Kahneman writes in his book, "The normal state of your mind is that you have intuitive feelings and opinions about almost everything that comes your way. Whether you state them or not, you often have answers to questions that you do not completely understand, relying on evidence that you can neither explain nor defend."
The quality of your thinking is closely associated with the quality of the questions you ask. The process of navigating the complexity of modern world entails dealing with hard questions.
When the weather report says there's a 40% chance of rain, and it rains, do you lose faith in its predictions?
No — you recognize that the weather is inherently uncertain and that a definitive statement of whether it will or won't rain tomorrow is usually the wrong thing to offer.
And that's where most new investors go wrong. They want a precise answer to the question — which stock should I buy?
When they seek answer to this question from any experienced and successful long term stock market investor, he often tells (if he has no axe to grind) something along these lines — in a portfolio of 10 such stocks, there's a 70 percent probability of making better than broader market returns.
"You're not giving me an answer," you'd shake your head. "Should I buy this stock or not?"
But you didn't understand that he is giving you an answer. Not a diplomatic but an honest answer.
Stock market uncertainty can't be made palatable with precise answers. And if someone offers you precision in terms of target prices or sure-shot multibagger ideas, then he's fooling you (intentionally or unintentionally).
The most important trick in investing is to make peace with the fact that smart decisions can end up with bad outcomes and dumb decisions with good results.
