This article, by Justin Baiocchi, was originally published in The Northern Daily Leader on 26 September 2015.

Whether you love or hate George W. Bush, at the very least you should appreciate what will no doubt be his longest-lasting legacy – the ‘Bushism’. A ‘Bushism’ is of course a memorable and often humorous statement or phrase uttered by George W. Bush during his time in politics. Classic ‘Bushisms’ include gems like: “Rarely is the question asked: Is our children learning?”, uttered during a speech in South Carolina in 2000. This one, in New Hampshire in 2000, “I know how hard it is for you to put food on your family”. And my personal favourite, from a speech in 2004 in Washington D.C: “Our enemies are innovative and resourceful, and so are we. They never stop thinking about new ways to harm our country and our people, and neither do we”. George W. Bush didn’t have it all his own way however, facing fierce competition from his Secretary of Defence, Donald Rumsfeld. Who can forget the first time they heard him say these words? “Reports that say that something hasn’t happened are always interesting to me, because as we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns – the ones we don’t know we don’t know.” Try and figure that one out after a few glasses of wine.

While Donald Rumsfeld may have sounded confused, there is in fact something worthwhile within that awkward and tangled sentence. The concept of an ‘unknown unknown’ is not new and has been used for some time, most prominently within NASA. There is a real danger in not knowing that you don’t know. If you don’t know that you don’t know, you might just go ahead and take action or do something anyway, with potentially disastrous consequences. This can be applied to fields as diverse as doing the electrical wiring in your house, to speculating with commodity derivatives at the Chicago Metals Exchange. In terms of its relevance to financial markets, an important attribute that successful investors share is knowing when they don’t know something (the known unknown). Be honest with yourself – are you really smarter than 99.9% of the rest of the population? Do you have an edge over everyone else when it comes to making successful investment decisions? Do you have some form of special knowledge which separates you from everyone else? Not everybody can fit into the top 0.01% of society unfortunately. So if you know you don’t know, adjust your investment approach accordingly and sleep better at night too.