I Don’t Know

I Don’t Know

I don’t know.

I don’t know if we’re in a bear market.

I don’t know if interest rates will go higher.

I don’t know if crypto will go lower.

I don’t know much of anything.

If you go to financial conferences or watch finance interviews online, you get the impression these people know a lot. They know everything. Because certainty pays.

Lacy Hunt is a popular guy. This is partly because he’s been right about the bond market for so long. But it’s also because he goes through life with the certainty that what he is doing is right. And it is that certainty, in the way he talks, the way he carries himself, that has attracted legions of followers. He communicates in such a way that leads you to believe there is no possible scenario where he is wrong.

It’s a valuable skill. If someone were to ask me if I thought interest rates would go up or down, I would say that rates could go up for these reasons—and rates could go up for those reasons. And while I have an opinion on the direction of interest rates, it is little more than an educated guess. I simply don’t know.

I don’t know who will be president in 2024. I don’t know who will win the World Series in 2022. I don’t even know if the sun will come up the next morning.

As absurd as that last one sounds, if you think about it, it really is true—we really don’t know if the sun will come up tomorrow morning. We don’t know anything.

So, if you are intellectually honest about the fact that you know very little, how do you obtain conviction in the markets?


Conviction is when you are really sure something is going to happen in the future.

This is an underappreciated point, but success in investing rests partly on your ability to predict the future. Seems impossible, but in certain circumstances, we can all predict the future. If a relative or friend is diagnosed with terminal cancer, we know months in advance how things will work out. If someone is arrested for a crime, we know there’s a likelihood he will go to jail. Events, once in motion, tend to remain in motion.

Likewise, when you see a pharmaceutical company with a new drug whose sales are increasing exponentially, you know that is likely to continue. Yes, sometimes we can predict the future.

So, if you are contemplating buying a stock, you have to reflect on how certain you are that events will transpire the way you think they will. You also have to consider how things might go wrong. The more knowledge you have, the better your ability to predict the future.

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On the other end of the spectrum are the index fund investors. They also don’t know anything, but they act as if they do. They have the certainty of Lacy Hunt that stocks will go up over time. They have certainty that no matter how deep the correction or bear market, the stock market always comes back. They may have zero financial acumen or knowledge of financial history, but they know in their bones that the market always comes back.

There is a fine line between conviction and faith.

Conviction is belief with knowledge. Faith is belief with no knowledge. There is a place for faith in our lives. I know with certainty that my spirit will live on after I die, even though I have no evidence to support this conclusion.

But there is no place for faith in the stock market. I can think of a dozen reasons why the stock market could go down and not come back.


Implicit in the statement I don’t know is an admission of humility. There is not much of that going around these days. Everywhere I go on Twitter, I see people who are pretty damn sure about their stocks. I wish I shared their conviction. It’s the main reason I don’t talk about stocks on Twitter. I am just not that sure.

Once you learn the magnitude of what you don’t know, the world becomes a very scary place. But as time passes, it becomes a very reassuring place. Because you learn that everyone is as clueless as you are and the markets will make fools of us all. Perhaps it is the accumulation of these indignities over time that gives me the humility I have today.

Humility is a necessary but not sufficient condition for success in the markets. On the other hand, without it, you’re doomed to fail.

Jared Dillian


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Jared is no longer writing the 10th Man.

To follow him and all of his musings you can subscribe to The Jared Dillian Letter here.