In the investment field, we are often told to pay attention to alphas, betas, standard deviations, and correlations – the language of specialized expertise. I’ve argued elsewhere that such knowledge is important. But investors also face the challenges of bull runs and bear raids, snake oil salesmen, black swans, and red herrings (a quasi-sarcastic term for private equity documents promising boundless riches that rarely materialize). Are investors operating in a zoo?
Yes – the human zoo, with all the frailties that human beings have displayed since the beginning of time. To navigate this often unkind environment, one must be a zoologist, or, as we call students of the human zoo, generalists or humanists. First and foremost, we must understand the past and its endless variations on a few themes, notably greed, fear, and ignorance.
But we must also understand the upside, or we could not in good conscience be investors. We must observe that living conditions have been improving for at least two centuries and are likely to keep doing so for many more. Business men and women, scientists, engineers, artists and writers, and many others have contributed immensely to this Great Enrichment.
By investing wisely, one can participate in its continuance.
~ Laurence B. Siegel, "The Advantage of Generalists Over Specialists," Adviser Perspectives, August 19, 2019