Diary of a Financier

Investing Is Not about Knowing Everything

In Idiosyncrasy on Wed 9 Nov 2011 at 15:43

I once heard Jeffrey Gundlach quote Socrates:

I am the wisest man alive, not because I know everything, but because I know that I don’t know everything.

…to wit, Mr. Gundlach surmises:

‘I am a top money manager because I know that I don’t know everything. Investing is about knowing that you don’t (and you can’t) know everything. I don’t know what future tax policy will be in the United States. I don’t know how to fix the broad economy or Europe, but I know they’re risks, and I manage with sensitivity to those risks.’

A terrific quote that I’ll save in my scrapbook. The more I listen to Mr. Gundlach, the more I find reflections of myself in him (more likely vice versa), specifically regarding money management philosophy. In light of the above quote, however, I realize that my stance in existential philosophy widely diverges from his. For example, an excerpt from this Diary’s “About” page:

I take no solace in forfeiting my intellect, in burying my thoughts within an invalid social proxy like capital markets. I need a greater sense of purpose: something that rears a proud legacy; something with resonance and social value. The intellectual capital that exists in the blogosphere stores such powerful potential energy… Converting brainpower & bickering into real solutions.

This is a matter of personal preference, philosophy, existentialism. This is by no means a critique of Mr. Gundlach’s persona, but taken in isolation, his comments have inspired what follows…

~~~~

I often call myself a masochist for deriding the financial services/banking industry, considering I’m a part of it. Personally, I feel an obligation to produce something toward social utility vis a vis my livelihood. Finance has grown so bloated that a large swath of the business provides no such social or economic value (on a sustainable basis). The majority are redundancies or intermediaries, skimming from the cream while they hold the great plunger to the world’s butter-churn.

Particularly since this bloated sector of the world economy annexes the “best & brightest minds” (as some suggest), I myself feel an obligation to contribute something to society–though I’m neither the best nor the brightest. I’m not recommending the total sacrifice of a great mind unto those unwitting “destroyers,” who idle in the safety of the welfare state, paralyzed by the luxury of sloth. I am, however, suggesting that history’s greatest icons exceed expectations. They don’t just get their job done, they transcend the role of professional and become a leader. I’m not content being a great banker, a great investment manager or financier. I want to be a great man. That doesn’t mean I vote with my money or my clout. What it means is that I (the royal “I”) apply my “greatness” toward solving problems, since my wonderful skill/intellect/greatness not only allows me to identify the problem, but also understand it like few others can.

I am a manger of investments. I do not–can not–know everything. When I’m ignorant, I abstain. With equal vociferousness, I grab the microphone when I’m propelled by veracious conviction. I have trumpeted the problems and solutions facing Europe & the United States for years now (on the record). Net-net, I’ve financially benefitted from 2011’s Eurocrisis, at least in my portfolios. Through all the dissertations crystallized in this Diary and all the positions open in my accounts, I’ve grown so familiar with these problems that I can clearly see how to fix them. After all, the fix is the risk to my portfolio. Solutions. That’s the name of the game. Without solutions, you’re not worth nothing to noone.

–Romeo

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  1. Great quote with relevance to investing and life in general! Thanks

  2. […] fundamentals, I have the composure to buy when there’s nobody buying and nobody left to sell, because: I’ve grown so familiar with these problems that I can clearly see how to fix them. After all, […]

  3. […] Nobody knows the outcomes of a complex system with any amount of certainty.  Socrates said: ‘Wise men aren’t wise because they know everything, but because they know they […]

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