As long as human breaths have been taken, the human imagination has waltzed its way to the future. A place which epitomizes what can be built through imagination is the city of New York. Each time I approach New York and see the shadow of the Manhattan skyline punctuated by the Empire State Building, I wonder at its beauty, that mankind could build such a marvel. New York is the finest factory for human ingenuity on earth. Walk around New York and you will always find interesting messages, sometimes scrawled on signs (such as above), other times, even on the ground, such as on Williamsburg Bridge. Despite my love of New York and numerous visits to the city, I realise that I can hardly claim to know it intimately. A lifetime is needed to accomplish such a feat.
In an attempt to better acquaint myself with the city, I have read numerous books about New York, most recently The New York Nobody Knows: Walking 6,000 Miles in the City by William Helmreich. As the name suggests, the author has walked through New York City and condensed his findings into a single volume. Reading the book, made me realise how comparatively little I know about New York. My perspective on the city consists of brief snapshots of time. It is like a slide show, taken at random intervals over the past few years, becoming grainier over time. By contrast, Helmreich's book is more like a film, seemingly linking together the few disparate snapshots of New York in my mind into a cohesive story, whilst simultaneously adding to my collection, numerous "slides" of parts of the city I have never visited.
Whilst his book his peppered with many interesting stories, possibly one of my favourite is that of the French restaurant Le Veau d'Or on 60th Street near Lexington Avenue, in the Upper East Side. Helmreich notes that in the front window of the restaurant, there is a stack of books from an eclectic array of authors, which include Michael Lewis and Danielle Steele. It transpires that all the books are by authors who have either mentioned the restaurant or who have dined there. On my next visit to New York, this November, I shall have to see whether I can persuade them to display my book (I shall not mention that my favourite food is the burger).
Obviously, these authors are not representative of all the diners who have been to the restaurant (I would hardly expect this establishment to be exclusively one for authors). The window provides a selective snapshot into the restaurant's collective memory, which has been filtered to provide a bit of showbiz and hence a talking point.
The notion of a selective memory is not purely something which might explain the windows of New York French restaurants. It is something very prevalent in financial markets. Ask me which days have been the worst in my professional career, in terms of profit and losses of models I have run and I can recall them instantly. I can give the precise figures, the dates and also the market backdrop at the time. Pain resonates in my trading memory in a way that somehow joy doesn't (even more so when I have been trading my own cash)! I might struggle however, to recall which were my best trading days. I can recall periods of time when my model did well, but it is difficult for me to isolate better days (without consulting a graph). One exercise I did find useful in the past however, was simply to write some a quick summary of my profit & losses to highlight which trades had done well and which had done worse.
A selective memory does not simply impact how you interpret the past. Your experiences and your memory can also cloud how you view the market going forward. Talk to traders who have been in the market for 20 years and their experiences of price action are very different from traders who have just started. VIX at 15 might panic new traders, but for veterans used to much higher levels, their perspectives will be very different.
So when trying to understand markets, the way you might interpret what has happened, can be very different to how others do. We all have the same news, the same price feed, but crucially different experiences, when it comes to markets.
My book Trading Thalesians: What the ancient world can teach us about trading today also has some colour on how your perspective can impact how you interpret the market and also examining how to interpret historical performance (mixed in with a bit of ancient history).