You read the title and the first reaction is it can’t be true because you have seen birds fly.
So where does it come from:
- Penguins are birds. Penguins can’t fly and hence all birds can’t fly
Correct observation but wrong conclusion.
You can think about things in 2 ways:
- All spiders have 8 legs. A tarantula is a spider and hence a tarantula has 8 legs.
Now if the 1st 2 points are factual, the 3rd is going to be true too.
However, what about this:
- All bald men are grandfathers, Peter is bald and hence Peter must be a grandfather.
The 1st assertion itself is false and hence no chance of this being true
So, you either observe something and conclude, which is an anecdotal style of conclusion; or
You first theorize, the observe and then conclude. Like the 1st example of spiders.
How does it matter?
The challenge in using a specific observation to make a generalized conclusion is that it is more likely to be wrong than right.
Think about observing 100 dogs with each having fleas and concluding that “all dogs have fleas”.
It will take only 1 dog without fleas to prove this wrong.
Or observing 100’s of white swans to conclude that all swans are white will be refuted by observing a black swan.
Anecdotal conclusions tend to give the most recent and negative experience undue bias. As a result, most of us are inclined to be over-confident when making predictions based on a recent experience, even when we have more reliable probabilistic information on hand.
Your most recent success of failure doesn’t make you an expert or a loser.
There is more to success and failure than the recent track record.
Your recent track record is a feed to how good or bad you are but it’s not the entire feed.
The following matters:
- How you think about what you do?
- What tools are available at your disposal and how do you deploy them?
- How do you decide and is that process consistent?
- How do you express your ideas and views and what are they backed by?
None of the above create certainty of success/failure but all of this creates probability for your success or failure.
A good process can improve the probabilities of success and failure and not alter the course altogether.
There are 2 different standards that you apply even though you use the same basis each time.
One is as the expert who is employed as a professional whether a doctor, lawyer, or financial advisor and the other as the user who has to choose the expert.
As a user you are looking at the 4 points above and aligning your comfort and thought process with that of the expert so that you can work with them well.
However, if you want to be the DIY expert especially in investing, you need to use the above benchmarks to see if you wo0uld employ yourself to do the job.
Just the way, if you are not a doctor or a lawyer, you would not even think of employing yourself as a doctor or a lawyer similarly think multiple times before employing yourself as a financial expert if you are not one.
Remember your current track record is only one of the date points and doesn’t prove anything about your general expertise.
Rationality is not a strong suit of individuals when they taste success in any field, however if you can deploy rationality, it will surely help you.
Thank you for Reading