This is a continuation of the summary of the book ” A few lessons from Sherlock Holmes” what do entrepreneurs and investors need to see and what they have to overlook !
Reasoning backwards – A very important aspect in thinking ! How do you think back ? Well always people work on the way front from the cause and effect – But what we need to think is the effect and cause relationship ! From the effect or the result work backwards to know how the result has unfolded so you will know many small nuances to your thinking . As an investor I think from why I have invested to the ideation process known as the “Meta Cognition” I recommend the book Emotional intelligence by Daniel Goldman which talks about Meta Cognition and its process .
How can you learn by differences than similarities? Some who analyse companies always look for Similarities between this and other company with parameters and variables that match them they like their thesis to match their patterns but sometimes it’s the difference with which we can learn . So how do I do this ? I have tried to develop a pattern or a ecosystem to investing looking at studying many investors and their patterns of companies thus I develop my own style to investing .
One of my favourite reasoning from Sherlock Holmes – If there is something we expect to see and is absent well it’s a case to ponder ! Well you might see clues as to why a company is doing exceptionally well or bad when none in the industry is doing great ? Well according to me it’s out of the ordinary and studying it will lead you to know if there’s a Moat or a Moat trap ? With this I reasoned a company I have invested with The company should have been doing exceptionally well with the situations supporting it but I’d didn’t so I reasoned that if what I expected to see isn’t happening than its a clue in itself and thus born a skepticism to dig more and arrive at a more precise conclusion .
Sherlock Homes main reasoning stands very well with investors , Well we need to exclude more and include less into our thought process. So as we saw in part -1 that “Don’t twist facts to suit your hypothesis ” rather it should be that your hypothesis should be suited to your facts and not other way round ! Some people suffer from commitment bias and Consistency bias they already set a Hypothesis in their mind and search for facts this will harm your thought process !
By exclusion we need to exclude all the other aspects that’s not suiting the facts of an investor . Raw facts are facts ! When asked a Entrepreneurs why don’t you believe god ? His Epic reply was I Believe in science and science is based on facts and god is based on faith ” i would go with facts that faith !
The most important trait an investor has to develop ” Sit idle” just thinking through and if you can’t think straight just don’t to anything and meditate !
Most people as I know them read about Charlie munger , Warren Buffett , Models etc etc use sophisticated language when things can be explained in very simple terms when someone uses the name Flabbergasted I’m like OMG ! 😮 why can’t you just say it means surprised that’s because people always try to prove them when its not required ! ” Knowing the name of something is different from knowing that ” so when investors and business professionals are idle there is more time to think rather than be an activity jerk !
” A rule is a rule only if it’s always true ” If there are rules than it means that it should be true to follow , When someone says its a Rule first ponder over and know if it’s always true in all occasions ! An investor learns rules of investing – But is it always true ? No that’s why you change them and when you don’t and apply the axiom in all situations then you fail ! So before knowing what’s a Rule and what’s not learnt to differentiate a rule and a rule with exceptions !
Sherlock Holmes is a fictional master investigator from whom you can learn more nuances to investing – It’s not from where you learn that matters it’s how you learn and apply them to your advantage that matters !
I have just taken a summary from the book of you’re a reader I highly recommend the book ” A few lessons from Sherlock Holmes “ into your reading list !
Master Moves 