Winter Solstice – 21st December and Chilblains In Our Brains

It is the Winter’s solstice on December 21 at 17:11 (UTC).

The shortest day of the year in the northern hemisphere and the longest in the south.

We get ready to eat sticky rice balls (tang yuan) over here on Sunday (Dong Zhi day) and I am hoping to find some nice flavours in the supermarket later – praying hard that they have created sweet yam or potato stuffing instead of the usual peanut and sesame goo.

My Christmas present to myself is a book that was recommended by my good friend who works for a think-tank. She said it is a must read and I couldn’t resist throwing it into the basket when I went down to Times, the bookshop, armed with my birthday 20% discount voucher – one of the few advantages of being born near Christmas against the absolute disadvantage of the usual single present instead of 2, which I rightly deserve !

Back to the book, The Art of Thinking Clearly by Rolf Dobelli. It is a phenomenal attempt to compile an entire list of cognitive biases we all face in financial decision making and I am now at chapter 16 but my favourite so far is Chapter 4, If 50 million people say something foolish, it is still foolish, to quote Somerset Maugham.

I have to admit I am terribly guilty of all the investment fallacies I have read till Chapter 16, and write this with a sheepish defiance, for I had scored a near perfect for my Decision Making Process module in my MBA despite my admission.

The human mind is as imperfect as a rose would ever get and does not take too well to multi faceted problems of complex natures. During this time, we revert to whatever we have to cling to – roadmaps (analyses by others), consensus, authority, hindsight and whatever to convince ourselves that everything is alright and there is someone on top of things.

The power of the media has never been more pervasive in our linked up world that we are never short of a viewpoint on any subject matter. And the bigger the media company, the more clout they exert. That is enough for governments to realise and to bend, a case in point would be China where there is a tight rein on journalists, bloggers and their work.

My disdain for mainstream media has led to seeking out the alternative viewpoints more akin to my own in the markets which is highlighted in Chapter 8, the flawed confirmation bias theory. Consorting with the minority is a lonely, angst filled path and hardly sensible when the rest of the flock chooses not to think about issues that have become far too complex to understand, let alone solve.

I am convinced, on this mid winter’s night that even here in Singapore where we had the coolest day of the year this week, that society at large has a case of chilblains in their heads on where the markets are heading. For even New York mayor Bloomberg to shrug that a homeless girl’s situation is “just the way God works” and congratulate her on being homeless in New York where it is a much better place to be homeless than some place else.

Faith in stocks is only given to the Fed and not the economy, as FT reports.

The Fed cannot grow revenues and force companies to invest or raise wages instead of stock buybacks. The Fed cannot eradicate the widespread plutonomy that has overtaken social order. And the Fed is probably not aware that happiness is a stochastic phenomenon too and that it is in our genes

Maybe I am thinking too fast this winter solstice and I should read my birthday present to myself, Thinking, Fast and Slow by Daniel Kahneman, the other Nobel laureate for economics.

Happy Mid Winter !