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This is good advice. Unfortunately, it's really hard, because an opposite of the statement is also good advice: Don't underreact to weak signals. I honestly co
by jerf 4y ago
This is good advice.
Unfortunately, it's really hard, because an opposite of the statement is also good advice: Don't underreact to weak signals. I honestly couldn't tell you which I see more of. Overreactions are intrinsically easier to notice, since they're big and showy, but I kinda suspect there may be more "underreaction" in the world.
Unfortunately, having the precisely correct level of reaction is really hard and I don't have any solid snappy advice for it, except that's one of the things that is probably irreducibly related to having experience and wisdom and not just raw intelligence.
- Mathnerd314 4y agoWell usually there are lots of signals. Overreacting means you might do something that's misguided and expensive. Underreacting means you miss a signal or two and delay a big risk until the information is certain. The pay-off is asymmetric. If you have a process for spending money in place and people with too much free time on their hands then overreacting might be OK. Too much research never hurt anyone so "overreacting" by investigating thoroughly is probably not wasting your time. But if your reaction process is throwing money at ideas you'll probably just get scammed.
- largepeepee 4y agoIt also depends on what climate you are. Overreacting to signals in a bull market was probably the right move with the abundance of opportunities. The opposite is of course true now.