I have attempted on this blog to, amongst other things, provide a healthy respect for the complexity of the world. Not even I, your (sometimes) humble blogger will attempt to hold a monopoly on truth or accuracy. Most outcomes derive from random processes. This has changed to some degree with coming of the information age, but that itself produces its own randomness.
Into this stark reminder of man’s limitations, steps modern media to fill the void. Providing simple, easier to understand, remember, and replicate to others, these explanations of things that have already occurred almost always wrong. A perfect, accurate, and timely explanation to an event is an extremely rare event.
Credentialism is another form of granting explanation to events that have random generators. People give credence to “experts” because they are well educated or have rubbed shoulders with “deciders”. Now, I gain from this genuflection to some degree, having a Law Degree and an MBA from respectable institutions…but what is truly valuable in the context of investments and policy formation probably cannot be gained via external sources.
I grew up, like everyone else, with certain gifts and certain limitations. These were in turn reinforced by certain environmental effects. But one of my “core” tendencies is to always be aware of crowds, how they act, what they do, how they behave, and where they form. I don’t think this temperament can be “taught” in any academic setting. It is a perspective, a fundamental way of looking at things.
One of my friends recently obtained the CFA (“chartered financial analyst”) designation. This is a wonderful designation to hold, since it really does provide the holder with a good set of evaluation tools for investment purposes. But it is neither necessary nor sufficient to be the best investor from this designation. Name your “top” investors and Hedge Fund managers. Few, if any, hold the CFA.
What creates “value” in an investment thesis starts and ends with a raw idea. The analysis only shapes it into something workable and actionable.