On Bullshit ...

Detecting an everyday phenomenon

Bullshit is an ever-present annoyance in the world. It is especially rife in finance. It’s everywhere, a constant daily occurrence in pretty much any organisation I have ever worked for.

You don’t realise it for obvious reasons when you start out, as you virtually have zero detectors for it being fresh. The same was true for me. I believed pretty much everything without thinking, especially when it came from more senior colleagues.

Over time, I got the hang of it and understood that bullshit is just part of the corporate game. I was lucky enough to have had a boss who was ruthless in not only detecting but also punishing bullshit. He did it to everyone and boy, that was refreshing. He had one of those buzzers (see picture below). It was hard at first, but the more I got punished, the better I understood how it will help me understand & question things, a key ingredient to being a good decision-maker and, ultimately, an accomplished investor in my view. It is easy to even bullshit yourself.

Everybody’s doing it

To some extent, we all bullshit. Even when we’re out of our depth in a conversation, we still feel the need to weigh in. So we do.

Bullshit is pervasive in our culture. Whether we want to or not, we all contribute to it. And we often feel confident in our ability to recognize and avoid it. 

The philosopher Harry Frankfurt thought that bullshit occurs when we’re required to talk about something we’re not really familiar with. The author goes even further: his research shows that we bullshit whenever people ask us our opinions. How well-informed we are doesn’t even come into it. 

And we’re even more likely to bullshit when we talk to people who know less than we do. In the author’s research, 41% of participants used bullshit when talking to someone new to a subject; but only 29% bullshitted when talking to someone knowledgeable.

Feynman technique

Throughout history, there have been individuals who possess the remarkable ability to spot and dismantle the intricacies of what we colloquially refer to as "bullshit." One such luminary was Professor Richard Feynman, an esteemed physicist and Nobel laureate and one of Paper Alfa’s heroes.

Known for his brilliant mind and unparalleled insight, Feynman approached the task of detecting and exposing bullshit with a unique methodology that is still revered today, including myself.

• Be a sceptic

  Feynman emphasized the significance of maintaining a healthy dose of scepticism. He understood that accepting information blindly can lead to deception and erroneous conclusions. To uncover the truth, Feynman actively asked questions, challenged assumptions, and sought evidence to support or refute claims.
  

• Be a critical thinker

  Critical thinking formed the basis of Feynman's approach. He was acutely aware of the need to analyze information critically, scrutinize claims, and evaluate the evidence provided. His meticulous examination led him to recognize inconsistencies, logical fallacies, and unsupported arguments that often underpinned bullshit claims. By honing his critical thinking skills, he could separate fact from fiction with remarkable precision.
  

• Ask for evidence

  Feynman firmly believed in the power of empirical evidence. He recognized that claims without substantial evidence were mere conjecture or, more bluntly, bullshit. Whenever faced with questionable statements, Feynman insisted on concrete facts, observable data, and reproducible experiments. This commitment to empirical evidence elevated his analysis, allowing him to expose baseless claims and separate truth from fiction.
  

• Embrace intellectual humility

  Despite his exceptional intellect, Feynman maintained intellectual humility. He recognized the limits of his knowledge and embraced the idea that no one person holds all the answers. This humility served as a valuable tool in detecting bullshit, as it allowed him to remain open to alternative viewpoints and perspectives. Rather than letting pride cloud his judgment, Feynman was receptive to new information and considerate of different opinions. This can very easily be applied to observing someone’s stance and conviction when speaking about a subject. I use it often.
  

• Communicate complexity with simplicity

  An integral aspect of Feynman's ability to detect bullshit lay in his gift for communicating complex ideas with simplicity and clarity. By breaking down convoluted concepts into easily digestible explanations, he could uncover instances where individuals attempted to obfuscate the truth with jargon or convoluted language. This skill helped him cut through the noise and identify genuine knowledge from the superficial bluff. This is one of the core tenets and the core of Paper Alfa’s quest to communicate clearly and easily.

Bullshit & the Real World

I am extremely sceptical by nature. If I am ever confronted with any topic I am not overly familiar with, I would seek to understand the basic concepts, collect an array of alternative views and ideas and try to figure out who the experts are in that particular field.

How do you know who the people are one should trust? A possibly good starting point is to ask yourself whether a certain domain could attract a lot of bullshiters. We have a bingo! Finance, for obvious reasons, attracts plenty of them.

Now, one has to distinguish between bullshit and just opinions. I have nothing against a well-thought-out argument that has been carefully tested and analysed. Everything else, in simple terms, has to be considered bullshit.

The well-established truth is that finance is a pseudo-science lacking proper empirical rigour. That makes sense; we have plenty of theories as to the macroeconomic workings yet lack any proven evidence of how it actually all works. Rather, we find various schools of thought, whether it is based on monetarist or Keynesian economist foundations.

Long Real / Short Fakers

You know of my often-cited Twitter slogan to short fakers. But how should you go about identifying them from the real ones? As in many things, you need to have a system. This can be very subjective, of course, but there has to be an inherent process as to how you filter things for yourself.

In professional investing, that’s relatively easy. Ask for someone’s experience and (if available) track records. I can tell you from personal encounters that clean track records are also very hard to come by. How do you know whether that person was really the only decision-maker who was mostly responsible for the performance? I have seen quite a few sell other people’s tracks as their own and worse.

Given the plethora of information out there, pretty much anyone can act and pretend to have the relevant experience. This is especially true on Fintwit. Recommending trades and views is a tricky field. How do you know whether someone’s got some skin in the game? You don’t, but you can certainly get a feel for whether, over time, they tend to be more right than wrong.

As for me, I keep a close eye on how credible someone is over time and get a handle on whether there is a repeatable process in their thinking or do they simply copy other people’s trades and sell them on as their own. I have encountered several accounts that pretty much just act as a distributor for other people’s ideas in order to generate traffic for themselves. There is no way of avoiding those but time and, unfortunately, some frustration will ultimately help you to separate the good from the bad.

Is Paper Alfa real? You will know my answer, but the best thing is to go and evaluate for yourself.