History as Enigma
There’s what we know, and there’s the rest
“The best investors in the world are really good historians.” - Tim Urban, writer and entrepreneur.
Understanding history, both actual events and the dynamics by which they unfold is important in our approach to investing. It elevates our perspectives and helps us stand firm against what often feels like heavy gravitational forces representing the importance of ‘here and now’.
“This too shall pass”, as Marcus Aurelius would say, is an attitude easier to absorb for the historian.
But before we establish a robust foundation in understanding history, it’s equally important to be alert to the complexity at play when dealing with past events.
So friends, today I’ll explore why history isn’t like science with a definitive answer.
(This will be Part One of a three-part essay on history.)
"History is always some form of interpretation, and it is inevitably colored by the values, assumptions, and biases of the historian. No single interpretation can be considered definitive or objective, and the search for truth in history is always an ongoing process.” - historians Will and Ariel Durant.
When we read history, it’s easy to assume that what you’re reading is an objective and accurate account of what happened. Especially if that account is given by someone who actually lived through the very events which they are describing. However, our perceptions and interpretations of what actually happened will always be subject to biases and limitations.
History is fundamentally reliant on human abilities, irrespective of how much it’s wrapped with formalities and objective touches in its presentation. Even the most sophisticated rhetorician, detailed textbook, and the most prestigious journal rest on the effort of humans to report accurately.
It all circles back to human ability - again, with all our flaws and biases.
Let me tell you, their work is incredibly useful, and I feel extremely privileged to be able to benefit from all their research. I genuinely believe that high-quality history, in nearly every instance, provides perspectives that may be close to 100% accurate.
However, it’s important to acknowledge that it likely only captures a portion of the entire narrative. While that portion may be as accurate as you get, it’s still only a portion.
Even the most brilliant historians will tell you that excellent content of history is, at best, a really good attempt at capturing the details of past events.
So, when we read history and construct our own mental record of past times - a record that will inform our decision-making as investors - we should be humble in our approach and open to revision. We should carefully consider the flaws of history, or at least reserve a spot in our mental record for additional information yet to be uncovered.
Our generation will be the ones who hand down remarks about this decade for the next generation to read, learn, and further research. We will produce the history of our time.
But can you imagine any one human being on this planet giving a complete, accurate, and fully unbiased account of the war in Ukraine? What about the past couple of U.S. presidential elections? Or COVID? Or all the reasons for the latest surge in inflation?
I think this should serve as a gentle reminder of the complexity of occurrences when we consider past events, whether it’s the Russian Revolution, the Great Depression, or the Dot-Com Bubble.
I’ll remind myself to cling to these words, rather than relying solely on historical records:
"History is a guidepost, not a hitching post." - William Safire