Today I am going to start with a few very controversial statements. Some deliberately and others meant as a bit of humour, but the lesson is very important and very real.
I have always loved maths and science. No, I can’t say that I understand it, but I still love it. I guess it is like men and women – no man will ever understand a woman, but we still love you! The definition of science is that you can prove it wrong. Which means there is a thesis – metal expands with heat. Science tries to find a metal that does not expand with heat. I love this – you can do experiments and confirm the theory – or notice that the theory has limits. Just read Stephen Hawkin’s A Brief History of Time.
At the same time I don’t consider psychology, sociology and the other “soft sciences” as science. In fact, I don’t even consider the other love of my life, economics, as science. At best it is a theory, but you can never really proof it wrong. Where maths and physics and chemistry are exact science, the “soft science” are very grey and very “woolly”. Take astrology as an example. Astrologers would also claim that what they do are science – but you can never proof it wrong. I am a Gemini (actually an octet in one body), and everyday I read “my fortune” in the newspaper. It can always be applicable, but I can never proof it wrong. And per implication, neither can I proof it right!
If the above raised your hackles – good, the blood is pumping through your veins.
Now for the important lessons.
Too often we accept a theory, a hypothesis, and idea for fact. And too often a mere idea, whimsical at best, is presented as fact and science. And I have seen it many times. And we need to be aware of it.
Consultants of all sorts grow stinking rich by selling ideas as fact – but rarely, if ever, take responsibility for their ideas.
Take one example that I know very well: getting clients by cold calling. I wish I had $1 for every book and article ever written on the subject (I would buy Microsoft from my back pocket). Some people say cold calling does not work. Others say it works, just use my system. Others say that system stinks, you have to use my system. And so every one has an idea and sells his idea as gospel truth. But, and this is the important thing, it is just an idea. You can never proof it right or wrong. It might work for you, but not for me. It might work in Mexico, but not in Texaco. It might work in November 2009, but not December 2009.
This same thing happens with our finances. Just listen to economists about the economy and all the various remedies that is offered. One economist suggest a drastic interest rate cut, another suggest an increase. And, as somebody once said, an economist is always right, it is just his timing that is out! Some science – I love it!
And then closer to ourselves – what about so called financial planners, consultants, investment guru’s, internet marketing guru’s and all the other people that have an exact plan to make you stinking rich? My perception is that all these people make good money, but few of their clients ever grow stinking rich?
And I am not trying to warn you away from these people, not at all. What I am trying to suggest, is that you always ask questions. Questions about assumptions, about historical results and the circumstances under which the results were achieved. And above all that you always remind yourself that only maths and physical science are actually exact science. Obviously psychologists and economists and even astrologists and consultants play an important role. But it is not an exact science – treat it as such.
Even Stephen Hawking and his colleagues don’t think their theories are cast in stone!