The Only Three Questions That Still Count: Investing By Knowing What Others Don't, 2nd Edition

Ignore the Rock in the Bushes

Thousands of years ago, our ancestors grouped together for security against other tribes and giant fanged beasts. When darkness fell, they gathered around campfires for warmth, protection and the occasional grilled mammoth burger. By the glowing campfire, they regaled each other with stories of the hunt and mythological tales, carrying their culture to younger generations. On a nice night, warm and mammoth-gorged, they could feel a real sense of security and well-being and envision a beckoning future.

Suddenly, in the dark, a loud and unexplained mammalian noise sliced through their sense of security. Instantly and instinctually, they all looked toward the source of that noise—in the bushes—and prepared for what could be threatening and ugly. An attacking rival tribe, perhaps, or a lion or a stampeding wildebeest herd. Every ear and eye correctly focused on the noise to maximize the human power to identify and, if possible, overcome the threat.

If you were from another tribe and led a warring group wanting to attack this camp, what would you do? To be clever, you might throw a stone or create some other ruckus that distracts the camp—then attack from a different direction. Of course, a stampeding herd wouldn’t do that. But for the camp, in case of a planned attack from clever marauders, a more evolved military-like response would be to have some folks look away from the noise, into the darkness elsewhere, to spot any surprise marauder threat.

The problem? ...