John M. Jennings wrote The Uncertainty Solution: How to Invest with Confidence in the Face of the Unknown. Mark “Moose” McGrath asked him how John Boyd’s ideas apply to investing. I wasn’t on this one.
Destruction and Creation
John and Mark work through Boyd’s paper Destruction and Creation and the parallels between warfighting and financial markets. They draw on Chuck Spinney, Boyd’s closest collaborator. John treats the economy as a biological, evolving system, closer to life than to physics.
Markets that keep changing
John looks for patterns in markets that never stop evolving. He walks through the Nifty 50, the Dogs of the Dow and the rise of hedge funds in the 1990s. Boyd’s warning about calling anyone an expert applies in investing too.
Biases and belief
Cognitive closure, assumptions and behavior shape investment decisions. John stresses flexible beliefs, because rigid ones leave investors exposed. Behavior matters most with large lump sums. He also describes how hard it is to sell an approach that embraces uncertainty.
This episode is not investment advice.
An investor who keeps orientation open can adapt when the market changes.
Which belief about markets would you find hardest to give up?
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