Is Opportunity Knocking? Strange Rites
It is the night of Saturday, especially consecrated to a ritual which is awesome to us, faithfully followed by the devotees of a certain cult.
Two groups of 12, dressed in colourful costumes, carry out complicated movements within an enclosed space. They at times respond to musical stimuli applied through a primitive instrument by men of seeming authority who, with a few assistants, supervises their activity. Entirely surrounding the area devoted to the ritual, a congregation gives its responses. At times the people saying, sometimes they shout, sometimes they are silent. Some wield an instrument which gives forth a strange sound.
Much care has evidently gone into the planning of the geometrically designed arena. Around it, are colourful insignia, flags, banners, decorations probably designed to raise the emotional pitch of the individuals in the group. The atmosphere is eerie partly because of the abrupt changes in emotion. Their reaction to the ecstatic processes being enacted in their midst is so explosive at times that one wonders why they do not spill over into this sacred enclosure. Both joy and sorrow are manifested among the votaries.
We are observers at a floodlit football game (soccer to North Americans). What is missing from the observer's account is a knowledge of what is actually happening, and why. If we have this knowledge, we can identify the players, crowd, referee, the use of chalk lines. If we do not, we continue:
Here a man writhes on the ground, another grimaces, sweat pouring from his face. One of the audience strikes himself, another his neighbor. The totem rises into the air, and is hailed by an awesome roar from the assembly... Then we see the blood has been shed.
This passage was written by an Eastern writer intended to show (Westerners) the importance of understanding events in context. From my previous post Blind Spots (see link below), this story could have been written by any one of the three blind men with their decontextualize worldview and primacy for the parts.
Investors, including institutional investors, without an insider’s perspective of an industry are at a disadvantage when it comes to extracting meaning from the ‘game’, much like the observers of this football game experienced. For these investors, a decision to invest in a particular industry – especially one that is not easy to understand and with a history of destroying value – is an out-of-context decision that usually comes with a sense of unease, a greater sense of uncertainty and an inaccurate perception of risk. I believe this is one reason why investors either avoid the airline industry or limit their time invested in a particular company within the industry.
To raise one’s ‘comfort’ level, reduce this sense of uncertainty and to assess risk more accurately, a larger viewpoint, a so-called shift in perception, is required, a view that changes the whole mosaic of making sense of things.
Think of a winter storm. An observer with no knowledge of weather systems encountering the storm for the first time, from ground level, will experience it as a series of uncertain and disparate events: a temperature drop followed by small intervals of snow, ice pellets, freezing precipitation, rain, slush on the ground, and then a shift in wind speed and direction. When viewed from a satellite, however, it’s just one event, a unique weather system called a Trowal, a trough of warm air aloft.
Individuals with an ‘active’ involvement in meteorology will experience the storm quite differently and be more at ease than the ‘out-of-context’ observer because they understand what is actually happening, and why. In fact, with this larger viewpoint, they can anticipate future events associated with the storm system’s movement – even an approaching weather system conveys information – and be more resolute in their decisions related to the phenomena.
The microlevels of understanding – the blind men’s analytical work – are not to be underestimated for they form the building blocks of any sound investment decision. But it becomes a poor reference point if a decision begins and ends here. Rather, it is this larger viewpoint – the contextual aspect – that is the Master, the one that provides the rich background to any sound decision. And it is with this additional viewpoint that a hidden opportunity may be presenting itself at the door today.
Below is a post from earlier this year that provides a contextual framework that should help in deciding to invest, or stay invested, in Air Canada. Maintaining a competitive advantage is a key aspect in any longer-term investment decision.
A matter of design, and design within a design
Resoluteness: The courage to act with conviction in the face of uncertainty and risk.