It Ain’t What You Don’t Know 

A Man of Routine

As a parent of young children, I find myself falling in love with all [correction: most of] the little idiosyncrasies of their developing personalities.  For example, my four-year-old is a real man of routine – his last question before bed every night is, “What day is it tomorrow?”  He knows his weekly schedule/routine, and he wants to mentally prepare for what that day has in store.

In the summer, Tuesdays are library days.  So, he knows when his head hits that pillow on Monday night exactly what’s on the docket for tomorrow.  My kids love library day, as they get to participate in some fun summer activities with other kids, and they get to pick out a few books for the week.

Clever Hans

One of the most recent library finds was Clever Hans: The True Story of the Counting, Adding, and Time-Telling Horse.

Side note, as a long-time Sunday school teacher, I’ve always been partial to children’s books and grade school lesson plans.  As adults, we tend to make things quite complicated, and in the midst of our own self-inflicted complexity, we often miss the simple truths of life.

Now, back to Clever Hans.  Hans was a horse, who, in the late 1900’s became quite the spectacle around Berlin.  His ability – the horse – to do basic arithmetic and answer seemingly complicated questions left crowds astonished.  His owner/trainer, Wilhelm von Osten, would inquire of Hans, “What is twenty-four divided by six?” Sure enough, Hans would tap his hoof four times, and the crowd would celebrate in amazement.  Whether the question was asked verbally or written on a chalkboard, Hans would tap-tap-tap and provide the solutions flawlessly.

As you might imagine, everyone had the same question on their mind, “How!?”  Scientists and psychologists from near and far flocked to study Hans.  They wanted to see the wonder horse live and in action; they wanted to dispel the notion that this was a horse with a human mind.  Yet, no one could solve the riddle.  That is, until Oskar Pfungst.  Pfungst, a psychologist, tried out his hypothesis by blindfolding Clever Hans and then posing the same questions.  He wanted to see if Hans could answer the questions “blindly.”  When you took away Hans’ sight, you stripped away all of his superpowers; the blindfold was his kryptonite.

Why so, you ask?  It wasn’t his brainpower that computed these answers, as some assumed, but rather his wit.  Hans figured out how to know when he had arrived at the right answer, even though he didn’t actually know the right answer.  His trainer, von Osten, was unintentionally giving Hans some non-verbal cues.  Basically, Hans started tapping once the question was delivered, and then von Osten’s anticipatory affirmations cued Hans to stop.  Hans was clever, but he wasn’t smart.  Without sight, Hans had no visibility of these cues.  Like a seasoned poker player, Hans was playing the man, not the game.

Pfungst, a true Sherlock Holmes of his day, had solved the mystery, yet the most troubling part of the story was how it ended.   Mr. von Osten refused to believe the conclusions presented and continued to believe Hans to be an equine genius.

Only in Fairy Tales

It’s like the conclusion in the Parable of the Prodigal Son, where the reader finds themselves at an abrupt ending as the older brother remains unreconciled with his anger.  Or in the final words in the account of Jonah, where the reader never gets to hear about Jonah reconciling his stubbornness and yielding to his calling.

What do we gather from these narratives? Do we imagine and/or wish there was a change-of-heart missing chapter? Of course, we do; we all love fairytale endings.  Yet, we also know that people are people.  The lesson here is that we need to be conscious of our blind spots.  Remember, these are “blind spots,” so it will take a second pair of eyes, wise counsel, to help you identify these.  Wilhelm von Osten had Oskar Pfungst, the elder brother had his father, and Jonah had… God.  We need to surround ourselves with high-quality people that will call us on our… stuff.

A quote accredited to Mark Twain seems quite fitting here:

“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”

When Faced with the Truth

von Osten’s world came crumbling down when his beliefs – his deepest beliefs – were deconstructed and destroyed.  So, his response? Deny the truth.  A tactic many of us subscribe to at one time or another.  One of the most difficult parts about being a financial advisor is battling through an investor’s/client’s preconceived beliefs about money, investing, and financial planning.

Again, we all have blind spots, and we all are in need of wise counsel.  Our beliefs are like our routines – the longer we become familiar with them, the harder they are to break.  Luckily for my kids, summer is almost over, and they will soon embark on a new set of routines.  There is something character-building about this, too, right? It makes us pliable, and it helps us to adapt and adjust as needed.  It keeps us humble.

Markets are difficult, and our emotions can be difficult to navigate – a challenging combination right there.  Hubris is our enemy, and stubbornness can be our greatest headwind.  Let us all heed the wisdom from these narratives and avoid the same mistakes of the elder brother, Jonah, and Mr. von Osten.  Let us place all of our beliefs about investing and planning on the table to be dissected.  Let us invite competent and wise counsel into the dialogue to challenge our approaches and beliefs.  Let us hold tight to our convictions that are grounded in truth, and let us be in a constant posture of listen-first and curiosity.  Let us strive to mature as investors, and grow in our knowledge and execution.

Thank you for your faithful readership of Thoughts On Money.  You and I, we are in this together.  As iron sharpens iron, So one person sharpens another.

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About the Author

Trevor Cummings

Private Wealth Advisor, Partner

Trevor is a Partner and Director of our Private Wealth Advisor Group.

As the author of TOM [Thoughts On Money], Trevor endeavors to write and speak about financial concepts and principles in a kind of “straight” talk demeanor and posture.

He received his Bachelor’s degree in Organizational Leadership from Biola University and his MBA from California State University, Fullerton.


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