One might have a smattering of intellectual curiosity, regarding what it is about aerobic exercise, that improves health and helps with weight-loss. But neither having such curiosity, nor satisfying it, helps per se with the weight loss. Instead one just goes jogging with some regularity, and watches the pounds drop. It is the dogged and unenlightened tenacity that produces the lasting effect. Intellectual knowledge is neither necessary nor sufficient....Just seems like we'd want to know what we are investing in and what is driving the returns, since we're investing our entire life savings in it. How did that one Buffet quote go...? Don't invest in something you don't understand..?
I think that the analogy holds, with equity investment. Today my knowledge is hopefully keener and more insightful than it was say 30 years ago... at least a bit. But my success as an investor is neither better nor worse. It is entirely dependent on what the market does, and not my choices or cleverness (or more commonly, its lack).
Investment is a particularly odd endeavor, where deeper understanding doesn't help. One becomes a better amateur car-mechanic if one understands automotive engineering better. It helps with the turning of wrenches. This holds, I think, in nearly any craft or hobby or profession. Seemingly effete book-knowledge is of very considerable use in doing even narrowly practical things. But I don't see such connection in investing.
None of this precludes our intellectual curiosity in how markets work, or why stocks go up. I don't think that it's somehow foolish or sophomoric to ask! But it does seem to be the case, that even having good and cogent answers, won't be of practical help. At best, it would offer consolation when nursing our losses during bear-markets.
Statistics: Posted by unwitting_gulag — Sat Jan 06, 2024 2:00 am — Replies 67 — Views 7304