Extreme views, kite flying and benchmarking

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Simple Simon
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Extreme views, kite flying and benchmarking

Post by Simple Simon » Thu Mar 01, 2018 4:08 pm

Hi all. I enjoy and value this forum, and have learned a lot from people with diverse financial knowledge and experience.

One thing I wonder. When a poster has a very extreme and very strong view - even if most others disagree, does this shift the consensus view in their direction somehow?

An example: lets say a poster expresses a view that the prudent way to buy a car is to have 20x price in cash assets. That way the car is insignificant on the balance sheet, and if it breaks down you can just get another, and so on, at least the first 19 times.

Does the hive-mind of the forum shift a little towards thinking... hmm, I better pay cash for my next car, and maybe I'll get something cheaper rather than what I really know is most suitable for my needs, or what I really want?

A bit like when you go to a restaurant and there is Steak Mignon on the menu at $50, and Salmon en Croute at $30. You choose the salmon - you don't really want to spend $30 on a fish dinner but come round to thinking that offers value relative to the $50 benchmark.

an_asker
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Re: Extreme views, kite flying and benchmarking

Post by an_asker » Thu Mar 01, 2018 4:26 pm

I understand what you are saying but I doubt it works that way! Unless you've a rogue moderator (I am obviously not saying there is one!) who deletes all contrary opinions! ;-)

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LadyGeek
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Re: Extreme views, kite flying and benchmarking

Post by LadyGeek » Thu Mar 01, 2018 7:15 pm

All opinions are welcome. :wink:

The "hive-mind" is good for presenting perspectives that you may not have thought of before.

However, it is very important to understand that a situation which applies to one person may not be suitable for another.

To say this another way: This is an investing forum whose members eat this stuff for lunch. Just because we like to talk ad-nauseum on saving the last $0.01 in taxes, does not mean it is right for you.

I've seen more than a few new investors wishing to do Backdoor Roths. They don't know what they are, yet they include one in their investing plan simply because they see it mentioned a lot here. Doing a backdoor Roth wrong will cost you far more than having done nothing at all.

Ask questions, yes. Act on advice for someone in a different situation that you don't understand, no.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

ThriftyPhD
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Re: Extreme views, kite flying and benchmarking

Post by ThriftyPhD » Thu Mar 01, 2018 7:36 pm

One of the nice things about this website is there is a wide range of opinions on most topics. Largely these are related to the poster's background, experience, and personal preference and circumstance.

Take asset allocation. Some are 100% stocks. Others are 100% stocks and purchasing with margin. Others are 100% CDs and still nervous. It's wonderful to read all of these opinions and see the background, the reasons people have for what they chose, and what their remaining concerns are. It helps to form your own asset allocation. You can see what aspects fit your own situation, and adjust.

Without this forum or other similar focused, anonymous places to have these discussions, you might be left with discussing with a small circle of friends and family, which would just turn into a echo chamber of potentially terrible advice.

Going to your 20x cash assets to set a car price. This person might describe their history, why they chose this rule, and what their concerns are. A second poster might come in and say they always buy 0% down because loans are cheap and they can make more in the market. Another posts that it's better to have two cars in case one breaks down.

If you're thoughtful, the diversity of opinion gets you to rethink your own situation. How much of your own rules are thoughtful decisions, and how much is a default opinion that you hold simply because you hadn't given it much thought and that's something you read sometime and it just stuck with you.

We're surrounded by these invisible biases. It's through polite discourse and civil debate that we can shine a light on them and bring them to our attention.

KlangFool
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Re: Extreme views, kite flying and benchmarking

Post by KlangFool » Thu Mar 01, 2018 7:49 pm

OP,

1) It is normal for people to disagree. If everyone agreed on something, it is bound to be wrong.

2) This is a personal finance forum. Look beyond the opinion. Understand the context and background of the person with that opinion. His/her circumstances may or may not be relevant to you.

3) Most of us have some implicit assumptions and biases in our thought process. When we are challenged and forced to examine our assumptions and biases in a public forum, we may or may not change our minds, But, it makes us a better thinker.

KlangFool

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Re: Extreme views, kite flying and benchmarking

Post by Fallible » Thu Mar 01, 2018 8:15 pm

ThriftyPhD wrote:
Thu Mar 01, 2018 7:36 pm
One of the nice things about this website is there is a wide range of opinions on most topics. Largely these are related to the poster's background, experience, and personal preference and circumstance.

Take asset allocation. Some are 100% stocks. Others are 100% stocks and purchasing with margin. Others are 100% CDs and still nervous. It's wonderful to read all of these opinions and see the background, the reasons people have for what they chose, and what their remaining concerns are. It helps to form your own asset allocation. You can see what aspects fit your own situation, and adjust.

Without this forum or other similar focused, anonymous places to have these discussions, you might be left with discussing with a small circle of friends and family, which would just turn into a echo chamber of potentially terrible advice.

Going to your 20x cash assets to set a car price. This person might describe their history, why they chose this rule, and what their concerns are. A second poster might come in and say they always buy 0% down because loans are cheap and they can make more in the market. Another posts that it's better to have two cars in case one breaks down.

If you're thoughtful, the diversity of opinion gets you to rethink your own situation. How much of your own rules are thoughtful decisions, and how much is a default opinion that you hold simply because you hadn't given it much thought and that's something you read sometime and it just stuck with you.

We're surrounded by these invisible biases. It's through polite discourse and civil debate that we can shine a light on them and bring them to our attention.
Nice description of the BH forum experience. :thumbsup
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nisiprius
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Re: Extreme views, kite flying and benchmarking

Post by nisiprius » Thu Mar 01, 2018 8:27 pm

ThriftyPhD wrote:
Thu Mar 01, 2018 7:36 pm
...If you're thoughtful, the diversity of opinion gets you to rethink your own situation...
This.

Also, I've thought for a long time that the big difference in perception is not so much the difference between "25% of my friends think so" and "75% of my friends think so."

The big difference is between "Nobody in the world thinks this" and "At least two or three people in the world think this."

Sometimes it's very personal: "Nobody in the world but me thinks this" and "Oh, there are other people in the world who think this." (George Orwell: "Perhaps a lunatic was simply a minority of one.") Other times, it is a mind-opening experience: "This person seems intelligent and sane, and yet he believes this. Perhaps this is not quite as impossible as I thought."
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

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