Precision

In 1966, Gemini XI traveled 853 miles above the earth’s surface in the farthest space mission ever.  Apollo 8 would shatter that record just two years later, taking Frank Borman, William Anders, and Jim Lovell to the moon, 240,000 miles away.

The Saturn V  had 5.6 million parts, carried a million gallons of propellant, and weighed 6.2 million pounds. With so many variables and moving parts, even a minor miscalculation could be deadly. Precision was necessary. From Robert Kurson’s Rocket Men

The question then became at what altitude to orbit. Kraft and his men wanted Apollo 8 to fly just 69 miles above the lunar surface, the same altitude at which the command and service modules would operate during a future landing mission. That required almost unimaginable precision, equivalent in scale to throwing a dart at a peach from a distance of 28 feet- and grazing the very top of the fuzz without touching the fruit’s skin. If that weren’t daunting enough, the Moon would be barreling through space at nearly 2,300 miles per hour. Toss a peach in the air at 28 feet and now hit the top of the fuzz with a dart. That’s what these trajectory experts were proposing to do. And soon, everyone agreed to do it.

Physics and engineering don’t just allow for precision, they demand it.

The Brooklyn Bridge stretches 5,826 feet, with towers reaching 276 feet above the East River. Each of the four cables have a diameter of 15 3/4 inches, weigh 1,732,086 pounds, and have 5,434 wires that would stretch 3,515 miles. This miracle of modern engineering took 14 years to complete and was done with such precision, that  “In 1944…a team of engineers began a painstaking examination of the entire structure to see what ought to be done about it. When they had concluded the studies two years later, it was announced that all the bridge needed was a new coat of paint.”

The moon travels at 2,300 miles per hour, and yet it’s location at any given second can be measure with pin-point accuracy. Finance, unfortunately, bears little resemblance to physics or engineering.

Say you had the following information: on December 31, the S&P 500 will have earned $142 a share for the year, the 10-year will be at 3.25%, inflation will be running at 2.5%, employment is at 3.9%, with GDP growing at 2.8%. Given this data, would you predict with any confidence where the S&P 500 is?

We cannot chart the future with precision, so the best and most important thing we should concern ourselves with is getting the big things right. Every investor should be able to answer:

  • What fundamental truths do I believe?
  • How much risk do I need to take?
  • But how much risk can I handle?
  • Do I believe risk is rewarded over the long-term?
  • But can I survive a painful short-term?

This is hardly an exhaustive list, but this covers 84.5% of what will determine whether or not you reach your financial goals. Those of us who aren’t Jim Simons shouldn’t spend much time worrying about precision. You just have to be good enough to be better than most.

Source:

Rocket Men

The Great Bridge


Earthrise from Apollo 8

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