Over break, I was able to read The Big Short, an account of the economic factors that resulted in the 2008 crash of the stock market and real estate values. Written by the brilliant Michael Lewis, it reads like fiction even though the events were perilously real.
A key reason the crash did happen is because so many money managers were oblivious to the thought that it could not happen. I received my MBA in 2008, and even though I studied under a tough economist, the notion of selling short on sub-prime mortgages wasn’t on our syllabus. Until it happened, only a tiny few believed that it was possible, never mind likely.
I was struck by the quote that opens the book — an apt observation from Leo Tolstoy in 1897 that applied over a century later:
“The most difficult subjects can be explained to the most slow-witted man if he has not formed any idea of them already; but the simplest thing cannot be made clear to the most intelligent man if he is firmly persuaded that he knows already, without a shadow of a doubt, what is laid before him.”
Resolve in this new year to become curious — about what you don’t know, but especially about what you think you do. It is far more dangerous to be certain than to be ignorant.