"Discovery of a solution consists of looking at the same thing as everyone else and thinking something different." - Albert Szent-Györgyi
A client once told me that I should have “On the other Hand...” chiseled into my headstone. “You have more potential problems and solutions than I could ever think of!”
Nassim Nicholas Taleb's 2007 seminal work, The Black Swan gave us a moniker for the things that we don’t know we don’t know and, more importantly, didn't see coming. But, even more insightful was his companion book, Fooled By Randomness. There he laid out the foundation of his claim that we don't have any rational knowledge about the next few seconds let alone a week, a month, or a lifetime from now. And, worse, we conflate the law of large-number randomness with a level of intellectual intuition into a belief that we actually do have control of the random chaos around us. But we're much more just blind squirrels finding random acorns than we are masters of our universe's next one second, according to Taleb.
In our world of financial prognosticative forecasting (ie. guessing) I've said for decades that our job is to create as many scenarios as we can imagine, rank their likely outcomes, and rate their potential impacts. Only then will we be able to invest client money according to their goals and risk tolerance. If success in investing only required a simple rank and rate methodology, then we'd all be great investors. But the sheer number of potential scenarios ahead is what smothers the process and binds up the analysis in paralysis and uncertainty. Like hairs on the back of your hand, there are many variables to consider in many ways that each presents a potential outcome for us to rank and rate. There is always an "On the other Hand...".
Lastly, all of that analysis uses variables that change by the moment, so the plan has to be flexible enough to adjust as the likeliness rank and impact rating become clearer. The ability to make another decision at another time and still leave a margin for error is a critical component of the actions we take.
Most of you know that we're good talkers and storytellers, but fewer know of our process of creating scenarios to consider and talk about so we even have a list to rank and rate. By looking differently, as well as by looking at different things, we create scenarios to keep the next Black Swan from being a vulture picking at our bones.