Philip Tetlock spent 30 years exploring what makes someone a superforecaster (not the ones you see on TV). In his book Superforecasting, he distills his work into several commandments on how we can improve our judgment without any complex algorithm. 1. Triage: Focus on questions where your hard work is likely to pay off […]
1. Experience may not be a good teacher Most elderly who died in Hurricane Katrina dies not because of their health, but because of confidence and denial. They have survived several hurricanes over their lifetime, so they believe Hurricane Katrina is no exception. Experience can create a close attitude that prevents us from seeing things […]
There is a story where a toll bridge at Delhi is always congested during rush hour. Therefore, the officials decided to keep it toll-free between 8 to 10 am and 5 to 7 pm to ease the traffic. What they didn’t expect is drivers arriving 30 mins before the toll-free period started queuing up in […]
“Buy things that you understand”, “Stick to what you know”, or “Stay within your circle of competence” – We hear these advises all the time so we don’t invest in stocks we know little about. But what define understanding? How do we know if we truly understand a business? If I know Apple designs, develops, […]
PDF Version *** In Warren Buffett’s 1965 partnership letter, he gave us a glimpse on how to think about capital allocation: “The question always is, “How much do I put in number one (ranked by expectation of relative performance) and how much do I put in number eight?” This depends to a great degree on […]
I got a car from a nearby dealership the other day. As part of the sales routine, the sales manager offered me a 5 years warranty against any unexpected repair for $2,000. Should I take it? If the car doesn’t require any substantial repair within that time frame, that’s money down the drain. But what […]