28th March 2025
How many times have you been 100% certain about something, only to find out you were wrong?
For me, it’s probably five times a day.
I’m certain about all kinds of things that turn out to be wrong: how long something is going to take to get done… what kind of project is certain to sell… what prospect will definitely get converted…A blog I wrote will definitely be liked by everyone…a business idea that will be super successful. The direction of the stock market and it goes on.
It wasn’t until I heard Joseph Goldstein articulate this idea in a podcast, that it struck me how important an insight this is:
“Certainty is not an indication of truth.”
Many of the things we are certain about eventually prove to be wrong.
And the faster we can rework our belief system in the face of contradicting evidence, the better off we’ll be.
It is generally seen that, the less we know about something, the more certain we are.
The great irony is that humans are more ‘certain’ about the things they understand the least.
Lawyers & architects think they can beat the stock market index if they really try. Pro athletes believe they’ll be great venture capitalists. Coca-Cola thought they knew how to make movies.
A lot of successful companies get into totally unrelated areas & fail miserably.
We assume that an expertise or success in one field makes us a master of all fields and of life issues.
This is the Dunning-Kruger effect in action – a cognitive bias where people with low ability or knowledge about a field overestimate their own competence. They’re far more certain about subjects they know little about than the people actually working in those fields.
The real experts, meanwhile, tend to underestimate their competence and are less certain about outcomes & their own abilities.
And, nowhere is it more evident than in the stock markets – everybody is an expert.
Every successful stock pick is not due to luck but is a special skill and every market correction is a Bear market and has the ‘I told you so’ reaction and all the reasons why the economy & market is overheated.
One way to combat a false sense of certainty is to be wary of our own beliefs. Don’t take them at face value, question, prod & poke everything you’re “certain” about & see if it holds up under scrutiny. Only then update your beliefs as you get new information.
One way to quickly embrace the art of doubting is to make sure every time you are wrong, you rub your own face in it.
This is what Charlie Munger and Warren Buffett do.
Buffett’s letters are full of the mistakes they’ve made, taking full responsibility for every screw-up while articulating exactly what went wrong, and why. That’s what gives them the best chance of avoiding the same mistake in the future.
As Munger says: “I like people admitting they were complete stupid horses’ asses. I know I’ll perform better if I rub my nose in my mistakes. This is a wonderful trick to learn.”
It’s okay to be wrong – it happens. But it’s not okay to move on without learning the lesson.
Plus, there’s nothing more humbling that writing it down for everyone else to read it. You’ll be far less hasty the next time you’re ‘certain.’
So, question everything – Just because you’re certain, doesn’t make it true & stay blessed forever.