Thursday, October 16, 2008

Of dead cats and live Tiggers

The Financial Times' John Authers turned to an antidepressant pre-Depression source to explain the stock market bounce (and draw a depressing conclusion) on Monday:
Markets oscillate between bulls and bears but they always keep a place for Tiggers. Like Winnie the Pooh’s friend, bouncing is what markets do best. And what Pooh says of his stuffed friend is also true of the stock market: “He always seems bigger because of his bounces.”
Context, John, context. The full verse is: "But whatever his weight in pounds, shillings and ounces,/he always seems bigger because of his bounces." Leverage illuminated!

Come to think of it, that's not the only financial insight in the Pooh books. They provide a whole glossary for the financial meltdown. To wit:

CEO compensation is a matter of knowing what to ask for and what to leave on the table. Pooh has a good feel for this: "...when Rabbit said, 'Honey or condensed milk with your bread?' he was so excited that he said, 'Both,' and then, so as not to seem greedy, he added, 'But don't bother about the bread, please.'"

Net worth: Pooh, a pioneer of derivatives, invents a game in which he throws two sticks off a bridge and forecasts which will come out the other end first. It meets expectations: "when he went home for tea, he had won thirty six and lost twenty-eight, which meant that he was--that he had--well, you take twenty-eight from thirty-six, and that's what he was. Instead of the other way around." No bailout for Bear!

Moral hazard: Eeyore, found floating upside down in the river, complains that Tigger "bounced" him there. Tigger insists that he merely coughed behind Eeyore. Eeyore's depressive response: "Bouncy or coffy, it's all the same at the bottom of the river."

Dynamic scoring is an accounting method expounded by Rabbit, after he interrupts Pooh counting his honey pots. Pooh asks Rabbit to sign off on his count, explaining, "I just like to know...So as I can say to myself: 'I've got fourteen pots of honey left.' Or fifteen, as the case may be. It's sort of comforting." Rabbit's response: "Well, let's call it sixteen."

Golden parachute: At the end of all things Pooh, in the final chapter of The House at Pooh Corner, Christopher Robin marks out what might serve for some as a post-financial career path:
"...what I like doing best is Nothing."
"How do you do Nothing?" asked Pooh, after he had wondered for a long time.
"Well, it's when people call out at you just as you're going off to do it, What are you going to do, Christopher Robin, and you say, Oh, nothing, and then you go and do it...It means just going along, listening to all the things you can't hear, and not bothering."
Take heart, C.R.: there's going to be plenty of nothing going around for a while.

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