Gustavo Ballvé on October 3rd, 2011
Food for thought, Home, Investment Themes, Mental models, Portfolio Management, Risk management

This New Yorker article, “The Mark of a Masterpiece”, is quite an enjoyable reading, particularly after watching Who the #$&% Is Jackson Pollock?. While 99.9% of the articles written on this subject will basically repeat the same story, the author goes a few steps beyond and provides a great example of what investigative work is (while writing about a guy whose job is to investigate famous fingerprints on uncelebrated works of art). The similarities between the job description of an analyst and that of an investigative reporter is always present in our work, as is the issue with eschewed incentives in any market. Quotes, comments and links inside.

Quotes from the story:

“Reporters work, in many ways, like authenticators. We encounter people, form intuitions about them, and then attempt to verify these impressions. I began to review Biro’s story; I spoke again with people I had already interviewed, and tracked down other associates. (…) As I probed further, I discovered an underpainting that I had never imagined.”

“Forgers usually succeed not because they are so talented but, rather, because they provide, at a moment in time, exactly what others desperately want to see. Conjurers as much as copyists, they fulfill a wish or a fantasy. And so the inconsistencies — crooked signatures, uncharacteristic brushstrokes — are ignored or explained away.”

“Connoisseurship is rife with flaws. It is susceptible to error, arrogance, even corruption. And yet there is something about that ‘strange breed of cat,’ (…), who could truly see with greater depth — who, after decades of training and study and immersion in an artist’s work, could experience a picture in a way that most of us can’t. Connoisseurship is not merely the ability to discern whether an art work is authentic or fake; it is also the ability to recognize whether a work is a masterpiece. Perhaps the most uncomfortable truth about art is that such knowledge can never be truly democratic.”

The similarities between the job description of an analyst and the one of an investigative reporter has always caught our attention.

The documentary’s siren song is quite enchanting. But what seems to be an independently produced film, might end up becoming the marketing tool for a well-packaged scam. In a certain way, the buyer of a fraudulent piece is not a victim, but an associate of greedy pseudo-experts. He wants so dearly to proceed with the buying that he overlooks the imperfections of the case. Impossible not to think of the piles of IPO prospectuses that are dispatched to analysts and portfolio managers in certain “bullish” times, displaying brands and names that refer to much of what has been depicted in the article.

Toolboxes that systematize the analysis & investment process, technical analysis (~ “fingerprints” of the behavior of securities prices) and the likes can be viewed as means in favor of the democratization of the stock markets (in “three easy steps”). Rephrasing the author: “perhaps the most uncomfortable truth about [investment process] is that such knowledge can never be truly democratic”.

This Richard Feynman-inspired “difficulty of getting to KNOW something”/ “having to pay the tolls to achieve knowledge” has been the subject of other posts here as well (this link is a good starting point). Charlie Munger phrases this as the objective of an intelligent man’s life: making sure you lie down in bed everyday a little smarter than your were when you woke up.

The good news is that this road never ends.

Finally, and this can’t be stressed enough (it’s the typical “last but not least” situation), there’s an underlying issue of eschewed incentive systems in the article. But that’s for another post.

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