I find commentary regarding open vs. closed minds to be vapid. For example, I saw this tweet:
Inspired_Ones Inspiration!!!Minds are like parachutes – they only function when open. -Thomas Dewar
I responded with this:
AlephBlog David Merkel
‘Inspired_Ones Minds are like castles under attack; they function well when the drawbridge is up, moat full, & the defenders are ready.@
I’m a value investor. I do well partly because I am skeptical. I implicitly trust few opinions shared over the internet, or among my acquaintances. There are many out to bamboozle the naive.
Now, I’m not saying never believe anything. I am saying that you should test claims that you receive from others. What is the historical evidence? What are the biases of the writer? Few in investing write neutrally, so analyze the angle of the writer.
But after that, once you understand the biases, read the contrary data. They may know something that you or I don’t know. Compare it against other opinions, and ask those that would likely disagree for their opinions. Analyze, asking which opinion is most likely, or whether yet another opinion not yet imagined could be right.
This isn’t easy to do; it takes humility, which makes it hard for me to do, but the effort must be made.
Odd opinions must be made to jump high hurdles. We don’t want to be like those that believe things merely because they are odd. (I have known more than my share of those.) For investors, in prosperous times, oddity yields bad results. In unprosperous times, oddity yields volatile results. Some do incredibly well, and some very badly.
If someone proposes a novel investment idea to you, be wary. Few novel ideas pay off. This is not to say that classic ideas always do well, but the odds are skewed against novel investments.
In closing, be sensitive to your economic environment. There are no economic environments that offer unlimited potential. There are many that limit “normal” economic opportunities. Don’t force an overly optimistic view on the markets, or an overly pessimistic view.
Do your “due diligence.” Analyze your assets, and potential replacements. Then make businesslike decisions to buy and sell, after you have analyzed the situation in entire.
[...] David Merkel, “Odd opinions must be made to jump high hurdles.” (Aleph Blog) [...]
Our minds are tricky. They are quick to associate what we see or read with what we know or believe, and don’t much care to ‘consider’ unless pressed to do so. Read Kahneman’s ‘Thinking Fast and Slow’, you’ll be glad you did.
> What are the biases of the writer?
One of the reasons I enjoy reading Richard J. Maybury (a.k.a, Uncle Eric) so much is that he lists his biases in the very front of his books.
Feynman said it well: “The first principal is that you must not fool yourself–and you are the easiest person to fool.”
I think there is less mendacity than agency issues in the financial world. The problem with basing your “value” decisions on financial reporting is that management and the accountants have an inherent bias to skew their reports. So the skeptic who does “his own” fundamental research is still beholden to the opinion of someone else, albeit someone with alternate biases.
That’s why fixed income analysis is often easier than equity analysis. Management is usually rewarded based on equity price, so “shareholder friendly” managements that screw the bondholders are often unintentionally honest in their financial reports when it comes to credit standing. They just don’t care what their coverage ratios are!
The real problem in investing is self-deception. Van Til explained self-deception as a self-covering action, in which the act “sweeps away” the evidence of its having taken place.
The best defense is rigorous note-taking, where you record the reasons for every trade, and your emotional state at the time. Over years of experience, you learn. Hopefully. If your clients can remain solvent longer than you remain irrationaly!
Wow, a reference to Van Til in an investment blog comment section.
Who woulda thunk that such enlightened minds exist in this section of the financial world? Actually, since it’s David Merkel’s blog…well, it all makes a bit more sense. 
HelicalZz — will ask the publisher for a copy
cold.as.ice — thanks as always
Doug and Luke — Never thought I would comment on Van Til at my blog. He had a large impact on the way that I reason. I have his “Complete Works,” and most of his published books. I once had them all, but I suspect after lending some to friends, I lost some.
Van Til is a significant thinker who deserves more attention from Christians, and also secular philosophers.
A GK Chesterton Chestnut: Merely having an open mind is nothing; the object of opening the mind, as of opening the mouth, is to shut it again on something solid.