It used to be that people did not have ready access to what was happening in the world. It took nearly two weeks for the news of Lincoln’s assassination to reach rural Americans. They may have heard the story but newspapers were the reliable source and confirmed and added detail. Today it would take minutes not weeks.
How capable are we of dealing with new information? Not very. We need time to fit new things into our existing thinking structure. That takes time and often discovering more information too.
Sleep on it is old advice. It has a sound basis.
The advantage to a wait is it gives us time to let others attack the validity of what ahs been observed. At a minimum the validity of opinion that has been added.
We cannot accept the fast news as necessarily useful or even right. This article from Nick Maggiulli makes an interesting point on accepting it as it appears. The Age of Financial Misinformation. The point is around the article is things that look pretty and are sensational might not be as true as we would like.
We can work through his thinking and come to a significantly different place than what the graph implies.
We must become a little more patient in assessing new data. Something that looks spectacular should be processed with the idea of having no strong commitment to its meaning.
Meaning is much more difficult to acquire than is mere data or news. Think about it as moving up from data to information to knowledge to wisdom.
Data to information eliminates anything that cannot be proven true or at least true in your particular context. That’s what the article is about. Life is much easier if you can eliminate the wrong material very early. Make that a priority when you come on something new.
Be very cautious about Cognitive biases. We each tend to notice and accept what is consistent with our previous beliefs. As a rule, if something agrees with what you think you know, you should step back and maybe think. What you should notice is that if it is right and is the same as what you think you know now, of what value is it?
You’ll grow by challenging what you know.
Everyone needs someone who can disagree when appropriate. Seek such a person to add to your thinking system.
Sometimes it is an advisor. One of the valuable functions an advisor provides is the ability to add meaning to financial information.
Not everything you will see is true. Sometimes by carelessness, other times by malice.
It is easy to believe things that agree with you. To accept they a re true requires the implicit assumption that you already know all you need to know. If you have an error in your thinking, reinforcement cannot work to your advantage.
“In short, numbers are accepted as evidence when they agree with preconceptions, but not when they don’t” Thomas Sowell
Don’t believe everything you think.
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I build strategy and fact-based estate and income plans. The plans identify alternate ways and alternate timing to achieve both spending and estate distribution goals. In the past I have been a planner with a large insurance, employee benefits, and investment agency, a partner in a large international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business. I have appeared on more than 100 television shows on financial planning, have presented to organizations as varied as the Canadian Bar Association, The Ontario Institute of Chartered Accountants, The Ontario Ministry of Agriculture and Food, Banks – from CIBC to the Business Development Bank.
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