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".

Edward Quince's Wisdom Bites: The Enduring Echoes

In an age drowning in data and relentless forecasts, the most valuable skill might just be the art of ignoring. As this blog often suggests, "the more data you get, the less you know what’s going on". This "Noise Bottleneck" means vast quantities of information can become "toxic," increasing the ratio of "spuriousness" to valuable "signal".

We're often told that some economic data point is "the secret to the future" or "the most important CPI print of your lifetime". But as the sources reveal, predicting economic variables like GDP growth, employment, inflation, and the 10Y Treasury Yield is essentially a coin flip. Mark Twain famously quipped, "It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so". Morgan Housel added, "if you’ve relied on data and logic alone to make sense of the economy, you’d have been confused for a hundred straight years". This constant deluge of information often leads to a "noise to signal ratio" that makes it harder, not easier, to understand what's truly going on. This is why we advocate for embracing uncertainty and developing a filter to tune out the overwhelming "noise".

This blog aims to be an intellectually humble source of timely, diverse perspectives that empowers you to become more informed and discerning. So, keep your popcorn stockpile high, focus on what truly matters, and remember: progress comes bit by bit.

Your behavior matters more than your forecast. 

Stop trying to be spectacular. Start being consistent. 

Clarity comes from subtraction, not addition. Remove the noise, the distractions, and the unnecessary. What truly matters will emerge. 

The less the prudence with which others conduct their affairs, the greater the prudence with which we should conduct our own affairs. 

Your time is your most valuable asset. Leverage it wisely by focusing on what truly matters

Edward Quince's Wisdom Bites: The Ascent to Wisdom – Beyond Mere Data

As we navigate an increasingly data-saturated world, today we ponder the ultimate goal: the ascent to wisdom.

In this blog, we've often referenced the DIKW (Data, Information, Knowledge, Wisdom) pyramid. While data is the base, and information provides meaning, and knowledge offers context, wisdom sits at the apex, representing the exercise of sound judgment and appropriate action. Unfortunately, as Simon Winchester warned, "today's all-too readily available stockpile of information will lead to a lowered need for the retention of knowledge, a lessening of thoughtfulness, and a consequent reduction in the appearance of wisdom in society".

The irony is that many seek answers from external sources, whether it's the daily barrage of economic updates or social media pundits. Yet, much of this is just "noise". As the esteemed Charlie Munger advised, "In my whole life, I have known no wise people who didn't read all the time — none, zero". 

But it's not just about reading; it's about how you read. As an XTOD emphasizes, "Re-reading is probably more important than reading. Seek to cognitively own a great book rather than just reading it". It's about deep understanding, not just consumption.

The journey to wisdom involves:

• Continuous Learning: "The game of life is the game of everlasting learning". This means constantly seeking to "get a little smarter every day".

• Critical Thinking: Being able to discern "signal from the noise" and challenging assumptions, even your own. As an XTOD reminds us, "Compelling writing requires clear thinking".

• Humility: Recognizing that "Nobody knows anything, and that's okay". Steve Kerr gained more respect as a leader by admitting he didn't know everything and letting others make decisions.

• Prioritization: Understanding that "Clarity comes from subtraction, not addition". An XTOD simply asks, "Is this truly necessary?” when looking at a to-do list. "If it won’t matter in 5 YEARS don’t give it more than 5 MINUTES attention".

• Action based on Principles, not Predictions: As Edward Quince notes, "Actions demonstrate competence and create value, whereas words, often in arguments, lead to negative emotions and resentment".

The "hard part is knowing what to apply and when". This "true learning is 'on the job'". It's about applying timeless principles and developing your own "right filter" to navigate the complexities of life and markets. Because ultimately, "Being smart and being wise are not correlated". The goal is to cultivate the kind of wisdom that allows you to "focus on controlling the things you can", and approach life with a clear mind and sound judgment

FOMC Recap: 6 7

 Maybe Edward, maybe not…if you know, you know

Six… Seven

The Fed held.

4.25%–4.50%.

No surprise there.

But two Governors dissented — the first time that’s happened since Jurassic Park debuted and Alanis dropped Jagged Little Pill. The headline writers scrambled. “Cracks in the façade,” they muttered. “Rising internal tension.” Okay.

Dot plot? Still penciling in one rate cut by the end of 2025?

The market responded with a casual scroll, maybe a sip of flat LaCroix. We’ve heard this song before — and we’re not dancing to it anymore.

Truth is, the Fed walked out like Powell always does:

🎶 Six… Seven… 🎶

Suit pressed, message tight, performance predictable.

But in the background, markets were already vibing to their own beat.

🎺 Doot doot doot da-doot doot…

Rate cuts aren’t coming because the Fed said so.

They’re coming because credit’s flowing, nominal’s cooling, and politics are heating up.

This isn’t a pivot. It’s a vibe shift.

And Powell’s still reading off the prompter while the music’s already changed.

– EQ

Edward Quince’s Wisdom Bites: Timeless Lessons For The Powell Rangers (and all of us)

Another FOMC day, another deluge of data, and another chorus of “experts” telling us exactly what the Fed did wrong, or right, or what they should do next. You know, the usual. While this blog famously believes that most of the daily financial commentary is “noise and false stimuli”, occasionally, amidst the cacophony, you stumble upon timeless wisdom. And who needs timeless wisdom more than the Federal Reserve, constantly navigating unexpected twists and turns? So, dear reader, grab your favorite beverage (mine’s a newly-tariffed tequila, if this blog’s GoFundMe ever takes off), and let's distill some enduring lessons for the FOMC, drawn from the wellspring of this very blog.

Here are 10 enduring and wise quotes that can serve as valuable advice to the Federal Reserve over time:

1. Independence is Paramount. Peter Stella nailed it: “I define central bank independence in one sentence, it's the ability to raise interest rates when the Treasury doesn't want you to. And the Treasury almost never wants you to, because of the cost of the debt.”. When politicians are clamoring for this or that, the Fed's ability to act without political interference is the bedrock of its credibility. Don't be swayed by the siren song of fiscal convenience.

2. Credibility Restores Stability. As Paul Volcker’s memoir reminds us, credibility is crucial "in restoring price stability and guarding against the ‘real danger [that] comes from encouraging or inadvertently tolerating rising inflation and its close cousin of extreme speculation and risk taking…'". It’s about building trust, which, like good wine, takes time.

3. Say Less, Imply More. Robert Greene’s Law 4: “Always Say Less Than Necessary: When you speak, always say as little as possible. The more you speak, the more likely you are to say something foolish.”. In a world of constant Fedspeak and interpretations, perhaps fewer words mean more impact. As the "wise old owl" knows, "The more he saw the less he spoke, The less he spoke, the more he heard".

4. Guard Your Reputation. Greene’s Law 5: “So Much Depends on Reputation – Guard It With your Life: Reputation is the cornerstone of power. You can influence more people and gain more opportunities with a solid reputation. Therefore, it is essential to protect it fiercely.”. The Fed’s power isn't just in its balance sheet, but in the trust it commands.

5. Actions Speak Louder. Greene’s Law 9: “Win through your Actions, Never through Argument: Actions demonstrate competence and create value, whereas words, often in arguments, lead to negative emotions and resentment.”. The market, and the economy, ultimately respond to policy actions, not carefully crafted press conference narratives or veiled threats about future moves.

6. Prevent Crises, Don't Just Cure Them. Charlie Munger's wisdom applies universally: “Nobody survives open heart surgery better than the guy who didn't need the procedure in the first place.”. This is a potent reminder for the Fed to act prudently and prevent economic conditions from deteriorating to a point where drastic, "surgical" interventions become unavoidable.

7. Plan for the Unexpected, Not the Predicted. As Dwight D. Eisenhower sagely put it: “Plans are worthless, but planning is everything…” because an emergency “is unexpected, therefore it is not going to happen the way you are planning.”. The future is inherently uncertain. Flexibility, not rigid forecasts, is the superpower.

8. Embrace Humility, Not Perfection. “It is impossible to be perfect: … The odds that the Fed can steer the economy to perfection by moving an interest rate both gives the Fed too much credit and creates an illusion that something as complex as the economy is that controllable.”. The economy is a beast, not a tightly controlled machine. Intellectual humility is a virtue.

9. Trust Observable Data, Not Blurry Guideposts. As one XTOD advises on r-star, it’s "advisable to guide policy decisions based more firmly on observed inflation rather than on highly uncertain estimates of the natural rate.”. When models and theories get too "blurry", perhaps it’s time to focus on what you can actually see and measure. Less star-gazing, more data-gazing.

10. Expect the Unexpected. This blog’s core philosophy: “The primary lesson is one of learning that the future is uncertain, expect the unexpected and that anything can happen.”. No amount of forecasting, political pressure, or market "vibes" can change the fundamental truth that the economic road is unmapped. Remain adaptive.

So, there you have it, folks. Ten timeless lessons that apply to the Fed, and frankly, to us all. In a world drowning in data, forecasts, and fleeting narratives, the real wisdom lies in subtraction, in discipline over drama, and in the humble acknowledgment that “Nobody knows anything, and that's okay.”. Because ultimately, “Your behavior matters more than your forecast.

Edward Quince's Wisdom Bites: The Uncomfortable Mirror of Truth and Integrity – Or, Why We Prefer a Pleasant Lie

Today, a Fed Day, we endeavor to peel back the layers of illusion and gaze, however uncomfortably, upon what truly matters. Today, we confront two formidable, yet often neglected, pillars of sound living and sound finance: Truth and Integrity. In an age overflowing with data and pronouncements, the genuine article often feels drowned out by the clamor of the convenient.

The Allure of the Lie: Why We Get Fooled

The market, much like life, often presents us with a "noise to signal ratio" that obscures understanding. We are perpetually in search of certainty, which some call "the greatest disease the mind faces". This craving makes us susceptible to those who offer "vague, simple messages often wrapped in a well crafted veneer that is alluring".

Consider how easily we can be led astray:

• Mark Twain famously quipped, "It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so". This applies when "experts" offer forecasts that are "less reliable than the flip of a coin".

• The financial industry's incentives often involve "adding noise, complexity and a constant pressure to do something", even when "the more data you get, the less you know what’s going on".

• Some volatile assets are marketed in ways that obscure the "truth," making it "easier to stick with" them even if it means "not being told the truth" and potentially "lowers future returns". This "volatility laundering" is a subtle form of deception that prioritizes comfort over reality.

• As Niccolo Machiavelli observed, "Men are so simple of mind, and so much dominated by their immediate needs, that a deceitful man will always find plenty who are ready to be deceived".

Integrity: The Priceless Asset

In the cacophony, integrity stands as a bedrock. As Fed Chair Powell has previously stated, "Integrity is priceless" and "at the end, that's all you have". "No amount of money can buy you integrity". This applies to all aspects of financial life, from personal investment decisions to institutional credibility. Peter Stella's definition of central bank independence as "the ability to raise interest rates when the Treasury doesn't want you to" highlights integrity as a crucial element in sound monetary policy, even when politically inconvenient.

Leaders and individuals alike demonstrate integrity by prioritizing truth, however uncomfortable. Jim Leyland's blunt wisdom from baseball applies universally: "If you mislead a player, you lose them forever. If you tell them the truth, you lose them for about 24 hours". The long-term value of truth, even when it "sucks" in the short term, is undeniable.

The Consequences of Deception

Lacking truth and integrity has real, often catastrophic, financial consequences:

• Warren Buffett warns that "if you start fooling your shareholders, you will soon believe your own baloney and be fooling yourself as well". This self-deception can lead to disastrous outcomes.

• The "Idiot Lender Chronicles" illustrate how a "CEO (who lacks the requisite brain folds to walk my dog)" can demand underwriting decisions based on future rate reductions rather than current realities, leading to "fucking portfolio[s] upside down".

• Financial disasters often arise not from complex quantitative failures, but from simple operational problems or outright fraud, sometimes motivated by hiding earlier losses. Lax supervision, a failure to separate functions, or a culture that doesn't encourage owning up to mistakes contribute to these failures. Sometimes, the incentives for auditors or regulators are "not aligned with drawing out the truth".

• "Low interest rates breed greed, and greed breeds fraud". The "unrelenting selfish pursuit of profit setting aside the consequences on relationships" is the obvious consequence of avarice.

• When a business or financial experience undergoes "enshittification"—the degradation of a product in "the blind pursuit of profit"—it reveals a lack of integrity towards the customer.

Cultivating Clarity and Honesty in Financial Decision-Making

To make wise financial decisions, cultivate an unwavering commitment to truth and integrity:

• Embrace Intellectual Humility: Recognize that forecasting the future is a "fool's errand". As Jason Zweig noted on Ben Graham's "margin of safety," the investor should constantly ask: "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 humility is key to avoiding overconfidence, which can "breed hubris, complacency, and an inability to recognize and adapt to new circumstances".

• Prioritize Clarity through Subtraction: "Clarity comes from subtraction, not addition. Remove the noise, the distractions, and the unnecessary. What truly matters will emerge". This means choosing what to ignore, focusing on what will matter in 5 years, not 5 minutes.

• Practice Self-Awareness and Detachment: Our behavioral biases, such as loss aversion, can lead us to take bigger risks than we should. "It’s about managing our ego, our arrogance, our stubbornness, our mistakes". Learn to "detach yourself from the crowd" and from emotions like hope, fear, pride, and ego, as they cloud judgment.

• Seek Simplicity: "Simplicity is key to successful investing". "Clear writing and clear speaking are simply outputs of clear thinking". "When a simple explanation for the risk of a portfolio does not exist, it can be a sign of trouble".

• Focus on Character Over Reputation: "a good reputation is not about being adored by all. It’s about earning the respect of those who matter most". As Coach Wooden suggested, care about your character over your reputation, because "it’s what you really are".

• Act with Courage: "Without courage we cannot practice any other virtue with consistency. We can't be kind, true, merciful, generous, or honest". This includes the courage to admit when you don't know or when you need to change your mind.

Ultimately, true wisdom in finance, and in life, is built on a foundation of unyielding truth and unshakeable integrity. "Discipline wins over drama". By continually seeking reality over fantasy and choosing courage over comfortable deception, you position yourself not just for financial longevity, but for a life lived authentically and well