Join us as we sit with and chat about not-knowing in our work, lives and practice.

“Who are you, standing before me?”
asked Emperor Wu on meeting Bodhidharma. 
“I don’t know,” replied the Indian sage. 
After Bodhidharma left, the Emperor’s advisor, 
Duke Zi, asked, “Your Majesty, do you know who that was?” 
“I don’t know,” replied the Emperor.

Yuanwu comments, ”So tell me, is the Emperor’s ‘I don’t know’ the same as Bodhidharma’s, or different?”

—Blue Cliff Record Case 1

Yesterday, I was going through my office shelves looking to toss out old books, and came across economist Burton Malkiel’s 1973 classic, A Random Walk Down Wall Street. His was a radical proposal in its time, and was also required reading for financial analysts-in-training, of which I was one. Malkiel proposes, in his theory of investing, that markets are largely unpredictable, price movements wholly unknowable, market analysis undependable, and that investment advisors provide little or no value. Of course, that is completely contrary to Wall Street’s sales pitch that it offers a professional class of people who “know,” when they really don’t.

Some years ago, I took my family to Machu Picchu. We left the mountain-top, taking an old school bus down a switch-back road to a railway station in Aqua Caliente, filled with tourists on summer vacation. By chance, I found myself sitting next to the CFO of Capital Group, one of the largest mutual fund companies in the world, with about $2.2 trillion in assets under management. Either you or someone you know has their 401K invested with Capital Group. Chatting, somehow we got on the subject of investors correctly “calling the market.” Can professional managers reliably predict whether, at any point in time, stocks will go up or down?

I was surprised at his answer: “I have eleven portfolio managers working for me, and to a person, they all believe they can predict the action of the stock market,” he said, smiling. ”I have analyzed their results, and I can tell you with great certainty that none of them can call the market.”

Peter Lynch, the legendary Fidelity fund manager, who for many years ran the flagship Magellan Fund, was fond of saying, “If you took every economist and laid them end to end, it wouldn’t be a bad thing.”

Wall Street, of course, sells certainty to us in an uncertain world: your college fund, your retirement, your savings are safe. But are they? The least efficient of all funds are ones run by the “smartest people in the room”—hedge funds, a trillion dollar market. Hedge fund managers claim they can make money whether the market goes up or down. Mostly, they don’t. Consistently over any ten-year period, passive index funds outperform hedge funds by twice to three times, an extraordinarily wide margin.

If you own a hedge fund, which you probably don’t, sell it.

Yuanwu asks if the “not knowing” of Emperor Wu (that is Wall Street’s) is the same, or different, from the “not knowing” of Bodhidharma (Zen’s). Not knowing on Wall Street is something academics talk about, but professionally it is “a bad.” On Wall Street, people get shit-canned for not knowing. Yet the fascinating and largely unexamined dynamic is this: to be successful, Wall Streeters must accept and incorporate the pervasive uncertainty of their world if they are to succeed. They understand “not knowing,” they just don’t talk about it.

Not knowing in Zen, of course, is “a good.” It feels good to not-know, to walk through the vast field of beginner’s mind, uncluttered with assumptions, predilections, and biases. But we are always randomly moving in and out of states of mind: clarity soon becomes doubt, and back again. Is Emperor Wu’s not knowing the same as Bodhidharma’s, or is it different? Excellent question. We should ask Professor Malkiel.