Common Sense Should Rule

One of the first things an investor or entrepreneur must learn is that information is not knowledge.  Not even close.  Information is like a string.  Unconnected.  Knowledge is like a spider web.  All connected and mutually supporting.

Knowledge is much harder to acquire because only some available information fits.  Acquiring a vast stack of information looks like it should include knowledge, but extra information, the parts that are unconnected to the knowledge you need, is hurtful.

“Everybody gets so much information all day long that they lose their common sense. They listen so much that they forget to be natural.”  Gertrude Stein

Common sense is not an attribute that you can afford to lose.  Common sense adds three key variables to your pursuit of value.

  1. Common sense sees opportunities much earlier than logic will. 
  2. Common sense sees problems before you can define them. 
  3. Common sense sees the outline of possible answers.

Do you think Bill Gates or Mark Zuckerberg or Steve Job gathered information first and then decided to build their empires?  Not at first.  They had a nearly subconscious belief.  Not yet a problem or opportunity and certainly not a solution, but they had the little dot on the horizon that enabled their future.

With that point as their guide, they acquired information that fitted and the knowledge followed soon after. That is the builder model.

The builder’s biggest problem is translating the point into steps that others implement. It is not an ability thing, it is a difficulty in turning what they think into words. Given that what they were doing was largely new, the listeners heard but did not fully understand.  With the point, the entrepreneurs did not lose their way and get trapped by details.  They stayed focused. 

For the rest of us, common sense and intuition are related.  That little twinge you get sometimes is the reporting function.  Don’t ignore it.  Check.

For investors, if you come upon a product you like,  you might wisely check the company that makes it.  If you own something and catch  a twinge of trouble it might be wise to sell.  Common sense leads the way in analyzing these.

Take a look at the businesses that have failed in the past two decades.  Were any of them a shock? Looking back, how big was the lead time.  Mortgage crisis.  Three to four years.  Nortel, at least three years.  Enron and Worldcom.  A couple of years at least.  Accounting trouble is a clear signal.  P.G.& E. governments tinkering in markets.

Information is your enemy. You could have found reasons to stay in Nortel or Enron. If you wanted to support your original decision, you could.  Same with opportunities.  What did Apple sell for 10 years ago?  Google?  Ebay? Lulu Lemon?   Admit it, you used shards of information to talk yourself out of all of them.

Be a little instinctive. Logic and information support only old decisions.

Don Shaughnessy arranges life insurance for people who understand the value of a life insured estate. He can be reached at The Protectors Group, a large insurance, employee benefits, and investment agency in Peterborough, Ontario.  In previous careers, he has been a partner in a large international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business.

Please be in touch if I can help you.  don@moneyfyi.com  866-285-7772

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