I recently reread one of Black Swan author Nassim Nicholas Taleb's lesser known books, one called 'The Bed of Procrustes: Philosophical and Practical Aphorisms'. As promised by the title, The Bed of Procrustes is a collection of short, simple and witty statements that encapsulate a piece of wisdom that is out of proportion to its length. The book involves a small amount of reading and a great deal of thinking, which is the opposite of what happens with most books and authors that have a certain amount of hype about them.
The title of the book is itself an interesting comment on how we evaluate what is happening around them. In Greek mythology, Procrustes was a bandit who would force his victims to sleep on an iron bed he had made. The bed was so made that if the victim was shorter than its length, he would be stretched till he exactly fitted it. And if the victim was too tall, then his legs would be cut off so that he fitted it.
It sounds like just another folk tale till you realise that this approach perfectly describes much of what we get from the media and various experts. People have a theory or an idea that they are trying to propagate, which is the bed of Procrustes they have made. They'll chop and change and stretch and mutilate information about the real world as much as needed to fit their ideas, but they won't change their ideas.
While the Bed of Procrustes is not specifically written for savers and investors, there's obviously much that is of value to investors. Here's one that no investment advisor will ever tell you: "The tragedy is that much of what you think is random is in your control and, what's worse, the opposite." Think about it for a moment. If you go around reading and absorbing everything that is out there about investing, the broad lesson is that the way to succeed is to know what markets and stocks are going to do. Which companies will do well, which sectors will do well, which external factors will impact countries, markets and businesses. Commodity prices, elections, interest rates, Europe, Ukraine, China etc etc etc.
You could hardly be blamed for thinking that to make the correct investment choices, you must have a good grip on all these. After all, reasons like these are trotted out day in and day out by experts, apparently to explain the movements of the markets. I'm not saying these things don't affect the markets, of course they do. They are not even random in the true sense. However, their combined impact on investments is unpredictable, therefore they are effectively random as far as investors are concerned. On the other hand, the things that one does control--one's own behaviour, how much one invests, what one's goals are and so on, are paid much less attention by investors.
This leads me to another, connected aphorism from Taleb's book, "The calamity of the information age is that the toxicity of data increases much faster than its benefits." I'm not sure what readers would make of the phrase 'toxicity of data'. After all, having a huge amount of information available is supposed to be one of the great positives of being an investor today. Everyone above a certain age remembers how difficult it used to be to find even basic data about the investments one wanted to make. And yet, too much of anything is definitely not a good thing. We have definitely reached a stage where it's far easier to drown in information than it is to differentiate between relevant data and just noise.
In fact, the number one problem of any kind of investing today is to cut out what pretends to be relevant information but is actually info-junk that misleads us. Or, as another aphorism from the book puts it, "Knowledge is subtractive, not additive - what we subtract (reduction by what does not work, what not to do), not what we add (what to do)."