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The Knowledge-Experience Continuum: Where Do You Fall?

It is only through studying the practicalities of investments that people learn and understand how it really works. Even so, their knowledge and understanding always has its limits, and learning and doing are two very different things.

These issues apply to a greater or lesser extent to almost everyone in the industry - theory and practice are often worlds apart, but many people dangerously treat them as one and the same.

In this article, we will look at what constitutes learning, understanding, experience and real expertise, as well as what sets the limits. The basic issue is that when it comes to investing, there is a huge gap between theory and practice. For this reason, it is important to take a look at the different levels of knowledge and how we achieve them.

The Dangers




People who study business or economics in college generally learn passively just to pass exams. Many do not really understand the material until they start teaching the same theories. And even then, this is still just theory. Practice happens when students apply this theory in their personal investing.

Even business professors who write articles in related areas, such as economics, tend to do so theoretically and do not necessarily know much about the real world of investment. In fact, their own investments may be run by other people.

Unfortunately, some types of theory just aren't helpful in practice. For example, although a good theoretical knowledge of economics, should help you learn quickly about real-world investments; unfortunately, the theory alone is of little practical use. Knowing about supply and demand, neoclassical interest rate theory and Keynesian cross diagrams is light years away from the real world of conflicts of interest, commission-hungry brokers and failed attempts at market timing. In other words, these theoretical models often assume the world has very specific and predictable conditions; does this sound like the world you live (and invest) in? (For related reading, see Economics Basics.)

In the world of investment, theory alone can even be dangerous, and this applies particularly to a limited degree of practical knowledge. The old saying that "a little knowledge is a dangerous thing" applies in this context, because it can inspire confidence in the investor, even when he or she has little experience and should be cautious.

The main problem is that the investment industry does not work the way an inexperienced person is likely to think. For example, who would ever dream that many fund managers try to beat an index and fail? How could the man in the street know that brokers may sell risky investments because these bring in the most money? Similarly, naive investors might put too much confidence in their brokers' abilities and assume that they "know what they're doing"

(To learn from experienced money managers. The term "experienced investor" can therefore be extremely misleading. The Know A Littles. this may not be apparent. such as from university economics or even some college finance courses. you will need to find one who is motivated to help you. The first category would be those who. but if this is purely passive. never assume that someone has the right package of skills. Unfortunately. Therefore. both on the part of the investor and his or her broker/advisor. but if you hire a broker. This is particularly the case with routine activities at lower levels. The Know Nothings. Another danger is that someone who worked with pensions for 20 years may get transferred to hedge funds two weeks before you turn up with your money. someone who knows a lot about stocks may know (almost) nothing about bonds. Motivation is also vital. but for an investor with limited experience. This means being genuinely interested in and caring about your portfolio. The extent to which knowledge with one asset class applies to another. see Has Your Fund Manager Been Through A Bear Market?) The combination of directly relevant experience and various aspects of sophistication is really essential to good money management. mismanagement is not uncommon. is extremely variable and cannot be taken for granted. this may not be a problem. The next group would be those with a limited degree of knowledge and experience. read Is Your Portfolio Beating Its Benchmark?) Experience Versus Real Expertise As you now know. This knowledge could be very theoretical. The Knowledge-Experience Continuum Given the above. This person is then very experienced. And even a government bond expert could be relatively ignorant about the ins and outs of corporate bonds. for example. These are complex issues. we can divide up private investors into three main knowledge-experience categories: 1. (To learn more. for all intents and purposes. (To learn more. you need to actually do things to develop real expertise and skills. passive knowledge alone does not count for much. but perhaps not in the right area. someone who simply works in a bank may administer funds and other assets for years and or decades and not really know much about them. Nonetheless. experience and expertise to advise or work in a particular field do your research and determine exactly what experience a professional has and how directly it applies to his or her current line of work. it is also possible to have a lot of experience with something. 2. people can go through their entire adult lives without gaining any real knowledge or understanding of the investment process and what it entails. If you do your own investing. or it . (For another aspect. uninterested and unmotivated.without further investigation. without having a profound understanding of how it works.) For example. No amount of education and experience counts if it is not applied appropriately. read Is Your Broker Acting In Your Best Interest?) Knowledge in One Area Is Still Ignorance in Another Given the extraordinarily wide range of investments. Only experience in a specific sector is really likely to help. but they are of fundamental importance. know nothing. Almost everyone earns some money and perhaps even invests part of it. read Words From The Wise On Active Management.

read Advice For Finding The Best Advisor. magazines and books. The Know A Lots. This in itself constitutes one of the great challenges of the investment scene.could be more practical. They still have to rely heavily on the "experts". I have to ‘experience’ Brahman all the time and everywhere. They would not necessarily know what constitutes a high versus low-risk portfolio or the difference between a mutual fund and a hedge fund. Applying the Continuum to People in the Industry When it comes to investment professionals. they too will inevitably have gaps in their knowledge and experience. there are obviously those with above-average or advanced levels of knowledge and experience. but also in what areas. The problem that I have is that. although I experience Brahman all the time. Despite this. Moving on from the above level. A complex interplay of education. Read Part IX – Experience versus Knowledge (How do I know that I exist?) Another problem is the confusion of self-knowledge with experience. It is not ‘knowledge of’ something nor is it an ‘experience of’ something. so it is important to find out not only how experienced a professional is. The experiences that we know are time bound. maybe even teaching or writing on investments or have been managing their own money or that of others quite actively. People say I have studied Vedanta and now I want to experience it. but with some important differences. I fail . These people have been reading extensively for years. There is an experiencer. Is it an experience or is it knowledge? Let us understand this difference. understand and can do in the investment industry is absolutely fundamental to managing your money or hiring someone else to manage your money properly. something experienced and the act of experiencing – this is called a triad or tripuTi in Sanskrit. but this knowledge may remain superficial and narrow. (For more insight into choosing the best advisor. Read more in The Alphabet Soup Of Financial Certifications. They know a bit or even a fair amount about stocks.) Conclusions What people really know. relevance and sophistication all determine whether an investor or a professional can successfully manage a portfolio. (One aid to evaluating real experience is certifications. Anything that has beginning has to have an end and that is the law. from reading newspapers. It is therefore extremely important to know who you are really dealing with. 3. All experiences have a beginning and therefore have an end. Now let us a ask question . motivation. Professionals are extremely varied in terms of their area(s) of expertise and commitment to customers.Is there any time that I do not experience Brahman? If Brahman is infinite and eternal. Many people fall into this category. bonds and real estate. the three groups above still apply.

Not knowing what Brahman is. (prameya is a thing to be recognize it. Therefore I do not know if I am here or not’. I am unaware of the existence of any object. But if one examines carefully. since everybody takes for granted he know about himself – that is evident when he tries to introduce himself to others. Whatever is conceptualized is not Brahman – that is exactly the teaching of Vedanta. A Self-existent and self-conscious entity need not be known or experienced. since it is pitch dark. Let us give a simple example: Suppose I am sitting in a pitch dark room and I cannot see anything. Should I say ‘I believe I am here’? Or should I say. In fact. Vedanta says every thing that I experience is nothing but Brahman only. I take whatever I experience as other than Brahman and therefore I set out to experience Brahman. including Veda pramANa are validated by me since I am there and I am a conscious entity able to validate them. he is not introducing himself but what he thinksabout himself. I have only conceptualized Brahman. since whatever can be known or experienced is an object or inert entity’? . or an object for a ‘pramANa’. Do I have knowledge of Brahman? If I understand Brahman intellectually by studying Vedanta. or what is the means of knowledge (pramANa) for me to know. If some one calls me from outside and asks me if I am there in that dark room – what should be my answer? I cannot say ‘I do not see anything here. aprameya means I am not an object for any pramANa. Forget about Brahman. Or should I say ‘I cannot be known or experienced either. that I am there and I am conscious? Do I have to see myself (perception) to know myself? Do I have to experience myself to know myself? Is it a belief that I am there because the scriptures say that I am there? No means of knowledge is required to know that I am there or that I am a conscious entity. How can I know I am sat chit Ananda? Vedanta says it is not something to be known but something to understand. but I take it as ‘this’ or ‘that’. it is pitch are sat chit Ananda or existence-consciousnessbliss. which Vedanta calls aprameya. I am a self-evident and self-conscious entity.) In fact all pramANa-s. therefore I must be hear somewhere’? How do I know. ‘I can hear you. Do I know myself? Not many will ask that question. Vedanta says you are not what you think you are .

in fact. It is a peculiar knowledge in which the knower-known-knowing triad is not there but all converge to one. Hence. The problem is that I. In fact. take myself as something other than myself. which illumines darkness. it is commonsense. But what illumines the darkness in order for me to see that it is dark. There is an error involved in the operations or transactions. the self-existent self-conscious entity that I am. this (‘this’ being the body-mind-intellect complex). it is so dark that I cannot see anything else. The objects may be there or may not be there – there is an inherent uncertainty about their existence or non-existence until they are illuminated and seen. If I say it is pitch dark and therefore I cannot see anything there. the existence of any object cannot be ascertained unless it is illumined. is not opposite to darkness. would I see darkness then? The external light that is needed to illumine all objects cannot illumine darkness. I can see that it is dark and. The solution therefore is to know myself as myself by rejecting all notions about myself such as ‘I am this or that’. Now let us ask another interesting question. The light that illumines the darkness is my own light of consciousness. in the light of which I know it is dark. But there is another light that illumines darkness too. which we can refer to as pure knowledge without any attributes. How do I know it is dark? Of course. I am the light of all lights that illumines not only the darkness but even the lights outside too. An external light is opposite to external darkness. when I cannot see anything else? Suppose I shine a light to see the darkness. So it is neither knowledge nor experience that we are familiar with – it is self-knowledge or recognition of who we are by discarding who we are not. take myself as an inert or unconscious entity. That other light. It is therefore not a ‘knowledge of’ in the sense of an objective knowledge but knowledge of ‘I am that I am’ and not ‘I am this or that’.Vedanta says it is different from ‘knowledge of’ or ‘experience of’. The error is called ‘adhyAsa’ or superimposed error – wherein a self-existent self-conscious entity. I can see any . Up to now. I. In the pitch dark room example there is another interesting point to note about my true nature. which is not opposite to the darkness outside like the outside light. this means that there is no illumination of the objects to reveal the objects that are there.

I am the consciousness because of which I am conscious of all the objects – even all the thoughts. not at the expense of one another.well picky when it comes to individual words. I am the light of consciousness that illumines everything else and I do not need another light to illumine me. hey take something away. in its entirety. etc.investopedia. at any one individual. That is what is called self-luminous. when there is no external light to illumine me. is that in addition to the vendors. I have been able to spend a little time reading. some have their own threads going elsewhere. Social Business and Social CRM is so new that very very few people can possibly be talking or . These are the words that take us beyond their meaning for a contemplative student to see myself as myself. If you see yourself in here. as well as…. The set I am picking on today is „Knowledge„ versus „Experience„. I would hope that we can get it done together. including my notions that ‘I am this’ or ‘I am that’ etc. Social Marketing. What light illumines me so that I can see myself? The fact of the matter is that I do not need a light to see the light. I mean that I really think you are wrong. more: http://www. really. as well as the darkness too in the light of illuminating consciousness that I I have a bit distracted for the past few days. and definitions. Feel free to pick on any one of these. lots of good posts on that this past week). Much of what we are all talking about and doing with respect to Social Media. well. This post is not directed. At the heart of the issue. from it (I am). but I do not want to waste my time engaging”. though not as much time as I would like. Why? Because too many people are confusing one with the other. thinking about a few projects I am working on. Hence Vedanta says ‘I am a self-luminous entity’ (svayam jyoti) and I am light of all lights (yotir jyoti). to think this blog is about you‟. and you do not have experience). Social Selling. as well as trying to create some original content for a client. That is the reason why I know I am there and I know I am conscious even in the pitch dark room. What is in a Word? Is there a difference between “credibility” and “trust” how about “ownership” versus “control”? What about “influence” and “empowerment” (that is a trick question. a little knowledge is a dangerous thing. so please do not be so „vain. and some are actually falling short on both (ie. One of the people who I had a less that enjoyable experience with recently chose to call me a “Social CRM Troll” – this is the same person who said on Twitter: “When I say it is semantics. the moon and all the lights.thing or any object including the sun. Everything else shines (gets illuminated) after me. One thing I have noticed recently is that some of the practitioners get a little defensive every once in a while. consultants and analysts are working to build their (our) credibility.

an article. . adding some of their own interpretations and posting a blog. but one that I think might actually cause bigger issues. Some people are talking/writing eloquently. so we can all learn from the few experiences that do exist. but I wonder about that – call me an intellectual. I can admit when I am wrong. I do get a bit passionate as was the case with a blogger earlier this week. (I could be sarcastic and say it does not happen often. Do not get me wrong. not egos and more people willing to consider the possibility that they are not always right. those whom you trust. My issue. But. Experience is tougher. geek. was his lack of humility. but you can either bring people in. and valuable. just wondering. I can take the hit. misinterpreted as knowledge. We need bridge builders. we are all on the journey together. can more easily be made up for by reading. experience without knowledge. The other side is a little harder to imagine. knowledge. Taking information provided by others. to make up a gap. aside from me” or “you cannot argue with”. or knowledge without experience? One direction is easy. So. research and learning. or talk to as many people as you can to see if you can replace a slight lack of experience with more knowledge. here is my question: “Does writing about someone else‟s experience provide knowledge”? I am not a philosopher. but does not typically start with “Very few people. Sorry. but I won‟t go there) and my approach is direct. Limitations of one. You might think of it as ‟street smarts‟ or success veiled by serendipity. It is the Combination that is Powerful Which is more dangerous. well read individual who is a little green. I rely on the combination knowledge and experience to get me through the day. nor a sociologist. academic. as a matter of fact. I will stand firm on that one. as the public sharing can accelerate the process. If you really are a blogger. I am not saying that will always work. from a position of both knowledge and experience. giving a talk or sharing a video. I admire the people that work hard. I can tell you. then engagement is more important than your schedule to put up another post. that time spent listening (not waiting to talk) is time well spent.writing from a position of significant experience. publicly to extend their knowledge (publicly even). I believe this to be especially true with bloggers. in the form of case studies. I think is important. the book smart. it might be downright dangerous in some situations.


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