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Thinking in bets Michel Pireu     | Business Day Friday, November 30, 2018
From Thinking in Bets by Annie Duke:

Every decision commits us to some course of action that, by definition, eliminates acting on other alternatives. Not placing a bet on something is, itself, a bet Ö A decision about a stock (buy, donít buy, sell, hold, not to mention esoteric investment options) involves a choice about the best use of financial resources. Incomplete information and factors outside of our control make all our investment choices uncertain. We evaluate what we can, figure out what we think will maximize our investment money, and execute. Deciding not to invest or not to sell a stock, likewise, is a bet.

Admitting that we donít know has an undeservedly bad reputation. Of course, we want to encourage acquiring knowledge, but the first step is in understanding what we donít know Ö Once you acknowledge uncertainty it should make you information hungry.

When we think probabilistically, we are less likely to use adverse results alone as proof that we made a decision error, because we recognize the possibility that the decision might have been good but luck and/or incomplete information intervened.

What makes a decision great is not that it has a great outcome.

Thereís this word that we use in poker: Ďresulting.í Itís a really important word. You can think about it as creating too tight a relationship between the quality of the outcome and the quality of the decision.

We canít control luck Ö You can improve the probability that you will have good outcomes by improving your decision-making, but that is not making your own luck. That is increasing the chances that you have a good outcome. You canít guarantee that things will turn out well and even though you might have made decisions that increased the probability that you have a good outcome, you cannot guarantee it. You cannot make luck go your way.
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