For normal people, Teju Cole’s “The White Savior Industrial Complex” is about Africa. For tunnel-visioned obsessives like myself, only a few words need to be replaced to explain something deeply profound about investing.

The essay is a brilliant punch in the face and I can’t recommend it highly enough. Two excerpts:

“The White Savior Industrial Complex is not about justice. it is about having a big emotional experience that validates privilege.”

and further:

“One song we hear too often is the one in which Africa serves as a backdrop for white fantasies of conquest and heroism. From the colonial project to Out of Africa to The Constant Gardener and Kony 2012, Africa has provided a space onto which white egos can conveniently be projected. It is a liberated space in which the usual rules do not apply: a nobody from America or Europe can go to Africa and become a godlike savior or, at the very least, have his or her emotional needs satisfied.”

The two fragments to remember while I pivot here are “big emotional experience” and “a  space onto which white egos can conveniently be projected” only for my purposes, switch “white” to “rich”.

(How many of you see where I’m going already?)

There’s not a single trustworthy study that suggests that picking individual stocks is a good idea relative to indexing. Not a fucking one.

If Rational Agent were even remotely applicable to investing, and the only concern was generating the highest long term returns, then 90% of investment accounts would consist entirely of SPY and cash.

But there’s no “conquest and heroism”  in that, is there? Anybody can just go along for the ride, taking what’s given like an ovine, medieval peasant. There is no way to, in the immortal words of Ebby Calvin Nuke Laloosh, “announce my presence with authority.”

As with the mythical, colonial, delusional version of Africa described by Mr. Cole, the market offers the chance, albeit infinitesimal, to show up poor and end up not only rich, but powerful and famous. Either way, personal decisions have tangible, monetary outcomes – the ego is at stake and this is a rush in itself.

Icahn, Cooperman, Druckenmiller, Soros  – these are the Great White Bwanas of  Money Africa. The role of ignorant savages (again, we’re talking the fictional, self-aggrandizing Kipling version of Africa not the inconvenient real one) is played by retail investors who conveniently provide the late rally bids so the Bwanas can take profit.

The metaphor breaks down here, though. Given the chance, a real life poverty-stricken African would gladly opt out for a wealthier existence. But the average investor plays the stock picking game despite knowing that passive indexing is far more likely to generate higher returns. Why?

There’s the same aspirational delusion that sells lottery tickets, for sure. But i also suspect that investing has become Real World Las Vegas – a form of emotional pornography that satisfies the need for what Cole called “a big emotional experience”.

Pornography is the right term, i think – nothing except money can rival sex in the “things that can most fuck up your dopamine levels” category.

Investing is a much more convenient option that stowing away on a steamship bound for Cape Town, moreso because its pretty much the only form of adventure where you can sit on your ass the whole time.

In a virtual, sedentary sense the market does provide high stakes entertainment. The setbacks are truly disheartening and  big wins are truly ego-boosting – there is the feeling that you’ve outsmarted the majority, pitted yourself against the jungle and won.

But it’s a joke in the end. Pure chartists betting with their own money last two cycles at best. Long term, the vast majority of big winners are those most adept at convincing the shmucks to keep playing. Everyone jokes about “Where are the customers yachts?” while scanning charts for the next good set-up.

There has to be something deeply psychologically ingrained here. Cole’s White Saviour Industrial Complex is a grain of sand next to the scale of Financial Disneyland.

We all need adventure, I suppose. An endless cycle of waking up tired, commuting, pushing paper, commuting, eating, watching tv, sleeping, dying, is too bleak to bear.

“Every man”, wrote Saul Bellow, “has his own book of poems” in what is my favorite description of the basic need to mythologize and storify our lives to keep going. When it comes to investing though, another Bellow quote should also be kept in mind:

“A great deal of intelligence can be invested in ignorance when the need for illusion is deep.”

Teju Cole explains investor delusions while writing about Africa

4 thoughts on “Teju Cole explains investor delusions while writing about Africa

  1. D says:

    Finally…the Interloper has come back to us.

    If I’m understanding you correctly, active investing (picking stocks) is akin to emotional fulfillment of the ego, almost encroaching on narcissism territory, where one’s intelligence can be validated by smartly picking the correct stocks. But I would argue that passive investors shouldn’t get too cocky and confident that active investors are purely stroking their ego rather than maximizing monetary rewards, The reason why the literature says passive investing outperforms is because the vast majority of investors, institutional or otherwise, are all active and thus collectively, very few active investors have any real edge. Competition drives down rewards in all industries, including investing, and net fees and commissions, passive investors come out ahead.

    Ultimately, a great deal of what we do in life is at least partially to satiate our ego. Active investing is just another manifestation of that. Paradoxically as a passive investor who is presumably outperforming, the last thing you want to do is to encourage people to become passive investors. The more active investors there are, the less chance for active outperformance.

  2. […] • Interloper: “Investing has become Real World Las Vegas — a form of emotional pornography.” […]

  3. Jonas says:

    I think it’s because investing is insanely boring, while at the same time being risky (more so than it needs to be, and also risky to both ego and wallet). So people invent ways to stay motivated, and belief that you can outdo the market, particularly stock picking or market timing are ways to do that.

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