Quote(s) of the day: Beware the Knowers!

Long-time readers and clients know that we painstakingly, and on-goingly, weigh a wide array of data as we assess the present global long-term setups that guide our asset allocation decisions. How can we not, given our responsibility to our clients!

That said, I have to forever remind myself that no information-gathering process, no matter how robust, will ever capture and assemble enough of the global economic system’s data to allow its operator to consistently (accurately) predict near-term market direction, let alone gyrations.

Therefore, along with the macro data, it is absolutely critical that we explore history’s long-term market patterns and look for present-day similarities (hence, all of the charts you see herein). What we’re after is the most informed assessment of the go-forward probabilities.

Atul Gawande, in his excellent book Complications: A Surgeon’s Notes on an Imperfect Science, speaks to how professionals working with another infinitely complex system must form their views based largely on the recognition of historical patterns. Although I’d like to think that ours is a conscious form of pattern recognition.

“Judgment, Klein points out, is rarely a calculated weighing of all options, which we are not good at anyway, but instead an unconscious form of pattern recognition.”

Gawande’s book is an analogous treasure trove reminding me that humility is the essential trait of those who deal with infinitely complex systems on behalf of others. I.e., beware the adviser, or, for that matter, the physician (the mere humans) who would pretend to know what’s about to happen without illustrating for you precisely what’s behind that knowing. Although, even then, the presumed “knowing” would remain a huge red flag, as it exposes a dangerous lack of humility. I prefer “tendency” or “probability” based on the data and past patterns.

“You have a cough that won’t go away—and then? It’s not science you call upon but a doctor. A doctor with good days and bad days. A doctor with a weird laugh and a bad haircut. A doctor with three other patients to see and, inevitably, gaps in what he knows and skills he’s still trying to learn.”

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