in Behavorial Psychology, Human Factors, mindshare, Morgan Housel, Steve Jobs, Warren Buffett

Rational / Irrational

People are completely irrational if they think people are generally rational.

People are completely irrational if they think people are generally irrational.

The facts are that the facts don’t always matter as much as people think it does. And data when used incompletely or inappropriately can cause making the conclusions or cognitions incorrect.

As it relates to investing, Morgan Housel, puts it so succinctly:

The point here is that investing is both art and science. Some things are countable. Others you have to just feel out.

Gathering information is a science. Filtering out noise is an art.

Net present value is a science. Identifying the trust and passion of a CEO is an art.

Measuring what worked in the past is a science. Understanding why things are different now is an art.

Since those are conflicting skill sets, toggling between the two is hard. Which is why business and investing is hard. Steve Jobs was both a technical and artistic genius. Warren Buffett can calculate DCF figures in his head, but he also drops fluffy feelings like, “With Coke, it’s not about share of market; it’s about share of mind.” That kind of mental flexibility is a rare trait.

If you think the world is all art you’ll miss how much stuff is too complicated to think about intuitively. Most people get that. But if you think the world is all data you’ll miss how much is too complicated to summarize in a statistic. That one’s a little harder.

Immeasurably Important, Morgan Housel