Musings from the CU Suite

Written by Anthony Demangone

Robotics. Uber. FinTech. Digital disruption.

There's a lot going on out there, and at times, it can be overwhelming to try to understand it all.

But I read something recently that suggests that perhaps we shouldn't try to understand it all. 

Tony Isola argues that no one can understand it all. But he takes it a step further. We can delude ourselves at times that we can. And that can be dangerous.

Often we delude ourselves into believing we have an understanding of these complex systems.  We love to plug numbers into a retirement calculator to give us the illusion of control over the billions of variables that will arise over the next few decades.

We watch the progress bar of a software update on our computer; mistakenly, we delude ourselves that we have some comprehension of what is actually going on inside our machines.

In both instances, we are soothed by a misleading perception that we understand a small piece of an opaque process. Black holes can be scary.

There is an alternative to combining mystery and wonder in our understanding of these intricate systems.

The answer is humility. In the words of Arbesman, “We must have humility without reverence and curiosity without fear.”

Humility recognizes limitations but does not paralyze us.

Being humble lets us observe complicated systems in a finite manner. It helps us to control what we can and ignore what we can’t.

Using humility as the cornerstone of our views of the global financial markets helps us to avoid:

• Forecasts of any type;
• Superstitions;
• The” Great Man” theory regarding investment managers; and
• Talking media heads with no skin in the game.

Understanding markets in a limited capacity will liberate energy to help us focus like a laser on the things we have some power over, such as:

• Investment fees;
• Tax consequences;
• Savings rates;
• Diversification; and
• Rebalancing.

Tony's article focuses on investments. But I think his logic can be extended to other areas. Focusing on what you can control is hugely powerful.

• Your health is complicated. But you do control to a large degree your sleep, diet and how much exercise you get.
• Employee morale is hugely complicated. But you control the emails you send and how you interact with people each day.
• What is FinTech coming up with next? Hard to say. But you control your own strategic plan and how you interact with your members.

I'm not preaching here. I fall victim to this all the time. In this complicated world, I can sometimes feel overwhelmed.

But when I focus on what I can control, that refocuses me. It puts me back on the offensive. 

And somehow, the world gets a little less complicated.