Jöns: What’s that rubbish there?
Painter: People think the plague is a punishment from God. Crowds wander the land lashing each other to please the Lord.
Jöns: Lashing each other?
Painter: Yes, it’s a horrible sight. You feel like hiding when they pass.
Jöns: Give me a gin. I’ve had nothing but water. I feel as thirsty as a desert camel.
Painter: Scared after all?
—The Seventh Seal
The Seventh Seal is a film about the silence of God. It’s set in medieval Europe, during the Plague and the Crusades. The protagonist, the knight Antonius Block, spends the film looking for signs of God’s existence. He stalls Death with a now-iconic game of chess.
They just don’t make ’em like this anymore, folks. We’re too clever for movies that take religion so seriously. So literally. It’s all too earnest for The Age of Snark.
Anyway, as much as it’s about Antonious Block’s existential crisis, The Seventh Seal is about medieval European society’s response to the apocalyptic destruction wrought by the plague. And boy, it ain’t pretty. Inquisitors burn witches. Charlatan theologians prey on the weak and the naive. Flagellants wander from town to town, putting on bizarre religious displays.
Observing a procession of flagellants, Block’s squire mutters:
Is this what we offer to modern men’s minds? Do they really believe we will take all of this seriously?
As investors, we too wrestle with God’s silence. It’s not war or plague that shakes our faith but changes in the structure and behavior of financial markets. How do we respond?
In many circles–particularly those of the fundamental discretionary persuasion–there has emerged a kind of millenarian cult mindset. We endure this suffering to purge our sins. To mortify the flesh. When The Great Reckoning arrives, the Algos and the Indexers and the Risk Parity Heretics shall be cast into the flames. And we, The True Investors, shall emerge from the hellfire unblemished, as did Buffett after the Dot Com Bubble.
Make no mistake. This is religion. Yes, the sermon comes with charts. There will be CAPE charts. There will be Value/Growth dispersion charts. There will be Active/Passive cycle charts. But these charts aren’t science. They’re religious icons.
As we begin meeting with clients, investment managers and management teams in 2019, I’d encourage us all to look at the arguments and data we’re being presented though this lens.
How much of what’s passed off as “analysis” is, in fact, religious fanaticism clothed in the language and trappings of science?
How much of what’s passed off as “analysis” is, in fact, religious art?
How often, when we laud “conviction,” are we just promoting the mortification of the flesh?