We owe mediocrity nothing
rewrite of a September 2019 note on exceptionalism inspired by Bloom
Shakespeare was a master of ellipsis, of leaving things out...
Bloom, Harold. Cleopatra: I Am Fire and Air
THE CRITIC SEES CLEARLY
In How to Read and Why, Harold Bloom exhorts us to “read deeply, not to believe, not to accept, not to contradict, but to learn.” Reading closely or “deeply” is much like listening -- it is about hearing both what is said and what is not said, as well as how it is said. In his books, Bloom repeatedly highlights one Shakespeare’s skills as knowing what to leave out or unsaid – the “master of ellipsis” was how he would express it.
Many will wonder what in the world a literary critic has to do with investing and business analysis – but I would point out two facts (1) much of business is just drama acted off-stage, and (2) most of a business or security analyst’s time is spent reading or interviewing professionals about their businesses. As business analysts, we are business critics – the domain is business, but large parts of the skill-set involved in performing criticism are the same as what’s used in literature, drama or any other field. Much of what we do as investment analysts is reading, so the question of how to read well and actively is essential. Just as one must interpret Shakespeare – one must interpret and be able to fill in the ellipses and gaps left in the narratives of CEO’s annual letters or business reports in the Financial Times or Wall Street Journal. Our job is to read and listen with a critical eye and ear -- to mind the gaps in what is said as well as the gaps in our own understanding.
The point of criticism in any domain is not just to criticize – but to see clearly. In The Anatomy of Influence, Bloom cites one of his mentors teaching him that the heart of criticism is appreciation. The opposite of appreciation and criticism is mediocrity. The mediocre eye sees what it is told to see and the mediocre ear hears what it is told to hear. The mediocre reader catches the headline and whatever points reinforce his or her existing beliefs and learns nothing.
In investing, systematic effects or factors and mediocrity are synonymous. Excellence and learning are idiosyncratic. Our fund portfolio is idiosyncratic as well. Time will tell if the fund achieves excellence, but that is our unrelenting goal. Although he has passed away, Bloom left clear thoughts on mediocrity:
… we certainly owe mediocrity nothing, whatever collectivity it purports to advance or at least represent. (How to Read and Why).
Collective forms of mediocrity often dominate the business environment and media, from index funds to netflix and chill. We believe that one should be careful of institutionalized forms of mediocrity. Blindly relying on them for your future wealth and investment returns might not work as well as the crowds suggest.
SEEING THE EXCEPTIONAL - BOTH WHAT IS AND ISN’T
The alternative to mediocrity is to embrace exceptionalism - to leave out the ways in which we are the same and deliberately search our differences for competitive advantages.
What is left out, the ellipsis, can shift a community from one driven by conformity to one drive by competition; from one where wealth and status are stagnant to one where there is dynamic growth; from one which is merely alive to one that is thriving. When one deliberately and strategically leaves something out, you can end up with more. The ellipsis enables simplification.
The opposite of an ellipsis is a leaky abstraction - where information is unintentionally lost. The best modern example of leaky abstractions is the way some LLM’s tend to hallucinate or seem to make things up. The LLMs are just calculating vectors but the process of calculating the vectors does some rounding here and makes assumptions there and because this is not a deliberate leaving out of information for a purpose but something else, information leaks and the AI hallucinates and appears to be making things up.
Beginning to see starts with solitary reading so that we can see past ourselves into other stories and personalities and problems. And once you can see past yourself, then one can begin to also see what is missing any why — differentiating the ellipsis from the leak. And only once undertanding these and other things which aren’t on the page do we begin to understand what is on the page. Only once we understand what is left out of a company presentation or strategy can we understand what is included.
If one has only learned from mediocrity and to see what you are shown or hear what you are told — then you are not even at the beginning of analysis of a business, or a story. A critic understands context, not just the subject. To even get to the beginning of any sort of quality analysis we must reject the mediocrity of any recevied narrative - in literature or business.
We owe mediocrity nothing — what better motto for exceptionalism exists? And what other than a belief in being exceptional drives competition? And what other than competition drives progress?
We owe mediocrity nothing — what better way to reject conformity and create space on the page to learn, improvise and imagine.
Bloom saw clearly and advocated the exceptional in literature as essential to being able to see the exceptional in ourselves and others as shown in the brief excepts below.
Bloom - Read Deeply
Literature is life. It should not surprise us that the lessons Bloom learned from the exceptional in western literature precisely echo themes from Henrich on what makes WEIRD people weird, and exceptional, as well as the lessons of Dave Dunning on calibration. The same rejection of mediocrity that shot through the clarity of Blooms literary visions also drives the combinatorial innovation Andrew McAfee sees driving American industrial efficiency and a process of getting More from Less.
We are wandering through a jungle of ideas - but all of these lessons are leading to different parts of the same elephant: human progress, which is the bottom line.
Our goal as analysts is ultimately to be able to see the bottom line clearly, but this begins with being able to see past ourselves and our biases and assumptions as well as any leaks or ellipses.
CLOSING
We owe mediocrity nothing and seek knowledge not to know ourselves, but to be able to see past ourselves and our own biases and errors in the style of Dunning. This begins with the rejection of mediocrity and the appreciation of the exceptional in some area. Learning to become a critic, before being able to be an analyst.
Bloom offers literature and Shakespeare as a touchstone — but there are many exceptional artists or scientists or entrepreneurs who offer their own models from Feynman to Jobs to Vonnegut or Frida or Jane Austen or George Eliot. The exceptional is idiosyncratic, it doesn’t have a single form or path. It knows itself. It rejects and transcends mediocrity — Calvino’s the inferno of the everyday, and in doing so creates and conjures into being the raw materials for human progress.
Calvino has his own way of stating this at the end of Invisible Cities:
And Polo said: “The inferno of the living is not something that will be; if there is one, it is what is already here, the inferno where we live every day, that we form by being together. There are two ways to escape suffering it. The first is easy for many: accept the inferno and become such a part of it that you can no longer see it. The second is risky and demands constant vigilance and apprehension: seek and learn to recognize who and what, in the midst of the inferno, are not inferno, then make them endure, give them space.”
Calvino seems to echo the openeing challenge from May Sarton in the Prologue:
….it occurs to me that there is a proper balance between not asking enough of oneself and asking or expecting too much.…. Not easy to find the balance, for if one does not have wild dreams of achievement, there is no spur…. One must think like a hero to behave like a merely decent human being.
Bringing, Bloom and Sarton together in the end: We owe medicocrity nothing, because one must develop a heroic set of mental habits and discipline in order to be a merely decent investment analyst. Now back to work.