A Key Lesson of Adulthood: The Need to Unlearn." As Matt so correctly put it, "We all think that we know certain things to be true beyond doubt, but these things often turn out to be false and, until we unlearn them, they get in the way of new understanding." It's ironic that this article appeared as President George W. Bush's former Defense Secretary, Donald Rumsfeld's Known and Unknown: A Memoir was being released. Rumsfeld spoke of the "unknown unknowns," as things we don't know that we don't know. While he was ridiculed for what some thought was a silly statement, it has a great deal of value.
In our slice of the investment universe, many performance measurement professionals should strive to be open to unlearning concepts they've embraced for years or, in some cases, decades. I have commented at length in this blog, our newsletter, and articles about the undeserved adulation awarded to time-weighting, and how money-weighting should be the most commonly used method to derive returns.
Matt Ridley cites the word "disenthrall" from Mark Stevenson's An Optimist's Tour of the Future," who borrowed it from an 1862 message from Abraham Lincoln to Congress, suggesting that they disenthrall themselves from "the dogmas of the quiet past," meaning to "think anew." Well, performance measurers should disenthrall themselves from the belief that there is one way and one way alone to measure performance and think anew! And, for that matter, that GIPS(R) (Global Investment Performance Standards) hold the key to everything we do in performance measurement. We very much need to "think anew" about much of what we do.