This principle was written in the 14th century by a Franciscan friar named William of Ockham (or “Occam” in Latin). He was from Surrey, England.
It turns out that Friar Ockham was a pretty smart guy.
His principle – called Occam’s razor – is used today in modern physics. Stephen Hawking writes about it in A Brief History of Time … We could still imagine that there is a set of laws that determines events completely for some supernatural being, who could observe the present state of the universe without disturbing it. However, such models of the universe are not of much interest to us mortals. It seems better to employ the principle known as Occam’s razor and cut out all the features of the theory that cannot be observed.
A master of the one-liner, Albert Einstein translated the principle like this…
Everything should be made as simple as possible, but not simpler.
The translation I prefer is…
The explanation requiring the fewest assumptions is most likely to be correct.
In other words… given all the current knowns, it’s better to make decisions and plans based upon those knowns rather than mostly upon assumptions about things that are possible but not so probable . So how does Occam’s razor apply to oil investing? And how do we use it to make money?
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