Once we get past the age of about ten, most of us start to see the importance of knowledge. Without it, we don’t see risks, understand how to get what we want or really understand the world around us. Most people that describe themselves as businessmen follow the stock markets, monitor local real estate develops, subscribe to blogs like mine and occasionally read a financial magazine or paper. But in their quest to become a subject matter expert, they focus too closely on a single subject, greatly limiting their range of knowledge. They concentrate on their industry, read books about it, attend seminars from ‘thought leaders’ and only network with people in the same field, narrowing their view of the world.
Although I work in marketing and communications, I don’t really read books about it. The only marketing books I’ve ever read were course material at University, and aside from ‘Propaganda’ by Edward L. Bernays which I thoroughly enjoyed, I find most marketing books to be pretty hard going. Instead, much of what I read hinges on the following topics;
- Finance and Banking
Whilst I fully believe in having an understanding of marketing and communications (how could I otherwise expect to work in the field?), I don’t believe that this should be my only field of expertise, mainly because of the interconnectedness of so many fields. For example, a person who wanted to go into real estate needs to have an understanding of hundreds of variables, including tax, demographics, social science, consumer psychology, law, accounting and construction. By focusing on one field – say, investment – they would gain only a basic comprehension of real estate.
Developing knowledge for investing
People often assume that investors are in the business of making money. The truth is that they’re really in the business of acquiring knowledge, which they sift and deploy to generate a return on their investments. A crucial objective is to develop an understanding of the world around them and to use that information to make reasonable estimations about the future. Once they’ve made these estimations, they make purchases and sales of assets which will generate the profit indicated by their predictions.
Whilst working to develop an understanding of the principles and best practices in marketing and communications, I quickly realised that I was going to lose sight of history, economics, finance, law and politics, and in doing so would lose understanding of the wider world. These things impact all assets classes; from stocks to commodities, to real estate.
In theory, I could get away with being narrow-minded for a short period of time, but eventually, the world around me would change and I wouldn’t have had any idea why it had happened or what I could do about it. My strategies and tactics would fail to work, my market would move on and my ability to generate income and add value to a business would end.
Few industries thrive forever
I grew up in Nottinghamshire – a county famed for its textiles and coal production. Hundreds of years ago, these industries made many investors rich, and many of those investors assumed that the good times were there to stay. When it all came to an end as the mines were closed and the factories off-shored, many were wiped out. They had no foresight and didn’t realise that few industries can survive forever.
To take more modern examples, think of CD store HMV or video rental store Blockbusters. Investors who couldn’t see the changing trends in these industries paid a steep price. By definition, noticing trends requires stepping back and assuming a broader view. You can’t do that by burying yourself in a single subject.
Finding a balance
It goes without saying that you must have a depth of knowledge in your field to be successful in it. But in my view, finding moderation is the best approach. By this, I mean that you need to find a balance between studying your specific field and keeping on top of wider subjects such as history, politics and economics. I’ve found that there are a few simple ways of doing that, all of which can be done simultaneously. First, read one book a month that is unrelated to your industry – take half an hour before you go to bed and you’ll have whizzed through it in no time. Second, listen to podcasts on the way to work and finally, follow reputable news sources.
Here’s a snapshot of what this month’s information intake has looked like;
- The House of Rothschild: Volume 2 – The World’s Banker
- The Great Investors: Lessons on Investing from Master Traders
- Sharpe’s Tiger
- Sharpe’s Triumph
- Property Geek Podcast
- FT Money Show
- We Study Billionaires
- Family Offices
- The Guardian
- Financial Times
- Bloomberg News
- Project Management.com
- Strategic Internet Consulting Blog
- Construction Enquirer
- Richard Murphy Blog
The list of information I posted is easy to access and digest. We all have time to listen to a podcast on the way to work, access the news on our phones and open a book before bed. For most, it’s simply a matter of changing what we’re reading and hearing.
I applaud anyone that values knowledge and takes learning seriously. It’s a hugely important part of making the most of the time we have – why limit ourselves to a single subject and ignore the rest? When pursuing knowledge aim to have a combination of both breadth and depth to produce the best results – don’t just focus on what interests or motivates you.
Depending on your taste, you might find it hard to immerse yourself in a particular subject. Personally, I find the law to be dry, complicated and overly facetious, but I motivate myself to find out about it by remembering how important it could be to help form the links I need to make accurate predictions in other areas of my life.