This is one of the most freeing phrases I could think of.
You Gotta Know, Or Else
All our lives we are expected to know. Know something, know the answer, know what to do, who to accept, who to trust, whom to distrust,and so on.
In school, if we answered “I don’t know” to a queston, we were considered wrong, bad, incomplete, a failure, a loser.
One outcome of this expectation can be the pressure that comes from the fear of choosing the “wrong” answer. A schoolchild can descend into unremitting anxiety over the difficulty of how to know the unknowable.
Investing
What does this all have to do with investing? The expectation that one can know in advance which companies or stocks will advance or which will decline is inherently simply a guess.
While one can extrapolate from the past and present which trends can be sustained in the short run, unexpected events occur. To put it another way, unexpected events will always occur, unexpectedly. As a result, total confidence on what will happen in the future is not possible.
How To
Since there is no solution to knowing the future, the path to take is to identify likely movements, and diversify. While concentrated events have the possibility of higher payouts in the short run, a diversified investor has a greater likelihood of surviving unforeseen events.
Here is a stunning example of divesification. In 1939, upon hearing of the outbreak of World War II in Europe, John Templeton instructed his broker to buy 100 shares of every company listed on the New York Stock Exchange whose price was less that $1 per share. Many of these companies later went bankrupt, but those that succeeded made Templeton a handsome profit.
Templeton’s story illustrates how not knowing which specific companies would succeed and which would fail can still allow for profit if one casts a wider net.
Not Knowing Leads To Seeing and Knowing
Allowing myself to acknowledge not having a predetermined answer opens my perspective to see an entire field of vision. From this wider outlook, I have the freedom to see all, as opposed to that which might have fit my initial point.
How well do you trust your “knowing”? Let me know here.
The photo of a jaguar in an zoo enclosure is from 2024.
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