Some Thoughts on Thinking

Thinking is something we do all the time; sometimes without even recognizing it. Yet, we seldom think about how we think. What types of pathways do our thoughts follow? How may our thoughts be influenced by external stimuli? How can we improve our thinking to make better decisions?

About Thinking

When we think, we would like to think we are analyzing the situation and our choices in depth. Perhaps we are, but that is not our default. The default is for our thoughts to follow the path of least resistance. In other words, our thoughts can be easily swayed by emotions and biases – which may result in suboptimal conclusions.

Critical thinking is a skill that must be developed. We are not hardwired to be critical thinkers. Just like great musicians who became great through countless hours of practice, so too do great thinkers become great through intentional effort and perseverance. There is no shortcut. While someone may look like they were born to be great at something, the reality is to be great at anything requires a lot of practice. Thinking is no exception.

Flaws in Thinking

When we are intentionally trying to think we are often influenced by flawed logic (logical fallacies). This is where we may “find” connections that are not real. For example, investors often identify things are correlated and erroneously believe that one caused the other one.

Another common investor flaw is to presume that a manager’s outperformance is due to his or her skill. This may cause investors to “chase” performance as they seek the manager with the greater skill. A recent example is Cathie Wood’s ARKK fund. A ton of money was invested after it experienced significant gains as investors (incorrectly) believed she “got it” more than other managers. Does that mean her recent underperformance is because she no longer “gets it?” The fact that no manager consistently outperforms is evidence that manager outperformance is not based on manager skill.

Mental shortcuts and pattern detection are some of the most prevalent thinking flaws. These provide the pathway of least resistance for our thoughts to follow. Cognitive biases such as anchoring, recency, availability, and representativeness biases produce these shortcuts below the level of our consciousness. We don’t realize how our thoughts are being influenced by shortcuts, patterns, and fallacies. For that reason, to improve our thoughts and ultimate conclusions, we need to practice critical thought.

Engage Your Critical Thinking

Critical thinking is a process and a skill that will take a lot of effort to develop. Before we begin thinking critically, we must ensure we have all facts at hand. This is where a lot of thinking goes awry. We must overcome the path of least resistance to consider only the information at hand (availability bias) and research other facts and opposing viewpoints.

Once you have all the facts, identify your primary motivation. This may sound basic, but it is really important. Are you motivated to draw a desired conclusion? Or are you motivated to learn the truth, even if that means your current beliefs and perspectives are wrong? Humility is a necessary quality to think critically.

Once you have information and you are motivated to find truth, your brain will still want to follow the path of least resistance. In fact, at every turn our brains are seeking shortcuts and ways to stop thinking so it can conserve energy. After all, one of the brain’s primary functions is to conserve energy for threatening situations. Playing devil’s advocate can help engage and keep your critical thinking engaged. Then you will be able to view the information in a less biased manner.

Concluding Thought

Examining our beliefs, opinions and conclusions can be hard, but is extremely empowering. Once we identify our goal is to get to the truth, we can more easily let go of prior beliefs or misperceptions and embrace truth – rather than selectively ignore such information and hold fast to our existing viewpoints (path of least resistance).