Biggs on Finance, Economics, and the Stock Market: Barton's Market Chronicles from the Morgan Stanley Years

Section 2B: Investment Discipline & Tactics

Discipline and Reading

February 7, 1983

A massive organizational problem with which the investment manager has to contend is the reading material that he is deluged with daily. “No one can know everything,” said Horace, an investor as well as a poet in the days when P/Es were low before Christ was born, but today most of us are compulsive readers, hoping to find the touchstone fragment of information that will spark a great investment decision. We read because we think we are accumulating knowledge and information. Yet, so much of what we read is repetitious, trivia, or random noise information.

As investment managers, we must realize we are not in the information or knowledge collection business but rather in the judgment business. In his great Essay Concerning Human Understanding, however, John Locke wrote: “He that judges without informing himself to the utmost that he is capable, cannot acquit himself of judging amiss.” But he went on to say that although knowledge is the treasure, judgment is the treasurer of a wise man, and that “he that has more knowledge than judgment is made for another man's use more than his own.” Judgment, not knowledge or information, is the final and only product of the investment manager.

Another facet of the problem is that we become obsessed with the housekeeping aspect of paper flow. Getting through a ...