Aug

31

 "Borrowing your Enemy's Arrows" is the title of a work of Cai Guo-Qiang which is on view at the Museum Of Modern Art in New York. Built on the skeleton of an old fishing boat excavated from his hometown, the sculpture, suspended above ground, is pierced with 3000 arrows. The title alludes to a legendary episode from the third century in which the general Zhuge Liang had to replenish a depleted store of arrows, as his army was facing an imminent attack from the enemy.

According to the tale, the Chinese general sailed "across the Yangtze river through the thick mist of early dawn with a surrogate army made of straw, while his soldiers remained behind yelling and beating on drums. Mistaking the pandemonium for a surprise attack, the enemy showered the decoys with volleys of arrows. Thus the general returned triumphantly with a freshly captured store of weapons".

This work is about the strategic importance of deception and cunning. As indicated in the MoMA website it is also about "surreptitiously gathering strength from one's opponent". When I visited the Museum yesterday, this work reminded me how badly I was misled by the market last week.

Last Thursday, after 3 consecutive down days, a new 20-day low and a number of other bullish patterns that had worked so well over the past years, prices plunged in a terrible 2-day down move of about 150 points.

During the move I started to throw arrows in a tentative to spot the turning point and try to recover the damage already done. The drums noise, the mist, emotions helped the "enemy" to gain strength and make me weaker.

When I finished my arrows and the margin was depleted, that was the right moment for the market to turn up for a bounce that has been as violent as the plunge. Hats off to those who put the boat down the river and managed to engineer this masterpiece of deception. Many costly mistakes were made. I had another hard lesson to learn.


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