Edward Quince's Wisdom Bites: Civilization

John Stuart Mill warned in 1836 that mass society risks drowning thoughtful voices in noise—the “hubbub” of the crowd. In 2026, that hubbub has a ring light and a referral link.

Enter the finfluencer.

Attention Is Not Insight

Finfluencers are not paid to protect your capital. They are paid to capture your attention. These incentives matter more than credentials, track records, or outcomes.

Their content is optimized for virality, not durability. Certainty sells. Complexity does not. Nuance is death on a short-form platform.

This creates a dangerous illusion: confidence masquerading as competence.

Herding Without Anchors

Markets already suffer from herd behavior. Finfluencers accelerate it by broadcasting narratives at scale. Price becomes proof. Momentum becomes validation.

This is the “I Know” school—loud, fast, and allergic to doubt.

The Lesson

Curate your information diet like a portfolio. Cut low-signal content ruthlessly. If advice is urgent, emotional, or promises easy wealth, it is almost certainly noise.

Silence is often the most intelligent response.

XTOD

“Celebrity is the most powerful currency in media... It's more important than track record, novelty of insight, or ROI.”

 

Edward Quince's Wisdom Bites: The Optimists Paradox

At first glance, optimism and pessimism look like opposites. In investing, they are better understood as complements.

Joachim Klement captures the tension well: pessimism sounds intelligent. It catalogs risks, critiques assumptions, and anticipates failure. Optimism, by contrast, sounds naïve—until you look at the data. Over long horizons, optimism is what actually makes money.

Human progress is real. Productivity grows. Problems get solved. Capitalism, for all its flaws, adapts. Betting against that trend has been a historically losing proposition.

And yet—blind optimism is lethal.

The Asymmetry of Survival

The paradox is this: you must survive the short run to benefit from the long run. Markets do not move in straight lines. They lurch, crash, and occasionally panic. If your optimism leads you to excessive leverage or concentrated bets, the market will eventually remind you who is in charge.

This is why the correct posture is asymmetric:

• Save like a pessimist: assume bad things happen. Hold liquidity. Avoid ruin.
  
  

• Invest like an optimist: own productive assets. Stay exposed to growth.
  
  

This is the barbell, not as theory, but as temperament.

Why Optimism Without Defense Fails

Optimists fail not because they are wrong about the long term, but because they underestimate volatility. Drawdowns test psychology, not spreadsheets. When losses exceed tolerance, forced selling replaces rational decision-making.

Your optimism must be earned through prudence, not asserted through bravado.

The Lesson

Long-term success belongs to those who combine faith in progress with paranoia about survival. If your strategy cannot withstand temporary failure, your long-term thesis is irrelevant.

XTOD

“Real optimists don’t believe that everything will be great. That’s complacency. Optimism is a belief that the odds of a good outcome are in your favor over time, even when there will be setbacks along the way.” — Morgan Housel

 

Edward Quince's Wisdom Bites: It's Radical

 

Risk is measurable. Uncertainty is not.

John Kay and Mervyn King call this distinction Radical Uncertainty—situations where you don’t know the odds because you don’t even know the game. Financial markets live here more often than models admit.

The Failure of Models

Most financial models assume normal distributions—bell curves where extreme events are rare. Reality disagrees. Financial history is a graveyard of “once-in-a-century” events that happen every decade.

VaR models don’t protect you from regime change. Sharpe ratios don’t warn you about political shocks.

Survival Beats Optimization

You cannot model the unmodelable. But you can design for survival.

That means redundancy, liquidity, low leverage, and humility. It means accepting lower returns in exchange for staying power.

As the saying goes: Risk means more things can happen than will happen.

The Lesson

Stop pretending the future is knowable. Build portfolios that endure surprise.

You don’t need to predict the apocalypse—you need to survive it.

XTOD

“The need for certainty is the greatest disease the mind faces.” — Robert Greene

Edward Quince's Wisdom Bites: Digital A's

 

We live in an age of abundance—data everywhere, insight nowhere.

Simon Winchester’s idea of “Digital Amnesia” captures the problem well. As we outsource memory and thinking to devices, we mistake access to information for understanding. Finance is particularly vulnerable to this confusion.

Enter the DIKW Pyramid.

Data Is Not Wisdom

At the base of the pyramid sits Data: prices, headlines, earnings releases. Above that is Information—data organized into narratives. Then Knowledge, which requires synthesis and context. At the top sits Wisdom, which demands judgment and restraint.

Most financial content never leaves the bottom two layers.

Checking prices feels productive. Consuming news feels informed. Neither guarantees understanding.

Why Speed Kills Insight

Markets reward patience, not reflexes. Yet the financial media ecosystem is optimized for immediacy. Push notifications, hot takes, and minute-by-minute updates ensure you are always reacting—and rarely thinking.

Wisdom requires time. It requires sitting with ideas long enough for them to settle.

The Lesson

Do not confuse checking your phone with doing research.

If something won’t matter in five years, don’t give it five minutes. Read old books. Study history. Let ideas compound the same way capital does.

XTOD

“If it won’t matter in 5 YEARS don’t give it more than 5 MINUTES attention.”

Edward Quince's Wisdom Bites: Cruel Ironies

 

Investing contains a cruel irony: we commit capital today for a future that refuses to cooperate. We make decisions under uncertainty, but price assets as if tomorrow will behave politely.

Jason Zweig, channeling Benjamin Graham, describes two fundamentally different approaches to this problem: projection and protection.

Understanding the difference is the difference between surviving markets and being periodically surprised by them.

The Projection Temptation

Projection is the default setting of modern finance. Analysts extrapolate current trends—AI adoption, margin expansion, market share dominance—and project them far into the future. The story becomes the justification for the price.

Projection requires optimism, confidence, and precision. It also requires you to be right about variables you do not control: growth rates, competition, regulation, interest rates, and human behavior.

That’s a long list of things to get right simultaneously.

The Protection Alternative

Protection is quieter and less exciting. It focuses not on how good the future might be, but on how bad it could get—and whether you can survive it.

Protection is price discipline. It is buying assets cheap enough that disappointment does not equal disaster. It assumes your forecasts are flawed and builds defense accordingly.

This is the essence of Graham’s Margin of Safety—not brilliance, but resilience.

Why Protection Wins Over Time

Projection feels intelligent. Protection feels boring. But investing is not scored on excitement—it is scored on outcomes.

Projection asks: What if everything goes right?
Protection asks: What if I’m wrong?

Only one of those questions keeps you in the game.

The Lesson

Stop trying to calculate earnings in 2030. Start asking whether your portfolio can survive the ignorance of 2026.

You don’t need to be prescient. You need to be consistently not stupid.

XTOD

“It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.” — Charlie Munger

Edward Quince's Wisdom Bites: Sheep Guts

 

It’s prediction season again. Every major bank, asset manager, and independent thinker with a Substack has published their carefully calibrated year-ahead forecast. The S&P 500 will finish at precisely X. Rates will peak in QY. Inflation will behave—unless it doesn’t.

Ignore them all.

This ritual persists not because forecasting works, but because clients demand certainty and the industry is paid to supply it. As Fred Schwed observed decades ago in Where Are the Customers’ Yachts?,

“It is a habit of the financial community to ask questions to which there is no answer.”

Forecasts create the comforting illusion that someone is in control.

Why Forecasts Feel Smart (and Aren’t)

Forecasting is seductive because it masquerades as rigor. Charts, regression models, confidence intervals—all signal competence. The problem is that financial markets are not governed by tidy, stationary systems. They are shaped by politics, psychology, reflexivity, and randomness.

Statistically, many economic forecasts perform no better than a coin flip. Worse, the most confident forecasts often cluster at precisely the wrong moments—at cycle peaks and troughs—when uncertainty is highest and extrapolation feels safest.

The industry doesn’t reward humility. It rewards conviction. Saying “I don’t know” doesn’t sell well, even when it is the only honest answer.

From Prediction to Preparation

The moment you admit you cannot forecast interest rates, GDP growth, or recessions with any reliability, something liberating happens: you can stop predicting and start preparing.

Howard Marks captures this pivot perfectly:

“We may never know where we’re going, but we’d better have a good idea where we are.”

Preparation means building portfolios that can survive multiple futures—not just the one your base case prefers. It means diversification, margin of safety, liquidity, and humility. It means acknowledging that the biggest risks are usually the ones no one is modeling.

The Illusion of Precision

There is a special danger in forecasts with decimal points. Precision implies knowledge that does not exist. When someone tells you the S&P will end the year at 7,327, they are not informing you—they are performing.

The future does not care about your spreadsheet.

The Lesson

The most powerful words in finance are still: “I don’t know.”

They free you from fragile bets, heroic assumptions, and single-path thinking. They allow you to build robustness instead of castles in the air.

Admitting uncertainty is not weakness; it is the starting point of durability.

XTOD

“Listening to today’s forecasters is just as crazy as when the king hired the guy to look at the sheep guts.” — Charlie Munger

Edward Quince's Wisdom Bites: The Great Divide

 

Welcome back to the digital saloon. With the approval of spot Bitcoin ETFs, predicition markets, and the steady financialization of nearly everything that moves, the line between investing and gambling has blurred faster than a mirage in the desert. This feels like a good moment to return to first principles—specifically, the oldest and most misunderstood divide in finance: investing versus speculating.

These words are often used interchangeably, but they describe fundamentally different activities—different mindsets, different risk profiles, and ultimately, different outcomes.

Two Religions, Not Two Strategies

Robert Hagstrom once put it succinctly at a CFA Institute forum:

An investor thinks first about the asset and second about the price. A speculator thinks first about the price and only later—if at all—about the asset.

Benjamin Graham gave us the canonical definition that still hasn’t been improved upon:

“An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.”

Notice what Graham didn’t say. He didn’t say speculation is immoral. He didn’t say it should be illegal. He said it is different—and dangerous when mistaken for something else.

Speculation is not defined by volatility or novelty. It is defined by dependence on future buyers rather than present value.

The Greater Fool Problem

If you are buying something because you believe someone else will pay more for it tomorrow, you are speculating. Full stop.

This is the “Greater Fool Theory,” and it works—until it doesn’t. As long as a larger fool arrives on schedule, prices rise and confidence grows. But when the chain breaks, value evaporates because it was never anchored to anything real in the first place.

Investing, by contrast, does not require applause. It requires cash flows, balance sheets, and a price that allows for error. It assumes you might be wrong about growth, margins, or timing—and builds in protection accordingly.

Speculation assumes you will be right and on time.

The Margin of Safety Is the Entire Point

The defining feature of investing is not return; it is survivability.

A Margin of Safety allows you to endure disappointment, volatility, and human error. Speculation offers no such buffer. When sentiment turns, there is nothing underneath to stop the fall.

This is why speculative assets tend to require constant narrative reinforcement. They need a hype cycle, a community, a steady stream of validation. If your portfolio collapses without a continuous inflow of belief, you don’t own assets—you own expectations.

And expectations are notoriously fragile.

Modern Markets Make This Harder

One reason this distinction feels blurry today is that modern markets actively encourage speculation. Financial products are packaged, marketed, and distributed in ways that reward turnover, excitement, and narrative simplicity.

This doesn’t make speculation evil—but it does make self-awareness essential. Problems arise when people believe they are investing while behaving like speculators, or worse, when they lever speculative positions under the illusion of safety.

Both activities exist. Both attract capital. Only one is built to survive disappointment.

The Lesson

Be honest about what you are doing.

If you are underwriting cash flows, assessing downside risk, and buying with room for error, you are investing—even if prices fluctuate.

If you are relying on price momentum, social consensus, or future enthusiasm to justify today’s valuation, you are speculating—even if the asset feels “inevitable.”

Both paths can lose money. Only one offers a Margin of Safety.

If your portfolio requires a hype-man to maintain its value, you are not investing—you are holding a hot potato and hoping the music doesn’t stop on your turn.

XTOD

“The world is full of foolish gamblers, and they will not do as well as the patient investor.” — Charlie Munger

Edward Quince's Wisdom Bites: Keeping With Year End Traditions

 "What you do when you don't have to, determines what you will be when you can no longer help it."

            -Rudyard Kipling