In his New York Times article ‘Blowing Up’, Malcolm Gladwell examines the approaches of two famous Wall Street money managers. The first, Victor Niederhoffer, is a fiercely competitive and hugely energetic man who became fantastically wealthy making daring investments in stocks which he picked as winners. The other, Nassim Taleb – who had seen great misfortune in his life, including a rare cancer – took a previously unheard of approach predicated on the inevitability, at some point, of disaster. He made trades in a way that would lead to ongoing losses when the market behaved normally, but result an enormous win if it took a catastrophic downturn. He stuck to this strategy with increasingly miserable determination as his losses mounted. Then Wall Street crashed. He became a fabulously wealthy investment guru. Neiderhoffer had to sell his fund and his mansions and borrow money from his children.
Gladwell reflects on Taleb’s past - the way that he knew, on a gut level, that none of us are shielded from the forces of “sheer dumb luck” - and commented as follows about his strategy of putting money on the worst outcome:
“This kind of caution does not seem heroic, of course. It seems like the joyless prudence of the accountant and the Sunday school teacher. The truth is that we are drawn to the Niederhoffers of this world because we are all, at heart, like Neiderhoffer: we associate the willingness to risk great failure – and the ability to climb back from catastrophe – with courage. But in this we are wrong... There is more courage and heroism in defying the human impulse, in taking the purposeful and painful steps to prepare for the unimaginable.”
My husband and I met at university and have effectively grown up together. Until now, we have tried to approach risk with a Neiderhoffer spirit. We have moved to a variety of places, including an overseas posting which commenced shortly before the birth of our first child. We have tried different jobs, and I returned to study while having children and changed careers entirely. We took the kids out of school during 2010 and camped our way around Australia for several months. When an opportunity came up for John in Darwin, I had real misgivings. As well as the pain involved in moving so far from loved ones, making such a major change at that point in our lives, with children approaching high school, felt dauntingly risky. But John really wanted to take the job. We were not a couple to shy from a spot of risk, I told myself. We were Neiderhoffers, damn it! So we headed off – straight into our very own Wall Street crash.
My surgeon reckons that there is about a 20% chance that my cancer will metastasize. Despite all the pink ribbons, there is still no cure for metastatic breast cancer. On some days I feel hugely positive about my chances. On others, the words “one in five” toll in my head and I wonder how it is possible to keep functioning with such a level of fear. On days like this I feel like I have a revolver barrel spinning near my temple in a game of cosmic Russian Roulette - and the barrel is missing one chamber.
While I was undergoing chemotherapy in Sydney, there was a period during which I became obsessed with pinning down my odds. I felt that I needed to know for certain if my surgeon’s statistical judgment was on the money. A driving force behind my (ultimately futile) quest was that I was trying to figure out if we should pull out all stops to return ‘Down South’, closer to our families and friends. Terrified by the prospect of finding ourselves ‘marooned’ in Darwin after an unlucky Russian Roulette spin, I was in a Taleb headspace. The smart thing, I thought, was to pull out as soon as possible and then hunker down indefinitely, close to support and prepared for the worst. I told John that this was my view, and started making preparations - both mental and practical - that anticipated our return.
Shortly after I went back to Darwin, a job was advertised in Sydney that John was well placed to apply for. Jobs don’t come up often in his field. By that point the kids were thoroughly settled into their new lives. They had a school they liked, a Scout troop, trumpet and electric guitar teachers, favourite bike rides, and most importantly, a tight group of friends with whom they socialised on several days of most weeks. They could provide passionate descriptions of what they loved about living in a small, nature-drenched city. They were at one in being adamant that they wanted to stay, and John and I loved seeing them so happy – it seemed nothing short of miraculous considering the time we’d been through. John, meanwhile, was beyond exhausted. When I got back to town he was flat out working to a deadline, and beaten down by our horrific year. Everything in him rebelled against the idea of another huge change. Simply writing a job application felt like it could be the straw that broke his poor, tense back. He asked if I would be OK with the idea of letting the opportunity pass by. Despite the risks involved in staying, he didn’t want to move again after the year we’d just had. If the worst happened, he said, we would deal with it at the time, as best we could. And – while he was almost as scared as I was about the future – he didn’t want us to approach life bracing for disaster. Disaster would feel like disaster, he argued, whether we had tried to prepare for it or not.
I guess that’s the thing. There isn’t much of a potential pay-off from this kind of Wall Street crash. Can one, really, “prepare for the unimaginable” in these circumstances? And what can be gained by attempting to do so? If disaster befalls me, would a sense of grim satisfaction at having gambled on that outcome outweigh the cost of having lived in fear of the worst? And even if there is an ultimate ‘payoff’, is that what matters most?
John didn’t apply for the job. For the moment, we’re staying here. I’m not sure for how long. But for now, he and I are hoping for time to re-build. To explore. To show our sons Jim Jim Falls and the Stone Country Festival. I know that this may ultimately seem foolhardy if the odds don’t go our way, and that Malcolm Gladwell may see it as the less courageous choice. But I guess that - despite our own recent Wall Street Crash - we're just not ready to abandon our inner Neiderhoffers.