Some things are more difficult to “know” than others.

“Hey Pete, is that the Atlantic or the Mediterranean?”

Last week I was strolling near the sea in the old city of Yafo with my wife and eldest son when we heard a short, bejeweled, sun-glassed American woman screaming those words at her out-of-sight traveling companion. We didn’t hear Pete’s answer.

I started thinking: In a world where alternative truths and fake anything seem to rule the dialog, are there things that you can know and others that are by their own nature more uncertain? I think so.

It’s easy to help the American lady in Yafo by simply showing her a map, unless perhaps she happens to be a member of a Modern Flat Earth society. It’s also easy, with the right facts at hand, to prove that Trump did sleep with Stormy Daniels or that he did not sleep with her (as this article demonstrates). Or that he lied constantly about the Russian collusion question, though the degree of data digging needed for an answer is exponentially higher than for the other story.

Things get more complicated when time plays a role in arriving at the truth. This is not only because of the difficulty in obtaining the information, but also because the circumstances generating it are not controllable (like in a physics experiment). When our kids were born 30 years ago the “rule” was that you never put your baby to sleep on his back lest he choke on possible regurgitations; today you should not put him to sleep on his tummy precisely for the same reason. (Or maybe it was the other way around; I can’t remember.) Research used to show that a glass of red wine a day was beneficial to your health; today we find out that two glasses of wine a day shorten your life expectancy by one year. (Admittedly one glass is not two glasses; give me a break.) In both instances a lot of us unquestioningly followed the instructions. Similar cases and associated angst come and go rhythmically on matters ranging from nutrition to testing for prostate cancer. It seems we have limited ability in determining what is good research and what is not. A selective and industrious press could be very helpful here; unfortunately, in a world of Presidential tweets and click-counting records that doesn’t work.

In the investment world it is not easy to tell who performs and who doesn’t; who is a true “genius” and who is simply lucky. For a good numerical answer (to say nothing of all the other qualitative issues) you need years, preferably decades, of quarterly data. Yet, just as in the case of the baby flip-flop or the one-glass-yes-two-glasses-no health turnaround, most investors jump at the chance of pouring their money in a fund or a strategy that shows a decent 3- or 5-year record. Remember: when it comes to money, taking shortcuts leads to paying huge sums often for just playing a game of chance.

“It’s the Mediterranean, for Pete’s sake,” yelled back my son.

Roberto Plaja

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