I recently read War and Chance by Jeffrey A. Friedman, which considers how foreign policy specialists deal with the uncertainty that surrounds their high stakes decisions. Friedman focuses on an historic reticence to explicitly discuss either probabilities or confidence levels when making subjective judgements. Whilst the impact of decisions made around the whereabouts of Osama bin Laden or the presence of WMD in Iraq have consequences that are far more profound, it struck me that the challenges and concerns highlighted by Friedman are also relevant to how we make investment decisions. In particular, the struggle we have in articulating how much conviction we hold in a position or opinion.
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