Dismantle your binary thinking
Most of us are programmed from birth to think in binary terms.
Right and wrong, good vs evil, heaven and hell, cops and robbers, snake and ladders, to name but a few.
Binary thinking keeps things simple at the expense of reality.
Break the binary chains restraining your mind
We do not live in a binary world. We live in a multivariate world.
The core of investing is assessing probabilities. If you think in binary terms you’re closing your mind to the raft of possible outcomes.
This is a quick rant, inspired by the following example of binary thinking resulting in a logical fallacy.
When 50-60% of your revenue is “highly likely” to reoccur, then by definition 40-50% of your revenue is “highly unlikely” to reoccur.
That sentence is at the end of this great write-up on billing software company Gentrack. [Update: author was being humourous, it was a play on words.]
If 50-60 percent of revenue is highly likely to reoccur then all you know is that 40-50 percent is not highly likely to reoccur. 20 percent may be likely to reoccur.
Open your mind to a world of possibilities.