The Best Tool for Understanding the Market and Trump
Consider the counterfactual. It puts this year’s paltry returns on stocks and the president’s popularity into perspective.
Not a Teflon Don.
Photographer: Mark Wilson/Getty ImagesWe spend lots of time thinking about the future. This is especially true for those of us who put capital to use seeking to obtain a return, relative to a certain amount of risk assumed. Prospectively, we consider our options and imagine various outcomes. Afterward, we evaluate the results to figure out what went right or wrong.
There’s the problem. Once we know a specific outcome, our analysis of the entire process becomes tainted. World-champion poker player Annie Duke uses the term “resulting.” It is an after-the-fact explanation for a recent event, ignoring random outcomes, discounting luck and using one’s hindsight bias. As you might imagine, people who engage in “resulting” fail to improve their processes.