Nexus casuality and investing - there is no one single cause

Causality itself is an evolved conceptual tool that simplifies, schematizes, and focuses our representation of situations. This cognitive machinery guides us to think in terms of the cause — of an outcome having a single cause. Yet for enlarged understanding, it is more accurate to represent outcomes as caused by an intersection or nexus of factors (including the absence of precluding conditions). In War and Peace, Tolstoy asks "When an apple ripens and falls, why does it fall? Because of its attraction to the earth, because its stem withers, because it is dried by the sun, because it grows heavier, because the wind shakes it….?" — with little effort any modern scientist could extend Tolstoy's list endlessly. We evolved, however, as cognitively improvisational tool-users, dependent on identifying actions we could take that lead to immediate payoffs. So, our minds evolved to represent situations in a way that highlighted the element in the nexus that we could manipulate to bring about a favored outcome. Elements in the situation that remained stable and that we could not change (like gravity or human nature) were left out of our representation of causes. Similarly, variable factors in the nexus (like the wind blowing) that we could not control, but that predicted an outcome (the apple falling), were also useful to represent as causes, in order to prepare ourselves to exploit opportunities or avoid dangers. So the reality of the causal nexus is cognitively ignored in favor of the cartoon of single causes. 

Nexus causality, moral warfare and misattribution arbitrage. 

John Tooby

Founder of field of Evolutionary Psychology

This is an interesting thought on on how we think and what we may need to do to think better. We are always looking for a single cause. The golden explanation. We want to have one factor which can explain everything, but the world is much more complex.  How many times to we fall into the trap of trying to find a single cause that can explain the movement of an asset?

In reality, the percentage explained by even a set of factors is small relative to the total variability of the asset. The setting makes a difference. The competitors make a difference. This does not mean we should not try to find a cause, but it will usually be a set of reasons and not just one event or cause that will make an asset move.