Saturday, February 7, 2009

The New Old Virtues

Sometimes, in time of trauma, people turn to religion. Sometimes they try to rediscover what matters in life. No one can object to these efforts, but for today I want to emphasize the importance of using a trauma to relearn some old lessons and to reacquire some old virtues.

I am thinking of dormant civic virtues like humility and discipline. If you like slogans, let's say that to solve our problems-- be they national or personal-- we need more character and less self-esteem, more reality-testing and less mindless optimism.

We could take one step in the right direction by recognizing that character is forged in the crucible of reality, most especially in the unforgiving reality of the markets.

If the current financial crisis does not mean that, it does not mean anything.

I offer this preamble to introduce an important blog post by trading coach Brett Steenbarger. Link here.

Here is the way Steenbarger expresses it: "Too often confidence is treated as if it is a simple matter of visualizing positive outcomes and sending oneself ego-enhancing messages."

Our culture's psychological bromides are misleading, he is saying. If you want to build character, you have to earn it through hard work. By which Steenbarger means, through trial and error, and especially by learning from mistakes. In his words: "No psycho-babble can substitute for the lived reality of making mistakes, correcting them, discovering strengths, and building them."

Hard work, discipline, humility... Steenbarger is pointing us to the correct cultural lesson: we need to rediscover the old virtues, and not just to rediscover them, but to start working on building them in us.

But Steenbarger is a trading coach-- thus the emphasis on markets-- and he writes for people who trade for a living. And yet, he adds that these same rules apply to other areas of life. Civic virtue is not just useful to give you a competitive edge in the trading pit... except in the sense that life is often like a trading pit.

If you have overcome the tendency to think that self-puffery will give you confidence, you will appreciate the way that humility leads to true confidence. By which I mean, confidence that has been earned.

As Steenbarger explains it: humility means respecting the reality of the markets, and the reality outside the markets. For example: "Truly confident rock climbers... trust in their skills, but also respect the mountain and the elements, never taking safety for granted."

Humility sounds like ancient wisdom. But perhaps it is time that we started drawing on the sources of ancient wisdom. It would help us to overcome the irrational exuberance that lulled us into believing that we could recreate ourselves and reinvent reality as we saw fit. Hopefully, the days when anyone would take that seriously are over.

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