"It is unlikely that anyone who has a passing knowledge of the English language would be unable to describe what each of the words "won't," "may," "could," "should," and "will" mean. Yet in the investing world, the meanings of these words are often obscured in the haze of fuzzy logic, stress, and heated emotions .. You can gather a great deal by paying attention to these words and their intentions to convey information, because each one offers a slightly different prognostication of something happening. Your ability to discern otherwise might give you some insights not into the topic matter, but into the speaker and his level of credibility.
This topic came up recently as I was reading F.A. Hayek's Road to Serfdom. It's an extremely interesting book since Hayek wrote it between 1940 and 1943, as his adopted home of Great Britain was embroiled in war against Germany, and by extension, the land of his birth, Austria. Hayek's a brilliant thinker, and one of the fascinating elements of this book is that it comes at the point when many British folks at every level had only just figured out that the National Socialism espoused by Adolf Hitler was pretty darn evil. Many British progressives -- who by wartime renounced Hitler and the Nazis -- had previously admired what the National Socialists had accomplished in Germany. Hayek's point was not to admonish these people for their stupidity, nor to praise them for their recognition of the realities of Hitler's regime. Rather Hayek noted that it was people of good will who paved the road for Hitler's thugs to take power, and that the same thing could happen in Great Britain if socialist policies were adopted.
Of course, the worst-case scenarios Hayek spelled out did not happen. Does this mean, then, that Hayek was wrong? (Whether Hayek's other premises have or will come to pass is a discussion well outside of the scope of this article.) No, absolutely not. Hayek noted potential outcomes. History shows that reality in the intervening years took a different path. What Hayek made, in effect, was a statement of risk.
Posted by Greg Ransom at May 5, 2004 04:44 PM | TrackBack