I have a little mantra I like to repeat sometimes. It is a riff on the famous quote from Fight Club.

The things you own, end up owning you.

The thoughts you think, end up thinking you.

The masks you wear, end up wearing you.

Me (with apologies to Chuck Palahniuk)

If you’re reading this, you probably think of yourself as having values.

But where do they come from?

Are they your values, or are they merely values that have been transmitted to you via prestigious institutions and mass media?

It is worth meditating on this. Values are not an unalloyed good. Values often function as obedience collars and/or prison walls.

Investors and investment organizations anchor on an identity and its associated values just like everyone else. A lot of this boils down to whether you are a mean reversion person or a trend person psychologically, and where you happen to land in terms of formative market experiences. People internalize this stuff and construct mental and emotional scaffolding around it. If they are successful, their sales and marketing strategies will invariably build on that scaffolding. The scaffolding is used to lay down masonry. Maybe this is the foundation for an exceptional investment career. Maybe it is the foundation for a psychological prison. Maybe it is both.

The thoughts you think, end up thinking you.

Market regimes apply selection pressures. What tends to happen is the poster children for a given regime get killed during regime changes. They are overfit for a particular environment. They cannot escape the psychological prisons they have built for themselves, and/or their investors have become their jailors. Woe unto she who offends the style drift police! (on Twitter, @ebitdaddy90, once commented that we should all strive to be beautiful cockroaches that are maddeningly difficult to kill)

A wise man once said: dinosaurs had their shot, and nature selected them for extinction.

Now do systematic value investors.

(I know value guy. I can see the steam coming out of your ears. That was just some good-natured ribbing. You’re getting your rotation year-to-date in 2021, and this is a big tent. I can’t resist poking the bear a bit is all)

Suppose we want to bust out of our psychological prison. How would we do it?

I would suggest a bit of LARPing. For those who are not huge nerds, LARPing stands for “live action roleplaying” a.k.a playing adult make-believe. As a creative-adjacent, woo-adjacent professional, one of the dumb assumptions I am guilt of making is that everyone plays a lot of adult make-believe in their heads.

I once had a conversation with an acquaintance about US-China relations. It was not an interesting conversation. To liven it up I said: well, what if we pretend it’s a big board game like Risk and we have to play the Chinese side? What might our strategy look like? The conversation got more interesting after that.

Where I think people get stuck is believing LARPing the Chinese side means you must personally endorse the CCP or Chinese government policy in some way. This is silly. But only to a point. If you LARP long enough and hard enough, you might end up coming around to China’s point of view.

The masks you wear, end up wearing you.

If you are an investor trapped in a psychic prison of your own making, LARP a little. Try looking at the world through a different lens. Let’s say you are a value guy anchored on low multiple stocks cuz cheapness. How would a growth guy evaluate opportunities? How would a growth guy think about risk? All you are doing is learning a new way of playing the game. You aren’t automatically going to turn into a sketchy SPAC promoter or a bellicose Tesla stan. I promise.

You can apply this playful LARPing in any area of your life. I’m not joking when I say you should meditate on it. You might be surprised by some of the prison infrastructure built out inside your head.