Messy World of Investing

The Israeli air strikes into Gaza should serve to remind us, once again, just how “messy” investing can be.  Fears of this latest armed conflict broadening and disrupting oil shipments have sent oil prices up and stock markets down.  Nothing unusual there.  Unforeseen and momentous events occur with surprising regularity, along with “Black Swan” events, that disrupt the best laid plans.

It does reinforce, in my mind at least, how much of an “art” investing is no matter how much people would like it to be a science.  If it were a science then it would not be nearly as messy and gut-wrenching.

Just last week I was on the phone with a colleague who was incredulous that I did not see the same value in his CIMA certification that he did (a financial management and accounting designation mostly designed for professionals working in large businesses).  He was angry that with my statement that good investment management and financial planning for individuals was not predicated on earning a professional designation.  In fact it could come from someone who had decades of business experience and an inquisitive mind.

As one with a master’s degree and a passion for constant learning, I think education is an essential process for learning how to learn.  But, the best investors in the world do not rely on simple financial and accounting formulas.

The world is much too messy a place to believe that a CIMA, CFA, CFP, or any other designation is a marker of good investment advice.  (I certainly did not see any professional society warning about the housing or credit crisis before they were obvious to all.) The best investors in the world have taken a different route: a synthesis of economics, investing principles, human psychology, and a passion for research and learning.  Combined these are an art form, not a science, which is why so few do it well.


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