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A Lesson From Mark Twain

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A Lesson From Mark Twain

“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so” – Mark Twain (1835 – 1910). This quote attributed to Mark Twain, elegantly articulates several wise adages, but the one that springs to my mind is misperception.

Financial misperceptions are one of the key drivers of potential value destruction that the team at Montaka Global seek to identify on a daily basis. While I could go through countless examples of misperceptions identified, avoided and capitalized on by the team, I thought a real-life misperception may be more interesting for our readers and provide an analogy to what we do in the financial world.

Let’s start with a mundane question: how well do you know the map of the world? The map below looks pretty reasonable right. The former USSR / Russia is enormous, Canada is very big and Greenland is about the size of Africa.

image001

 

Source: Brilliant Maps 

What if I told you that in reality the size of the countries portrayed in the map were materially incorrect in reality. On the above map, Canada and Russia appear to take up approximately 25 per cent of the Earth’s surface, when in reality they occupy a mere 5 per cent of and Greenland isn’t actually the size of Africa, but closer to the size of Queensland, Australia!

image003

 

Source: Brilliant Maps 

For those of you who who are unsurprised by this, well done and please enjoy the next blog posting on the site. However if this was new information then the natural question is how did this happen. Well the answer goes back to 1569, when the great cartographer, Gerardus Mercator created a revolutionary new map. It took the 3D spherical earth and transposed it into 2D, where every line (horizontal and vertical) was straight and allowed nautical navigators to more easily chart the oceans. The downside of what is know as “Mercator’s Projection”, was that it warped the true size of countries.

Below is the actual size of countries superimposed on the map of the world as it is most commonly depicted (i.e. Mercator’s Projection). Quite the misperception, and as Mark Twain said, “it ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so”.

image004

 

Source: Brilliant Maps

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Amit joined Montgomery Global Investment Management in April 2018 as a Senior Research Analyst after spending seven years as a credit analyst at Credit Agricole and Citigroup, based in New York. Prior to this, Amit was an investment banker with Citigroup for five years in New York and Sydney, focusing on Media and Telecoms; Metals and Mining; and Consumer Products.

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.

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Comments

  1. Great article, very insightful and telling, in that we should question what is put before us and why it is so.

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