The Scout Mindset - What is needed for good investing

 

The Scout Mindset by Julia Galef, starts with a very simple premise, have "the motivation to see things as they are, not as you wish they were". Looking for the truth is not in conflict with your goals. It only enhances your chance of reaching your goals. To be a good scout you need to understand whether or when you are biased. You cannot fill yourself. There is no right way or wrong way to thing, only a way to focus on the truth. 

The search for the truth starts with the simple question with anything we see, Is it true? You are not focused on motivated reason to look for confirmation but focus just on what is reality. This scout mindset can be summarized in Galef's table on the difference between a soldier and a scout. 

Don't protect your opinion, protect or search for the truth. Unfortunately, the soldier mindset is easier. You can take comfort of being with a group that agrees with each other, have the certainty of our opinions so we can persuade others, and have an image associated with a common view. Truth seeking requires us to be more self-aware, so it is important to run some thought experiments to avoid bias traps.

We should appreciate that there are two types of confidence, epistemic and social. Epistemic confidence is associated with the certainty about what is true while social confidence is the self-assurance versus our peers. 

There are also two types of uncertainty; uncertainty due to ignorance or inexperience and uncertainty due to unpredictability.  We tray and control our ignorance and then prepare for what is unpredictable. 

The critical skill for those more quantitatively focused is to think in terms of odds, but more important is the ability to say you are wrong or the model is wrong. Admitting mistakes allows for better decision-making.  Be a scout and not a soldier.