Avoid The Famous & Authoritative
In my last post, I discussed how we tend to crave certainty, even when we know, logically, that it doesn’t exist. With investing, it’s a desire to believe that there’s someone who can protect us from bear markets and the devastating losses that can result. That leads to what we can call the “Wizard of Oz effect.”
We sometimes come under the spell of “wizards,” authoritative voices whose words we are “trained” to take as truths. We deeply want to believe that we can control things, because otherwise, as Woody Allen put it, “life is scarier.” Yet political scientist Philip Tetlock demonstrated in his outstanding book, “Expert Political Judgment,” that even professional economic forecasters don’t make accurate predictions with any persistence.
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