic to understand this. Then we'll tie this science into economics.
The book “The Holographic Universe” by Michael Talbot shares three stories, one of a famous physicist, David Bohm, one of a new kind of energy field and the last is about the bullet that killed Abraham Lincoln.
Bohm, in talks with Albert Einstein, came up with a theory that there is a deeper reality that connects all things which has not yet been discovered by science. Bohm called this proposed new field the Quantum Potential and theorized that like gravity it pervaded all space. However, unlike gravity the influence of this field does not diminish with distance. This energy has an information quality that connects all things. He argued that our views of reality are too limited. An example used in the book to explain this connection was to ask what caused Abraham Lincoln's death. The traditional answer would be the wound from the bullet fired from John Wilkes' gun.
But a complete list would have to include all the events that led to the development of the gun, all the factors that caused Booth to want to kill Lincoln and even all the steps in the evolution of the human race, that allowed for the development of the hand capable of holding the gun, and so on and so on.
The point is that no single cause and effect event is really separate from the universe as a whole. Moreover, Bohm argues that the universe is a hologram and just as every portion of a hologram contains the image of the whole, every aspect of the universe unfolds the whole as well.
Bohm argues passionately that our current way of fragmenting the world into parts not only does not work but may lead to our extinction. We cannot treat parts of our body and not be concerned with the whole. We cannot deal with various problems of society such as crime, poverty, drug addiction and terrorism without addressing the problems of our society as a whole.
In the same vein we cannot invest in any one part of an economy without paying attention to the whole. We cannot go for the money without looking at the service and the customer.
Investors who succeed are always asking themselves the following questions:
1. What do potential customers of a business need now?
2. What worries these customers? What would they be eager to buy?
3. What can make the current customers happier?
4. How can the products this business sells help the customers have a
5. How can the products this business sells become more useful?
6. How can the products this business sells become more valuable?
7. What good will this product bring to everyone as a whole?
In addition, successful investors gain knowledge about their next investment from their failures as well as success. Most investors discard lessons that result in loss because they consider losses failures. Personal failure is difficult so the tendency is to distance oneself from the experience. Typically investors don't invest twice in types of investments that lose for them first time.
So investors who jumped into the ecommerce equity market before it crashed are burned on that idea for all time. Successful investors see the links between their losing trades and those that will win.
Even worse losing investors take winning investments personally.
Successful investors use the “As above, so below” theory which says that we can learn something about everything from anything.
Using this principle creates a huge data base for us to expand our thoughts and knowledge about any investment we may choose.
Successful investors realize that everything is connected and that every single particle of the universe contains a field that has access to a blueprint of the universe not to mention the global economy and more mundane matters such as the value of an investment. This is what I think William Blake understood when he wrote his poem.
Until next message may all your investing be whole.