What can Lev Vygotsky teach us about investing?

An introduction to one of the psychologist’s central theses on cognitive development.

Step outside your comfort zone. We’ve all heard that countless times before and felt it firsthand too, especially when investing monies into the stock market. But what about our knowledge zone? What happens in the interstices, the knowledge gaps, we can’t fill in on our own? Are there limits to what—and how—we can learn, and if so, what are the consequences for investing?

“Are there limits to what—and how—we can learn and if so, what are the consequences for investing?”

A compelling answer can be found in the work of Lev Vygotsky. A leading 20th century psychologist with a focus on children’s cognitive development, Vygotsky identified two key concepts that underscore the psychological basis—and framework of reinforcement—of Force500. These are called the Zone of Proximal Development (ZPD) and the More Knowledgeable Other (MKO), and they work hand-in-hand.

Per Vygotsky, our cognitive development can be broken down into three tiers. At the lower limit, one is able to learn new things by oneself. At the upper limit, there is a learning ceiling; one cannot learn new things, even with the assistance of others. But there is a magical middle ground: in the in-between, or the Zone of Proximal Development, we can learn new things through the specialised help of a More Knowledgeable Other.

In the Zone of Proximal Development, there is no limit to the benefits of highly targeted, expert guidance. With outcome-driven help, one can gain a level of understanding that is otherwise unattainable if one attempted to do so oneself. Provided you are coached by a More Knowledgeable Other, motivated by genuine intentions for your wellbeing and guided by a specific and proven methodology, in this zone, there is enormous value for investors to upgrade their performance.

For example, an investor whose performance lies in the 4-7 per cent return bracket may, through persistent expert coaching, migrate to an expected 8-12 per cent return (bearing in mind that it is unlikely to reasonably expect to exceed that 12 per cent threshold consistently—other than through good luck—as this probably lies in the upper “impossible” zone). Conversely, the Zone of Proximal Development is a zone of untapped potential improvement, provided one is learning via a proven and understandable system. So, what happens if this zone goes ignored?

“The Zone of Proximal Development is a zone of untapped potential improvement.”

Hovering above this zone is impossible—some things cannot be mastered, even with the help of others—and hovering below will generate similar outcomes to those you’re already achieving.

We see Force500 as equivalent to the Zone of Profitable Development. Our unique financial system delivers an understandable and proven methodology as well as positive, consistent and reliable email communications designed to proxy a More Knowledgeable Other. Extending beyond Vygotsky, regular coaching and reinforcement bolsters investor confidence and maximises the likelihood of achieving a better outcome.

Without Force500, investors are on either side of an opportunity to generate that better outcome for themselves. If they lean in, Vygotsky intimates they avail themselves to a methodology and coaching framework that can accordingly optimise outcomes that may seem impossible to achieve without expert external help. The alternative puts investors at risk of confining themselves within their comfort zone or overreaching beyond their capacity—either way, forfeiting potential gains or inviting near-certain loss.

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