Book : Psychology of Intelligent Analysis & Article : Triple U Investing
Enjoying this fine work on behavioral domain. Whilst the book was intended for CIA and intelligence agents with backdrop of military and political illustrations, it would make a more apt textbook for just about any analyst, business or otherwise.
One could have it from Amazon or download from CIA library for free,
It would make one a better analyst, expose the limitations of our mind, memory, aid to provide the tools to overcome those shortcomings. Taleb’s work exposed our dope-ness for narrative and this affirms our chump-ness for analogies. In all work to do with analysis, decisions ought to be arrived at with incomplete information. One interesting aspect is, the very circumstances under which analysts work, i.e. are presented with bits of information leading to clearer view towards the end, is the most vulnerable and error prone from our cognitive ability vantage point.
Several limitations, including maximum number of simultaneous thoughts, competing hypothesis, tendency for satisficing and selective perception and failure to consider ‘diagnosticity of evidence’ and all of psychology schemata applies to our field of investing. Simultaneous evaluation of competing hypothesis causes greater cognitive strain.
In my readings several religious books too aver to our mental state unable to grasp contradictory viewpoints. We either see a twisted object lying on the ground as either a rope or snake, not both, at least not at the same moment. Our standards may have changed and we like to over simplify but in another world measuring scales can be radically different or even in ours at a different time in past, person who could interpret a sentence in maximum possible permutations was deemed most erudite, not the one who could stick a singular simplified view.
Interesting essay, I can relate to it : Unknown, Unknowable and Unique Investing by Zechhauser.