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“[B]lowup risks-to-others are easily concealed owing to the growing complexity of modern institutions.” Nassim Taleb, Antifragile. A page later, Taleb writes, “I want to live happily in a world I don’t understand.” I combine those quotes with a consistent piece of investment advice that I have consistently seen online and in investment books: “Don’t invest money in things you don’t understand.”

Thing is, does anyone really understand anything about this modern economy, besides, of course, those people whose full-time job is to understand it?

Take a very simple example from a very simple “investment”: Like any responsible father, I carry term life insurance on myself. I understand the basic concept: If I die, my wife or kids get money and, because it’s simply “term” insurance (no investment/cash buildup value), it’s relatively cheap. But I’m wholly ignorant of actuarial matters. How do I know the premium is fair? I know what other insurance companies are charging, but that doesn’t tell me that the premium is fair. It only tells me that my insurance company is screwing me no worse than the other life insurance companies. And how financially sound is my life insurance company’s underwriter? I can look it up, but that doesn’t mean I understand how the rating company came to its conclusions (and we know the rating companies often lack integrity). In order to do that, I’d have to delve into the underwriter’s financials, including its investment portfolio, which would include investments I don’t understand (“What is that 2nd Tranch LLP Johnson Rod Preferred Option position about?”). The fact is, I don’t understand any investment outside a few basic things: cash, real estate, gardening supplies, and tradeables. So do I limit my investments to such things?

I honestly don’t know, but in this complex world, it would seem that a person ought to shore up his position in all those areas before delving into mutual funds and other “routine” investments. Because let’s face it: very few of us understand anything about the modern economy, and if, like Taleb, we want to live happily in a world we don’t understand, we should first nail down the basic items and give ourselves, and our kids, at least a semblance of security. After that, and only after that, should we commence to gamble.

That, at least, is how I juggle the complexity of modern life.