The Art of Thinking Clearly | Rolf Dobelli

About the Book

My learning from the book: (1) Never underestimate the hard work and lower probability of success, just because we are shown more successful people than many more actual failures (2) Confirmation bias is the mother of all misconceptions. It is a tendency to interpret new information so that it becomes compatible with our existing theories. Warren Buffet has seen people losing money with this because they ignore facts which contradict the theory in the mind of the investor. Dis confirming evidence must be seeked out to beat this theory. e.g. what is next in the sequence 2-4-6-8-... (3) Calamity of Conformity - If you ever find yourself in a tight unanimous group, you must speak your mind, even if your team does not like it, even if it means risking expulsion from the warm nest. And if you lead a group, appoint someone as devil's advocate. He or she will not be the most popular member of the team, but definitely the most important. (4) Induction - Send an email to 10,000 people with stock market prediction by dividing them into 2 groups - telling reverse prediction to each group. Prediction for one of the groups will come true. Send a new prediction to the 5,000 whom you predicted correctly earlier - again after dividing them into 2 groups...carry on like this, and the last 100 would consider you as a genius. People get inducted into a decision based on history without thinking logically. (5) Loss Aversion - The fear of losing something motivates people more than the prospect of gaining something of equal value. (6) When it comes to compounding, don't trust your intuition - you have no idea how powerful it is (7) It is not what you say, but how you say, that's important. 98% Fat Free product seems more healthy than a product with 1% Fat. (8) If you are not a part of the solution, you are definitely a part of the problem. There is no 3rd category of passive onlookers. (9) Follow your passion even if you have to do away with part of your income for that (10) Whenever you are dealing with averages, be careful of the distribution behind it. A Bill Gates monthly income in a group of 50 ordinary citizens can give an extremely misleading average. (11) Money does not always motivate. It works as a motivation only in companies where employees work for only money. (12) Money comes wrapped in emotions. Monet won incidentally, as against earned through hard work, is more likely to be spent erratically - though it is illogical because the money is the same. This can be prevented if you have a clear financial plan with you. (13) Self Control drains your energy, and therefore you need a lot of energy if you want to exercise self control. (14) Presence of something is more noticeable and valued than its absence. e.g. presence of disease than its absence. OR getting off a plane and not noticing that it did not crash. (15) NEWS is to mind, what sugar is to body, appetizing, easy to digest - and highly destructive in the ling run