Think Like the Great Investors: Make Better Decisions and Raise Your Investing to a New Level

Chapter 19

Ask why not? (confirmation revisited)

Everybody has some idea of what happens when we fall in love with another person. We tend to see all their good points, exaggerating some of them in our mind and maybe imagining some that don’t exist. We readily find more good points. More importantly, we unconsciously overlook their bad points. We probably hardly notice their bad habits and, if we do, we find it easy to rationalise them away. We might even harbour an inner belief that the object of our love will change and any aspects of their personality with which we are vaguely uncomfortable will fade away. If someone brings one of our beloved’s bad behaviours to our attention, we will tend to defend them strongly, denying that the behaviour is important or a problem.

Now consider Mark. He is an experienced medical professional, trained in scientific method and the analysis and diagnosis of problems. In conversation with a colleague, Mary, he mentions that he has some money he is looking to invest. Mary tells him that she has just invested in MedicineDirect, a new company being set up by her brother to supply prescription drugs to patients directly, using internet ordering and mail delivery instead of through a retail pharmacy. Mary is very enthusiastic about the idea and convinces Mark that he should look at it.

The next day, Mary gives Mark the prospectus. She has flagged ...