Knowledge of cognitive bias and personality types should determine who you ask for advice. For instance, a friend of mine differs from me in personality. While I prefer solitude, silence, skepticism and endurance sports (as a participant, not an observer), he prefers noise, people, faith (in people) and team sports (as a fan). For those familiar with the concept, we lie on different ends of the Autistic spectrum (me near Aspberger’s Syndrome, him neurotypical). I recently spoke to him about a new investment strategy he was considering. I was not surprised to realize that we suffer from different cognitive biases due to our different personality types.
© by Casey Serin
We talked about the new strategy for quite a while, and I did not understand how it could work in real life. To judge from the marketing material the seller sent over, it seemed like a prime example of survivorship bias. I told my friend this, and he said he was not concerned as he trusted the person selling it to him.
Having to trust the person selling the investment product to you irritated me. Why should that matter? I’ve found investment decisions to be an easy process in concept.
- Step 1 – Find something you understand, that has an acceptable level of risk and maintenance.
- Step 2 – Buy it from someone who will deliver as promised, i.e. 100 shares of VTIVX for example.
- Step 3 – Profit!
- Step 1 – Find someone you trust and seems knowledgeable about investment
- Step 2 – Buy from that person
- Step 3 – Profit!
- Investing
- Design
- Programming
- Mechanical objects
- Physical Organization
- Interviewing
- Public speaking
- Performances
- Management of people
- Conflict Resolution
Editor’s Note
This blog post originally appeared on the Profit Awareness Blog – as that app is up for sale, it has been consolidated into the main Digital Tool Factory blog.
Tags: Business
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Written By Steve French |
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