(noun, etymology Dutch from ‘boedel’: estate, possession, inheritance, stock.). 1. Crowd, pack, lot, as in ‘the whole boodle.’ 2. a. Counterfeit money b. Money acquired or spent illegally or improperly, particularly when used in bribery for political purposes. 3. Slang for money in general.

The Ancient Wisdom of Uncertainty

Posted on: Sep. 27, 2011  |  By: Ronnie Kahn  |  Category: Advice, General

Europe is on the brink.  They’re goin’ down.  No wait.  They can contain it.  We’re okay for now.   Gee, it’s only Greece.  No wait.  It may spread to Spain and Italy.  Everyone watches and tries to gage where this is all going.  The markets are pacified one day and panicked the next.  What everyone knows is the Heisenberg Principle of Quantum Economics.  We cannot tolerate the uncertainty that we know how uncertain everything is.

What seems to be the problem?  Why is this such a Greek Tragedy?  I live in L.A.  The Greek theater seems to be packing them in.  Greek Yogurt is selling more than ever.  Colleges still pledge Greek Life.  They should be making money by these accounts.  Even the movie with Travolta and Newton-John seems to be selling well on Netflix and even the sequel gets some requests.  No wait.  Sorry, my bad, that’s “Grease.”  Can’t we go back to the old days when a country like Greece was isolated like a Greek Island that had no effect on the rest of the world?  Why do we have to have this Butterfly Effect where any small thing can start an avalanche?  Apparently, Winston Churchill knew even than how small things can escalate in the context of Greece when he commented about the monkey bite that killed 250,000 people.  He was referring to King Alexander of Greece who was trying to protect his dog from a monkey when the monkey bit him.  He later died from the infection leaving his exiled father to come in and start the 250K dead war and spurred Churchill to say that the monkey bite cost 250,000 persons their lives.  In our global financial world, these small occurrences with large effects are even more common, I guess we can call this “monkey business.”

What is our psychological need for certainty or at least a feeling that we can predict the future?  Did science give us all the feeling that we could control the universe since we can predict the movements of planets and tides?  While we have improved our understanding of the probability of things, we all still know we will be caught without an umbrella when we need one if we totally rely on the weather report.  I know that I will be shaken, not stirred, by the next earthquake but is today the day?  Most of these things are just too complex to predict no matter how much we know about them.

So if even real science can’t do the forecast job for complex things, it would be even sillier to expect how economics can be expected to do so.  After all, economics is not physical but social.   Financial markets are not just based on supply and demand but whether we feel like demanding something from their supply.  This is not to mention the self-fulfilling and self-negating prophesy stuff when the media tells us we are all uncertain or that things are hunky-dory and we get scared into inaction.  It’s like the political polls where people don’t go out and vote because they figure what’s the point since the race isn’t close.  Then, with so many people staying home, the other candidate wins.

The world seems to want to reduce itself to one understandable theme in order to produce predictability and certainty.   Isaiah Berlin used a Greek Poem by Archilochus to make the point that foxes know the world of many things while hedgehogs know one big thing.  Now put this into the perspective of economics.  Economics is complexity.  There are too many moving parts for anyone to know where things are going.  New businesses, new technologies, new powerful countries are just a tiny fraction of unpredictability.  Yet everyone wants to see the world through their own one big thing in order to think they understand where things are going to be headed.  If we would try and understand money and business like the fox understands many things, while accepting uncertainty, in a sense, we would ironically have a better shot at predicting where things will go.  Yet, even though many of us know better, we figure that knowledge must equal predictability.

Is there a Grecian Aesop fable we can look to for money guidance?  Well, “The Ant and the Grasshopper” speaks to hard work.  “The Tortoise and the Hare” can be applied to avoiding get rich quick schemes.  “The Fox and the Grapes” can be used to illustrate how easily we can hold two conflicting views about money or success.  The wisdom we should look to is not from or about Greece though, it is about another ancient culture, Babylon, a diverse and robust city as ever there was.  There was an Aesop fable like telling about money but it was told from the perspective of Babylon and not Greece.  In the 1920’s, George Clason published little financial parables of financial planning in “The Richest Man in Babylon.”  “A part of all you earn is yours to keep” was used to illustrate how to make savings like an expense and put something away each time you get paid.   Now, if money and finance is too complex, why would we waste time to plan or listen to what was said when the world was a much smaller place?  If one small change can be magnified which throws all predictions out the window, then why take the time to make choices based on the unknown?  After all, isn’t the pop culture saying “man plans and God laughs.”

When it comes to money, the gravitational pull of uncertainty draws us to make a financial plan.  At the same time, we are repelled by action.  It is as if the future can be uncertain and hopeless at the same time.  Over the years, I have received many calls from someone who feels they need to have a financial plan and yet, I can predict with certainty, that most will do nothing about it.  In “The Richest Man in Babylon” book, the ancient city of Babylon is portrayed as one of the richest cities that ever existed.   One of my favorite lessons in this book is that one end of the spectrum is procrastination.  At the other end is opportunity.  Good luck comes to those persons of action who accept and follow opportunity.  This is at the heart of a financial plan.  It is not about being able to predict the future.  The lesson I tell my clients about a financial plan is:  Don’t plan for control, plan for opportunity.  It is how to best scatter the seeds that when unpredictable things happen that you are in a position to take advantage of them.  Do not shutter from uncertainty but, on the contrary, not only accept it but use it to your benefit.

The next time you want to give in to the prediction of the expert or procrastinate yourself out of an opportunity, think about the folly of prognostication like the accuracy of sports predictions.  Think of Jimmy the Greek.

 

 

 

Note:  For more depth on our need for predictability, foxes and hedgehogs, and the Monkey Bite read Future Babble by Dan Gardner

 

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