If you are an investment enthusiast, the situation you face on a daily basis should be: there is a flood of opinions, and you don't know who is right. This is where it is important to identify which information is true and how credible different facts are!
In the process of obtaining information on a daily basis, we are generally exposed to the following five types of facts:
1.Common sense;2.Direct facts;3.Circumstantial facts;4.Deduce the facts;5.Summarize the facts.
Among them, the most powerful are common sense and direct facts, which can be directly adopted;The weakest are deductive and inductive facts, which need to be multiplied by a credibility weight.
1.Common sense;
Common sense, that is, the underlying laws and scientific principles, is most likely to contribute information about the "underlying environment".
Most of the time, common sense can be used directly, but when there is a fact that is in great contrast with common sense, it should be directly falsified - it is not that the facts are wrong, but that there is something wrong with common sense, please revise common sense.
What everyone should be wary of is that some common sense is likely to be an unverified opinion, experience or law, and it will become "pseudo-common sense" if it is passed on by more people, but it will still expose certain limitations after all.
2.Direct facts;
Direct facts are objective phenomena that do not need to be argued and are not controversial, and are most likely to contribute to the "elephant in the room" level of information, but require further argumentation.
For example, objective phenomena such as economic data and product sales are direct facts.
The main job of many analysts every day is to find a large number of direct facts, and all opinions and insights should be based on direct fact comparisons, not opinion comparisons, logical comparisons.
3.Circumstantial facts;
Circumstantial facts invoke common sense and are derived by simple reasoning, but there is a certain probability that they will be wrong.
4.Deduce the facts;
Deductive facts invoke existing theories, and there is a greater probability of error after deduction.
We have accumulated some experiences, opinions, and theories in our lives, which are inherently difficult to prove or falsify, controversial, and limited, and not enough to be used to deduce anything.
Therefore, it is necessary to give priority to looking for common sense and direct facts, first proofreading with your own investment framework, and then deducing if it conforms to the framework, otherwise you may find the shortcomings of the framework. We must always be wary of the logical self-consistency of deductive facts.
5.Summarize the facts.
Inductive facts refer to the conclusions inducted through a large number of facts, because there has not yet been a black swan, so it is temporarily believed that the existence of white swans exists, but it is necessary to continue to excavate, falsify, and look for negative proof.
If you keep collecting positive facts and constantly reinforcing yourself, you will eventually face an unbearable blow one day.
It needs to be borne in mind that "the past is not a proxy for the future" and cannot be easily extrapolated linearly to the outside world.
If you are an investment enthusiast, you must be clear that the investment framework is formed through induction, and only on the basis of common sense and direct facts can we ensure that the framework is long-term, universal and repetitive.
If we just blindly recite the scriptures or reread the experiences of others (indirect facts and deductive facts with low credibility), we will only be empty and vulnerable after induction.
It should be reminded that inductive facts are top-down conclusions from the perspective of deconstruction, and do not describe the whole picture of things, so they have the least credibility.
Most of the content we see on the Internet is inductive facts, and such information is easy to obtain, but we need to judge whether the information is trustworthy or not. Don't accept so-called authoritative information lightly unless you have investigated and confirmed it yourself!
Facts are the most powerful thing in the world, and as long as you soak your brain in the facts every day, you can easily become a high-IQ person. If your brain is always immersed in other people's logic, it will eventually become a repeater.
Therefore, it is strongly recommended that everyone first learn to distinguish the facts, and then change the so-called understanding and cognition. If the facts are big enough, they can explain all the problems in themselves, and there is no need for elaborate solutions at all!