By: Cameron MacKenzie
The reason we tell a story isn’t to communicate information. The reason we tell a story is to communicate the truth. Or rather, the truth as we see it.
We believe something is true, and so we deliver information in such a way that conveys our belief about the meaning of that information. I would even argue that the preconceptions we use to gather the information could be understood as a story. We are meaning-making animals, which is another way of saying that we are story-telling animals.
But what we increasingly see in the stories we consume everyday from our various news outlets is something further and further from anything that could be called truth.
Warren Buffett, so we’re told, is a genial old man who lives in a quiet little ‘burb, who spends his days applying a simple theory to amass more wealth than any living soul. This is the first version of the story; the second usually swings the other way: Buffett in fact is a ruthless old man who’s transformed a single town into the fortress of his personal empire, from which he schemes to amass more wealth (and international influence) than any living soul.
Who knows who Buffett really is? At some point it doesn’t really matter. What matters is that we understand what the story does and why it does it. Is Tesla what Musk rambles about on a podcast, or is it a massive multi-national corporation employing tens of thousands? It’s the second, but the story of Tesla is the story of Musk--so, to understand Tesla becomes a question of understanding Musk: is he a narcissistic genius, or is he a frightened charlatan? Hour-by-hour the story changes, but it changes in a manner that, if you’re sensitive to the behavior of a story, is neither surprising nor difficult to comprehend.
The story needs compelling characters, and so the people involved become, in short notice, bigger than we are--smarter or stupider or more egotistical or more naive or more intuitive. As it stands today, we’re not even talking about the truth of the person or the company--we’re talking instead about the truth of the media. The story now shows not what the subject is, but instead it shows what the media wants.
Unfortunately, this matters. If valuations are indeed driven by stories, then if we don’t understand the story, we won’t understand the valuation. Is Jamie Dimon a hero or a villain? Is Starbucks better or worse off without Shultz? What is the ultimate legacy of Bill Gross? Is Exxon stuck in the past or positioning for the future? Even the framing of these questions suggests a pre-existing story and demands a response that will then weave another story. People want that story, and I think that story affects the valuation. After a while it’s natural to ask that if the valuation is the truth, and the story affects the valuation, then what’s the difference between the truth and the story? Will the “truth” ever come out?
This assumes, however, that we’re caught up in the minute-by-minute story. There are other stories. There are stories that argue the market is unquestionably the best bet over the long term. There are stories that argue it’s useless to try to time the rise and fall of prices. There are calm, measured, responsible stories that are told by educated people with a long-term view. From these bigger stories--these longer, more sophisticated stories that encompass the little whirlpools we’ve been talking about--we can sit back and watch the media turn itself around. We can watch the newest IPO flash and fade. We can watch the market build up the next superstar, tear him down, and build him back up again. And we might be able to do it without losing money. Once we understand the existence of the story and how the story works, we might be able to use that story to our own benefit instead of getting used by it. If we can begin to see what the little stories are doing and why, we might be able to get a window into the thinking of the market itself. And while neither the story nor the market is calm and measured, if we can affect just such an attitude in the face of it, we might be able to chart a path to our own gains through it.
Opinions expressed here are those of the author and not necessarily those of SagePoint Financial, Inc.