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The Knowledge

Published on 17/12/2020

The world famous Knowledge of London - the process of becoming a black cab driver - is one of the toughest tests you can take.

Since the requirement came into force in 1865, cabbies have to memorise 320 routes and the thousands of landmarks within the six mile radius of Charing Cross. That six mile radius is home to an estimated three million people and many more businesses, so no wonder it can take up to four years to complete.

Anyone who has sat in the back seat of a London cab has seen the sheer speed that the cabbie will know exactly where you want to go just by throwing them a street name, a restaurant or bar, a hospital, or hotel name. They always get you there in double quick time, knowing the most direct route, even with London’s ever changing road landscape with its continually growing cycle routes, tube stations, and almost never-ending roadworks.

Time, patience and dedication are all attributing factors to a cabbie's success; research has shown that studying for the Knowledge actually changes the physical structure of the brain. A study at UCL used MRI scans to show that the Hippocampus of people who pass the Knowledge grows by over 25 percent, and the neural pathways around it noticeably strengthen. Also, retired black cabbies have one of the lowest rates of Alzheimer’s in the world!

But, what does this have to do with investing? Well, 34-year old black cab driver Nikki, featured in the TFL Knowledge prospectus says it best: “anyone can do it. It’s all about commitment”. And this is what we think about learning investment analysis and investing.

As a cabbie you have to be able to manage change - some things are fixed (The Natural History Museum, for example), but lots of things can change: there’s a new restaurant that’s opened on Berners Street, road works have shut part of Stockwell Road, they’ve changed the entrance to Farringdon tube station. Spotting and then remembering these changes can lead to successful or unsuccessful outcomes.

Now imagine roads, routes and landmarks are companies - some things are fixed (the terminology, for example), but lots of things can change: there’s a new Chairman and CEO of a company you’ve been analysing, a revolutionary product is due to be launched, or regulation is changing an industry you’ve been looking into. Spotting and then analysing these changes can lead to successful or unsuccessful outcomes.

We know this ever changing world can be hard to penetrate at first, especially if you are new to the world of investing. But with Upside, you can learn every route you need to successfully navigate every company financial report, balance sheet or management change. It takes time, practice and patience, but like The Knowledge, you already have the skills.

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