This chapter explores the differences between cumulative knowledge, which is stable and scientific, and cyclical knowledge, which is subjective and influenced by human experience. It emphasizes the volatility in financial decision-making and the tendency of society to overlook past lessons, especially in behavioral fields.
In some fields our knowledge is seamlessly passed down across generations. In others, it’s fleeting. To paraphrase investor Jim Grant: Knowledge in some fields is cumulative. In other fields it’s cyclical (at best).