In this strange, straitened time when stock markets are volatile again, I’m reposting this article I wrote nearly a decade ago for the San Francisco Business Times.
When markets swoon, I read War and Peace
By Steve Brown
San Francisco Business Times
Aug 11, 2011, 12:14pm PDT
Updated Aug 16, 2011, 2:35pm PDT
I’m not bragging, but I’ve read War and Peace five times and this week I picked it up and started my sixth.
I can think of plenty of people who would benefit from reading it right now, too — Ben Bernanke, John Chambers of Cisco Systems, Brian Moynihan of Bank of America and Jamie Dimon of JPMorgan Chase. Rex Tillerson of Exxon Mobil might find solace in its 1,200+ pages, too, now that Steve Jobs and Apple have stolen the market cap crown. And I think it would help Larry Ellison of Oracle to dump The Book of Five Rings and all that samurai strategy stuff and read Tolstoy instead.
I first read Leo Tolstoy’s monumental novel as an undergraduate at the University of California, Berkeley. We cracked our books open on Sept. 22, 1987 (I still have my wrinkled old English 174 course syllabus, folded between the pages of the novel for 25 years) and Professor Raleigh looked at us with eyes twinkling below the bushy white eyebrows of an elderly scholar. And he said something I’ve never forgotten.
“I envy you, reading it for the first time.”
Back then we hurried through the book in exactly a month, as we had other books to read. So I can’t say I really understood what Tolstoy was getting at. In fact, when I got to the lengthy passages in the latter half of the book where he expounds endlessly about his theory of history — you know, a king is the slave of history, and all that stuff — I sped through them and got back to the more exciting passages where characters were actually doing stuff.
Then three days before we finished the novel, on “Black Monday” Oct. 19, 1987, the stock market crashed. So that short month was my first introduction to both Tolstoy and financial crises. The two have been linked in my mind ever since.
Since that first rather rapid reading I’ve returned to the epic novel four more times, often picking it up when the world was similarly convulsed by chaos.
Keep calm and carry on
This week, as stockmarkets crashed, soared and crashed again, even pretty levelheaded people in my office and elsewhere started talking in doomsday terms, as though we were living through — financially at least — the End of Days.
I watched people gnaw knuckles as they stared bloodyeyed at real-time reports of their disintegrating stock portfolios and retirement accounts. They wailed and gnashed their teeth and wondered what to do, what to do, what to do. Buy? Sell?
My answer, thank you Leo Tolstoy, is to not do anything.
When an envelope arrived from the fund that manages my own meagre investments, I put it unopened into my desk drawer and forgot about it. Because there’s nothing I can personally do to increase or decrease the value of those investments.
Then I reached over to my bookshelf and pulled out War and Peace. I shoved away the other books I’d been reading on the train back and forth to San Francisco each day and started a book I’ll spend several months reading, getting through about a dozen pages a day on my commute.
As I read, I will absorb once again Tolstoy’s theory that we are each of us powerless to personally affect history. It’s a bit of a scary idea, but it can also be profoundly reassuring.
Powerful men, Tolstoy says, are really just labels we use to name historical events. They don’t actually make anything happen.
Napoleon couldn’t invade Russia, Tolstoy said, unless hundreds of thousands of soldiers all decided to march east for weeks and months and to fight the hundreds of thousands of Russian soldiers waiting for them. Had they decided otherwise, Napoleon wouldn’t have gone anywhere.
Putting the cart before the horse?
Tolstoy compares a general leading troops in battle to a horse harnessed to a cart that’s rolling down a hill. The horse doesn’t know whether it is pulling the cart or being pushed by it.
Whereas we go around the world making choices and thinking that outcomes depend directly on what we decide, Tolstoy says, no, we’re all the slaves of circumstances, that we are bound by elemental forces and carried along in the current of history like bits of cork floating in a river.
And the more “powerful” we are, the less power we actually have (I’m talkin’ to you, Larry Ellison). Just as Napoleon was swept along by the river of his half million soldiers, so CEOs are swept along, all the while thinking they’re making important decisions — like the layoffs and reorganization Cisco’s CEO has ordered to get his company back on track. Oh, yes, the company’s stock soared today, but tomorrow it will go down again.
Nothing can happen at Cisco unless all of its 70,000 workers around the world decide to do it.
And the stock market won’t go up or down or do anything based on what I decide to do. Only the collective choices of millions of investors can push the shuttle of that enormous Ouija board one way or another. All I can do is make my little decisions and not panic about what happens.
So that’s my solution to the stock market implosion. Read Tolstoy. He makes me feel better. And also, by the time I finish his book, this particular crisis will be behind us.