Read? The Laws of Investing Law #11: The most persuasive evidence is what you want to be true and/or have experienced personally. A good investor turns over many rocks in a quest to find something special. But special is subjective. What you think is amazing may bore me, and vice versa. The special things we discover usually aren’t like nuggets of gold, with a specific quantifiable market value. Special is in the eye of the beholder, and because of Law #10, the trick is getting others to eventually behold it. Take value stocks. They are loved by many and, by definition, hated by others. Your story vs. mine. “Special” is defined by a story, and the undefeated Pulitzer Prize-winning storyteller inside your own head is always yourself. The story that sounds the best is typically: What you want to be true. The incentives for being right in investing are so big that it’s hard to think clearly about your analysis without getting distracted by the potential rewards. Predict the right weather and you get to wear the right clothes. Predict the right investments and you get to retire on the beach. High stakes cause fuzzy thinking because they push you to desperately want something to be true even if it’s not. What you’ve personally experienced. Familiarity is a doppelganger of accuracy in your brain. The two can be hard to tell apart. Stuff you’ve experienced personally is way more realistic than what you merely read about, and two equally smart investors with the same data can come to opposite conclusions, swayed only by the differences in their unique life experiences.
Evidence you don’t want to be true and haven’t experienced can be persuasive, of course. But the amount of reinforcement you get when you do, and have, is easy to underestimate. Read more? Other Laws
Last updated : 14 Sep 2019
I am 63 yrs old uncle living in HDB heartland who has achieved financial independence @ 56 and finally retired @ 60 from full-time job as employee on 1 Oct 2016.
Single household income since 1995 with three children.
Currently, two sons and one daughter are working.
I have been doing 20 years of long-term investing and short-term trading in Singapore stock market only since Jan 2000 so I am that so-called Panda or Koala in the investment world.
I am currently executing my Three Taps solution model to maintain sustainable retirement income for life till 2041 @ 85 yrs old.
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