Rational Advisor

What I’ve noticed is that a lot of the propellor heads spout Knowledge. or Statistics, data etc.

We see it all the time on the idiot box. And for some reason, we believe these monkeys, in that answer is in the data. As if that’s solved any of the world problems. The secret is NOT in the numbers, if it was computers we woudln’t need humans, computers would do everything.

Apparently it was the data that told Bush that WMD were in Iraq - it was this fantastic knowledge of what Sadman Hussein was doing that led to the war.

And then it was the Knowledge of the two Nobel Prize winning economists Scholes and Merton that the best way to beat the markets was to use statistical arbitrage and other number and data stuff

for more details see

http://en.wikipedia.org/wiki/Long-Term_Capital_Management

It was also the data in July that CIBC had that told them that Oil was going up to $200, and the data that told the american banks that sub-prime was a great investment - very low correlation, great standard deviation etc.

So, you see I don’t have a real regard for just Knowledge, for the sake of knowledge, or for just numbers or data points etc

To me, the most important thign is wisdom, when you look at great investors, it’s not their knowledge that really separates them, it’s their wisdom.

Wisdom, to me, is timeless, universal and self-evident principles

Alfred North Whitehead, the great educator, differentiated knowledge from wisdom. He said “Knowledge shrinks as wisdom grows, for details are swallowed up in principles”.

“The details of knowledge which are important will be picked up ad hoc in each avocation of life. But the habit of the active utilization of well understood principles is the final possession of wisdom”

But, it’s not only important just to have wisdom, the real secret is when you apply that wisdom, and actually “DO” with it.

To learn and not do, is really not to learn
To know and not to do, is really not to know