Are you truly open-minded and able to take on board a view other than your own? If you can, then this will help you make better investment, business, and life decisions.
Take a reality check with a different view
If you can, then this will help you make better investment, business, and life decisions.
And it all boils down to overcoming our inherent "confirmation bias". More on this in a minute.
I have just learnt that I've been labelled as "anti" a documentary project that's looking for funding purely because I raised questions regarding how effective it will be addressing the bigger issue it sets out to tackle, and about the reasons for doing it in the first place.
This smacks to me of a George W Bush type moment of having to declare that I'm either with or against what's being proposed, and if I am with it, then what am I doing raising concerns and asking for clarification? The overriding message is: if I support it, then I should look at the good, and ignore the potential problems.
In other words, those behind it are looking for confirmation of their own beliefs, and people who agree with what they're proposing.
But discounting or ignoring opinions that go against what's set out can be very problematic.
We can always find people who say "yes, you are right" and agree with us, but the only way we can make informed decisions and minimise risk is to ask questions and be exposed to people and information with a different take on things.
The same is true when it comes to running a business or making investments.
Stories abound about how people surrounding established business owners are "yes" people - in other words, they tell the business owner what they believe he or she wants to hear as opposed to the reality on the ground.
Perhaps they want to spare the owner anxiety, or want to be the bearer of only good news . or perhaps they know all too well, from first-hand experience, that this person is big on confirmation bias. But the moment will come when it all goes terribly wrong, and hiding bad news is no longer possible.
And in the same vein, I have been told that in this part of the world there can be more than one set of books for a business - one for sharing "good" news with the owner(s), another that details the real situation, to be pored over by accountants and the people on the ground operating the business, and even a third set for banks or potential investors. It all boils down to giving people what they want.
The assumption being that what people really want is information that backs them up, that makes them feel good about decisions they have made.
But this is a recipe for disaster.
Every time an investment decision is made, the word "risk" is present. And what great investors do is focus on this - they research alternative viewpoints, products, trends, possible economic policies or fallout from politics, all with the aim of reducing risk and understanding market conditions and what various scenarios could come about. They are not looking to simply confirm what they believe to be "true".
The point is that arriving at a decision from a position of credible, comprehensive information is key. It's not about agreeing with everything that is presented, it's about understanding it, listening, acknowledging, and taking it on board.
And it needs to be done with an open heart and mind, not with the view of proving a point.
Here's another example of confirmation bias. How many smokers do you know who will rattle off names of people they know who have died of lung cancer, never having smoked, or who smoke like a chimney and are a picture of health at 68.
These smokers want to back up their belief that smoking isn't as bad as it's made out to be - and any- way, here are people who missed out on the pleasure and died of lung cancer.
This behaviour is exactly what happens when it comes to investing money, too. We look for evidence that will support our already existing beliefs, such as: stocks are a better bet than bricks and mortar, haven't you seen the returns over the past 10 or 20 years?
Convincing ourselves that we are right is easy.
Stepping out of our comfort zone and challenging ourselves and our beliefs isn't.
So, before you make your next big (or small) decision, look for information that challenges and contradicts what you think. Get to grips with it, and have a sound understanding of the opposite of what you believe, it's one simple - but difficult - step on the path to making better life, and money, decisions.
Nima Abu Wardeh is the founder of the personal finance website www.cashy.me. You can contact her at firstname.lastname@example.org