Curiosity@Intelsense
Weekly dose of learning
1.
Stock prices (and other forecasts) are built on narratives
A fact multiplied by a story always equals something less than a fact. So almost all predictions have less than a 100% chance of coming true. The most persuasive stories are what you want to believe are true or are an extension of what you’ve experienced firsthand, which is what makes forecasting so hard.
If you’re trying to figure out where something is going next, you have to understand more than its technical possibilities. You have to understand the stories everyone tells themselves about those possibilities, because it’s such a big part of the forecasting equation.
2.
How to avoid bad fund managers
If a prospective investment is too difficult to understand, or if there’s anything that strikes you as odd, you might want to move on. In some cases, you’ll be passing on an investment that works out well. But don’t worry about that. As Warren Buffett often says, there are no “called strikes” in investing. There’s no penalty for being patient and waiting for another opportunity—because there will always be another.
Investing seems to have more than its fair share of storytellers, brimming with self-confidence and speaking in absolutes. But this sort of thing can distract investors from making clear-eyed assessments of risk. That’s why it’s so important to stay focused on the numbers. If a fund manager seems to be using emotional appeal as part of the pitch, be wary.
If an investment fits in the “new and interesting” category, it may be worthwhile—but there’s no rush. Allow it time to prove itself before committing.
In the Media
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Thought of the Week
“The problem, simply put, is that we cannot choose everything simultaneously. So we live in danger of becoming paralyzed by indecision, terrified that every choice might be the wrong choice.” – Elizabeth Gilbert
“Our lives are defined by opportunities, even the ones we miss.” – F. Scott Fitzgerald
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