Why the Best Investors Think Like Philosophers
And how a 1930s Polish mathematician's insight could transform how you think about markets
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Alfred Korzybski’s famous dictum - ”the map is not the territory” - might be the most underappreciated insight in investing.
While markets obsess over narratives, models, and abstractions, reality continues its indifferent march forward.
Consider how we talk about companies.
We say “Apple is innovative” or “Tesla is overvalued” as if these statements capture some essential truth.
But Korzybski would remind us that “is” creates a dangerous illusion.
No company “is” anything in a fixed sense.
Companies exist in constant flux - evolving, adapting, declining, transforming. The moment we crystallize them in language, we’ve already lost touch with their dynamic reality.
This matters profoundly for investors.
The financial statements we pore over? Maps.
The analyst reports we digest? Maps.
The mental models we construct? Maps upon maps.
Each abstraction takes us one step further from the actual territory - the messy, complex, ever-changing reality of business operations, human behavior, and market dynamics.
The danger isn’t in using maps.
We need them.
The danger lies in confusing them with reality itself.
The Prison of Labels
Think about how often investors get trapped by labels.
A “growth stock” crashes when growth slows.
A “value stock” stays cheap for years.
A “defensive holding” crumbles in a crisis.
The labels become prisons, preventing us from seeing what’s actually happening.
The market punishes those who mistake yesterday’s categorization for tomorrow’s reality.
E-Prime, a form of English that eliminates all forms of “to be,” offers a useful exercise.
Instead of “This company is undervalued,” try “The market currently prices this company below my estimate of its worth.”
The second formulation acknowledges subjectivity, temporality, and the possibility of error.
It keeps us humble.
Learning from History Without Being Trapped By It
Time-binding, another of Korzybski’s concepts, suggests humans uniquely build knowledge across generations.
In investing, this creates both opportunity and trap.
We can learn from past patterns, but we also risk fighting the last war.
The 1929 crash informed Depression-era investors who missed the post-war boom.
The 1970s inflation haunts those who can’t see disinflation.
Each generation’s hard-won wisdom becomes the next generation’s outdated map.
The Abstraction Ladder
The abstraction ladder reveals another insight.
At the bottom rung: specific transactions, individual customers, particular products.
As we climb: quarterly earnings, annual reports, sector analyses, market indices. Each rung up loses detail but gains scope.
Master investors know when to climb and when to descend.
They understand that “the market” doesn’t exist - only millions of individual decisions, each based on incomplete maps of an unknowable territory.
Useful Maps, Not Ultimate Truth
This isn’t an argument for nihilism.
Some maps prove more useful than others.
But usefulness depends on context, timeframe, and purpose.
A value investor’s map differs from a day trader’s.
Neither captures ultimate truth; both might work in certain conditions.
General semantics teaches us to hold our investment beliefs lightly.
That compelling narrative about AI transformation? A map.
The rigorous discounted cash flow model? A map.
The technical pattern suggesting a breakout? Another map.
Use them, but don’t worship them.
The Paradox of Pattern and Change
The most dangerous words in investing might be “This time is different.”
But equally dangerous: “It’s always the same.”
Both statements confuse map with territory.
Reality includes both continuity and change, pattern and novelty. Our language struggles to capture this paradox.
Perhaps the wisest investors develop what Korzybski called “consciousness of abstracting” - constant awareness that our symbols and structures are not the things themselves.
They remain perpetually open to updating their maps when the territory shifts.
They question not just what they think, but how they think.
Better Questions, Not Right Answers
In the end, investing success might depend less on having the right answers than on asking better questions.
Not “What is this company worth?” but “What assumptions underlie my current valuation?”
Not “Is this a bull market?” but “What evidence would change my market view?”
The map is not the territory.
In investing, fortunes have been made by those who remember this - and lost by those who have forgot.
Consider becoming a paid subscriber if you’d like to see how I personally apply my investing philosophy.
Until next week,
Dom
Schwar Capital
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Disclaimer: The content provided in this newsletter is for informational purposes only and does not constitute financial, investment, or other professional advice. The opinions expressed here are those of the author and do not necessarily reflect the views of Schwar Capital. Investing involves risk, including the possible loss of principal. Past performance is not indicative of future results. The author may or may not hold positions in the stocks or other financial instruments mentioned. Always do your own research or consult with a qualified financial advisor before making any investment decisions. To read our full disclaimer, click here.