Abstract: The Geological Thought Process: A Help in Developing Business Instincts

Samuel A. Epstein

Since the beginning of modern-day geology it has been understood that the present is the key to the past. However, when attempting to apply current geological models one discovers that there are no exact look-alikes. Thus, the geological discipline inherently accepts modifications, omissions, and relatively large margins of error compared with engineering. Geologists are comfortable in a world of non-unique solutions. Thus the experience in working with numerous geological settings is extremely critical in selecting the most reasonable geological interpretations, often by using a composite of specific models. One can not simply replace a dynamic geologist's life-time of experiences and geologic instinct with simply a book-smart young upstart.

Petroleum corporations accept geologic risk and manage it by drilling numerous wells in various geological provenances. Oil corporations have attempted to quantify and manage risk by using Monte Carlo simulations, thus invoking a formal discipline of risk.

The acceptance of risk, results in an asset allocation approach to investing. Asset allocators attempt to reduce volatility and risk, inherently understanding that in any specific time interval anything can happen. Dollar cost averaging significantly reduces market risk over time, however it requires discipline and commitment. The single most important ingredient to a successful investing plan is to assign a reasonable holding period. Historically, a majority of the investment community demands instant gratification causing unneeded anxiety and failure. As in geology nothing can replace experience.

AAPG Search and Discovery Article #90954©1995 AAPG Eastern Section, Schenectady, New York