A light breeze blew across the Tweed River one warm December evening in 2006. People stood at tables drinking, laughing and telling tales of the year that was all but done. A middle-aged stranger made his way across the crowded balcony and gave me some very disturbing news.
He was a seasoned investor and he offered me one piece of free advice: sell all your shares. He said a crisis was coming. He couldn’t tell me when, but he warned it would not be long. He said it would affect the entire world.
I didn’t know this guy. Why should I believe what he said? The threat of crisis wasn’t on the news. Politicians weren’t predicting one, and neither were most economists.
But nonetheless he was right. In less than two years the world fell into the harsh grip of the GFC. This man had correctly read the signs. He foresaw what very few others could see at the time. I don’t know how he did it, but he did.
Perhaps experts were looking at other information and drawing different conclusions about the nature of economic reality. Perhaps some could see what was happening but didn’t think enough about what it meant. Or perhaps they just weren’t all that interested, living in comfortable fool’s paradise.
And what if this guy was wrong? At the time, how could I know he was right?
This brings us to a key understanding. There is an element of uncertainty about the nature of reality. There is an element of uncertainty about the future. There is an element of uncertainty about change. We may predict and we can plan, but we can never really be sure. (Is command and control nothing more than an illusion?)
So let’s stop for a moment and think. We may, like the guy I met, correctly read the