A Silent Interlude

Published on August 29, 2019

“My God, what did he tweet now?!?”

One week ago, at exactly the hour that I am typing these words, I stood at the tallest summit in the contiguous United States. Mt. Whitney, at 14,505 feet, is the crown jewel of the Sierra Nevada mountain range and towers over ten thousand feet above the small town of Lone Pine in California’s arid Owens Valley. But isolated and serene it is not. Every day during the brief summer season, hundreds of hikers ascend the eastern slope of the mountain wearing headlamps, long before daybreak, in order to catch the sunrise from the summit. At times, the traffic on the trail can resemble a pedestrian rush hour and, while injuries and deaths sadly occur every year, the mountain is hardly unspoiled wilderness, and it is hardly disconnected from the world. Cell connectivity allows for texting, talking, and bragging on social media, and hikers fully avail themselves of these opportunities as they make the grueling 21 mile round trip to visit the summit from the eastern trailhead.

Three hours before joining the crowds coming from the east, I woke up at 2 am seven miles to the west. For the past week, I had been on a hike of a portion of the John Muir Trail, a hiking path winding from Yosemite to Mt. Whitney, a distance of over two hundred rugged miles involving nearly fifty thousand feet of cumulative elevation gain. Although the trail has a reputation for being “crowded” among hiking enthusiasts, crowded is a relative term. I camped alone most nights, including the night before the push to the final summit and, for the first hour of my walk that morning, I did not see another human being.

There is very limited cell phone reception in the vast wilderness on the western side of the Sierra Crest, so seven days previously when I crossed Bishop Pass a hundred miles to the north, I departed from the modern world of constant connectivity and noise and entered into a different world, one that is infinitely more “silent” and where the passage of time means something quite different. I exited that quiet world a week later as I stepped onto the summit of Mt. Whitney and descended ten miles to the east to finish my walk.

In the world of finance and investing, events are taking place every minute of every day that market participants, both human and algorithmic, feel a need to incorporate into the thousands of prices of securities on a real time basis. When I say “My God, what did he tweet?” everyone knows exactly who I am referring to. Wall Street has always been hyper-responsive to both real news and mere noise, but it seems like the severity of reactions have become more amplified over the past few years as politics has become less predictable.

Most of us have read the books and listened to the words of investment sages who urge intelligent investors to ignore the noise and focus on the long term, and this is a practice that most successful value investors take to heart. There is no way that I know of to succeed in investing if you’re constantly reacting to day-to-day “news” because much of what we are “learning” is merely noise. To separate the signal from the noise requires sustained study and a calm temperament. At least in the value investing world, individuals who feel a need to act on every piece of news or become emotional in response to every price swing are unlikely to beat the market over time.

While I have always tried to internalize the wisdom of the sages, and doing so has saved me from much folly that would have come from being emotional, I still follow news on a daily basis and I suspect that most of you reading this do the same. My news diet has decreased in recent years, but I still review the Wall Street Journal for 45 minutes most mornings and I check to see what’s going on in politics and markets a few times per day, and more if I am bored. So far, I do not think that doing so has impacted my actions but my recent trip leads me to suspect that constant connectivity has indeed impacted my mind and has the potential to influence future actions.

Were the past seven days more eventful than the seven days prior to that? It certainly does seem like the past week was more eventful because I’ve been following daily events, “his tweets”, and market action. And the past seven days have flown by in a blur. In contrast, the prior seven days in the wilderness had a different pace, a more sustainable mental pace in rhythm with the physical world. Those seven days also seemed to be longer in duration. When you are in a disconnected wilderness, the rhythm of your day involves waking up, cooking breakfast, breaking camp, walking ten or twelve hours, setting up camp, cooking dinner, and going to sleep. And when you are walking alone, you are alone with your thoughts all the time, unfiltered and unaffected by outside noise.

A side effect of such a disconnected interlude illustrates aspects of the central insight of Daniel Kahneman’s Prospect Theory which is covered in Thinking, Fast and Slow. Human beings, unlike algorithms, normally feel the pain of losses more than they benefit from the pleasure of gains. If you take quotes seriously and live through a week when markets go down one percent on Monday, Tuesday, Wednesday and Thursday, but the market recovers the losses on Friday to end the week unchanged, you will be psychologically worse off at the end of that week even though nothing has changed.

My week offline was not particularly more volatile than other weeks in recent history, but there were significant interim changes in the market value of my holdings. I was none the wiser, however, and from my perspective, I noticed just one weekly net change, not five daily changes. Even though I don’t take market quotes seriously and try to mentally anchor to my own independent assessment of intrinsic value, as a human being it is inevitable that I am subject to psychological effects just like everyone else. I might not think that I will act rashly in the future if I subject myself to the daily noise, but do I know for sure? Furthermore, although I do not believe that my past results were negatively impacted by exposing myself to noise, I cannot know that for sure. It is certainly possible that one or more of my regrettable past decisions were due to mental pollution from overexposure to “information” that turned out to be noise.

Isolating yourself is not a desirable or realistic option. We need to be aware of what’s going on in the world and in our communities, and being informed can lead to opportunities. Warren Buffett doesn’t read five newspapers every day for no reason. One must find the right balance between exposure to the news and avoiding unnecessary noise. This task has become much more difficult as the perceived pace of “news” increases. The best way to prove to yourself that this is true is to remove yourself from the news cycle for a week or more and observe the changes to your mental state that will inevitably result. One can then calibrate news consumption and frequency accordingly.

It takes five hours to descend from the summit to the trailhead and from there it is twelve miles by road to Lone Pine. Having no desire to walk into town, I stuck my thumb out on the side of the road and soon had a ride. As we approached town, I turned on my phone. The beeping of text messages and voice mails started. Thanking the driver for the ride, I smiled at the noises emanating from my phone and remarked that “we’re definitely back in civilization”. The driver smiled but it looked like he had yet to turn on his phone. His silent interlude would continue for a while longer.

Resources for those who are interested in the John Muir Trail:

A Silent Interlude