As readers of these posts know already, I’m a huge fan of The Lord of the Rings and for good reason. Lately, I’ve been obsessing over the scene with Gandalf and Frodo in the Mines of Moria:
“Frodo: 'It's a pity Bilbo didn't kill Gollum when he had the chance.'
Gandalf: 'Pity? It's a pity that stayed Bilbo's hand. Many that live deserve death. Some that die deserve life. Can you give it to them, Frodo? Do not be too eager to deal out death in judgment. Even the very wise cannot see all ends. My heart tells me that Gollum has some part to play in it, for good or evil, before this is over. The pity of Bilbo may rule the fate of many.'
Frodo: 'I wish the Ring had never come to me. I wish none of this had happened.'
Gandalf: 'So do all who live to see such times, but that is not for them to decide. All we have to decide is what to do with the time that is given to us. There are other forces at work in this world, Frodo, besides that of evil. Bilbo was meant to find the Ring, in which case you were also meant to have it. And that is an encouraging thought.”
I wrote about this back in July, but have found myself over the past few weeks, in situations in which I seem so certain, to pause and think…Why are you so sure? If I’ve learned anything since starting Paper Street Capital is that its never quite so obvious when a “bad” situation isn’t there to serve you toward a greater good. The tragedy at times, is that many throw away the gifts that were simply wrapped in bad paper, before they had their own opportunity to serve a greater purpose.
The natural question is how can you tell from the onset?
You can’t.
Now some things are obvious and trivial, and I’m relying on everyone to use their judgement to know the difference of pure good and tragedy, so with that, I’ll tell you a quick story of my own “bad” gift.
Summer of 2022
On the evening of June 19, 2022 I was sitting at my dining table watching panic unfold as a very difficult decision, between two bad choices, was made by Bancor and the Impermanent Loss Protection was paused. The net result was if you choose to withdraw from the protocol, it was an instant 50% loss in most cases, with the potential for things to spiral out of control. I had a very large position on the protocol, so there was reason to be alarmed. What was presented looked very much like this:
Now, naturally most took this at face value and threw it away. They allowed the panic to ensue, took losses and withdrew, while cursing or threatening anyone involved.
But that evening…I sat with it.
I knew what it looked like, what people with apparent certainty were saying about it, but that night I decided to sleep on it and left it sitting on the dining room table. Remember, the panic and fear at the time was for a full collapse, that if I didn’t withdraw I would be last in line to get nothing and lose it all.
At the time I knew enough about the protocol to know what choices were given to the Bancor team, and how they made the best one, it generally removed the risk from the table of complete collapse. There are many times we all face bad choices and must choose the least bad road. It was from that framing in which I had a gut instinct that this situation was not meant to harm me, I just could not tell why.
What transpired was one of the best lessons in wisdom I’ve gained this past 12-18 months, some gifts are wrapped in very bad paper.
So I made a decision the next day. I knew they made a very difficult decision, were being crucified for it, so I choose to be as positive and constructive as I could. I sent a message to all involved, knowing they were catching the worst of it, and my messages would likely never be read.
I knew none of them at the time, and for all I knew I could be very wrong and set to lose everything. Yet.. it was only the choice to treat others well in spite of the financial risks, because I knew one day I might find myself in their shoes and hope someone else would treat me the same.
What transpired was a gift, which still may not be obvious to some, especially if the metric is “price”.
The Gift Revealed
My initial messages, by some miracle, found their way through the noise to everyone. Then, the world became very small, as I had the opportunity to meet people from all around the world. After many months of showing up to each call, I flew out to Denver to personally meet everyone. It was in that bar in Denver I also had the chance to meet Piers Ridyard, CEO of Radix, and which later was invited on as a guest on his podcast, The Defi Download. Truth was, everyone in that room was working on great things, and in normal times, I didn’t belong there.
And yet I did belong, because everyone was presented with the exact same box on June 19th. It clearly looked terrible, and a knee-jerk reaction to it solidified that. It was only because I choose to not throw it out, and make the choice to make the best of it, that much better things came out, and continue to do so. I’m obviously talking my book, but my investments in BNT and now in Radix I sense are the natural extension of the gift from last summer and will continue to bloom, regardless of the current market. If I’m honest, its only icing on the cake for having the privilege to become friends with people I would have never had the chance to, especially during a raging bull market.
The sense that I’ve come away with all of this, is to not be so sure when “bad” things happen, that they aren’t part of a larger good that is outside the scope of our understanding. Same in the gut feel from Gandalf above that Gollum had a greater part to play, is echoed in Romans 8:28: “That's why we can be so sure that every detail in our lives of love for God is worked into something good.”
Moreover, lets say I do lose whatever monetary value in making the choice I did, lets say I was wrong on it all and I lost that large position. I don’t think you could convince me that I still made the wrong choice. In some sense, I became at peace with sacrificing the position, because there was never an option for financial certainty. The only choices I had were to reach out and be a friend…or not.
Moreover, it meant that I could potentially sacrifice both the money AND the opportunity to be supportive in a dark time. I would be none the wiser and missed an opportunity for me to personally know how I would act in a time of crisis, while still then losing all the money.
And lets say I choose to act in a way many did then, and still do today, by cursing and threatening those involved. If so, you would have learned something about yourself then too. Its a lesson that will always stay with you, because things routinely go sideways.
You would have learned that in a time of panic, you joined the mob.
I’ll speak personally but I know with all certainty that this bear market has done more good than any financial gain I would have made from avoiding it, by far. For what good comes from financial success without the requisite wisdom to handle it, its in that scope that what sometimes appears to be a gift, actually becomes a curse. The reverse of this piece is true too.
For now, I think its more important to remember that there is always some good if you look for it. I’m resigned to the fact that I’m not wise enough to fully understand the purpose or meaning of many things, but I can trust that if I approach it with as much truth and faith as I can muster, the net result will always be good.
Will