MICHEL PIREU: Playing detective has its rewards when investing in the market
The approach of famous investigators to solving mysteries holds crucial lessons for investors
Investing involves a great deal of detective work, so it might be an idea to see what we can learn from the great fictional detectives – the likes of Sherlock Holmes, Hercule Poirot, Veronica Mars and Columbo. Peter Bevelin starts his book, A Few Lessons from Sherlock Holmes, by quoting mathematics and science writer Martin Gardner. "Like the scientist trying to solve a mystery of nature, Holmes first gathered all the evidence he could that was relevant to his problem," says Gardner. "At times, he performed experiments to obtain fresh data. He then surveyed the total evidence in the light of his vast knowledge of crime, and/or sciences relevant to crime, to arrive at the most probable hypothesis. Deductions were made from the hypothesis; then the theory was further tested against new evidence, revised if need be, until finally the truth emerged with a probability close to certainty." Bevelin distills this into three principles: observation (gathering evidence), deduction (drawing in...
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