"We have two classes of forecasters: Those who don’t know, and those who don’t know they don’t know."
-- John Kenneth Galbraith
For investors, realizing the limits of your knowledge is just as important as expanding your understanding. No matter how hard you try, you can't know everything -- and completely unanticipated surprises can often cause the most damage to your investments.
Know what you know
Superinvestor Warren Buffett is famous for sticking within his circle of competence, and avoiding what he doesn't understand. When tech stocks were soaring in the late l990s, he was criticized for not buying Microsoft
As it turns out, Microsoft's stock has averaged just a 1% annual gain since 1998. Few observers back then expected Mr. Softy to be late to the online party. Rivals like Google
Similarly, pharmaceutical Dendreon
As you invest, try to remember that there are some dangers you'll never see coming. Sticking with business you know inside and out could help you skate by with fewer nasty surprises.
What have you now known that you didn't know, and how did that hurt you? Let us know -- leave a comment below.
In a world of uncertainty, at least one thing's for certain: There are big profits to be made in emerging markets.
Longtime Fool contributor Selena Maranjian owns shares of Apple, Microsoft, and Google. Apple is a Motley Fool Stock Advisor selection. Motley Fool Options has recommended a diagonal call position on Microsoft, which is a Motley Fool Inside Value recommendation. The Fool owns shares of Google, which is a Motley Fool Rule Breakers pick. Try any of our investing newsletter services free for 30 days. The Motley Fool is Fools writing for Fools.