Feynman Learning Technique - This can be applied to investing

Richard Feynman, the great physicist, was known for using a simple learning technique which can be usefully applied to any investment issue, or in the present time, learning how to be an amateur epidemiologist. (Hat tip to Farnam Street Brain Food #361 for reminding me of the Feynman technique.) It is a simple four step rule: 

1. Pick the topic you want to learn.

2. Figure out how to explain this to someone in the sixth grade. (Ok, we can switch this to a 14-year old if it involves more math.)

3. Identify gaps in your explanation and go back to the source material to learn more.

4. Review and simplify, use clearly understood words and eliminate jargon. Repeat steps 2 and 3 if necessary.

There is no better way to learn something than to teach it to someone else. I might add that you should have to explain both the pros and cons of an idea if is supposed to be knowledge that is being put to use and have some risk. 

This simple learning technique can be applied to any finance concept. Can you explain the idea to someone in the sixth grade? Full stop. If they cannot understand it, there is something wrong. You can always get more complex and go into further detail but start with the simple standard.

All the troubles with investment strategies start with the fact that many investors do not know what they have bought. Would we have problems with risk parity if you had to explain it to a sixth grader? Look at any tech firm. Can you explain its reason for being to a sixth grader? Can you explain Fed policy to a sixth grader? Some of these explanations can be a challenge but isn't that the point of this learning technique.

Feynman also discussed the difference between knowing the name of something and knowing something. Everyone can learn to spout facts. Not everyone can claim understanding of those facts. Unfortunately, learning takes work and time. You cannot be an expert at everything even though you may know the name for almost everything.