For a portfolio to endure, it’s necessary to distinguish between important questions that are knowable and those that can’t be answered with confidence. We prefer to avoid unanswerable questions when picking stocks. Corporate tax rates, for example, aren’t likely to increase in the next few years—and may decrease. But to what level? What form they will take? We don’t know, but we do know that if we get material tax reform, some companies will be big winners. How do we invest when the answers to key questions like this are unknowable?
