Breadth Thrusts & Bread Crusts: In Pursuit of the Unexpected

JC Parets
September 2, 2021

From the desk of Willie Delwiche.

According to Charles Darwin, you cannot make observations without some kind of underlying theory. And if you have any theories about financial markets, you understand thinking about what could or should happen with your investments.  

These concepts can be useful if they help us prepare for what is happening in the markets. But they can also impede or obscure reality.

We can observe and project all we want -- so long as we don't get distracted by the what could and what should that we lose sight of what is. 

I don't see this as an argument in favor of always being bullish or a warning about the risks of needing to be proven right. Instead, it's an encouragement to agnostically acknowledge and operate within the market as it is rather than as we wish it would be.

It’s about pursuing the opportunities that are before us even when they are unexpected. 

Especially when they are unexpected. 

I was reading Annie Dillard’s Pilgrim at Tinker Creek the other night when I came across this passage:

“But there's always unseasonable weather. What we think of the weather and behavior of life on the planet at any given season is really all a matter of statistical probabilities; at any given point, anything might happen.”

Statistical probabilities can help us know where to look and and avoid catching us off guard. But we live in the present reality, not in historical averages. We can form expectations, but we need to take what is and act accordingly. If it’s raining outside, we take an umbrella with us even if the forecast was for clear skies. The opposite is also true. We might carry an umbrella with us if the forecast is for rain. But we don't pull it out until rain drops start to fall.

As much as we try to prepare, there will still be times when we are caught off guard. When this happens, we manage as well as we can in that environment and try to add to our wisdom for the next time around. 

There is always something we can learn. There is always something we can apply.

The coulds and the shoulds are great intellectual fodder. But if we cannot adapt our expectations in light of the current experience, we are missing out.  

As Annie Dillard reminds us, "There is a bit of every season in each season."

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