A Form of Intellectual Discipline

Jumping to conclusions is to become an Olympic sport.   Dodging responsibility and pushing luck will be trial sports at the next Olympiad with an expectation of full status not later than 2024.

I, myself, am not highly skilled at conclusion jumping but have gusts of competence.

Conclusion jumping is characterized by the ability to decide without ample consideration of all the facts and interactions among them.  Sometimes it works, but one can never be sure.  The risk is that early success may lead to overconfidence in one’s intuitive abilities.

The following will demonstrate how it works.  If you live somewhere where it is always warm it might not make sense.  Think of a car outside in the frost and snow.

Text from wife:  Windows frozen.  What should I do?
Text from husband.  Put hot water on the corners and then tap them with a hammer.
Text from wife later:  I did that but windows still frozen and the screen broke.

Ah, now I see it.  The other windows.

Conclusion jumping is a common form of sloppy thinking.  Many times it will not matter.  I can carry the water with a 7-iron.  Oops wind, I guess it was a 6.  No great harm, but in life plans, especially the financial parts, intuition is not guaranteed and those decisions must not be taken lightly.

  • The fact that you have awakened every morning for 15,000 consecutive days says nothing about tomorrow.
  • One in four thirty-year-olds will be off work for 90 days or longer before retirement.
  • If the stock market averages 10% annually it earns on average four hundredths of one percent each trading day.  Most days are much larger or much smaller than that.  Daily returns mean nothing.  They are noise
  • Investments and debt are both driven by compound interest. If you think linearly instead of exponentially, you have little hope of getting it right.  Compound interest requires patience.
  • Taxes are a limit.  They matter.  So do advisor fees.
  • Price does not matter if you receive equal or higher value. Price attentiveness without assessing value received is a mistake.

The frozen windows story above is likely apocryphal. This one is not.

Three weeks after installing exquisite off-white carpet in the living room, Mom gets a phone call at work:

Child:  Mom. I spilled Tang on the new carpet, what should I do?

Mom (panicked) :  Get lots of cool water and spread it around it.  Try to dilute it and then use the shop vac to vacuum it up.  Keep doing that until the stain is gone.  I will be home in 15 minutes to help.

On arriving home, Mom finds that the spill involved an envelope of Tang crystals.  Seems the add water instruction wasn’t a good one.

If a decision matters, be thorough.  If you think you have the resources to fix it later, then you have the resources to do it right now.  Or wait. One more question is often the difference.  Assuming is a mistake.

Don Shaughnessy is a retired partner in an international public accounting firm and is now with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario.

Contact: don@moneyfyi.com  705-748-5181

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