His and other researchers’ findings suggest that we resort more heavily to superstition when there is high uncertainty, the stakes are high, and when we perceive outcomes to be essentially beyond our control. The great irony, of course, is that superstitions are supposed to protect us from misfortune. Yet they do the opposite. They are expensive, and their cost is borne by believers and eye-rollers alike.
Unproven experiment
For Chung, the whole thing was personal at first but it quickly snowballed. He comes from a family that subscribes to many superstitions. His mother never orders seven dishes at a restaurant (unlucky number) and has filled the house with lucky bamboo and statues of the Buddha holding gold (lucky vegetation, deity, and metal respectively). More recently, she decided at the last minute not to buy a house because the feng shui of the place was off; a decision made because of the direction the toilet faced.
After maintaining a blog about superstition for a while, Chung decided that a fund that actually trades on the FTSE100 would be an interesting way to explore the murky intersection of value, faith and the economy. “Where money and risk are involved,” he says, “superstition is there lurking in the background” – at casinos, of course, but also on Wall Street. “I wanted to poke fun at our superstitions,” he says, “but I also wanted to highlight our irrational nature in a way that is less critical and more about encouraging dialogue.”
At present he plans to let the fund run for a year, tracking its performance against various indices and other funds, both managed and automated. Should there be gains, he will send dividends to people like me who threw down for a stake in this otherworldly approach to playing the markets. (Yes, his mother is an investor, to the tune of £100/$157) If the whole thing tanks, the money is gone. Poof. But at least investors are aware of that risk ahead of time, not to mention reminded of it in every correspondence from Chung, which now includes the cautionary e-mail tag: Please be aware, that this is an unproven, highly speculative, experiment and a project with the risk of total loss.
Meanwhile, everyone and their cousin is reaching out to him to share titbits about their personal superstitions, and he is currently making the rounds to talk with future-of-money thinkers in London, audiences at Microsoft, CNBC, CNET, The Wall Street Journal, among others.
Has the whole experience made him want a career in finance? “Definitely not,” says Chung; he finds the prospect of losing other peoples’ money quite worrisome. After three weeks of trading the fund had dropped 12% from its starting value of £5,000, while the NASDAQ100 and Hang Seng Index rose around 4% during this period. It has since rebounded a little; at the time of writing the fund is around -5% of its starting amount.
Is losing 5% of value horrible? Depends whom you ask and what you compare it to. In the age of Libor, Lehman, Madoff, and sovereign debt write-offs, maybe it’s not so bad. I guess I’ll find out next spring, and BBC Future will follow up with Chung to find out how both he and the fund have fared over the course of this experiment. Besides, speculation is just that: not a sure bet. “When you gamble,” says Chung, “you either win or lose.” When you put it that way, maybe the more rewarding way to lose $200 would have been an impromptu trip to Las Vegas. Then again, I’m a Cancer, and Cancers aren’t prone to such rash behaviour.
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