King Arthur and the Stock Market

O Fortuna
velut luna
statu variabilis,
semper crescis
aut decrescis;
vita detestabilis
nunc obdurat
et tunc curat
ludo mentis aciem,
dissolvit ut glaciem.

O Fortune,
like the moon
you are changeable,
ever waxing
or waning;
hateful life
first oppresses
and then soothes
as fancy takes it;
and power
it melts them like ice.
–Carl Orff,
Carmina Burana,
O Fortuna (Stanza 1)

I was listening to an economist discuss projections of the market for 2018, and it struck me how much this reminded me of King Arthur. The connection? The medieval idea of the Wheel of Fortune, a prism which could help us view the world in proper context and settle our turbulent emotions just as it did centuries ago.

Now, this is not the game show with Pat and Vanna that has filled the after-dinner TV slot for decades. Although those who know about the enduring notion of Fortune surely find it amusing that this show has displayed such enduring popularity.

Illustration from John Lydgate’s Troy Book, f.30v

The basic idea of the Wheel of Fortune, if you recall from your world history days, is that those on top of the wheel — kings, rich men, landowners — enjoy the bounty of the earth, while the poor and the peasants struggle at the bottom. But the wheel always turns and even kings and emperors now high will eventually be struck low. We’ve seen this played out in history and can understand the dynamic. Dictators who overstep their power are brought down. Wealthy playboys waste the inheritance that their thrifty parents worked years to create. Meanwhile, others rise out of poverty to amass their own financial empire or to create their own new political followings.

Sors immanis
et inanis,
rota tu volubilis,
status malus,
vana salus
semper dissolubilis,
et velata
michi quoque niteris;
nunc per ludum
dorsum nudum
fero tui sceleris.

Fate – monstrous
and empty,
you whirling wheel,
you are malevolent,
well-being is vain
and always fades to nothing,
and veiled
you plague me too;
now through the game
I bring my bare back
to your villainy.
—-Carl Orff,
Carmina Burana,
O Fortuna (Stanza 2)

King of the Who?

Arthur is on my mind as I have just finished listening to a Great Course audiobook — and, it was Great! — on the history and legend of King Arthur. Taught by Professor Dorsey Armstrong at Purdue University, this lecture series covered everything from the Welsh and French origins of the legend to Sir Thomas Malory to Wagner’s Tristan und Isolde to the graphic novel series Camelot 3000.  I highly recommend it; Professor Armstrong was that perfect combination of funny and knowledgeable. You’ve got to love someone who can slip into French and old Norse with as much ease as discussing the transgender aspects of modern comics. She also correctly opined that Monty Python and the Holy Grail is the best movie made about Arthur and probably about the Middle Ages.  Here’s one tidbit she pointed out that students must know for the test — Excalibur was not the sword in the stone!

In several of the Arthurian stories, he has a dream about this famous wheel. For example, in a poem referenced by Thomas Malory — whose widely read Le Morte d’Arthur  was in turn used by Tennyson, T.H. White, and Walt Disney — the king tells of a dream about a wheel and a mysterious lady:

“My lady,” he replied, “I am on a high wheel, but I do not know what kind of a wheel it is.”

“It is the wheel of Fortune,” she replied. “… and there is very little of which you have not been lord up till now. Of all the circle you can see you have been the most powerful king there ever was. But such is earthly pride that no one is seated so high that he can avoid having to fall from power in the world.”

Then she took him and pushed him to the ground so roughly that King Arthur felt that he had broken all his bones in the fall and had lost the use of his body and limbs.
Stanzaic Morte Arthur, source of Thomas Malory’s Morte d’Arthur

Arthur had been known as the king who united all the warring tribes and brought brave and valiant knights together to protect the weak against Saxon invaders, ogres, and dragons alike. But he also fathered Mordred, in some legends, by sleeping with his sister. Lancelot, his best friend, falls in his love with Arthur’s wife, Guinevere. Some versions of the story — like the Stanzaic Arthur — have the king amassing troops against Lancelot. Others have Arthur fighting against Mordred who also, in some cases, has fathered a child with Guinevere. Most legends end with Arthur and Mordred battling ferociously and giving each other mortal wounds. Arthur is taken away to Avalon with hints that he may return someday, which he does today in movie after movie.

Considering his reputation as the Alexander the Great of 5th century Wales, Arthur spends much of the time in stories fighting against his sister, best friend, son, or usurpers. Perhaps the decades of peace, harmony, and good harvest that he brought to The Land were too boring to make it into the stories. The core notion of Fortune — that even the great Arthur could be brought low — takes a bigger share of the tales than does the peace. Merlin as well, described as one of the most powerful sorcerers who ever lived, takes a turn of the wheel since he ends up imprisoned by the disciple whom he has taught all his magic.

Before I get carried away with the hundreds of hours on Arthurian tales, let’s talk about what this has to do with the stock market.

20171213 market shot.jpg

This is Not Market Advice

The phenomena of business cycles is well known. Businesses go boom, then bust, then boom again, and when a lot of companies go bust together, it’s called a recession. The market in its entirety resembles a roller coaster although, over long enough periods of time, the market tends to go up. But it goes down in between times when it’s going up. If you wandered into the stock market to invest in 1987 or 1999 or 2007, you might have found yourself quickly disillusioned by the “pain” of the downslopes and hurried out again. After all, this is just a graph, but when it’s your hard-earned money that “corrects,” it means hours of your time and food out of the mouth of your children that evaporates in a blip.

So, in between discussions of Arthurian chivalry, I was also listening to a Vanguard economist  describing 2018 projections, and he pointed out that the probability of a market correction had risen in their models to around 70%. That’s not hard to imagine when looking at the up swing of the last couple of years and even the last few months. The down part of the cycle always happens…eventually. (It reminded me of a comment offered by a savvy financial advisor this year. I was lamenting my anxiety about whether the market would go down, and she raised her eyebrows and said, somewhat flippantly, but in the most oracular way: “Well, there’s going to be a correction. We just don’t know if it’s going to be tomorrow or five years from now.” I forgot to look to see if she was clad in the purest shimmering samite…)

As the economist also said, there is always at least a 40% probability of a correction. The current 70% estimate is higher than usual, but the stock market always contains the capability of going up and going down. And not just a little — a market correction is usually defined as at least 10%. Pressure on an up market always contains within it the natural seeds of its own demise. Lengthy financial and statistical analysis will explain ideas like this with math — for example, see the discussion of the Coffee Cup with Handle pattern in O’Neil’s How to Make Money in Stocks — but it also reminds us of the Wheel.

Well, there’s going to be a correction. We just don’t know if it’s going to be tomorrow or five years from now.
–Generic Financial Advisor advice

The funny thing is that fortune used to be a synonym with chance and risk. Fortune could be benevolent or soul-crushing. Over time, fortune has come to mean wealth — only the up side of the market. Philosophies which further yoke good fortune to the Protestant Ethic or the American Dream have also eliminated the chance part of the equation; those concepts say you got to the top of the wheel by hard work. They conveniently ignore the part played by forces outside your control. Forget the chance element that said and were the stupidest ideas on the planet whereas Twitter was brilliant and destined to be a multi-billion dollar empire.

When times are good, we tend to forget the part about cycles. People in the market say that fundamentals (i.e. facts) are driving value. Political spinners talk about trends that dominate or lock up the electorate, citing examples that go back just enough years to prove their point. The top of the wheel looks out just far enough to see examples that show how it has always been at the top. Looking a little farther in history or taking into account changes in public opinion, technology, or historical events remind us that the wheel turns.

This can be both good and bad for us. When our health complaints are minor or the boss assigns us a particularly unpleasant task, we tend to forget how devastated we felt after that surgery or when we were desperately sending out resumes. When times are bad, we remember how good it was, but not vice versa. Conversely, when the world crushes in on us all at once — family member dies, someone is laid off, there’s a terrifying spot on an x-ray — it is hard to imagine that the wheel is just turning on us for a time. That things will get better.


Hac in hora
sine mora
corde pulsum tangite;
quod per sortem
sternit fortem,
mecum omnes plangite!

So at this hour
without delay
pluck the vibrating strings;
since Fate
strikes down the strong man,
everyone weep with me!
–Carl Orff,
Carmina Burana,
O Fortuna (Stanza 3 end)


This is a good time of year to take stock in such things. If you are happy, you need not fear that misery is coming but might spend a little extra time hugging the family members around you and making sure you have an emergency fund. If you feel oppressed by the kings and robber barons above you, remember that they will not always be there.

The wheel always turns.

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