If You Don't Know Now You Know

It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so. – Mark Twain

What a line. Would you expect any less from the great Mark Twain? I heard this quote while listening to Howard Marks on The Tim Ferriss Show (a legend quoting a legend on a soon-to-be legend’s podcast – this is surely some sort of wisdom Oreo) and it got me thinking about my own journey.

I’ve always erred on the side of self-doubt, and I’ve found there’s nothing like joining a community of know-it-alls to make you really question your abilities. Okay, maybe know-it-all is the wrong term. Because I truly believe Twitter is a magical place – allowing some of the most brilliant minds to share their knowledge with us delusional, everyday folk. But this platform can also create an environment that breeds overconfidence and lack of critical introspection.

We all have an innate need to predict the future and to control our fates. People want a clear direction, an unwavering answer, and they turn to those people who they believe can give them one. And on the flip side, as someone people turn to for answers, it’s easy to let confidence in your abilities turn into overconfidence. In the case of FinTwit, once you get that market prediction correct a few times, you start to discount the luck (aka probability) involved, and suddenly you’re out there preaching like the homeless guy on the strip who claims he is the second-coming of Jesus.

This isn’t just a FinTwit problem – it’s pervasive in the business world. In recent weeks I have come upon many well-established folks from varying industries trying to tackle this issue and encouraging the idea of admitting when you “don’t know.” What a relief. Especially in the case of market predictions where no one really does know for certain. I often don’t know the answers to financial questions and can let the self-doubt of this realization consume me. And that got me thinking, what are the implications of self-doubt vs. overconfidence and is there truly power in not knowing?

I will address this topic in a series of short blogs entitled “If You Don’t Know, Now You Know”

Where I will search for the answers to the following:

  • Why do we feel we can’t say “I don’t know”?

  • Why do we think we know in the first place?

  • Is there a gender difference?

  • What are the benefits/consequences of admitting you don’t know?

  • What are the implications on markets, trading and risk?

(I say searching because – I don’t know.)

But before I conclude, let us return to the quote that kicked this whole series off. How would you feel if I told you Mark Twain was not the originator of that quote? In fact, there’s no evidence Mark Twain ever said (or wrote) those words at all. Yet they are often attributed to him. The Quote Investigator determined that the modern version comes from an encyclopedia of humor by Josh Billings, written in 1874. The first attribution to Twain comes as early as 1899, but again, there’s no evidence that he was the originator. A quote about the dangers of thinking you know something for certain, attributed to the wrong man for centuries. What magnificent irony.



© 2018 by The Delusional Trader

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