Sunday, December 21, 2014

"The Farther One Travels The Less One Knows"

The title is from the song, "The Inner Light" written by George Harrison of the Beatles.(1) The lyric reflected Harrison's nuanced view of Indian music. As we grow and mature we become aware of how much we do not know about a body of knowledge we are exposed to or are immersed in. Learning exposes us to the depths of our ignorance. (2)

We are all ignorant at some level even as a subject matter expert. In investing this is an unavoidable handicap and one that many individual investors are not aware of. The challenge in investing is that we can never completely know, understand or predict everything we would really need to know to clearly see the future we are investing in over time. So our results cannot be guaranteed. Ignorance is believing we know more than what we actually do. Ignorance in investing will ultimately lead to sub optimal results and over time take investors out of the game altogether. Investors in this category often blame outside forces for their poor results which is misguided. Mastery (i.e. maturity, development and experience) on the other hand allows investors to acknowledge this issue which may allow for development of techniques to better cope with this problem.

The lyrics made famous by Harrison and the Beatles are based on a Zen poem. The meaning of these lyrics are profound as beauty, joy, fulfillment and riches are found within each of us. If we hope to obtain these things, the more they will elude us as the world cannot give us what it does not contain. Where do you experience the universe as the calling in life should not be to gain more beauty, joy and riches, etc. When you discover what you are you will find that the universe is contained within you. You will find the the world is really inside of you and that the world outside of you is an illusion. (3)

Average and below average investors typically do not understand this so they are all too often focused on the opinions (predictions) of others, the outside world, markets, instruments, the economy and indexes, etc. that they have no control over. This type of focus and framing results in sub par results over time. Masters are instead focused within themselves in a way where they are not relying on outside forces to drive their investment process and approach. The pursuit of riches in investing typically leads to the opposite result because it is an outcome focus that leads to poor processes which ultimately results in poor results.

In summary, success or failure in the markets over time for an investor will be dictated from what lies within the investor instead of outside factors such as the economy, markets, investment vehicle performance (i.e. movements in asset prices) and a myriad of other outside factors. This is often not understood or acknowledged by investors focused on external factors which results in their depths of their ignorance not being exposed.

(1) From "Concert for George," 2002 and, the song lyrics are:

The Inner Light
The Beatles

(Verse 1)
Without going out of my door
I can know all things on Earth
Without Looking out of my window
I could know the ways of Heaven

The farther one travels
The less one knows
The less one really knows

(Verse 2)
Without going out of your door
You can know all things on Earth
Without looking out of your window
You could know the ways of Heaven


Arrive without traveling
See without looking
Do all without doing

(2) Adapted from Beatles "Inner Light" lyrics.
(3) Adapted from from a synopsis from the blog,

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