Complexity is taking a lot of beatings lately. It’s a carrier of misunderstanding, and we don’t want any misunderstandings – especially when we are full of fear. And there is no doubt that humans can very rapidly make things far more complex than they can understand and control. Our very capabilities carry the seeds of our own destruction. However, as long as you can understand and control complexity, it is your friend.
I’m no fan of complexity myself. I want everything not only simple enough so that I can understand it, but also so simple I can’t misunderstand it. I want it simple enough so that I can learn everything about it. Yet it is complexity that makes our modern life modern. Cars are more complex than walking, computers are more complex than pencil and paper, and a steel driving machine is more complex than a hammer.
A monkey understands a hammer. You could teach a monkey to use a steel-driving machine, but not to build or maintain one. Most of us are like that monkey. That is, we can only make use of a vast amount of the modern world because someone has found a way to package complexity in an easy-to-use wrapper. We can exploit complexity because someone else has taken care of all of the details. In fact, complexity beats simplicity on a wide variety of measures.
Once complexity gets out of control, it can be very dangerous. A drunk behind the wheel of a car and a madman with a nuclear weapon are just two such examples. Complexity is powerful, and control is easily lost. Simplicity may win in the long run, but complexity wins time after time in the short run. Are you going to bet on the man with the hammer or on the steel-driving machine?
I think we are all going to bet on the machine. It has too many advantages, each of which is an encapsulation of complexity. We want complexity on our side.
I think this is true when you are following or building an investment management system or a trading system as well. If you want to beat the other systems that are out there, you have to have more complexity on your side. You need to add the right kind of complexity, you need to keep it under control, and you need to deliver in an easy to use package even if you are the only user. The more details you need to keep in mind to use your system, the more you are likely to misuse it.
Let’s look at a simple investment plan. Buy real estate. Lots of people have made lots of money with a plan no more complex than this, but it is easy to see how a little complexity could make it better. For example, it gets considerably more complex if the plan is simply expanded to add one condition: “Buy real estate if you can afford it.” The added condition encapsulates a significant amount of complexity, and that complexity should make the plan work better.
If you actually want to make sure that you are getting a good deal, that complicates the plan even more. “Buy real estate when you can get it for less than it is worth for a price you can afford.” It still looks like a pretty simple plan, but we can all attest that our ability to state simply and plainly what needs to be done doesn’t really mean that it is simple or easy.
There isn’t really much simplicity around until we impose it by not thinking about most of what is going on. That’s not a problem for us. People are very good at ignoring most of what is going on. It’s how we get through every day.