The world we live in is profoundly complex and is much more difficult for us to navigate than we usually think or assume. According to Dan Kahneman, “We systematically underestimate the amount of uncertainty to which we’re exposed, and we are wired to underestimate the amount of uncertainty to which we are exposed.” Accordingly, “we create an illusion of the world that is much more orderly than it actually is.”
Our ability to forecast the future, much less control the future, is extremely limited and is far more limited than we want to believe. That’s why the planning fallacy is such a constant and monumental problem. We simply misapprehend (or ignore) the data far too often. Instead, we concoct stories — often wonderful stories — to provide an interpretive framework for our forecasts, expectations and decisions. That framework is necessary for us to “sell” our stories and ourselves.
We are always tempted and too often swayed by the shiny new object — the next “silver bullet” — that will make things right. Sadly, life doesn’t seem to work that way very often. No matter what our stories say.
My guest today is Robert Seawright, the Chief Investment & Information Officer for Madison Avenue Securities, a boutique broker-dealer and investment advisory firm headquartered in San Diego, California. Seawright is also a columnist for Research magazine, a Contributing Editor at Portfolioist as well as a contributor to the Financial Times, The Big Picture, The Wall Street Journal’s MarketWatch, Pragmatic Capitalism, and ThinkAdvisor.
The topic is his blog A New Kind Of Investment Outlook.
In this episode of Trend Following Radio we discuss:
How Seawright was able to put together this blog piece
Perfection and prediction
Volatility vs. risk
Separating your politics from your investing
Financial media as entertainment
Whether Seawright encountered any pushback after putting out his article
Letting go of the high leverage idea
Why the more we trade
The worse we do
Nobel laureate David Baltimore
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