Tuesday 7 April 2020
Correct Belief vs Correct Practice
I'll steal with pride from CW and do a blast from the past.
When I first wrote it in 2013, you could hear a pin drop... LOL!
Now, maybe some can appreciate it better, having gone through both bull and bear phases in their financial journeys.
Here's the post:
Orthodoxy versus Orthopraxy
When we started out, without any track record to our name, we have to rely on some theories as our foundation. And more frequently than not, these theories or "correct beliefts" were implanted into us from outside in.
It could be a book we read , a class we paid for, an advice from someone we trusted, or even an anonymois source we swallowed hook, line, and sinker nevetherless!? Hey! Its "free" what!?
How did all those "correct beliefs" done recently?
Some are not shaken. Their "faith" strong as ever. Unrealised losses are not "real"...
Some are having their cognitive dissonance moment.
Some are not letting this crisis go to waste. They are thinking for themselves and making adjustments to their "correct beliefs".
No need to consult others as they have their own track records to do their own "trust but verify" due diligence.
Some "beliefs" they had held dear for so many years may have to be thrown out...
Its the transition to grey.
Where "labels" matter less. Just like you don't care whether the cat is black or white, can catch mice that's what important!
"Correct practice" can also be more apealing to those who thrive on feedback from reality.
When we do something, there will always be "crash got sound" feedback.
When all one does is "believe" but never do anything abougt it, how to verify whether its true or not? Wink.
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Believing is easier as less time and effort is required.
ReplyDeletePracticing will require lots of time and effort to track, review and revise and hopefully over time we will improve and achieve good rewards.
Why sweat when we can pay for it to achieve the same outcome?
Sound familiar in one Teochew's phrase? :-)
CW，
DeleteWe can believe anything we want!
Just like some believe Earth is only 12,000 years young.
Its the centre of the universe.
And its flat like a pancake.
But when it comes to putting our beliefs into practice, then it get awkward...
Practice is evidence-based.
If our track records show the more we invest the more we lose, and we chose to be in denial about it, what can anyone do?
Just as long we are losing our own money, nobody would care!
Black cat or white cat.
ReplyDeleteWhat is important is whether the cat is dead and is it gonna bounce?
ERSG,
DeleteIt already has! The bounce is power!
The reversal from yesterday's low and the continuation of the gains today very impressive!!!
For those of us on the sidelines, the question is whether its a bear market rally (will retest 2200) or is the bear over (2800 here we come)?
Putting our beliefs into practice is what really matters ;)
If not, its just NATO.
I guess that's why Buy-and-Hold provides a great cover for those who don't like to make decisions.
Making a decision is lot harder than "planning" :(
So POWER that one would think the cat isn't dead.
DeleteNow the true test really is, do you trust your experience and what you have learnt. OR go along with the crowd.
Only time will tell who is right.
ERSG,
DeleteThat's something one has to figure out for himself whether investing/trading is an individual game like chess, or team sport like soccer ;)
You stay safe and take care in Houston!
Not just belief and action, it is wisdom also.
DeleteShould know how to protect both sides. Meaning if test 2800, win. Test 2200 also win.
but of course one may win less than the other.
Many investors never do that and hence their portfolio is not resilient.
A resilient portfolio or person, normally do well or at least still survive resiliently during crisis.
Likewise a business. Too many investors have no experience in real business and like to believe theory or pure paper reading is the truth!
Rolf,
DeleteHow to have "wisdom" when one is intellectually lazy to challenge the Buy-and-Hold mantra peddled by snake oils?
Knowing how and when to rebalance our portfolios need not complicated. The simplest is to use cash as the hedge.
But rebalancing does involve SELLING...
And that's already a problem to some...
Yes, its a bit hilarious when so called financially "literate" bloggers confuse ownership of a financial instrument like equities as equivalent to partial ownership of a real business ;)
There's a reason why where blog articles were so well received during the O&G heydays!
Its not only clear you have industry insider perspective, you are also speaking from alpha shepherd position ;)
Hahahaha... that is why my blog article received many views during heyday when I somehow is the only blogger focusing more on O&G. My snakeoil recipe. Now cannot use anymore. O&G crashed like never before and never recover.
DeleteLuckily, I transited to other industry though still in same co / trade. But over the years, it also taught me to have many backup plans.
I remember reading somewhere that a small retail investor telling how his life is much better than the CEO of a big company, when all he does is investing n can sit and shake leg n collect money, while the CEO need to work so hard to pay him/her dividends.
Hahahaha... tat is so naive.
Rolf,
DeleteI often try to "guess" what a blogger's day job is from the way they write.
That blogger probably middle management also don't qualify...
That's what most retail "investors" do - invest to escape.
Day job not going anywhere, to compensate, invests in a few shares, go to AGM and talk big...
A CEO's annual salary, without even investing or risking a single cent, is several time more than the $100K passive income that yield hogs dream of...
The CEO can also initiate stock buybacks, borrow to pay higher dividends to boost stock prices. Especially when bonuses are based on stock prices? Now who's your daddy?
Yeah sure! The CEO and everyone in the company is working for you! You as the minority shareholder is the landowner!
Delusions of grandeur...
The hole-in-the-heart is too obvious!
Hi SMOL,
ReplyDeleteThe belief-practice thing should be a feedback loop. Belief first, then practice based on that belief, followed by a reflection or After-Action report of what had been practiced, loop it back to setting of new beliefs, new practice, new reflection and again and again.
After 17 yrs in my line, I still learn something new. Wah, can convert to 1 month teach at home online one ah? Never experienced it before. Heard some older teachers in school all fumbling with the forced upgrade in their tech skills in short notice. Adapt or die loh.
LP,
DeleteAnother good example is the wearing of masks.
When we have zero knowledge on a topic, we have trust the "experts" to tell us what to do.
Taiwan, Korea, and Japan have an existing culture (correct practice) of wearing masks, so they don't have to listen to WHO or big USA recommendations ;)
But when big USA had 2nd thoughts as new evidence surfaced that masks do help to contain the spread of the Wuhan virus, Singapore rightly changed our official stance.
Facts change; we change. Evidence based.
Its a feedback loop like you've said.
Next time, our big daddy will make sure we have some local production of masks and other protective gears.
"Correct belief; correct practice" useless if we can't get our hands on the masks :(
Tell me about it!
As an IT dinosaur, I'm lost when it comes to all these online shopping apps with discount coupons and what not?
When customers ask me, I just shrug and say I'm a part-timer...
I'm stuck at the credit card promotions dinosaur stage?
LOL!
Faith without action is dead!
ReplyDeleteRolf,
DeleteI was very fortunate to have an excellent group leader during my Alpha course.
A question came up what makes a good christian?
When it came to his turn, he simply said 2 words,
"Christ-like."
I immediately hold my palms together an gave him my namaste - I salute the holiness in him.
Amen to u attending to Alpha. Amen on Christ-like. That is so true! God knows our hearts!
Delete