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« Get Rid of Your Stuff: Make Money, Declutter Your Life, and Help Others | Main | Cavalcade of Risk »

May 01, 2012


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Great post. This is absolutely true... once people have made up their minds one way or the other, it can be very difficult to get them to change their minds no matter what the evidence supports. Very few people will admit to being wrong even if they know they are!

I think the rat in the T maze can outperform a human because of the superior sense of smell.



I don't think so.

That would be a bit of a silly test if the food was already there for the rat to smell.

The point was prediction. It doesn't say the rat had to choose before the food was presented but it does say that the students did poor at prediction, and that the rat ALMOST ALWAYS went left meaning the rat got it right 60% of the time. If it was using smell it should have gotten it right nearly 100% of the time by going the direction of the smell each time but it did not. It almost always went left.

That means the rat eventually was able to perform a low level computation that figured out the probability was higher to the left so that is where it went to wait for it's food. This would make sense in the wild because rats that were good at predicting where food was more likely to be, would out survive rats that are poor at it. The rats are not thinking. They are simply doing some kind of repetition meter that was able to detect the direction that repeated more often.

As humans we think we are pretty smart so we are looking for more complex patterns or clues to tell us where it will be next. And often our "thinking" is downright stupid like the boards showing the last 15 colors at the roulette table in Vegas. Our smart brains say if it has been black the last 7 times it is way over due for red and we smartly over bet on red. And we are of course wrong because mutually exclusive probably events have no impact on future events. A rat would likely figure that out. Many of us humans don't because we think we are thinking but our thinking too often turns out to be horribly flawed such that it leads us to conclusions that are worse than if we did no thinking at all.

Of course I don't think this way and I know this because I think it. :)


You make a good point- there are many situations where there is NO PATTERN.

We have to recognize that our minds try to find patters even when they don't exist. Then use a higher level of thinking to admit we can't predict the next spin of the roulette wheel from past results and similarly we can't use technical analysis to predict the future stock price from any chart of the past prices.

-Rick Francis

The velocity and trajectory of a body remains constant unless the body is acted upon by an external force (Sir Isaac Newton's First Law of Motion).

You cannot predict what the stockmarket, or a fund, or a bond will do tomorrow, next week, next month, or next year. However you can study its trend and use the direction and strength of the trend to guide your decisions. You don't even need to know what external forces are causing the trend to change. You just have to base your Buy, Sell, or Hold decisions opon your analysis of the trend. Low volatility investments have smoother trends and are a lot easier to work with.

There's an old trader's saying, "The Trend is your Friend". This is why smart, active investing is a whole easier than most people think and why only fools make predictions.

Selective exposure and selective retention are parts of the human psyche that we are all guilty of acting upon. We seek out information that agrees with our already preconceived ideas because it is cognitively uncomfortable for us to receive information that disagrees with our thoughts and beliefs on a subject. Not only this, but when we are presented with information from all sides of an argument, and are later asked about this information, we will most certainly only relay back the information that we ourselves agree with. This must play a major role in more facets of our lives than anyone can even be aware of.

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