QOTD: The Trouble with Scientism

Is there a scientific answer to all investment questions?

I don’t think so, even as a proponent of evidence-based investing. In fact, this doubt has led me to propose a panel for our upcoming EBI conference titled “The Limitations of Evidence,” and it’s meant to put a skeptical cap on a full day’s worth of the event’s primary subject matter.

The danger here is that we give ourselves wholly over to scientism, neglecting the roles of common sense and experiential wisdom, for our portfolios. Scientism can be defined as:

Scientism is a belief in the universal applicability of the scientific method and approach, and the view that empirical science constitutes the most “authoritative” worldview or the most valuable part of human learning—to the exclusion of other viewpoints.

This seems to be the direction things are heading, in all facets of life (save for politics, where facts don’t matter anymore). Even in pop culture this applies, as the movie studios have used science to determine that the only films worth investing large sums in are sequels, prequels and comic book superheroes.

I don’t know that investing will ever become the province of pure science, given the absence of bankable laws, like those you find in physics. That said, if given the choice, I’d prefer to lean on what the science says more heavily than on the alternatives (convention, superstition, the Great Man Theory, etc).

We don’t have perfect evidence in the realm of investment, but we do have pretty good evidence about a lot of important things.

More about the Evidence-Based Investing Conference here.