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Hindsight Bias.
The tendency to see past results as having been obvious/'bound to happen'.
Physicist Richard Feynman said "The first principle is that you must not fool yourself, and you are the easiest person to fool."
#es_f $spy
cont...
The tendency to see past results as having been obvious/'bound to happen'.
Physicist Richard Feynman said "The first principle is that you must not fool yourself, and you are the easiest person to fool."
#es_f $spy
cont...
1) Hindsight bias is "an enemy to probabilistic thinking." - @AnnieDuke
When we pursue objectivity in markets, we must be comfortable with some uncertainty + pursue best odds.
After an event has unfolded, we tend to see it not as being probabilistic, but "I should've known"!
When we pursue objectivity in markets, we must be comfortable with some uncertainty + pursue best odds.
After an event has unfolded, we tend to see it not as being probabilistic, but "I should've known"!
2) Hindsight bias looks like:
- The Monday Morning Quarterback
- Saying that a past trade/investment was 'so easy' or 'simple' to see
- Kicking yourself for errors
- "I should have known #bitcoin
would go up" 
- Believing that you should always be right
- The Monday Morning Quarterback
- Saying that a past trade/investment was 'so easy' or 'simple' to see
- Kicking yourself for errors
- "I should have known #bitcoin
would go up" - Believing that you should always be right
3) The hindsight bias of others has a strong effect on us.
“Told ya! I got it right! I’m smart!”
For one, it puts you down for having missed "the obvious".
For another, they're elevating themselves to a place of superiority or power.
Being right feels good.
“Told ya! I got it right! I’m smart!”
For one, it puts you down for having missed "the obvious".
For another, they're elevating themselves to a place of superiority or power.
Being right feels good.
4) Hindsight bias contributes to the dangerous belief that we should never make an error.
You don't need me or anyone else to tell you that life will be full of errors.
This causes us to treat each trade or investment as a do-or-die bet, as if our only task is to be correct.
You don't need me or anyone else to tell you that life will be full of errors.
This causes us to treat each trade or investment as a do-or-die bet, as if our only task is to be correct.
5) We can work against our natural hindsight bias by:
- keeping accurate notes on our beliefs, planning process, + outcomes
- not editorializing past events
- calibrating processes
* #5 This will be the topic of my blog post, up after market close tomorrow.
- keeping accurate notes on our beliefs, planning process, + outcomes
- not editorializing past events
- calibrating processes
* #5 This will be the topic of my blog post, up after market close tomorrow.
You can sign up to receive my blog post later today at the link below, or stay tuned as I will share it here on Twitter.
Sources or inspiration for this thread + the blog post:
- @AnnieDuke
- @fatbabyfunds
- @jposhaughnessy
- @FromValue https://orderflow.substack.com/
Sources or inspiration for this thread + the blog post:
- @AnnieDuke
- @fatbabyfunds
- @jposhaughnessy
- @FromValue https://orderflow.substack.com/
