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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Shane M who wrote (43535)	7/25/2011 7:15:21 AM
From: badi_	Read Replies (1) \| Respond to of 78472

Thanks! I appreciate your sharing. Tech companies are wonderful examples of Black Swan companies, but the book doesn't follow my "line of thoughts", first because my thoughts are not linear, and second because the book endorses a type of biased thinking... People tend to make sense from patterns that in fact make no sense, Michael Shermer who wrote "The Believing Brain" said: "Unfortunately our brains evolve to assume that most of the patterns we see are true", you may check the man's arguments. People involved in value investing are often effected by such bias, you see a company that made big success, you make your own conclusions that the company did succeed because of factors: a, b ,c , ...etc If you hear somebody else speaking about a given set of factors, say :b, and c, you may start believe even more strongly in the said factors, and if someone commonly called "expert" says the same thing it may exaggerate the importance of these factors in your mind, the next you do is look for companies that gather the biggest number of "success factors", and you buy. If anyone here has been long enough in the value investing business he must have had experiences like "it was had everything to succeed but it didn't". Nassim Taleb provides very good arguments about fallacies and biased thinking, he also says, which may not be new to anybody here, the events that had the biggest impact were unpredictable, but they seem to be that way after they occur, The Black Swans. I don't look for the so called factors of success and don't believe in magical recipes, if anyone was so special to find the "great secrets of success" then I believe they wouldn't share it in a publicly available book. I strategize starting from an understanding of uncertainty, and from studying the exposure of the company to the unexpected, random and big events. I am glad to react to every constructive post in this forum.