The Evolution of a Species (and other things)
This week I listened to Joe Rogan interview Richard Dawkins. The Selfish Gene, Dawkins’ most famous book, captivated me as a teenager and I went on to study Biology at Oxford where Richard Dawkins was (and is) a Professor. His presence was always felt in the Zoology department, though I am ashamed that I cannot recall if he ever taught any of my lectures.
Towards the end of the conversation, Joe asks how you simplify something as complex as the science of evolutionary biology and natural selection and random mutations so that people (particularly young people) can be introduced to the works of great scientists, and not be indoctrinated into the theory of creationism?
Dawkins’ answer was that it’s not a complex idea. It’s a very simple idea that plays out in very complex ways.
“The results are so complex that it’s hard to believe that anything so simple as natural selection, non-random selection of randomly varying genes could really be responsible for producing something as complicated as a human body.”
He goes on, “if the idea was more complex in a way it might be easier. It’s the fact that the idea is so simple.”
“I think that might be why it took so long for a Darwin to come on the scene. When you think about it, the middle of the nineteenth century is rather late – 200 hundred years after Newton did, on the face of it, much cleverer things. I think the reason for that is that idea is just too simple, it’s almost ridiculously simple to be big enough to achieve the feat of explaining the complexity of any part of an animal, let alone a whole animal.”
Human beings naturally seek complex solutions to seemingly complex problems. It’s called complexity bias and is defined by Shane Parrish as ‘a logical fallacy that leads us to give undue credence to complex concepts.’
In investing, the most simple solution is a low-cost index fund or exchange-traded fund. It gives you exposure to the market you are seeking exposure to, at a very low cost (some are now actually free) with no fancy gimmicks.
The origin of the New York Stock Exchange can be traced back to 1792, but the first low-cost index fund did not come along for another 185 years when it was created by Jack Bogle, the founder of Vanguard.
Bogle was the investing industries’ Darwin. Why did it take so long?
It’s because complexity sells. Dawkins theorises that it explains why we have creationists in 2019 and it’s certainly why we have structured products, hedge funds and most other complex investment products that are being packaged up and sold to individuals. It also explains why we didn’t put wheels on a suitcase until 1972 (I still find this fact amazing).
All of the concepts around investing are simple. The only thing that is complex is the language. Ditch the jargon and everything makes sense. Dawkins said of evolution, it’s a very simple idea that plays out in very complex ways. Investing is no different. We make it complex because it’s hard to believe that great investing could be so simple.
Warren Buffett agrees. He once said “If calculus or algebra were required to be a great investor, I’d have to go back to delivering newspapers.”
Simple processes can have extraordinary large results over time.
The random selection of randomly varying genes over many years generated human beings from bacterium. The long-term compounding of money causes wealth to snowball.
“What can be achieved in a couple of hundred years is small.
What can be achieved in a couple of thousand years is Wolf to Pekingese
What can be achieved in a couple of million years is Australopithecus to Homo Sapiens.
What can be achieved over a hundred million years is shrew to human.
And what can be achieved over a couple of thousand million years is bacterium to human.”
These are wise words to live by.
Georgie
georgie@libertywealth.ky