Biases Caused by What We Know
Sometimes what we know matches a particular investing context, while other times we impose incorrect patterns onto a situation to our peril. We first discuss ways that our own knowledge, or perception of our knowledge, can influence our thinking. We then discuss two important social knowledge biases that derive from our interactions with other people.
Real knowledge is to know the extent of one’s ignorance.
—Confucius
I’m no genius, but I’m smart in spots and I stay around those spots.
—Tom Watson
I. Individual Knowledge Biases
There is no substitute for a well-developed body of knowledge in most walks of life. Sound investment decisions in individual businesses require a thorough knowledge ...
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