Edward Quince's Wisdom Bites: The Enduring Human Condition

Welcome back to Edward Quince's Wisdom Bites, your daily reminder to cut through the noise and focus on what truly matters. Today, let's reflect on a constant in our ever-changing world: the human condition.

No matter how sophisticated our markets or technologies become, human nature remains remarkably consistent. As Ben Graham observed, financial services work often illuminates "human nature in the securities markets". The recurring patterns of greed, fear, envy, and irrational behavior persist through history. "People have always had this craving to have someone tell them the future", a demand that charlatans are always ready to supply with "vague, simple messages wrapped in a well crafted veneer that is alluring".

The rise of "finfluencers" and social media amplifies this ancient dynamic, creating "cultlike followings and draw[ing] people into otherwise ridiculous ideas" at an exponential rate. It becomes increasingly "unclear whether finfluencers are authorised to conduct regulated activities", yet they are "an important source for young investors". As an XTOD bluntly puts it, "Celebrity is the most powerful currency in media, including financial media. It's more important than track record, novelty of insight, or ROI". This means that "most people just want to hear the latest take from the person they know, even if that person's been saying the same thing over and over again for years and has been consistently wrong doing it".

This reality means that "any amount of intelligence can be overridden by ego, insecurity, immorality, bad incentives, or impatience".

Instead of relying on what "experts" confidently assert, we must cultivate intellectual humility and discernment.

Jason Zweig's commentary on Ben Graham's "margin of safety" extends this principle to the investor themselves: "Do I know what I think I know? How do I know what I think I know? What evidence is there that I might be wrong?". This self-awareness is crucial for "investing on the basis of protection - from overpaying for a stock or from overconfidence in the quality of their own judgment".

Ultimately, the goal isn't to eliminate these human tendencies, for "the iron rule of life is that everybody struggles". Instead, it's about recognizing them and building a robust process that accounts for them. It's about consciously choosing "courage" and "focusing on what you can control", rather than getting swept away by the collective delusion of the moment. As a reminder, "The game of life is the game of everlasting learning".