Should I buy into this? Is that story too good to be true? If this part is bad, is the rest bad too? Pin those questions on any topic from finance to philosophy and entire books, doctoral theses, and political movements can be generated. Answers, however, are harder to find.
I hear lots of questions about life choices and investment decisions. The search for clarity is common and constant. Everyone wants at least some level of security, or at least a lot less doubt. Guessing the future has never been a very successful occupation. A few succeed. Random chance predicts that someone will manage to guess right, just as someone will manage to guess wrong. Being right all the time is nearly impossible, but then being wrong all the time has the same odds. We ask questions to improve the odds, but we can only get to certainty emotionally. Logic only gets there in abstraction. In the real world, logic eventually runs out of data and into patches of chaos.
A friendly conversation the other night reminded me of one technique I use when faced with uncertainty. It has become such an integral part of my life that I frequently forget how much it occupies my time. I look for answers. The way I do it is different than simply asking more questions. I like to get my eyes off the computer, my fingers away from the keyboard, and set myself out into the world so my senses can do their thing.
That’s why I like to invest in local companies. I can visit them. Data in financial statements or summarized research reports are useful and necessary. Numbers rule business. But numbers are not a business. The business may be an artifice of our civilization, but its people, buildings, and stores are real. Ideally, both stories should tell the same tale. The numbers and the operations should look good. The people (employees, customers, management, suppliers) should be treated well and are hopefully happy. The community should be glad that they are there. Many aspects of a business can be asked about in conference calls, but the only answers provided are words. If feasible, I visit. I visit the company. I go to its meetings. I shop in its stores, if it has any. I simply meet the people, listen to their stories, and watch how they interact with the business. Dig back through these posts and you’ll find a few stockholders meetings that I’ve attended. I learn things there that could never be revealed in a conference call.
Soon I’ll be traveling to and through Scotland. It’s a vacation, and it’s also an opportunity to see how they live. Any culture with distinctive features like kilts, whiskey, and an accent (from others’ points of view), can be too easily stereotyped. I’ll be walking across the island. There’s no tour group. It will be just me, my pack, my credit card, and a hope that I can find a place to eat and stay every night. Just like my bicycle ride across America, slowly moving through the country puts me in contact with the people, their lives, and their land. The loneliness of eastern Utah, and the feat of pioneers crossing it, was much more strongly felt while I battled headwinds and hoped that colliding storms collided elsewhere. It was an experience that took a day. On a bus, it would have been possible to nap through the entire experience, and still not get enough sleep. A day on the bicycle covered as much distance as a car does in an hour. It probably took them weeks, if they survived.
Getting to know a person is no different. We hear stories about celebrities, and even though we know that the tabloid tales are less than accurate, we draw conclusions and judgments about their lives. But, because we rarely get to meet them, maybe it doesn’t matter. Except that, for some, it is too easy to use that same approach to people within our communities. Gossip replaces the tabloids. Casual encounters, possibly on really bad days, become the basis of a guess about someone.
Businesses, cultures, people all can be reduced to two dimensional abstractions, flattened images that are efficiently stored, but that lack the depth that truly exists.
Simply showing up is not enough either. It takes time to acquire a deep understanding by absorption through experience. Imagine trying to understand someone by asking them to play act their life while you sit there as a spectator. It would take longer than they’ve been alive. Even parents, who get to watch someone grow, eventually develop uncertainties about what is really going on in that other person’s head.
That’s why at some point we have to rely on trust, intuition, and a bit of luck to get us through. There will always be unknowns. Every logical decision will involve some doubt, though emotions may scoff at logic and overrule it to act as if certain. The trick is to find what is enough. I don’t need to know what’s going on in teenage movie star’s head. I want to know a bit more about investments, and will read, ask and experience enough to reduce the risk. And when it comes to cultures, and people I meet, I try to open up to much more. Face to face, lots of time, lots of listening, and when I want to hear more, lots of questions.