Capital Flows and Asset Markets
Capital Flows and Asset Markets


I have always loved this movie, and as I age the lessons it teaches me change

1997 movie Gattaca has always been one of my favourite films, and I have rewatched it many times. Unlike my other favourite films, I seem to be the only one I know that loves this film. Films like Casablanca, Groundhog Day, Aliens, Little Miss Sunshine, Dark Knight, Sound of Music, I find other people love too, but my love of Gattaca seems to be a lonely affair.


For those who have not seen it, the core story of Gattaca revolves around two brothers in a future where your DNA is the sole determinant of your success. The older brother is conceived naturally, and told that his DNA has condemned him to a second rate and ultimately short life. Despite that he dreams of being an astronaut, a role that is confined to only those with perfect genes. Ultimately, he prevails, overcoming those with better DNA. The message being that all the ability in the world is pointless without the drive and will to succeed.

When I watched this in my 20s, I felt a connection with this film. Growing up in a very middle class family in Australia, when I started to travel and work overseas, I became aware of the limitations of an Australian upbringing. I felt poor when I first went to Japan, and was made very aware of my inferior education. I still remember being told my maths was pretty good for a white guy. Discussion on my Japanese ability and pronunciation were also similarly brutal. In Australia, I had been a top student, in Japan I was as close to a dunce as you can get. But these trials and tribulations were all fuel for the fire in the belly, and I devoted myself to improving my Japanese.

In my mid 20s, when I started working in finance, I again became acutely aware of my limitations. Most of my peers had been focused on joining an investment bank for years, and had worked on the connections and the qualifications well before I had even realised this was a career option for me. Starting as a graduate at 25 years old, I could tell some thought I was already a “has been”, particularly as I only had a bachelors degree. But like the hero of Gattaca, I was playing the long game, and I was willing to do what it takes.

And when I was younger, there was one scene that really struck home to me. The two brothers play a game of chicken when they swim out to sea as far as they dare, and the older genetically inferior brother keeps winning. "Vincent, How are you doing this?” asks the younger brother. To which he replies, “Do you want to know how I did it? I never saved anything for the swim back” And for me, I have tried to live my life that way, always and everywhere. If you really want it, you never save anything for the swim back.

When I used to look at other people, I would ask the same question. Are they saving for the swim back? Are they committed? And so often people would say that they wanted to be this or that, but when words did not translate into actions, then I knew that was not what they really wanted. Are you willing to do what is necessary to achieve your dreams? For me that was the message of Gattaca, and the message I took from watching it in my 20s and 30s.

But as I watched it again, knocking on 50, I realise that I missed so much of the message of Gattaca. The drama in Gattaca comes from the main character trying to avoid detection before his departure for Titan. Vincent used blood, skin and urine samples from the genetically superior Jerome to pass DNA tests. A murder has led the police to investigate his workplace, and finding an errant eyelash from Vincent they begin to look for the obvious killer, a genetically inferior member of society impersonating a superior member. The tension is heightened as we discover that the lead detective is his younger brother.

As the circle tightens, his willingness to do whatever it takes is no longer enough. You become aware that more and more of the characters in the film are aware that Vincent has inferior DNA, but are willingly overlooking this to help him evade detection. The implication is that they recognise a system that focuses purely on potential, and not on drive and determination is a failed system. Or perhaps it is just that most natural of human emotions, rooting for the underdog. Either way, it is clear that the system is not universally supported or loved.

While the message from Gattaca remains one of chasing your dreams, and never saving anything for the swim back, it also has a message that the trial of chasing a shared dream can bind people together. Those around Vincent can no longer just passively support him, but to actively support him. They need to take risks themselves. Ultimately, Vincent requires those around him to give up love, freedom, life and duty for him to achieve his dreams, and they give willingly. As Jerome, the man that Vincent pretends to be, says at the end, “I got the better end of the deal. I only lent you my body. You lent me your dream.”

And the lesson I now learn from Gattaca, is not just never saving anything for the swim back, but that when you are chasing a dream, you are never really alone. Seeing someone pursue and achieve their dreams is something that we all want a part of - and everyone around you is helping you achieve. Chase your dreams, but remember everyone around you is helping you chase your dream too.

You may be wondering why a substack that is largely about economics and finance is talking about the lessons to be learnt from 1990s sci-fi film. Well the changes in my views on Gattaca, match up with my changes on my views on what it takes to have a successful hedge fund.

In my 20s and 30s, I would have taken the view that you need to be the best. You never saved anything for the swim back. Or in more financial terms, in a bull market the most bullish wins, and in a bear market the most bearish wins (and by wins I mean has the best hedge fund). That was certainly the mindset I lived by. I remember being very deflationary and bullish on bonds, and at some point, the numbers said to me to buy long dated JGBs. They were only yielding 2%, but the spread between 30 years and 10 years seemed very wide to me, and I did not think the 10 years would sell off, so I bought them. It was a great trade, but buying it felt like crossing a Rubicon, completely committing to the deflationary trade that I saw. Buying 30 year JGBs was committing to an investment theme, with no way back.

Coming up on 50, I still have the same attitude. You need to commit to succeed, but I also realise my success was coming from the explicit and implicit support of others. Colleagues, investors, supportive websites (hello Zerohedge!) and many many others. And I find myself dreaming of shorting again, I wonder if I can find others to share that dream. Will others follow, or at least will me on into the great dark unknown, offering at least tacit support. I think they will, but I don’t know for sure. So now, all that is left to answer is when do I strip off, and start swimming out to sea, saving nothing for the swim back?

Capital Flows and Asset Markets
Capital Flows and Asset Markets
Explaining how capital flows and asset markets work