March 15, 2004
The Art of Reading Tea Leaves

John P. Hussman, Ph.D.
All rights reserved and actively enforced.

Thousands of years ago, the ancient Chinese developed the practice of reading tea leaves, which would follow ceremonial tea meditation (a way of focusing mindfulness on even the smallest aspects of life). The belief was that the configuration of tea leaves remaining in the cup was a reflection of the state of the world at that particular moment.

If you're in a meditative mood, or just completely bored out of your mind, you can go ahead and try this (not that I have, but it could be fun). Brew some loose, unstrained tea in a white, large-bottomed tea cup. Sip the tea mindfully while you observe each action, and maybe meditate gently on something, like Intel's second-quarter revenue outlook or the next rate hike by the FOMC.

As you finish the cup, swirl the remaining tea a few times so the loose leaves get up along the sides of the cup, invert it over a saucer to drain the leftover liquid, then turn the cup over again and look inside.

The basic idea is that the dispersion of the tea leaves will create patterns. Patterns of tea leaves near the rim of the cup tell of events in the near future, while patterns near the bottom tell of more distant things. Fortunately, the patterns that the ancient Chinese looked for were fairly straightforward. Here are a few of them:

Good luck: bell, angel, fruit, kite, horseshoe, rainbow.

Bad luck: bear, raven, lock, tower.

Travel: boat, palm tree.

Argument: bull, closed hand.

Harmony: dove, open hand.

Financial gain or advancement: ladder, coin, fountain, whole eggs.

Financial loss or difficulty: broken eggs, Martha Stewart.

You get the picture. Anyway, there's an interesting aspect of reading tea leaves that comes straight from information theory: the best information comes from a pattern of dispersion that tells a story. If the tea in your cup always settles in a single nondescript clump at the bottom of the cup, you're not going to be able to say much that's interesting. It's the variation, dispersion, and patterns in the tea leaves that tell the richest stories.

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