Domain Dependence in Investing: Why Persistence is Key

Domain dependence is a term used by statistician Nassim Nicholas Taleb, to describe a common problem that impacts a person’s ability to make a clear headed decision. In terms of investing, domain dependence can prevent you from building smart capital or from making a sound decision while at an investment firm in a large city like Toronto. To combat this, you must cultivate your awareness and persistence. This allows you to recognize when domain dependence is affecting you, and helps you to push through its influence. 

For in the sense of investing, the “domain” of domain dependence means the environment and the circumstances that you are used to. Once your domain has become so deeply ingrained in your mind, you start to become dependent on the things you know, and fearful of anything new or outside of what you would consider normal. This can be very detrimental when trying to build smart capital, or when trying to decipher the advice given to you by a big Toronto investment firm. 

Take for example, a smart young businesswoman who lives in a city like Toronto. She was raised in and embraced the era of smartphones and technology, and as a result has come up with an idea for an app that no one else has thought of before. While this app idea is still within the realm of her domain, she is running into the issue that many others are fearful and / or hesitant to invest due to their domain dependence (since they have never seen an app like this before and doubt its ability to turn a profit). 

For the businesswoman to be successful in this scenario, she not only needs to cultivate persistence in herself (so that she continues to work on her idea to make it into a reality), but she also needs to inspire persistence in everyone else (so that they can see outside of their normal circumstances, recognize their own domain dependence, and approach her app idea logically.) This is easier said than done, but without persistence, the businesswoman would abandon her idea the moment she ran into a speed bump, and would never have a chance to build it into smart capital. 

In fact, persistence in the face of adversity is one of the most important skills to learn for building smart capital in any scenario, since it can help you overcome challenges of any kind. While beneficial for dealing with issues that can pop-up due to domain dependence, for Noah Murad of Mill St. & Co., persistence is a core value that needs proper consideration at all times – and its benefits go well beyond defeating domain dependence. 

By cultivating persistence in all the things you do, you are able to avoid discouragement, and oftentimes you will be able to find the solution to your problem through your persistence. In terms of building smart capital in Toronto, this means continuing to try despite previous failures or shortcomings. After all, mistakes or missteps are opportunities to learn and grow – but only if persistence and a will to improve is involved.  

Noah Murad speaks about making decisions in his Perspectives #6, and recognizes that people rarely make decisions based on all available factors and / or relevant information. Instead, it is common for people to make decisions by using their past experiences as a point of reference, and then applying that experience to their current decision. While this can be helpful for many decisions, it can also cause you to fall victim to domain dependence without proper care (and persistence to push through its restrictions). 

When drawing from your past experiences, Noah Murad believes that extra care must be taken to recognize their influence, and to not allow them to tarnish your view of your current choice. For if you were to consider all of the factors and possibilities involved with making your decision – and were also to make a conscious effort to recognize and persevere through the limits of your domain – you would then be free to make a clear-headed decision that will help you build smart capital. 

If you would like to learn more about using persistence to overcome domain dependence, and how it helps you to build smart capital in a city like Toronto, check out the Mill Street & Co. website. This is where Noah Murad, the CEO of Mill Street & Co., offers his take on effective business management and how to properly build smart capital. The Mill Street & Co. website also has a terrific online knowledge base, which is helpful for anyone looking to learn more about personal finance, controlling risk, and wealth generation in a modern context. 

Mill Street & Co. Core Values

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  • Generosity