Finance 101 – Art vs Science

This Finance 101 is part of a larger TW3 newsletter, you can find the full article here.


Marketing guru Seth Godin has written a new post in his blog every day since 2008. This week he provided some career advice that also applies to investing:

Every golf scorecard has a map of the course on the back. Moving the hole placement is a big deal, accompanied by meetings and oversight. A big shift is whether or not it rained last week.

On the other hand, every wave is the first and last of its kind. It has never happened before and will never happen again.

Using Godin’s terminology, investing is more like surfing than it is like golf – meaning it is an art as well as a science. The science of investing is crunching data and reading up on history, the art of investing is knowing which lessons from the past are useful and whether those lessons will be relevant for the future. Because each market wave is unique, the art is often more important than the science. Investing by only looking at the past is like driving by only looking at the rear-view mirror – difficult but doable if the road ahead is exactly like the road behind, dangerous if and when there is an unexpected twist in the road!

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