I think of myself as a reasonably intelligent person. I like to imagine myself as an independent thinker who is reasonably well-read. So for a long time, it was nearly impossible for me to say “I don’t know.”
I think there were several contributing factors here. Youthful arrogance (it seems young people chronically overestimate their competency); ambition (“it is good for my development and career prospects to be seen as capable and intelligent”); anxiety (“if I cop to ‘not knowing’ I am admitting I am not as smart and well-read as I line to think”).
These days I try to make “I don’t know” my default answer.
Charlie Munger models this behavior well. I read a transcript of the most recent Daily Journal Meeting, and it’s littered with stuff like this:
Question 2: My question relates to BYD. Given that you’ve successfully invested in commodities in the past, how do you view investing in things such Cobalt, Lithium, and Helium as technologies of the future?
Charlie: Well I’m hardly an expert in commodity investing, but certainly cobalt is a very interesting metal. It’s up about 100% from the bottom. And it could get tighter, but that’s not my game. I don’t know much about…I haven’t invested in metals in my life much. I think I bought copper once with a few thousand dollars. I think that’s my only experience.
And this:
Question 8: Your thoughts on the valuation of software companies like Apple, Facebook, Google, Amazon, Alibaba. Are they over-valued, potentially under-valued, too early to tell?
Charlie: Well my answer is I don’t know. (laughter) Next question. (laughter)
There are a couple of important benefits that come with a willingness to say “I don’t know.”
The first is that it helps combat conformation bias. Of all the behavioral biases, the one I suffer most from is confirmation bias: a tendency to seek out only information that confirms my (usually contrarian) view. Openly admitting “I don’t know” helps me maintain a more open mindset, and to loosen my grip on my ideas. If you get too entrenched in a position you risk developing what Dealbreaker jokingly refers to as “Ackmania.” Or some new strain of it, anyway.
Also, when you say “I don’t know” in conversation with someone else, you leave them an opening to teach you something new. No only that, but you are likely to develop a deeper relationship with that person. People love to talk about themselves and their areas of expertise.
Now, I am still more than willing to hypothesize about different things. Sometimes, for entertainment purposes, I even frame these hypotheses as statements of facts. But in my mind they are still just hypotheses.
Because most of the time I just don’t know.
Nice one. I’ve never had a problem saying “I don’t know”. Not a problem now that I’m out of the workforce and making all my own investment decisions, but of course employment situations do tend to favour those who speak fluent BS. “I don’t know” is, in many environments, not an acceptable answer….
An astute observation. Particularly in the financial markets people seem to prefer BS expressed with great conviction over nuance and uncertainty, though in my experience most aspects of investing are fairly nuanced and involve significant uncertainty.