Few investors require an expert to suggest to them what to do, when what kind of decision requires to make, etc. They entirely rely on the expert. So that if they have made a mistake for choosing their expert then their chance of winning get reduced and sometimes, very less chance or increases in the chance of losing. They are financially uneducated and not interested in investing in learning financial education which makes them helpless to rely on so-called experts.
Few are those who interviewed many stockbrokers, advisors, before making any investment decisions. They are busy with their works and do not find time to gain knowledge. So that they would like to delegate their investment decision to those who are good at it.
And remaining having a good knowledge about investment which help them to make more wise decision with their investment without relying on others.
For gaining a good grip into the B and I quadrant, we learn to solve bigger financial problems. We try to be a good business owner because a good business owner can understand the business part well and also has an excess cash flow to invest. If we do not have a proper financial education then we can do a blunder in the I quadrant. So that financial education is key to making a wiser decision as well as avoiding blunders.
There are two types of knowledge. First, we have real knowledge. We see it in people who have committed a large amount of time and effort to understand a topic.
The second type is chauffeur knowledge – knowledge from people who have learned to put on a show. These people just make show that they know everything but they just speak what they have heard from the source. They speak as per the predefined script ready for them.
Any fool can know. The point is to understand. – A. Einstein
Investment – It is difficult to judge who is an expert and who has just a bird view of knowledge.
In 1998 Wesco meeting, Charlie Munger Quoted –
I try to get rid of people who always confidently answer questions about which they don’t have any real knowledge. To me, they are like the bee dancing its incoherent dance. They are just screwing up the hive.
Mr Warren Buffett suggests us to decide what we know and stay with it, what he calls a circle of competence. Mr Munger suggests that the size of the circle is not important but important is, we stay within its limit well. If we do not know anything, we should simply say we don’t know rather act as an expert. I also faced such problems during the initial days of my career. I considered people with Chauffeur knowledge as an expert until I do not meet real experts.
In the stock market, we meet many people who act as an expert but the majority of them not. We have to carefully check their knowledge before trust on them. We have to understand their investment philosophy and process before making a judgement of them. True experts recognize the limits of what they know and what they do not know. If they find themselves outside their circle of competence, they keep quiet or simply say, ‘I don’t know.’ We also have to perform the same for becoming an expert in our field.