The four seasons of investing

As human beings, we are hardwired to apprehend the world through stories. Stories are how our memories are stored, how we put facts together. Stories are always linked to primary emotions, always interconnected, hence our tendency to apprehend the world through causality and our incapacity to accept uncertainty and randomness. Stories are what define us as individuals and as people. Man’s search for meaning and the narrative process are at the core of our psychology, but also the roots of every religion, culture etc. As Reynold Price wrote “A need to tell and hear stories is essential to the Homo sapiens--second in necessity apparently after nourishment and before love and shelter. Millions survive without love or home, almost none in silence; the opposite of silence leads quickly to narrative, and the sound of story is the dominant sound of our lives, from the small accounts of our day's events to the vast incommunicable constructs of psychopaths."

As market participants, our actions are driven by primitive emotions of greed, fear, hopes and herd instincts. The internal battles, between our reptilian brain and our neocortex, are the engines powering the stock market and giving it its impetus. While a utilitarian rational brain would command to buy more when prices are falling, most market participants prefer to buy rising prices or sell when prices are falling. Without emotions there would be no action. Without action and emotional inefficiencies, there would be no market. Man’s "failabilty" is the source of progress. For every stock you want to buy, you need to find a willing seller. For every stock you want to sell, you need to find a willing buyer. You need two to make a market, like you need two to tango. If one accepts the idea that in a closed system where the money in circulation does not change and where taxes and commissions can be ignored, any trade is a zero sum game, that would mean that for eve