Your Expertise is Your Edge
There's 101 ways to win so I'm focused on my edge, are you?
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Define It!
At one point or another during our lifetimes, it’s likely that the majority of us can proudly say we have been referred to as an ‘expert’ of some sort. No matter how trivial the subject matter or activity may be perceived as, being labelled better-than-average gives a strong sense of usefulness and value which is important (rightly or wrongly so…) in today’s society. You could be an expert in quantum physics or the very best at baking cookies, it doesn’t really matter. When all is said and done, your grasp of the subject matter puts you in an advantageous position to be able to navigate within that area with immense confidence.
The “First Hand Trend Observation” is a very important paragraph in this blog, make sure you take it in…
Relative vs Absolute
Expertise can be judged or assigned in two different ways. Being a relative expert is concerned with comparisons among other knowledgeworthy or similarlyly equipped people within the same subject area or activity. For example, all qualified accountants are by definition classed as experts right? But by various and often uncomparable yard sticks, one may be deemed more capable than their peers. As humans we like to compare and measure populations don’t we.
On the other hand, being an absolute expert from my viewpoint is more akin to making comparisons between subject matter or activity based experts versus complete novices. For example, a qualified vet is clearly an absolute expert compared to someone who has never even read veterinary science 101.
Using these lenses, it’s clear that absolute experts are much easier to identify and accepting yourself as one should be less daunting. Of course there may be instances where people over-inflate their judgement but for the purpose of the discussion let’s assume a sensible level of self assessment. Relative experts are much harder to point out unless of course you are an incumbent within that subject matter/activity. This is why industries tend to be heavily regulated and credentials act as external indicators. Free speech and the digital dissemination of information (including this blog) means that there are more visible participants within a given subject area so relative experts are more prominent compared to absolute experts. That is to say, many may have read veterinary science 101 but only a handful would have stuck around for the years required to actually become qualified. So despite a high level of baseline knowledge across a population, not everyone is spending as many hours refining and making an impact within a certain activity. Logic follows that as complexity within a subject matter rises, the number of experts in general diminishes.
Who Decides?
As previously alluded to, those outside a subject sphere may label you an expert due to their non-existent comparative skill or knowledge. For instance, I know zilch about veterinary science - I am an absolute novice and would probably label someone else with baseline knowledge an expert in comparison to me. So in that case, that imaginary person would be an absolute expert - in comparison to me. However, those within the subject sphere may assess that person differently and they may turn out not to be a relative expert (yes they’d still be an abs. expert on paper). In the scientific community, peer review is an obvious gauge of this.
Anyway, I guess we can conclude that judgement is subjective and the relative-absolute dichotomy (like many others) is clearly reductionist. But perhaps as is the case many a time with mislabelled experts, accurate labels usually comes to light when tested or tasked with conceptual presentation.
However, the purpose of exploring this subject is to say this: if you are a relative or absolute expert on any subject matter/activity, you immediately have a strong advantage over second movers and blind participants, of which there are many.
Exploiting Expertise
Keeping in line with the veterinary science example, let’s ask ourselves, how can this person make use of their expertise?
Income: this is probably the most obvious answer because the first level of deciding (in theory) who is deserving of a job offer is comparing the candidates qualifications (comparing credentials is a can of worms I won’t open today). Garnering a certain level of expertise, especially in today’s gig economy, should help to create a basis from which someone can generate income. For instance, becoming a vet.
Informed decision making: personally, I only have expertise in a small amount of subject areas/activities which I focus maximum effort in ensuring all decisions pertaining to them are quality because I know which levers to pull. For everything else, I find experts which I can learn from to help inform my own ideas. When things get too complex or time consuming I look to outsource said decision making because I have no idea what I’m doing. For the vet in our running example, they should have a better grasp of decision making when it comes to managaing pets and things of that nature. If I lived with a vet and we shared a pet I would no doubt be looking to them to make the big decisions.
First Hand Trend Observation: when it comes to investing, those of you on the premium channel will attest that my approach and research is through the lenses of observable real world thematics. If you are an expert in your field, whatever that field may be - you are most likely the person shaping thematics long before anyone else takes notice. Moreover, you will have a far superior grasp of the dynamics that determine the occurences within these observations. In other words, you are a first mover. Bringing back our lovely vet, they would be far closer to reality when it comes to certain trends. For instance:
the sheer number of domestic visits within a comparative timespan may indicate pet ownership is on the rise or decline
discovery of the most/least popular pet food brands and other accessories through exposure to a significant sample size of the pet owner population
These first hand observations are not always material or investable but for someone who is switched on, skilled enough and lucky, they may be able to tap into trends way before anyone else. Your expertise is your edge.
Expertise extends to all angles of investing and business. Someone can make a fortune investing in bonds only, others in property and others in some other asset class. Some people have exposure broadly and so do I to an extent but I always try to ensure I’m maximising the area I know deeply first and foremost.
Departure
Before we part ways for another week, let’s put into context what we’ve just discussed. Expertise can be obvious, but also unclear at the same time due to the absolute/relative argument so its measurement can be flawed. But what’s clear is that experts do exist and if you are one of them in any given realm, you have value so tap into it! Your expertise can also be a function of a hobby which you have no intention of capitalising from which is totally fine too. There are some things I do for fun that I’d never dream of treating any differently despite what other people suggest - I don’t punish myself for it.
Catch you next week (spring!)
Peace!
Remember, if you want to tune into the rocky road to £100k journey consider jumping on to the premium tier
Free Publications - Coming Up:
[ Today @ 11am ] Clubhouse: What’s in Your Portfolio?
[ 6th Mar 2021 ] New Tax Year Prep
[ 13th Mar 2021 ] *topic chosen by you*
[ 20th Mar 2021 ] Due Diligence
[ 27th Mar 2021 ] Diversification, Too Much?
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