A rebel, two generals, and their story
Do you know the story of Francois Dominique Toussaint Louverture? He was a highly respected French general, a visionary rebel leader who established a free republic, and much more. Check your feelings while reading this remarkable true story as it is essential to know what chemicals are released to create your feelings. Yes, I want to show you something. There is a reason.
Toussaint Louverture was born a Prince. His family ruled the Kingdom of Allada, one of five neighboring kingdoms, all individually aiming to become the regional "superpower" in the early 18th century. The five kingdoms were situated in what is today the Western-African state of Benin, which was a significant center of the Atlantic slave trade. The local kingdoms often fought bloody wars to take control of this "lucrative" trade.
The King of Allada had two sons of which one, after a conflict, fled to the neighboring Kingdom of Dahomey, asking to go to war with the King of Allada; yes, you got it right, his own brother. The King of Dahomey saw a chance to grab more power and agreed to fight this war with inside information in 1724.
The Kingdom of Allada did not stand a chance. Dahomey conquered Allada, and King Gaou Guinou and his wife Catherine were captured and sold as slaves. History (both oral and written) reports that in three days, the King of Dahomey's army slaughtered thousands of Allada's warriors and made more than 8,000 prisoners who were sold as slaves. During 1724, St. Domingue (now called Haiti) received circa 12,000 slaves, mostly coming from the Kingdom of Allada (Cornevin R.- Histoire du Dahomey, 1962 p.105).
And so King Gaou Guinou and his wife Catherine were shipped, as slaves, to St. Domingue, to work on a sugar plantation. At the time, St. Domingue had just become a French colony, ceded to the Kingdom of France from the Kingdom of Spain after Spain lost the nine years war (the unofficial first world war). Gaou Guinou and his wife Catherine were separated on arrival and both remarried. Just a year after arriving in St. Domingue, Gaou Guinou became the father of Francois Dominique Toussaint Louverture, a prince, the successor to the crown of Allada and born a slave.
Meanwhile, Europe's kingdoms were also fighting wars against each other to become the regional superpower motivated by large financial incentives. Amongst the financial incentives was the Caribbean sugar trade, which created a significant source of income. The European wars often spilled over the Caribbean islands. Toussaint Louverture, a very able and talented man, became a highly respected high-ranking general in the French army fighting off English and Spanish forces in the islands.
Nothing stays the same, and the Kingdom of France came to an abrupt end during a revolution. King Louis the XVI and his wife Marie-Antoinette were captured and not sold as slaves but were executed by guillotine. After a tumultuous, bloody, and terrifying period in France, a young general in the French army became the de-facto new ruler of France by a coup. His name was Napoleon Bonaparte.
St. Domingue had its own revolution, and Toussaint Louverture became a very successful rebellion leader, as well as a respected leader of the newly established free Republic of St. Domingue, which lies in the western part of what was known then as Hispaniola. Rather than taking revenge on former plantation owners, Toussaint let most of them keep their properties and ordered them to pay for labor and increased their taxes. The free republic of St. Domingue blossomed under his leadership.
However, Napoleon Bonaparte's interpretation of Liberté, Egalité, Fraternité was not the same as Toussaint's. Napoleon sent an expeditionary force to St. Domingue to regain possession of it. Toussaint Louverture was defeated and died a lonely man in a French prison. He would never know Napoleon Bonaparte would end up in the same way.
Wow, this story is ridiculous. It can be used to explain so many things in life: randomness, family, betrayal, greed, revenge, inequality, power struggles, incentives, morals, values, interdependencies, and the fact that nothing stays the same apart from the frequent motivations of a few main characters who are always amongst us at any given time and any given place, no matter where we are or what period we are in.
We all continuously read, listen to, and tell stories. We connect socially through them, creating feelings through the release of chemicals like oxytocin (love), cortisol (fear), and testosterone (aggressivity): from the time when stories were first sung or told around prehistoric campfires, to current bedtime stories, to the stories that we describe in our blog posts, Facebook posts, YouTube videos, Instagram and TikTok posts.
Stories play a huge role in preserving cultures, defining tribes, or groups with shared norms and values. Stories also serve as a record of our history. So the next generation will abide by the stories of our main characters' norms and values, implicitly manipulating the listener/reader's future behavior. Stories also are used to deceit us or to rewrite a different version of history. Stories influence our behavior much more than we would like to admit. More on this later…
Electroshock, fake truths, parallel universes, and probabilities
Funny enough, as much as we like to listen to stories, we don't want to listen to our inner speech; you know, the voice inside your head that runs almost non-stop. We know this because a scientific experiment showed that 25% of women and a whopping 67% of men prefer electroshock over spending time alone with their thoughts. Scientists have not quite figured out why there is such a difference between genders nor the reason why many of us prefer electroshocks over listening to ourselves. In any event, it looks like we are better suited to follow stories of others than listening to ourselves. But here lies a problem: what are the motivations of the people telling these stories we like to follow? Are they fact-based, fantasies, or outright manipulation?
Is it even possible to know the truth, or are there multiple truths or parallel universes at the same time? So yes, here it gets a bit difficult. You see, parallel universes could very well exist. Many scientists believe a multiverse is a real possibility. It has been scientifically-proven that particles can be at two places at the same time. The basis of this thinking lies in quantum physics, which states that interaction between particles is entirely random, is entirely probabilistic, and can jump space but stay linked.
To me, it has many similarities with the story of Toussaint Louverture. Toussaint's story is entirely random, jumps space, but stays linked, and its events are wholly random and probabilistic. Toussaint's story shows multiple truths are possible: it depends on who tells the story and what their motivation is. A parallel universe of truths, if you will. Toussaint's story is just one example, but parallel universes exist all around us.
Stories from anthropology, history, sociology, and religions tell us many explanations of who, what, and where it all began for us. Nobody can prove yet what happened in the last million years, so all we can do is believe. Our mind will conform its thinking and self-talk to the universe we choose to believe in, or have been manipulated to believe in.
Ouch! – and I thought I was an independent thinker and that there was only one truth!
Narratives, pandemics, stock market, big data, and the universal truth
So yes, what about stories and the stock market? Yikes, enough already! We all know financial "news" play 24/7; TV/Cable shows, websites, financial newspapers, blogs, stock-tweets, friends and family liking, forwarding, or telling us stories about this fantastic new investment or explaining everything that is going on. You name it. It is a perpetual waterfall of information, and randomly some stories survive and make it to the headlines, while some start to live a life of their own and go viral in a matter of hours. How is this possible, and why are these stories influencing billions of people at the same time?
Robert Schiller has written a fascinating book called Economic Narratives, in which he explores this subject. He thinks economics should embrace stories as an angle to explain economic, consumer, and investor behavior. One of the most intriguing things in his book is the proposition that viral stories act a lot like a pandemic virus. Epidemiology can help explain how stories are contagious, multiply fast, die out, and reoccur over time. A few super spreaders are responsible for large contagions in a pandemic, and it is the same for viral stories. Influencers, experts, or people we regard highly, can have a disproportional impact on the stories we read and believe. It surely creates openings for darker forces who want to manipulate our behavior. This should give us great pause for thought!
The stock market is a place where we can be sure that contagious stories appear almost constantly, and some are straight out deceptions. For every believer (buyer), there is a disbeliever (seller), each with their convincing story. Short-sellers live in a parallel universe compared to buyers/owners who believe the investment story's complete opposite. Where things go really off the chart is when a pandemic is taking place in the stock market where believers outnumber the non-believers in droves and push valuations into a new universe.
You have heard the stories about market bubbles, buy when there is blood-on-the-street, disrupter, game-changer, revolutionary technology, this is the new normal, a few times, right? This is likely when uninformed decisions are easily made based on the prevailing contagious story, but they often do not result in the desired investment outcome.
Like in a pandemic, self-isolation, lockdown, and less interaction with super-spreaders might help obtain our desired investment outcome. It will give us enough time to fact-check, be skeptical, get informed, and check the positive and negative data before believing. The need for clean data is paramount. It is becoming a significant asset for anyone who wants to invest and act on a promising story.
Last time I checked, we do not live in prehistoric times anymore; our smartphones are our campfires but also our libraries. It is much easier to fact-check the data presented to us, so why not do it more?
Even when a story lives in multiple universes and is very contagious, know there is one multiverse truth that can make us immune to all investment narratives, a vaccine so potent it works against all random infectious investment stories with high probabilities of multiple universes, and it is free for everybody.
Unfortunately, you may think it is fake, but think about it: the result of your investments will improve dramatically. You have to believe in it. Anyway, here it is:
"Over the long term, it's hard for a stock to earn a much better return than the business which underlies it earns. If the business earns six percent on capital over forty years and you hold it for that forty years, you're not going to make much different than a six percent return – even if you originally buy it at a huge discount. Conversely, if a business earns eighteen percent on capital over twenty or thirty years, even if you pay an expensive looking price, you'll end up with one hell of a result." Charlie Munger on the Art of Stock Picking.