pb4uski
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
https://www.forbes.com/sites/ryanfr...-impacts-your-personal-finances/#30f3f1df3ee5
I'm at a bar with a friend, and we've each had too much to drink. I schedule a car to pick me up via Uber and leave. Unbeknownst to me, my friend decides he's fine to drive himself home despite the six beers we each consumed.
On my drive home, my Uber was sideswiped as we passed through an intersection, leaving me with months of physical therapy.
He drives himself home and parks, slightly crooked, in front of his house.
Who made a better decision upon leaving the bar?
What is Resulting?
I made the better decision and had a worse outcome. He made a poor decision and had a positive outcome. Put another way, he got lucky and I was unlucky.
All around us people confuse the results of a decision to be completely linked to the decision making process that went in. This is the concept of "resulting", or drawing a conclusion on the soundness of a decision based on the outcome, rather than whether there was a sound decision making process that gave you the best chance of a favorable outcome. After reading Annie Duke's "Thinking in Bets", I see this sort of faulty logic everywhere, particularly in personal finance decisions.
In personal finance and investing, resulting is dangerous. Thinking you made a good decision when in reality the odds were stacked against you and you got lucky can gives you a false sense of confidence. Overconfidence leads to more risk-taking. More risk taking increases the odds one of those risks blows up on you. Conversely, you can spend years making what probability tells us is a sound decision, only to end up with nothing to show for it.
[and then it goes on to give a number of examples]....