Critical Thinking Is Now More Crucial Than Ever

I recently was sent a video purporting to tell me how the Vanguard Group was controlling the world as we know it. I felt compelled to watch it. It would be astounding if true, or it would be a way for me to exercise my critical thinking skills.

As it turned out it was one of those things that only pass for information. It would need to be twice as good to make it to the bottom threshold of stupid.

The implied idea

The claim is Vanguard Group is a sinister dark operator controlling the world. The claim is slightly plausible if you are willing to ignore some logic gaps.

Yes, Vanguard is the largest shareholder in many companies. Apple, Google, Facebook, and more. The implication is they control them. I am not convinced that owning 7% of a public company will give you control, but who knows.

There is more talk about how Vanguard owns Costco and Walmart. Also true.

The impression the person wants to create is we are manipulated by forces operating in the dark.

What is more true.

Vanguard Group is a platform for passive investments. Active management involvement in their investments is outside their nature and skill set.

Vanguard is the manager of large investment funds. Most are “Index funds” which are a way to passively participate in the stock market as a whole. John Bogle created the idea decades ago so people could invest, widely diversified, without having to know much. While it is true Vanguard is a very large shareholder in many businesses, it is through their efforts to own stocks in proportion to the index itself. If any stock falls out of the index, their ownership of it would drop to zero. Given their size, $7.1 Trillion under management, they must necessarily own large positions.

While people often talk about owning Costco, they mean they own stock in Costco. It does not have the common meaning as they own Costco in the same sense as they own their golf clubs. There is a long jump from owning stock and controlling management of that company. Have you ever seen a proxy fight lead by Vanguard?

The idea of control

The video wants me to believe in the idea of some international cabal controlling the world. It addresses the point that the fund participants in Vanguard own the Vanguard Group. That’s true!  The funds themselves own the Vanguard Group. The implied idea is if Justin Trudeau owned some units in a Vanguard managed fund, he would be an owner of Vanguard and somehow that would give him immense power.

Realistically, there is a step between those thoughts where magic must happen. It is difficult for me to imagine how a sane person could make that leap. Perhaps Mark Twain’s insight applies.

“You can’t depend on your judgment when your imagination is out of focus.”

What’s happening

There are at least some people in the world who are both paranoid and feeling helpless. They assume that control is a zero sum game. If I have only a little, someone else must have a lot. Worse yet, most of them have a very narrow time horizon.

In longer time spans, most things work out.

Things change. I recently noticed that if I took the top 10 companies in the S&P 500 Index in 1980, I would find none of them were in the top 20 now.  Vanguard would have adjusted their holding to reflect the “weighting” within the index. All the control that would have accrued by owning EXXON, AT&T, Chevron, IBM, GE, and Schlumberger in 1980 would have dissipated.

You can assess things like this easily enough.

Develop critical thinking skills

Critical thinking is an acquired skill. It requires several sub-skills.

  1. How to collect evidence
  2. How to evaluate evidence
  3. How to connect the pieces
  4. How to estimate what’s missing. The dog that didn’t bark idea.
  5. How to update
  6. Critical thinking requires exercise.

The first step is learn to look for evidence. You will notice that most ideas being promoted today seldom include any. You can be sure if there were any, it would be front and center. If there is no evidence, why are you paying attention?

How do you process what you find? We each are a victim of  thinking flaws. A commonly noticed one is “reliance on experts.” If a politician tells you their panel of experts says whatever, you are very little further ahead. What the politician is telling you is their interpretation of their staff’s interpretation, of the expert’s interpretation of some objective fact. Without names to evaluate skill and bias, and the evidence they used to reach their conclusion, you have nothing,

We each accept things that support what we already believe. Confirmation bias. It is very difficult to recognize this in yourself. Be a little open minded and test new ideas that disagree with yours. Listen to those close to you.

The Takeaway

You can travel very far down the rabbit hole, if you don’t stop and think about facts and reasoning. It will save you a lot of time and trouble if you do a little research before starting down the hole.

How you connect the pieces of information you discover matters. Correlation and causation are not necessarily connected. Correlation is hint about a good place to start looking though.

Wet roads do not cause rain. You should apply reasonable methods to derive your personal beliefs.

Wrong thinking is punished and often quite quickly.

Crowd thinking is not thinking at all. It is reaction to other stimuli. Crowds, properly handled, will believe anything. “A group is extraordinarily credulous and open to influence; it has no critical faculty”  – Sigmund Freud. There are people who know how to manipulate crowds.

Learn how to defend yourself from the charlatans who manipulate you for their own benefit.

The rule: Immense claims require immense evidence.

Do not fear change. Expect change. Be prepared. You prepare by anticipating what’s possible.

I help people have more retirement income and larger, more liquid estates.

Call in Canada 705-927-4770, or email 

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