Author: Taking Care Of My Own Business

Others are just like me

We have the tendency to overestimate the degree to which others agree with us; therein making this—tendency—just another of those predictable patterns of thought and behavior that lead us to draw incorrect conclusions. Psychologists call this the False Consensus Bias. Let me ask you: “Is agreeing with the masses the best course of action when it comes to investing in the stock markets?” As Carl Jung said, “Masses are always breeding grounds of psychic epidemics.” Hence, expert investors would answer that question with a ‘No’ and claim that they stray from the herd. That, however, is easier said than done. That said, think carefully for a moment about your sources of...

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Book: ‘Antifragile’ by Nassim Nicholas Taleb – Key Statements

Wind extinguishes a candle and energizes fire. Likewise with randomness, uncertainty, chaos: you want to use them, not hide from them.  Some things are fragile—they don’t like chaos, while others are robust—they don’t care if things are crazy. Antifragility is beyond resilience or robustness.  Antifragile things get better and stronger when the world is falling apart.  Everything that has more upside than downside from random events (or certain shocks) is antifragile; the reverse is fragile. If antifragility is the property of all those natural (and complex) systems that have survived till now, depriving these systems of volatility, randomness, and stressors...

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The good ol’ gut feeling

We sometimes tend to think that ideas and feelings arising from our intuition are essentially superior to those achieved by reason and logic. As such, intuition—the good old “gut feeling”—has come to be idealized as the Noble Savage of the mind, fearlessly cutting through the precision of reason. In truth, intuition is just another heuristic of our brain honed—over millions of years—to ease the cognitive load of making a decision.  But it is not always good at it. Let’s test your intuition with a question that Ludwig Wittgenstein used to pose to his students. You have a ribbon, which you want to tie around the...

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Don’t get framed by …

… the Framing Bias. This is another beautiful mental shortcut that we use to solve common problems. Although this heuristic speeds up processing in our brain, it occassionally makes us think so fast that we miss what is important. When heuristics work, they help our brain stay frugal, but when they don’t, we see the world as a much simpler place than it really is. Some heuristics are learned, while others come free with every copy of the human brain.  This heuristic comes as a freebie and has tricked me so often in the past that I am almost tempted to award it...

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