From our latest discussion paper…
I was six or seven when I first came across Alice Through the Looking-Glass in one of the rooms at my grandparents’ home. While the adults spoke over tea, I would sneak away into the backroom and lose myself in a world of peculiar characters.
“I can’t believe THAT!” said Alice.
“Can’t you?” the Queen said in a pitying tone.
“Try again: draw a long breath, and shut your eyes.”
Alice laughed. “There’s no use trying,” she said: “one CAN’T believe impossible things.”
“I daresay you haven’t had much practice,” said the Queen. “When I was your age, I always did it for half-an-hour a day. Why, sometimes I’ve believed as many as six impossible things before breakfast.”
– Lewis Carroll
It is a subtle exchange that can be easily overlooked. I love it for the outlandish proposition it makes: not only can we think about impossible things, we should do so on a regular basis.
Like Alice, investors today find themselves in a strange world. In the last year, the price of oil halved, Russia invaded Ukraine, central banks responded to the threat of deflation with massive stimulus, and the risk-free rates of Spain, Italy and Portugal fell below the equivalent yield in the United States. Even the yield on some of Nestle’s bonds turned negative. In short, many events transpired that were previously considered impossible by some in the investment community. This underscores that much of what is considered “unfathomable” is clearly not impossible.
Read the full discussion paper here.