If You Can’t Spot The Sucker…
A quote from the poker movie “Rounders”:
“Listen, here’s the thing. If you can’t spot the sucker in the first half hour at the table, then you ARE the sucker”
It’s important to take in a lot of different viewpoints regarding any investment.
Every single person is biased in some degree.
I am certainly biased.
Anyone offering up information has a reason for doing so.
Anyone offering up a lot of often unwanted opinions certainly has a few reasons for doing so.
I think it is important to figure out who are biased in a “good” way and who are biased in a “bad” way.
Someone can be biased but still be quite rational.
Someone can also be very biased which often leads to irrational arguments and conclusions in order for them to fit with said bias.
If you can’t spot when someone is letting their arguments/conclusions forcefully conform to their bias then you might be in trouble.
Sometimes it takes just one blatantly irrational post or comment to realize you are dealing with someone who has a bias and who also wants your thinking and actions to take a specific path (buy or sell).
With that said, I usually give a poster more than one strike before I put them in the garbage bin simply due to the fact that some conclusions might look obscenely biased but the reason for it might simply be a lack of due diligence.
Another warning sign in my opinion is the use of absolutes…
In a world which is uncertain and in a business which is riddled with uncertainty, the only certainty is uncertainty.
We are working with probabilities, risk/reward functions and everyone has a different appetite for risk based on numerous factors.
A “buy” for someone should probably not be a “buy” for someone else.
This is why I never give buy or sell calls but try to present the risk/reward case for a company at a given price.
The rest is up to each and every person to ponder the case presented and evaluate if it fits with his/her appetite for risk etc.
I much rather hear biased opinions backed up by rational arguments over supposedly “unbiased” opinions with little to no rational arguments backing them up.
Red Flags:
- Frequent offering of opinions with little demand for them
- Use of absolutes
- Lots of opinions but only few “one liner” arguments backing them up
- The use of exaggerations to undermine a point that does not fit with his/her bias
- Use of disclaimers such as “I am objective”, “legitimate questions” or “I am unbiased” etc
… The more of these you see from a single anonymous poster the more biased he/she probably is in my opinion.
The most important thing is still to get to a point where you can listen to every basher/troll/bear argument and be able to discern why their logic is flawed. That is a good sign, because it means that they are the fish, not you.
