Arpit Ranka: "Responding to Noise
'There is lots of noise that comes with information and one needs to train himself to separate noise from information' -- Naseem Taleb (in substance)"
I have a problem in that once I look at a subject, I end up going in all directions to try and find information around that subject, related subjects, and non-related subjects. Talk about stressful!
Then comes blogs. The blogsphere is a very noisy place. Picture Beijing or Calcutta on the busiest day of the week. Most of the conversation is frivolous but still interesting. All of it is worth reading, except for the splogs (blog spam).
I spent most of tonight researching how to buy value stocks. Or it started out that way. Then the market looked overbought, so I pursued gold. Then gold looked overvalued and hard to sell, so I looked at bonds. Then I saw they were worth 4% and figured I'll keep my limited cash for awhile until I can dig through this.
Anyway, this article is a great summary on Value Investment Decision Making, and how people make decisions in general.
Decision Making - "One can evade reality but he cannot evade the consequences of evading reality."
Psychological tendencies (or) Noises Some of the most common are Availability Bias, Doubt avoidance tendency, Inconsistency avoidance tendency & Psychological denial
Tversky & Kahneman's Experiment: (K or xxK?)
Charlie Munger on Human misjudgment
"The brain of man conserves programming space by being reluctant to change, which is a form of inconsistency avoidance." (Inconsistency Avoidance Tendency)
I have long looked for insight by inversion in the intense manner counseled by the great Jacobi: 'Invert, always invert.' I sought good judgment mostly by collecting instances of bad judgment, then pondering ways to avoid such outcomes."
Interpretation of Financial Information
"If you want to stand out of the pack, you have to think out of the pack"--Ralph Wanger.
Buy & Sell Decision
Taking a loss should not make us feel like a stupid, if our process is right & taking a profit as genius, if our process if wrong.
Conclusion:
"You don?t need 99 percent of the information out there for investments?-Warren Buffett.
What is the 1% then, Warren?
