Investing: fact versus fiction

In the world of investing, there is often a lot of confusion about what investing professionals know, should know, have known, etc. Sometimes investment experts are seen as possessing crystal balls that can predict the future, or they have an ability to see things in the future that others can’t, and can therefore make investment decisions better than others. But that’s not how it works.

Perhaps a scene from a movie can help illustrate the point. In The Matrix, Keanu Reeves (Neo) finds himself in his office cubicle about to get arrested by the police. He has a cell phone from which Laurence Fishburne (Morpheus) provides instructions on how to escape that seem too incredible. How could Morpheus know all these things from a cell phone and appear to predict the future while guiding Neo on his route of escape?

investing fact versus fiction
(The Matrix TV shot by Forsaken Fotos under Creative Commons licence. )

Are we in The Matrix?

Well, the easy answer is that Morpheus simply had more information than Neo. Morpheus had access to seeing almost everything that was happening in the Matrix, while Neo didn’t even know yet that he was in the Matrix.

The world of investing isn’t actually much different. The best investment professionals cannot possibly see the future. Nobody can. But what they can do is see more in the present than others do. And they do this through a number of measures: research, contacts, study, analysis, experience, etc. By having a bigger picture to work with, smart investment experts can have a much better idea of what might happen in the future, but they can’t tell you exactly what will happen. No one can.

Substance versus fluff

Which is why, when you’re dealing with investment professionals, you should always learn to differentiate between those that can give you the best information in the here and now, versus promises they can’t possibly justify or stand by as events unfold. As with so much in life, substance, hard work, and real-world expertise are far more preferable than pretending to know the future.

ASCEND GRP is an asset-management firm, with offices in Toronto, Richmond Hill, and New York, that services clients seeking investment opportunities worldwide.

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