Knowing knowledge is a good start

By Ken Akoundi and Kartik Uchil

“The only true wisdom is in knowing you know nothing.” ― Socrates

Knowledge in the investment office

It has been increasingly apparent that investment offices need to define certain basic definitions to have a more efficient dialogue. Without it, ample time is spent defining, in mid-conversation, what each party means by the specific terminology.

This particular piece is about knowledge and its definition. The investment office, the amalgamation of processes, people, and policies can be viewed as a manufacturing plant. One that manufactures Alpha. In that, it focuses on constantly becoming more efficient.

Professor Ashby Monk suggests[1] that the hierarchy of knowledge starts with data, that with added context becomes information, and graduates to become and morph into intelligence. We disagree and believe that the next level up from knowledge is not intelligence but “judgment.” At this level, the decision-makers create their decision models based on their experience. We find this type of decision to apply to any decision making, including the CIOs and the other senior members of the investment teams.

To improve its manufacturing ability, an investment office can only focus on its processes, comprised of people and technology. We believe that universally, a more knowledgeable team is desirable. The third component, Policies, are…