Since my Normblog profile, some of you have asked how someone of my opinions can work in and around the stock market. Easy. There’s a link between my liking of Wodehouse, Barrios and Hank Williams and my interest in equity markets.
It’s an opposition to what Paul Krugman sometimes calls “bigthink” – grandiose pronouncements about the big issues of the day, and a preference instead for close thinking about “smaller” parochial matters.
One thing Hank and Barrios have in common is that two of their greatest compositions were about dolls; El Sueno de la Munequita and Kaw-Liga. And in Wodehouse, the worst crime is the theft of a copper’s helmet, and the greatest disaster an unfortunate engagement or choice of dinner jacket.
There’s no pomp, pretention or bombast here. And no attempt to solve deep mysteries – though in eschewing the ambition of explaining human nature, they come closer than most to doing so.
And here's the link with stock markets. Because these are “unimportant”, they permit careful, detailed and illuminating thinking. By contrast, big issues – Iraq, Palestine or Westminster politics – are often just platforms for the mentally ill, or (to change the metaphor) areas in which people from intellectual ghettos lob stones at each other.
Put it this way. Show me a paper about Iraq that combines the careful empirical work with good theorizing that you can find in this paper (to cite only one of many recent examples). Papers like this give me an intellectual, even aesthetic, satisfaction I hardly ever get from anyone's writings about Iraq.
Or this way. Thinking about equity returns is dominated by men like Robert Shiller and John Cochrane. “Thinking” about Iraq is dominated by the likes of Bush, Galloway and Chomsky. Spot the difference? Am I alone in being depressed by the fact that Oliver Kamm can waste his intellect writing about Chomsky?
What's more, thinking about stock markets does, maybe inadvertently, yield insights into human nature; it tells us about our attitudes to risk, and the errors we make in making judgments under uncertainty.
Of course, there are charlatans and idiots in the stock market, as in any walk of life, some in senior positions. But I can ignore these. On the bigthink issues, no-one seems able to do this.
What I’m saying is that greatness, in intellect or in aesthetics, is more often pursued and achieved in small arenas than large ones – which is, I guess, one message of this poem.