Nietzsche On The Twilight of the Idols: On Maxims and Errors

Nietzsche On The Twilight of the Idols: On Maxims and Errors
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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.

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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 of freedom of the will.  As Nietzsche declares, “There is no error more dangerous than that of confusing the consequence with cause: I call this the ruination of reason. Nevertheless this error is among the most long-standing and recent of humanity’s habits” (VI:1). This quote requires no more elaboration as it should be plainly obvious how important this concept is for prudent investors. Another error, dubbed by Nietzsche as “The Error of False Causality”, is the mistake of thinking we know what causation is because of our introspective confidence in what we take to be the causal powers of our own mental life. Nietzsche explains:

“Tracing something unknown back to something known gives relief, soothes, satisfies, and furthermore gives a feeling of power. The unknown brings with it danger, disquiet, worry – one’s first instinct is to get rid of these awkward conditions. First principle: any explanation is better than none. Because it is basically just a question of wanting to get rid of oppressive ideals, we are not exactly strict with the means we employ to get rid of them: the first idea which can explain the unknown as known feels so good that it is ‘held to be true’… The causal drive is stimulated by fear. The ‘why?’ is intended, if at all possible, not so much to yield the cause in its own right as rather a kind of cause – a soothing, liberating, relief-giving cause. The fact that something already known, experienced, inscribed in the memory is established as a cause, is the first consequence of this need. The new, the unexperienced, the alien is ruled out as a cause. So it is not just a kind of explanation, the kind which has allowed the feeling of the alien, new, unexperienced to be dispelled most quickly and most often – the most usual explanations. – Result: one way of positing causes becomes increasingly prevalent, it concentrated into a system and ultimately emerges as dominant, i.e. simply ruling out other causes and explanations” (VI:5).

Nietzsche posits a robust psychological mechanism behind the process of ‘rationalizing’ causality for the layman individual. For the vast majority of speculators and value pretenders (who are, of course, just speculators) inferring or deducing causality is merely a psychologically comforting practice by which the intellectual heavy-lifting involved in diligent investment research is reduced to what essentially amounts to conventional ‘rules of thumb’ and stereotypes. Moreover, these hermeneutic interpretations are typically based on severely limited sample sizes of individual experience (which was likely based on equally indolent ‘analyses’). A prudent investor would be well advised to challenge this conventional wisdom. Rules of thumb can be just as inimical as they are convenient and expeditious. Moreover, the prudent investor ought to treat each situation as unique, employing comparison to past experience with great caution, careful to assess the differences of such comparisons in addition to the usually more similarities. On this note, I leave the reader with one of Nietzsche’s aphorisms to contemplate: “To search for beginnings you turn into a crab. The historian looks backwards; in the end he even believes backwards” (I:24).


In chapter eight, titled “What the Germans Lack”¸ Nietzsche derides German society, in this way anticipating much of the first half of the twentieth century. In particular, Nietzsche scoffs at their education system and that state of German intellectualism. In regards to education, Nietzsche comments: “That schooling, education is an end itself… people have forgotten this” (VIII:5). German schooling no longer placed education as its end, instead it trained rather than educated so as to increase each student’s exploitable utility. As Nietzsche writes: “What Germany’s ‘high schools’ actually achieve is a brutal kind of training aimed at losing as little time as possible in making a multitude of young men usable, exploitable for public service” (VIII:5). This very same mentality is the domineering force in finance today, especially on Wall Street. Aspiring analysts care not for learning, but only want the ‘skills’ required to obtain an analyst position. While on Wall Street, these finance monkey’s only want to obtain ‘experience’ for their resumes to climb the ladder further. Two plus two plus two and so on; they are in such a rush to race through each step that they never stop to think, their views on careers is as short-termed as their speculative mind-set. These finance monkeys error by the same manner that Nietzsche chides Germans for being too career oriented. More specifically, these individuals, who undoubtedly comprise the vast majority of professionals in this field, believe that finance is something to be conquered and something that can be mastered. This is far from the truth as any prudent investor would tell you. There is no such summit from which there is no further room for development, as Nietzsche writes:

“A higher kind of man, if I may be forgiven for saying so, does not like ‘occupations’, precisely because he knows he has a calling… He has time, he takes his time, he does not even think of getting ‘finished’ – at thirty you are, in the sense of high culture, a beginner, a child”(VIII:5).


Nietzsche also rebukes the state of German scholarship. Of the contemporary German scholars, Nietzsche japes, “you can even be a great scholar without a mind – but in every other respect it remains a problem” (VIII:3). I’d quip that one could say the very same of today’s academic economists and Wall Street bankers. Nietzsche continues, stating that the mentality of scholarship is plagued by a superficial and short-term mentality. Instead, scholars should learn prudence and patience, as Nietzsche elaborates:

“Learning to see – accustoming the eye to rest, to patience, to letting things come to it; learning to deter judgment, to encircle and encompass the individual case on all sides. This is the first preparatory schooling for intellectuality: not to react immediately to a stimulus, but to take in hand the inhibiting, isolating instincts” (VIII:6).

Investors would be well advised to ‘learn to see,’ as Nietzsche describes it. The prudent scholar, as well as the investor, ought to view each case idiosyncratically, making sure to view it from every angle and perspective so as to avoid confirmation biases. The investor ought to read and think with patience, not letting his or her desire to find value project into their assessments. For I posit that most investors do not realize that in the art of investing, interpretation is more commonplace and critical than that analysis texts. The analysis is rather formulaic, but the conclusions drawn from statements and analysis, the interpretation, is where the investor differentiates himself or herself and where insights and mistakes are regularly made. Nietzsche continues:

“One lesson from having learnt to see: as a learner you will have become generally slow, mistrustful, reluctant. You will initially greet any kind of alien, new thing with a hostile calm, and let it approach – you will draw your hand back from it. Opening all your doors, subserviently prostrating yourself before every little fact, stepping, rushing into one thing after another, ever ready to pounce, in short our famous modern ‘objectivity’ is bad taste, ignoble par excellence” (VIII:6).

The prudent scholar, like the prudent investor, ought to proceed with caution and a healthy dose of skepticism. New information is treated with a steady and hesitant hand, controlling one’s emotional dispositions, especially that of greed and fear so as not to overreact or skew the information. The prudent scholar, like the investor, does not react to every stimulus, every piece of noise or ‘information.’ Such a habit is bad taste, according to Nietzsche; a taste that definitely belongs to the speculative mentality. As Nietzsche remarks: “Only the degenerate find radical means indispensable; weakness of will, more specifically the inability to not react to stimulus, is itself simply another form of degenerescence”(V:2).


I conclude with a final passage titled “My Idea of Freedom”, which is of great interest to Nietzsche scholars as it is one the most cogent passages on the subject in the Nietzschean corpus. In particular, Nietzsche’s revisionary usage of the term freedom is a beneficial perspective on this often dogmatically deployed concept. Nietzsche writes:

“Liberal institutions stop being liberal as soon as they have been set up: afterwards there is no one more inveterate or thorough in damaging freedom than liberal institutions… they undermine the will to power, they are the levelling of mountain and valley elevated to the status of morality, they make things petty, cowardly, and hedonistic – with them the herd animal triumphs every time” (IX:38).

Nietzsche prefaces his discussion of freedom stating, “The value of something sometimes depends on not on what we manage to do with it, but on what we pay for it – what it costs us” (IX:38). Keeping this in mind, Nietzsche reminds us that in the example of liberal institutions freedom is not something that can be obtained and held, but is something that is constantly won, that must be continuously ‘paid’ for (not in the monetary sense of the term). Our equivalent liberal institutions would be none other than the mutual funds and institutionalized hedge funds. These value pretenders are sheep in sheep’s clothes. Perhaps once, like the liberal institutions, they fought for their freedom. However, having attained a certain level of success subsequent to their freedom, they become institutionalized. The ability to wage war to maintain their freedom quickly became diluted. As they expanded their ranks to handle their growing assets under management, they employed increasingly mediocre, meek, and mindless parasites that sucked the vigor and independent thinking from these firms. On freedom, Nietzsche recommences:

“While these same institutions are still being fought for, they produce quite different effects: then they are actually powerful promoters of freedom. On closer inspection, it is war that produces these effects… war is an education in freedom. For what is freedom! Having the will to be responsible to oneself. Maintaining the distance which divides us off from each other. Becoming indifferent towards hardship, harshness, privation, even life itself. Being prepared to sacrifice people to one’s cause – oneself included… The liberated man – the liberated spirit even more so – tramples over the contemptible kind of well-being that shopkeepers, Christians, cows, women, Englishmen, and other democrats dream about. The free man is a warrior” (IX:38).

Freedom for Nietzsche is not something with an equilibrium point, nor is it a binary or static state of being. In philosophic terms, it might be described as a ceaseless act of becoming. Freedom is a constant struggle to maintain one’s distance from the herd; it is a continuous climb against the forces of the gravity of consensus. The herd hates all free-spirits, for these contrarians either proselytization or castigation is the herd’s desideratum. For Nietzsche, freedom is the will to be responsible to oneself, not for oneself; for one is free with respect to themselves if they are the creators of their own values. Once one becomes responsible for oneself they cease to be free as they subjugate themselves to the valuations of others, namely that of the herd. The genuine investor is a free-spirit. The investor is responsible only to himself, he is in a constant struggle against gravitational pull of the herd and their consensus building. He is indifferent to the hardships and scorn he receives from the herd who mistrusts him, who mistake him, as a result of his freedom. Instead, he tramples over these contemptible types, he carefully calculates where he makes his stands against the consensus of the herd, striving forth boldly when does so. For the free man is a warrior, and wisdom always loves a warrior.

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Author: Mike Darmiento I am a undergraduate student at the University of Chicago studying Philosophy and Political Science. My two great interests are value investing and philosophy. I strongly believe in a value investing approach that follows the mold of investors like Klarman, Marks, Abrams, and Singer. My favorite investing books are Margin of Safety, The Most Important Thing, and Security Analysis, and my primary area of interest within value investing is distressed debt. As a avid reader, I try to find links between classical texts and the principles of value investing. As Klarman writes, “Investing is the intersection of economics and psychology.” Many of the psychological elements inherent to investing are not unique to investing, rather they have been taken from the philosophical canon and applied to financial markets; these concepts include cognition and its biases, prudence, ethics, rationality and decision making, and crowd psychology, among many others. Therefore, in this website I hope to shed light on and analyze these connections. Experienced investors will likely find none of the conclusions I make to be revolutionary, nor is that my intention to be so. My goal is to trace modern investment principles to their roots in the philosophical intellectual tradition and to illustrate how investors today can still learn from these classical authors and texts. In terms of the logistics of running this website, I am aiming to do at least one post per week, though it will likely vary from time to time due to exams and the like. I will always try to quote and cite as many relevant passages from the text so that the readers can see where I draw my analysis from. In terms of which texts I will cover, there is no predetermined order and it will likely be highly influenced by what classes I am taking at the time and which texts I deem relevant to investing.
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