I wrote a post late last week on the value of admitting what we don’t know. I made some arguments about the dangers of false confidence, and the errors we can make if we don’t take the time to think deeply about the limits of our knowledge. Though I think I made some good points, one of my readers have some good counterpoints, and points out a few things I may have missed. In Shai’s own words:
I’m following up on your last great post “the hardest words to say”. In other words, what you are basically describing is that people normally prefer to have the “wrong map” rather than “no map” at all.
While I personally prefer the “no map” way of living and frankly was quite judgmental in the past about people that preferred the “wrong map”, I’ve learned over the years that there is value in having a “wrong map”.
The major issue is that having the “wrong map” creates a belief you are heading toward your goals. This belief, more often than not, helps overcome very difficult and dark moments one might have in their journey. Without it, a common outcome would probably be quitting with despair. Consider a situation when you or one you know had a “wrong map” while in the “dark”. Did that “wrong map” generate a belief that eventually pulled you out of that darkness?.
I think that adopting a “no map” style of living comes only after being in that long journey for a while, falling and getting up. Therefore for a new trader using the “no map” concept too early might make more harm than having him use a balanced approach that has “wrong maps”.
Thought this was not so clear in your post.
These are a good points, and a perspective I missed. I do think there is value in my original points, perhaps most important, that it is necessary to do “something” in the market that has a statistical edge because, without that edge, we can’t profit in the long run. (If there’s one, central message to all the words I write, I think that’s it!) I could take Shai’s map analogy further and say “yes, so you just want any map, but what if that map leads you off a cliff…?”, but then I consider the alternative: Is having no map, no plan, and simply shivering the darkness a good alternative? That is a nearly certain path to failure.
There is a line from an old US Army infantry manual that says: “Any plan, no matter how poorly conceived, if boldly executed is better than inaction“, and I do see the point. Given unfamiliar territory in a hostile environment, perhaps the best plan is to simply move. Do something; pick a direction, and go. Evaluate and course correct as needed, but get moving.
There’s also probably great value here, as the individual, self-directed trader refines her own map. Years ago, when I started trading, I thought I was going to look for something like double bottoms in cattle futures, pyramid up as the trend reversed, and eventually control thousands of cattle contracts, starting with a few thousand dollars in risk capital. I had a wrong map; I had a bad map. In fact, I don’t think you could have had a worse map! I had a map that absolutely assured financial ruin, but I learned why that map was wrong, made better maps, and eventually came to understand a few things. My trading journey started with a bad map.
As I thought about Shai’s words over the weekend, the irony struck me: in writing a post about the dangers of intellectual hubris and of not considering the limitations of our knowledge, I may have been guilty of that same hubris. Maybe there is value in the map, no matter how flawed, and maybe there is wisdom in the process. It pays to check and recheck our assumptions, and I am fortunate to have readers who think deeply and challenge my perspectives.