Please note that for the purposes of this analysis, I use the Duncan Large translation of Nietzsche’s Twilight of the Idols. I use the notation (X:N) to cite passages, where X refers to the chapter and N refers to the section.
Twilight of the Idols, or, How to Philosophize with a Hammer (German: Götzen-Dämmerung, oder, Wie man mit dem Hammer philosophirt) is one of Nietzsche’s shortest books, written in 1888 and published in 1889, and was written to serve as an introduction to the rest of his corpus. Despite its short length, it is a sophisticated rhetorical accomplishment, an effervescent polemic against the thoroughgoing philosophical values hitherto. In Twilight, he debases the pervading highest values from their pedestals, unmasks the mundane origins of seemingly transcendent norms, and devalues the grandest ideals to their unpretentious truths; all in order to signal the twilight of the old idols, shattering these old values with his philosophical hammer. In this analysis, I’ve selected a myriad of aphorisms and passages that serve as timeless lessons for the erudite investor.
Twilight, and Nietzsche for that matter, is notoriously remembered for the dictum: “From the Military School of Life – Whatever does not kill me makes me stronger” (I:8). This apercu is a timeless treasure of wisdom. Even the prudent investor is not likely to find himself immune from life’s school of hard knocks. However, it is within the sole discretion of the individual and the investor to determine whether or not they will become harder, bolder, and wiser as a result. Many decadent individuals, to borrow Nietzsche’s term, are too pathologically weak to take a hard lesson from their errors. These indolent individuals impugn their having any responsibility, instead they find solace with the rest of the herd, blaming their mistakes on misfortune and unforeseeable ‘black swans.’ But for such individuals, Nietzsche states, “Rash actions are rarely one-offs. With the first rash action people always do too much. Which is precisely why they usually commit a second – when they do too little” (I:30). Greed is the first error, followed by fear, the second error.
Another aphorism of interest for today’s investor from the first chapter, titled “Maxims and Barbs”, is the following: “That is the kind of artist I like, modest in his needs; he actually wants only two things: his bread and his art – panem at Circen” (I:17). Nietzsche derides what he deems to be ‘play-actors,’ or just simply, ‘actors.’ These actors pervade in the philosophies as well as the arts. These actors are not genuine, they do not care for their philosophies or arts insofar as they are a means to some other end, typically validation, wealth, and status. Nietzsche approves of those artists who are dedicated to their craft; these rarified individuals are modest in their needs as they strive for their work first and foremost. Nietzsche parodies panem et circenses (bread and circuses), that which kept the Roman mob happy, by turning art into the enchantress of Homer’s Odyssey to illustrate the singular focus of the genuine artist. Our contemporary equivalents are the value pretenders, of which the celebrity-activist is the most pernicious species of the genus. Genuine investors, those focused on their craft, are thus distinguished from the rest. I leave readers to consider another example from Nietzsche:
“The means by which Julius Caesar protected himself against minor ailments and headaches: immense marches, the simplest ways of life, uninterrupted period in the open air, constant exertions – these are by and large the definitive measures for preserving and protecting against the extreme vulnerability of that subtle machine working under the most intense pressure, called genius” (IX:31).
In addition to the play-actors, Nietzsche had a special place in his heart (or more aptly, in his bowels) for the hyper-rational type, epitomized by Socrates as Nietzsche’s ‘theoretical man’ in The Birth of Tragedy. This archetype delights in unveiling the truth wherever possible, caring more for the search after truth than for truth itself, all the while maintaining an infrangible and implacable faith in the power of knowledge. Contra Socrates, Nietzsche writes, “I want, once and for all, not to know many things. – Wisdom sets limits even to knowledge” (I:5). Contrary to conventional wisdom, investors have much to learn from knowing precisely when not to learn, lest one wants to end up like the academic economists. In a similar vein, Nietzsche declares, “I mistrust all systematists and avoid them. The will to system is a lack of integrity” (I:26). Against the likes of Hegel, Kant, Leibniz, Nietzsche asserts that systems presuppose too much. Beyond the mere folly of such endeavors, supposing everything can be systematized and formulated is a quixotic notion and one of arrogance and ignorance. The prudent investor ought to realize the limits of knowledge, recusing himself from crossing over to the tyranny of reason, whose domain is ruled by the academic economists and other clairvoyant value pretenders.
Nietzsche attacks the philosophical tradition’s idea of ‘Reason’ (German: Vernunft), the faculty by which we purportedly discover truths which are neither historically nor temporally contingent, those which are beyond what sensory experience can teach us in the third chapter, titled “‘Reason’ in Philosophy”. As Nietzsche writes, “‘Reason’ is what causes us to falsify the evidence of the senses” (III:2). Nietzsche continues:
“All that philosophers have been handling for a thousand years is conceptual mummies; nothing real has ever left their hands alive. They kill things and stuff them, these servants of conceptual idols… But because they cannot gain possession of it they look for reasons as to why it is being withheld from them” (III:1).
These progeny of Socrates, theoretical men alike, are so far removed from reality; with them anything empirical is reduced by reason, killed and stuffed with nonsensical theories and equations. The academic economists of the efficient markets and of the Federal Reserve similarly only worship mathematical formulae. In summary, “They put what comes at the end… the ‘highest concepts’, i.e. the most general, emptiest concepts, the last wisp of evaporating reality, at the beginning as the beginning” (III:4). Like these tyrants of reason, the academic economists are not objective, instead they are fanatical about ‘fitting’ reality to their theories. When markets are shown to be inefficient and where quantitative easing is shown to be ineffective if not inimical, well… to hell with the truth! For them the error lies in reality, not in the theory. Five-and-seven factors, not three, were needed to ‘prove’ market efficiency; three rounds of QE, not one, were needed to ‘revitalize’ the economy. Like spiders, they prey on the flies in their ointment, spinning them into their ever more convoluted and nebulous web of theory and formulae.
Nietzsche launches a polemic against “The Four Great Errors”, the title of the sixth chapter. Three of the errors Nietzsche discusses here pertain to causation, while the fourth pertains to the conception