Foxes and Hedgehogs

“The fox knows many things, but the hedgehog knows one big thing.”

So goes the old saying. Some people are sorters: they see the world through one defining idea. This gives them focus and direction. These are the hedgehogs. Others are gatherers: they see things through lots of lenses. They’re always looking for new ideas, new analytical tools, and different perspectives. They’re foxes.

Which approach is best? Clearly, in an economy that rewards specialization, hedgehogs have their place. Neurosurgery and rocket science require focus. But a complex world requires intellectual flexibility. The broader perspective you bring, the better your chances.

In finance, there’s room for both types. Analysts need to focus on a company’s core competency; portfolio managers need to synthesize loads of information and bring it all to bear on a client’s total financial picture. Ideally, in a diversified team they work together.

One thing is certain: hedgehogs make better guests on cable news shows. The rock-star economists who predicted 10 of the last 3 recessions can always be counted on to say something outrageous. They’re fun to listen to. But studies show that in something as complicated as a modern economy, foxes make better predictions. They just don’t get as much press, because they can be boring.

Both foxes and hedgehogs have their place. They trick is knowing when, and how, to listen.

Douglas R. Tengdin, CFA
Chief Investment Officer
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