I was talking to Gary Mishuris about his (open and free to the public) value investing seminar for Excess Returns and he brought up the term cargo cults. I hadn’t heard of or thought about that since high school. It’s such a great analogy to keep on hand.

Gary was talking about people who copy or clone their perception of the factors of great investors and then get mad when the results don’t produce the same effect. There’s some nuance to think through here, both in what level of copying a form is reasonable to start with, and how complex the scenario is you’re mapping, but the idea basically boils down to - if you don’t totally understand how it works, you’re susceptible to missing some key steps.

Back in WWII, you’d have these soldiers in areas that didn’t normally see people or technology like what was going on in the war, especially on some of the islands. Put yourself in their shoes for a second. You see these foreign military people putting up towers and docks and then, almost magically, aid shows up, aka cargo, and you have food, medicine, etc.

So now when the soldiers leave, some people might believe if they just build a tower, or something like that, they can bring forth the same result. There are innocent and naïve versions of this that end in silly ways with people wondering why they can’t get the same effect, but also a range of mercenary and cultishly-misguided variations that end with people killing calves or burning crops because the cargo-gods will deliver.

In all cases, it’s a good reminder that we don’t have all the factors.

People who want to clone investors have to think about the period the investors they were cloning were operating it, exactly what they were working with, exactly what their competition was working with, and then all the other nearly infinite macro factors.

Same goes for islanders who want to clone the results of soldiers. In this case, it’s even tougher, because life experience means there are questions they don’t even know to ask. It’s like aliens landed and they want to copy alien tech.

In both cases - it showcases how hard it is to copy a process for a result in loads of life.

Especially when we see something new. Especially when we encounter a new effect and want some of that to rub off on us. Few things are magic, and if somebody else can manifest it, you need to really look close before you infer any magic step is going to manifest the same result for you.

I don’t know what the AI equivalent of a cargo cult is right now, but somewhere between the hustle bros and slop creators, I know it’s amongst us.

Thanks, Gary, for getting this metaphor back at the top of my mind.