There is more information at our disposal than ever before. It’s available within seconds and with just a few clicks or taps on a screen. Now you may have thought that would be a positive thing, but it’s harder than ever to discern its quality, reliability and significance.
An obvious example is the growth of misinformation on social media; remember, for instance, those false claims about COVID-19 treatments, such as ingesting bleach, which quickly gained traction. We also have “deepfake” videos of politicians making statements they never made being circulated online.
These may seem like extreme examples, but they’re actually very common. Whatever subject it is you’re learning about online, there are grave risks that you’re being misled — even by organisations which appear to be reliable sources.
What, then, can you as an investor do to avoid being led astray in an age of information overload? In short, you need to develop critical thinking skills, similar to those of a scientist, that make you less gullible and help you to base any decisions you make on data, evidence and logic, rather than on impulse or emotion.
A new book called Third Millennium Thinking by Saul Perlmutter, John Campbell and Robert MacCoun, provides a useful roadmap for learning those skills. It’s not specifically about investing — the authors are a Nobel Prize-winning physicist, a philosopher and a social psychologist respectively — but the five main lessons it teaches us are extremely relevant to anyone thinking about their investment strategy and indeed financial planning in general.
© The Evidence-Based Investor MMXXIV. All rights reserved. Unauthorised use and/ or duplication of this material without express and written permission is strictly prohibited.