Admitting ‘I don’t know’ can be a positive for investors

England rugby coach Eddie Jones took some flak for saying he did not know why England performed as they did in the World Cup final – but admitting that should not be automatically viewed as a weakness


Ben Arnold

Ben Arnold

Associate Investment Director, Equity Value

Having already written two Rugby World Cup-themed articles in the last month – on rising corporate debt and judging probabilities – we had not planned a third, yes, ‘try’.

In the press conference that followed South Africa’s emphatic win in the final, however, England coach Eddie Jones said something so contrarian and – not unconnectedly – so in tune with our thinking, here on The Value Perspective, that we could not ignore it.

Jones said: “I don’t know.”

And he said it more than once. Asked to explain why England’s performance had been so at odds with their semi-final demolition of the All Blacks just seven days earlier, he replied: “I don’t know why we didn’t play well today … You can have the most investigative debrief of your game and you still don’t know what was wrong. It just happens sometimes.”

Pushed to elaborate, Jones added: “I’ve been coaching 23 years, it happens periodically every time. You think you’ve got a team right and ready to go and for some reason they don’t perform to the level you expect. Why, I don’t know. I’ve spoken to a lot of experienced coaches about it and everyone says the same thing. You just don’t know. You’re better off putting that game aside and getting on with it.”

At least one journalist was not happy with this answer, however – taking the view the England coach really ought to have some explanation.

To which Jones responded: “I don’t know. What do you want me to say? I don’t know. If I knew I’d be able to fix it, and I wasn’t able to fix it.” And then one final observation to the still dissatisfied journalist: “It’s sport, mate.”

A sign of weakness?

As this exchange illustrates, saying ‘I don’t know’ can often be seen as a sign of weakness but, here on The Value Perspective, we take a different view.

Our belief is that, if you can be honest – with yourself and with your work colleagues – and own up on the occasions when you do not know something, then this can ultimately allow for a more objective reflection of the facts.

That, of course, is precisely what we are striving for in our investment approach when we analyse companies as potential investments and why we always work through our list of seven ‘Red’ questions.

Set out below, these help us to assess both the upside and downside of a business – yet sometimes it may not be possible to reach a definite answer to one of them.


Our seven ‘Red’ questions

* Has anything been missed off from the company’s enterprise value?

* Have profits – that is, the company’s net operating profit after tax – been misrepresented?

* Is the company’s past a good guide to its future?

* Do the company’s profits turn into cash?

* Is the company’s balance sheet good enough?

* Is the business itself good enough?

* Are there other risks to consider?

Source: The Value Perspective


That does not mean, however, we cannot make a judgement on the business as an investment – and indeed being willing to say ‘I don’t know’ to something should expose us to less risk than those who feel they have to bluff an answer to everything.

On a similar note, to paraphrase Jones, sometimes you think you have the right stock but for some reason it does not perform to the level you expect – and you may not know why.

That’s investment, mate.


Ben Arnold

Ben Arnold

Associate Investment Director, Equity Value

Ben joined Schroders in 2016 after spending 3 years as an analyst at the Royal Bank of Scotland. He moved in to the Value team in January 2018 as an investment specialist after working for two years in Schroders' Distribution division. He is a CFA Charterholder and holds an MSc in Corporate Strategy from The University of Nottingham.

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