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HedgehogThe Legend of the Fox and the Hedgehog
In a now famous 1953 essay on Russian author Leo Tolstoy, Isaiah Berlin resurrected the idea of dividing the world into people who were more like foxes, and those who thought like hedgehogs. Originally found in Greek poetry, the hedgehog “concept” essentially said that the wily fox knows many things; the lowly hedgehog “knows one big thing.” Scholars have differed about the correct interpretation of these dark words, which may mean no more than that the fox, for all his cunning, is defeated by the hedgehog's one defense.

Berlin expanded on this concept to figuratively include the world of writers (his main topic) and maybe humans in general. There exists a great chasm, he wrote “between those, on one side, who relate everything to a single central vision, one system less or more coherent or articulate, in terms of which they understand, think and feel-a single, universal, organizing principle” and others on the other side, those who pursue many ends, often unrelated and even contradictory.” The first view of the world is that of the hedgehog; the second, in all its complexity and confusion, represents the world of the fox.

Wall Street’s Foxes
The myriad economists and analysts that inhabit Wall Street are a lot like foxes. They pore over reams of data that that pour in from government and private agencies. They analyze, they slice, they dice, and they correlate. They play an endless game of connect the dots in order to relate the past to the present, and weave the complex elements of the modern economy into a single forecast. Worst of all, they try to make predictions.

Unsurprisingly, they are often wrong. A correct prediction is often hailed as a rare event by the Wall Street Journal, and the lucky economist gets to wear the mantle of “guru of the day” until his or her next prediction (which is now required) comes to naught, and a new guru is crowned.

How many headlines are written featuring the bold predictions of a famous Wall Street guru, only to relegated to the "dustbins of history" by their failure to come true. It is an open secret that their predictive powers are marginal, at best, and the explanations often obtuse. No wonder Laurence Peter said "An economist is an expert who will know tomorrow why the things he predicted yesterday didn't happen today."

Well, foxes will be foxes no matter how many times their predictions go awry. The important question for investors is this: “So what?”

The One Big Thing
The one big idea is this: It’s What You Own That Counts. Good stocks (and mutual funds) will always help you, good market or bad. Poor stocks, on the other hand, will always hurt you, no matter what the market, economic, or political environment. Many will say this is simple to the point of being overly simplistic, but the truth remains. Predicting the market is not nearly as important as participating in the market.

Like the fox (and the economist) we can expend a great deal of energy, time and worry analyzing an endless stream of always–changing (and often contradictory) data while trying to form a prediction of the future. Or, we can be more hedgehog-like and take comfort in a single simple concept that has stood the test of time: It’s What You Own That Counts.