A Human is Just That – A Human
Humans are always searching for the ‘leader’ who will inspire and lead his followers to riches and success. There is a belief that someone else exists that knows more than we do, and if we follow that person, we will bathe in his success and share his riches. It is very true that the intelligence level of humans varies tremendously, as does each individual’s IQ, and that the understanding of certain humans for certain subjects is infinitely better than other humans.
So we glorify he that has made the right investment choice about the market a single time, and we glorify he that has a track record that seems outstanding. Yet the ‘leader’ and all-knowing investor has not yet been born, and will never be born. That person that made a correct investing decision, has won the lottery by getting all factors correct at a particular point in time, and as a result made a calculation that was spot on. Incredibly lucky to have done that. There are many many people with similar abilities who have analyzed the factors and arrived at different conclusions, and different timing. Analyzing all available factors is not sufficient to make a correct decision. Available information does not include certain factors that can never be taken into account, and cannot be known.
These factors include the unknown. It is inevitable that other factors that apparently have little to do with the subject at hand, will surprisingly affect the outcome of whatever is being analyzed.
These factors include expecting the unexpected. The unexpected is simply unexpected and no human can determine that an unexpected event or circumstance will occur. It is simply incomprehensible.
These factors include timing. Timing is always the most difficult of all factors. What appears inevitable may be in fact inevitable. Yet the question is when is that inevitable event going to occur. It is never when expected.
The time factor is also complicating in a more direct fashion. When an event seems inevitable, every moment in time that passes without that event occurring, means the other unknown factors that haven’t yet occurred, have another moment in which to occur. As more time passes, the odds that such an unexpected event will occur, keep increasing until as more and more time passes, the unexpected effect becomes more and more of a certainty.
Following the Investment Advice of the Guru
So what we have is a very smart intuitive person that has really lucked out by beating all the odds regarding the time factor, and the unknown factors. Following the lead of such a person is more often than not, a very poor investment policy for the average investor. That person will change his investing hypothesis continually as these other factors become evident to him over time. The follower is never tuned in to changes in opinion and conclusion, so the follower is making investment decisions based on old and outdated information.
If you want to let someone else determine your investment policies, hire an investment advisor and follow that advisor’s advice. You will have a reasoned and continual thought process based on tried and true long term experience, rather than following someone who managed to beat the odds and bet on a event that actually happened when it was supposed to happen.
Gurus
Einstein was an exceptional genius, yet who would understand that his genius would allow humans to use nuclear weapons to kill each other at unprecedented rates.
Alan Greenspan was renowned as a believer in his younger years that you couldn’t print money without gold reflecting the loss in purchasing power by gold escalating in value. Yet Greenspan was the author of printing the greatest amount of money in the history of the world.
Kyle Bass was famous for predicting the great collapse of 2008 and has since become famous by predicting the economic fall of Japan. Yet Japan has not fallen. Other factors have prevented his assumption from becoming a reality – so far.
The list goes on and it is endless. The great gurus and investors have been wrong as often as they have been correct. Their fame at being correct a single time and making enormous wealth in that investment, has not prevented them from misreading the market many other times.
A single work of genius does not prove the existence of such inspiration.
It is merely a correct decision, at a point in time, that was not duplicated by a number of others. The investment world is fraught with people attempting to tell the future, using innumerable methods of determining what will probably happen.
Every investment house requires you to sign an acknowledgement when you open an account that says “Past performance is no guarantee of future results”. The reason is that experienced investment professionals realize that every investment decision rests on its own merits and is just as likely to succeed or fail as every other investment decision.
So How Does The Investor Cope With This Uncertainty?
Follow common sense rather than investing gurus. Pick stocks that have intrinsic value. Pick stocks that are in industries that are expanding and growing. Pick stocks that have a strong balance sheet. Pick stocks that have strong assets and strong potentials. Pick stocks that you believe have an excellent future. Use your own common sense. Don’t blindly follow he who has made a correct pick and is glorified for that pick.
The views expressed in this blog are opinions only and are not investment advice. Persons investing should seek the advice of a licensed professional to guide them and should not rely on the opinions expressed herein. This blog is not a solicitation for investment and we do not accept unsolicited investment funds
