One hundred years of Bitcoin finance

Bad investment is degrading only when found in company with riches. The poor man is restrained by poverty and need: labor occupies his thoughts, and takes the place of investment clout. But rich men who are badly invested live for their stupidity only, and are like the beasts of the field; as may be seen every day: and they can also be reproached for not having used wealth and leisure for that which gives them their greatest value.ⁱ

When we invest, another person thinks for us: we merely repeat his mental process. In learning to handle money, the pupil goes over what his mentor outlines: so in investing; the greater part of the work of thought is already done for us : this is why it relieves us to go into owning shares after a lifetime of having built our own companies. And in investing, one's capital is, in fact, only the playground of another’s thoughts. So it comes about that if anyone spends almost the whole day in following stocks, and by way of relaxation devotes the intervals to some thoughtless pastime, he gradually loses the capacity for thinking; just as the man who always rides, at last forgets how to walk. This is the case with many famous money managers: they have read themselves stupid.

For to occupy every spare moment in investing, and to do nothing but follow one's investments, is even more paralyzing to the mind than constant manual labor, which at least allows those engaged in it to follow their own thoughts. A spring never free from the pressure of some foreign body at last loses its elasticity; and so does the mind if other people’s thoughts are constantly forced upon it. Just as you can ruin the stomach and impair the whole body by taking too much nourishment, so you can overfill and choke the mind by feeding it too much. The more you buy and sell, the fewer are the traces left by what you have bought and sold: your capital account becomes like a tablet crossed over and over with writing. There is no time for ruminating, and in no other way can you assimilate what you have bought. If you trade on and on without setting your own thoughts to work, what you have can not strike root, and is generally lost. It is, in fact, just the same with money as with bodily food: hardly the fifth part of what one takes is assimilated. The rest passes off in evaporation, respiration and the like.

The result of all this is that graphs are nothing more than footsteps in the sand: you see the way the man has gone, but to know what he saw on his walk, you want his eyes.

There is no quality that can be gained by simply investing in those who possess it; whether it be persuasiveness, imagination, the gift of seeing similarities, boldness, high margins, quick returns, stability in face of market turbulence, rapid implementation within budget or correct design, unexpectedly being right, a cheap ruggedness or surprisingly functional complexity and the like. But if these qualities are already in us, exist, that is to say, potentially, we can call them forth and bring them to consciousness; we can learn the purposes to which they can be put; we can be strengthened in our inclination to use them, or get courage to do so; we can judge by examples the effect of applying them, and so acquire the correct use of them; and of course it is only when we have arrived at that point that we actually possess these qualities. The only way in which investing can form a businessman is by teaching us the use to which we can put our own natural gifts. We must have these gifts before we begin to learn the use of them. Without them, following the markets teaches us nothing but cold, dead mannerisms and makes us shallow imitators.

The strata of the earth preserve in rows the creatures which lived in former ages; and the array of paper on the shelves of a clearing house stores up in like manner the errors of the past and the way in which they have been exposed and, sometimes, corrected. Like those creatures, they too were full of life in their time, and made a great deal of noise; but now they are stiff and fossilized, and an object of curiosity to the financial palaeontologist alone.ⁱⁱ

Herodotus relates that Xerxes wept at the sight of his army, which stretched further than the eye could reach, in the thought that of all these, after a hundred years, not one would be alive. And in looking over a huge catalogue of new issuance, one might weep at thinking that, when ten years have passed, not one of them will be heard of.

It is in finance as in life: wherever you turn, you stumble at once upon the incorrigible mob of humanity, swarming in all directions, crowding and soiling everything, like flies in summer. Hence the number, which no man can count, of bad IPOs, those rank weeds of finance, which draw nourishment from the corn and choke it. The time, money and attention of the public, which rightfully belong to good companies and their noble aims, they take for themselves: they are written for the mere purpose of scamming money or procuring undeserved trust. So they are not only useless; they do positive mischief. Nine-tenths of the whole of our present financial market as perceived by an innocent outsider has no other aim than to get a few shillings out of the pockets of the naive public; and to this end issuer, exchange and forum shill are in league.

Let me mention a crafty and wicked trick, albeit a profitable and successful one, practised by littérateurs, hack writers, and voluminous authors. In complete disregard of good taste and the true culture of the period, they have succeeded in getting the whole of the world of fashion into leading strings, so that they are all trained to read in time, and all the same thing, viz., the newest books; and that for the purpose of getting food for conversation in the circles in which they move. This is the aim served by bad novels, produced by writers who were once celebrated, as Spindler, Bulwer Lytton, Eugene Sue. What can be more miserable than the lot of a reading public like this, always bound to peruse the latest works of extremely commonplace persons who write for money only, and who are therefore never few in number? and for this advantage they are content to know by name only the works of the few superior minds of all ages and all countries. Literary newspapers, too, are a singularly cunning device for robbing the reading public of the time which, if culture is to be attained, should be devoted to the genuine productions of literature, instead of being occupied by the daily bungling commonplace persons.

It is in finance no different from literature, and hence, in regard to investing, it is a very important thing to be able to refrain. Skill in doing so consists in not taking into one’s account any stock merely because at the time it happens to be extensively bought; such as mining cooperatives and miner manufacturers, dice sites and various Bitcoin gems, which make a noise, and may even attain to several editions in the first and last year of their existence. Consider, rather, that the man who underwrites for fools is always sure of a large audience; be careful to limit your time for reading his crud, and devote it exclusively to those prospectuses of those great minds of all times and countries, they who o’ertop the rest of humanity, those whom the voice of fame points to as such. These alone really educate and instruct, these alone may bring you return and revenue for your time and effort. You can never read bad literature too little, nor good literature too much ; you can never avoid too many scams, nor invest enough in the true businesses. Scams are intellectual poison; they destroy the mind. Because people always follow what is new instead of the best of all ages, scammers remain in the narrow circle of the ideas which happen to prevail in their ephemeral time; and so their circle sinks deeper and deeper into its own mire.

There are at all times two financial markets in progress, running side by side, but little known to each other; the one real, the other only apparent. The former grows into permanent wealth; it is pursued by those who live for thinking and making; its course is sober and quiet, but extremely slow; and it produces in a year scarcely a dozen items; these, however, are permanent. The other kind is pursued by persons who live on other's thinking and making; it goes at a gallop with much noise and shouting of partisans; and every week puts a thousand items on the market. But after a few years one asks, Where are they? where is the glory which came so soon and made so much clamor? This kind may be called fleeting, and the other, permanent finance.

This text is greatly indebted to the late German philosopher, Arthur Schopenhauer's third chapter on Religion, as well as to the excellent English version by Thomas Bailey Saunders. My own contribution is minimal.

1. This otherwise dubious passage needs to be reinforced, first by observing that said reproachments may never come from the poor, as it is strictly they who have money who may judge the proper uses of money, and second by the following clarifications of charity :

   Sep 11 17:14:51 {mircea_popescu> i blame ballmer. i think he's the first idiot that gave money to these retards with their advice to be cool. it's always the fault of whoever gives money to retards.
   Sep 11 17:16:10 {nubbins`> giving money to retards is OK as long as you have a plan for getting it back. e.g.: welfare cheques + video lottery terminals

   Sep 11 17:16:24 {mircea_popescu> nope, it's the only sin, as retards should never have money. any of it. at all. if you do everything else including raping your infant mother and killing random people a la johnny the homicidal maniac, but you never ever under any circumstances give money to retards you still go to heaven, plus all the other trims, like 40 virgins, nirvana etc.
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2. Got any Revlon shares, do you ? [↩]