30 Mar What does Life of Pi teach you about investing
I am not a fan of fiction books but I love stories. One of the easiest ways of going through a story is to watch the movie adapted from a popular fiction book, and Life of Pi is one of them.
The story is about a young Indian boy who called himself “Pi” after his real name, “Piscine”, was made fun of by his schoolmates (rhymes with “Pissing”). His father was a businessman who operated a zoo and the family was quite well-to-do. Pi was an intelligent young man who could recite the mathematical pi to countless decimal places. He was also a curious kid where he was fascinated by a few religions at the same time – he learned and practised the teachings from Hinduism, Christianity, and Islam. He recognised each religion contained valuable insights even though each told a different story.
One day, the government wanted to take back the land where the zoo resided. The family decided to sell the animals to various zoos around the world and emigrate to Canada thereafter. They met with a storm out in the ocean and the ship sank. Pi, who was out in the deck alone, survived. But the rest of the family perished in the sinking ship.
Pi escaped on a life boat and found himself in company with a zebra, orangutan, hyena and tiger the following day. The hyena began to attack the zebra. The zebra was initially injured during the storm. It could not retaliate and was eventually killed by the hyena. The hyena then killed the orangutan. The commotion was ended abruptly when the tiger, who was hiding under the canvas all the while, pounced on the hyena and killed it. Pi found himself alone with one of the fiercest animals. He learned to survive with the tiger on the lifeboat for 227 days before they reached the Mexican shore.
Pi escaped on a life boat and found himself company with his mum, a terrible cook and an injured sailor. The cook attacked and killed the injured sailor and Pi’s mum so that he would have all the food for himself. Pi was terribly upset seeing his mum die and he killed the cook in return. He survived on the lifeboat for 227 days before he reached the Mexican shore.
Which do you prefer?
Pi did not say which was the true story. Instead, he asked which story do you prefer. This is linked to his perspective on religion – there is no one size fits all narrative that would help people find faith. The essence of the stories above was the same but the interpretations were different. You choose the story (religion) that you accept.
What’s the point, Alvin?
It struck me as I see similarities in my situation. I am not talking about religion but about investment. Like Pi, I was trying to find the “truth”. While he tried to see the faith through the different lens painted by each religion, I tried to look for profits in the financial market through the lens of various methods. I learned and practised technical analysis, fundamental analysis, trend following, mean reversion, value investing, and passive investing, hoping there is one method that can show me the way to profits. Each has its unique approach to see the market and sometimes, it can be contradictory to one another. Despite the differences, we have seen successful practitioners in each field.
Pi did not want to convert the reader to a particular religion. In fact, he left it open by asking which story do you prefer. Likewise, I am not going to tell you technical analysis is better than fundamental analysis, or vice versa. In fact, I am not going to tell you what is the best method. I will ask you which lens do you prefer to put on while looking at the financial markets. You can also have the flexibility to take the elements from the different lens and piece together your unique pair of lens to see the markets.
Which do you prefer?