Interpretation Is Overrated

2020 was one of the more interesting years to exist. 

I'm curious how one might react to that statement -- it depends on one's inner monologue. If you find yourself scoffing, your inner monologue interprets 2020 as a shit show and "interesting" as an ironic description. If you find yourself amused, your inner monologue projects a bit of playfulness. You could, I guess, have any number of reactions. What I've learned is that it is really about you and not about 2020. Events are events. Inner monologues assume and project meaning. 

Inner monologues make judgments. 

Inner monologues are not infallible. In fact they often apply meaning in ways that are unhelpful. 

I don't know enough about mindfulness or stoicism or zen / buddhism to know which is the most relevant philosophy here, but if I've learned anything this year it's the value of non-judgment. By non-judgment I don't mean the pop usage, which is sensitivity to moral judgments of personal behaviors, as in "don't be judgmental." By non-judgment I mean this: accepting reality as it is and not adding layers of subjective interpretation to that reality. Injecting space between event and interpretation, so as not to confuse the two.

So back to 2020. Year of a pandemic and an interesting time. One does not really need to layer on all the interpretations, whether they be political, social, economic, or whatever. It's kind of liberating. One does not need to consider 2020 a shit show. 

I'm trying to get away from simple reactionary unmindful thinking. Why? Well, without knowing it, I've realized that I'm often telling myself stories, and these stories are not always true or accurate. I'm making connections to narratives, making analogies, making ... judgments. I'm finding that it's not helpful, it's not clear-headed, and it may not even be true. Those stories might blind me to opportunities and possibilities and even realities that could otherwise be enjoyed, noticed, appreciated. 

This is true personally and in business and in investing. 

On the personal front, maybe it's my contrarian nature, but all the anxiety and ennui in the world makes me want to zag in the other direction. To worry less and relax more. Laugh more. Enjoy this interesting time to be alive.

On the investing front, escaping from narratives helps. 2020 was a year of economic turmoil and the Fed this and unemployment that and there were a million reasons to hate a rising stock market. But, the stock market does not "feel" this and neither should investors. Moreover, I think we'll go astray if we reach for analogies: the dot com bubble, the nifty fifty, the roaring 20s. This will be none of those. I'm not saying I know how this ends; I am saying that if I invest based on analogy / monologue / interpretation, I'll probably struggle. Better to see events as they are.

So, back to my ongoing thought process. We had the crash, government stepped in, and companies are accelerating digital transformation. Valuations are high, in some sectors, because there is appetite for innovation, whether it be in tech, in medicine, or in retail.  

A sector I've been following for a while is gene editing / Crispr. In order to spread risk, I bought a basket of stocks: CRSP, EDIT, NTLA, BEAM. I sold some earlier in the year when they were struggling and too large a part of my portfolio. I'm glad I didn't abandon the sector, and bought some back later. In the past month they've all exploded higher. 

I'm not an expert on genetics. I just like innovation and was intrigued by a technology that has the potential to be revolutionary. These stocks along with MRNA have made biotech my biggest winning sector.

What have I learned from all this? 

When investing in innovation and disruption, there's no way to time breakthroughs. I can't necessarily wait decades, but as a small part of my portfolio I could wait years as long as the technology was progressing. It just happens that December was a breakthrough. The sector reported good news. Had it gone the other way, my small positions would be even smaller.

When it comes to investing, 2020 was a good year for me, mostly because I resisted my usual bearish narratives. 

I can see first hand that wealth inequality is increasing; rather than wring my hands I'm looking to capitalize, if I'm in a position to do so, with a view to greater generosity.