My goal when I started down this ret-fin road a number of years ago -- after I saw the full scariness of my under-informed and under-illuminated path revealed to me -- was to be able to see my risk with clarity, to be able to "know" it and then to circumscribe it by drawing around it some planning lines using what I learned along the way. The goal was what? Comfort? Tempered anxiety? A real sense of safety? Yes, probably all three. To a great extent I think I've achieved at least some of that. That is why uncertainty in "that place beyond" now interests me. I was thinking that maybe I could do the same kind of thing with uncertainty that I did with risk: get to know it, draw some lines, do some planning. You know, feel safer. But maybe I have it exactly wrong this time. The seeds of doubt have been planted.
Uncertainty proper appears to be an underappreciated topic in the professional ranks that are supposed to know this stuff. But that is not for lack of reading material. There is certainly no real shortage of literature in the world of finance, decision theory, probability and statistics, and risk management on topics like uncertainty. I could probably have an un-cleared reading pile for a very long time if I chose to. But today I was reading something else that turned me around a little bit on this and there weren't even any equations, case studies, or quantitative models or charts.
As is my habit of 40 years I was reading about books rather than actually reading a book. This is a minor vice I always vow to change with only limited successes so far. One particular piece ""The Idiot" savant" by Gary Saul Morson, New Criterion May 2018 -- these are his reflections on Dostoevsky's The Idiot 150 years after FD sent the first chapters to his publisher -- caught my eye because here too was a discussion of uncertainty just like in the finance papers I read. His main point was that The Idiot, along with some others like Tolstoy's War and Peace, were artistically innovative -- in contrast to past narrative literature -- in the sense that the authors didn't necessarily fully and intentionally know where their work was going to go in the end. They were "uncertain" though Morson implies that Dostoevsky's uncertainty was the more deliberate, risky, and ultimately successful artistically. This is a debate for academics no doubt. But here, let's read Morson for a second because he riffs on this idea of people and uncertainty in a more general way:
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"The experience of execution reveals essential truths about life, especially about how people experience time. People always orient themselves to an uncertain future. Actions have meaning because our efforts matter and the future depends partly on what we choose to do. Time is open, and we must exercise free will. As W. H. Auden was to write, “we live in freedom by necessity.”
No matter what they may profess, determinists cannot help behaving as if choice were real and the future uncertain. No less than the rest of us, they experience guilt and regret, both of which imply that they might have acted differently. What’s more, if the future were fixed, if everyone were simply given whatever they might desire, as socialism promises, life would lose all meaning. As Dostoevsky once explained, “people would see that they had . . . no will, no personality . . . that their human image had disappeared . . . that it is not possible to love one’s neighbor without sacrificing to him something of one’s labor . . . and that happiness lies not in happiness but only in its pursuit.”
Humanness entails choice and uncertainty, which is why not just socialism but also capital punishment is so horrible. As Myshkin explains in his first description of execution, once the sentence is passed, death is absolutely certain, and so our humanness, which depends on uncertainty, is stripped away:
Anyone murdered by brigands, whose throat is cut at night in a wood . . . must surely hope to escape till the very last minute. There have been instances when a man has still hoped for escape, running or begging for mercy after his throat was cut. But in the other case all that hope, which makes dying ten times as easy, is taken away for certain.
...[and then later]..."In the novel’s most quoted passage, Ippolit expresses Dostoevsky’s idea that life can be meaningful and truly happy only when understood as a process, an uncertain sequence with many possible outcomes, and not as a finished product whose ending is a foregone conclusion:
Oh, you may be sure that Columbus was happy not when he had discovered America but while he was discovering it. Take my word for it, the highest moment of his happiness was just three days before the discovery of the New World, when the mutinous crew were on the point of returning to Europe in despair. It wasn’t the New World that mattered, even if it had fallen to pieces.
Columbus died almost without seeing it; and not really knowing what he had discovered. It’s life that matters, nothing but life—the process of discovering, the everlasting and perpetual process, not the discovery itself at all."
--------------------------------This is good stuff. It reminded me that perhaps uncertainty is not something merely to be circumscribed or hedged or cut out of a plan but maybe something essential or even necessary
"Humanness entails choice and uncertainty"Financial risk can be understood and managed while that is not so true for uncertainty. But the latter's presence, an often unspoken or unacknowledged artifact of the planning process, has it's purposes. In my case it keeps me wary and vigilant, which is a good thing and probably something worth more in terms of keeping me out of trouble than even the best Monte Carlo simulation on the planet. Uncertainty may also just simply be part of being human and alive and engaged with the world. I guess one could take it a step further and say "woe to the certain."
"our humanness, which depends on uncertainty"
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