It’s Not Rocket Science

“It’s not rocket science”, is a phrase commonly invoked to indicate a topic’s simplicity. As Duncan Watts laments in his book, Everything is Obvious, this refrain is often unfairly applied to social science:

“Well, I’m no rocket scientist, and I have immense respect for the people who can land a machine the size of a small car on another planet. But the sad fact is that we’re actually much better at planning the flight path of an interplanetary rocket than we are at managing the economy, merging two corporations, or even predicting how many copies of a book will sell.”

For whatever reason, it seems that we accurately value the difficulty of physical science, but undervalue the difficulty of social science. This is ironic, as social science deals with the universe’s biggest wild card: us. We are literally the reason why social science gets a bad rap. Because we are unpredictable. As Richard Feynman said, “Imagine how much harder physics would be if electrons had feelings!”.

According to Morgan Housel: “Investing is not the study of finance. It’s the study of how people behave with money.” I agree, and believe that investing is far closer to sociology than it is to physics. We require formulas and spreadsheets, but only to an extent.

Things we deem to be, “not rocket science”, often fall into the category of “simple, but not easy”. These are things we know we should do, and still don’t. They taunt us psychologically because the answers are right in front of us, but implementation is way easier said than done.

I think this is why many of us try to transform investing into rocket science. We prefer, “not simple or easy”, to “simple, but not easy”. This doesn’t help anything, but makes us feel better. After all, failing at something complex appears more laudable than struggling with something that’s, “not rocket science”. When we don’t like the rules, we change the game.

But no matter how elaborate an investment formula is, it will never be a scientific law. No matter how convincing somebody sounds, they do not have all the answers. And no matter how good a backtest looks, it means very little about the future.

While it’s true that investing is “not rocket science”, I don’t think we should take that to mean it’s easy. It just means the emotional challenges will outnumber the intellectual challenges as we pursue success, which is certainly no walk in the park.