Dave Nadig: Financially Futurist? Seriously?
To suggest we live in interesting times is a radical understatement. We live in a world not only of constant change, but one in which the pace of change is accelerating each and every day. At the same time, the systems we work with increase in complexity.
But here’s the thing: change happens. Impermanence is one of the only absolute certainties in finance (… and life honestly.) But change is uncomfortable. So what we try to do isn’t so much predict the future as lay out the potential paths we might collectively walk. We’re not going to tell you what the markets going to do, but just maybe, we can have conversations that help us uncover the possibilities and make better plans..
How? Building a crystal ball out of information.
First, we need to understand the past. Of course the old trope that “history doesn’t repeat itself but it sure does rhyme” has merit, but investors spend an inordinate amount of time obsessing about the past because it’s the only data we generally have to work with. When we think about history, however, we’re interested in what we can learn from how systems and events interacted – the causes and effects. While we can learn how markets changed when the New York Stock Exchange was formed under the buttonwood tree on Wall Street, it’s even more important to look at the roots: Why did the people of the age need an exchange, and why it was successful, and what can we learn about the changes we face today from those “whys.”
Second, we have to take apart the actual present and understand how it works. Most of us understand a lot about a little – we’re metaphorically all feeling our part of the elephant in the dark, identifying the toenails and trunks and tails. But until you get right down the framework of how money works – from the Russian Central Bank all the way to using Apple Pay to buy Coffee in Austin Texas – there’s no hope of being prepared for what may happen next. So step 2: understand the world as it is, in realtime.
Third, and probably most important, is understanding people. In this case, we care mostly about investors – from big sovereign wealth funds to Robinhood daytraders to retirees. Only by really talking to human beings, understanding the cultural and social nuances of modern society, and even the nature of how people and groups make decisions can you make even the wildest of guesses about what they might do tomorrow. Luckily, by studying the past, we can see how our crazy species has perturbed the present time and time again.
Put another way? It’s all about context, mindful observation of the present state, and understanding the real drivers of investor behavior, with the hope of understanding tomorrow just a nanosecond before it’s upon us. Past, Present, People.
Sounds simple right?