The Quest to Understand Investing: Lessons Learned from 'The Uncertainty Solution' by John M. Jennings

A Journey of Self-Education and Enlightenment in the World of Personal Finance

Once in a while, you come across a new voice at exactly the right time, taking your thinking in an entirely new direction.  Such an experience recently happened to me. The stranger’s name is John Jennings, he manages $10 billion and doesn’t eat meat.

My husband and I embarked on a new adventure: learning how to manage our own investments.  “We were not thrilled with the financial planning arrangement’s perverse incentives in that they get paid even when producing negative returns?” my husband said.  “Must be nice! It took us a while, but we finally got weary enough to do something about it.”

As engineers, my husband and I have this sticky belief that there really isn’t any magic: if someone else can (insert a difficult task here), then with enough hard work, we can also learn said difficult task.  My husband especially ascribes to this belief, having taught himself myriad specialty skills from the practical (fine finish carpentry, plumbing, appliance repair) to the career-adjacent.  After seeing his success throughout the years, when he said, “we can learn investing,” who was I to disagree?

The premise was simple: without hefty advisor fees and expensive funds and investing with a simple portfolio, it should be possible to beat the sub-par returns we had been averaging as of late.  But where to start?  What should be in that “simple” portfolio?  Is there any way to know what lies ahead for the stock market in the coming year?  “Experts” seem to be everywhere and freely offering predictions, but will they be correct?  Should I be following this pundit’s advice or that pundit’s contradictory advice?  Should I keep my financial advisor?  It boiled down to one fundamental question: What is the path that will give us the highest chance of meeting our retirement goals? We had many questions and few answers.

We Searched for Enlightenment.

My husband and I read dozens, if not hundreds of books, articles and websites. We devoured everything we could get our hands on from classics like Mark T. Herner’s Index Funds and Daniel R. Solin’s The Smartest Portfolio You’ll Ever Own to the latest thinking by Forbes, Julie Jason, Carrie Schwab-Pomerantz, Lyn Alden, and many more.

“Much of this information we read leaned either very financially conservative and vague (buy one index and be happy) or speculative (buy a few stocks and be happy if you can sleep at night),” he said.  “A running theme to boost morale was that everyone routinely beats the market, makes no financial mistakes and is worth millions of dollars. What a bummer for ‘regular’ folks like us.”

The books were often tactical, helpful in a specific area, such as drilling down to why one portfolio type is better and how to tweak it for better gains with less risk, always measuring against the holy grail of trying to beat the market.  We certainly grasped the mechanics, but existential questions remained.  

Think about the engineers you know: they need to understand how things work and will work incredibly hard to gain that insight.  My husband and I are no different: we know that effort yields wisdom, yet the gyrations of the financial industry still did not make sense.  The more we endeavored to understand the fundamental nature of the stock market, the more its behavior seemed unknowable. 

Enter John Jennings. 

We ran across a Jennings article in Forbes considering whether retail investors should invest like a university endowment.  It was a concise and straightforward article comparing a standard 70/30 index portfolio to the complex allocations in the enormous and actively managed investments held by higher education.  Much of what you read these days in the financial media touts complexity and active management, yet Jennings’ message was simple, “the average endowment return is indistinguishable from a 70/30 index portfolio.”  Yes, this is a common theme in the Bogle camp but Jennings is not an evangelist.  He uses persuasive data which especially resonates with readers like us.  

Reaching out to Jennings with a few follow-up questions, he actually wrote back!  Jennings, a thoughtful and knowledgeable fellow, was excited to discuss his work, kindly sending us an advance copy of The Uncertainty Solution.  Without any hidden agenda, the book details Jennings’ decades-long quest to understand the nature of the stock market.  Pulling from research in wide-ranging disciplines, Jennings engagingly enlightens the reader with helpful mental models to frame thinking around investing in general and the stock market specifically.  Calling this an “investment book” does not fully satisfy; certainly the mental models center on investing, but the research and anecdotes teach larger lessons, like the wisdom hierarchy, scientific method, probability and statistics, psychology, organizational behavior, and much, much more.

How does The Uncertainty Solution help novice investors like us? 

The book has answered our more existential questions on investing and the stock market, and especially how fundamental human nature factors in.  We learned that yes, we should ignore the pop financial pundits and their forecasts as the market is chaotic and the past cannot possibly indicate what lies ahead in the future.  We should expect and mentally prepare for downturns, and potentially large ones.  It’s okay to “settle” for a simple portfolio - the data is on your side and show this is likely the best course of action for many investors.  Behavior can trump paid advice: if you are disciplined enough to create a plan and stick to it, you can do as well or better (no fees!) without a financial planner.

My husband and I gained the confidence to go forward with our personal investing and tune out the noise of those advocating for fear and complexity.  In fact, we did fire our financial advisor. (You would be surprised how easy it was!)  We are creating our strategy and will soon put it into action and move on to the next life challenge.

If we haven’t given you enough reason to grab your copy of The Uncertainty Solution, maybe the celebrity blurb on the front cover will, provided by none other than Charles R. Schwab who states the book is “a must-have for anyone interested in developing habits that will make them a more successful lifelong investor.”  Hear! Hear!

Christine McQuilkin is the vice president of account services at Rivergate Marketing.

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