Three Little Words

Perhaps the three most important words in an investor’s vocabulary may be “I don’t know”.  Investment decisions are typically (hopefully) based on an informed assessment of potential future financial results.  However, any estimate of future events is inherently uncertain, which no amount of research can fully mitigate.  Generally, past performance, broad industry trends and projections by knowledgeable sources can be helpful in providing some clues as to future outcomes.  Financial analysts and other professional advisors seek to develop a plausible range of future company performance.  This assessment is often presented as a best case, worst case, scenario.

Unfortunately, there can be investment opportunities that may be subject to so many variables and unknowns that the future is too uncertain.  Rather than flying blind, it may make sense to just conclude, I don’t know, and move on to other opportunities.

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA