temperament
Verify It Yourself
The rule
Believe no claim just because of who said it. Re-do the sums yourself first, the way you re-count your own change in a shop.
Where it flips
Push it too far and doubting all experts becomes its own trap. You cannot personally re-check every audited account, and refusing every expert leaves you stuck or trusting only your own mistakes. The fix: check what you reasonably can. For the rest, prefer sources whose motives and track record you have already tested, rather than trusting nobody at all.
Thorp trusted plain arithmetic and his own testing over big reputations. This held whether the subject was cards, roulette, or the stock market. Titles, confidence, and famous names are not proof. A claim is only as good as the check you can run on it yourself. For a normal investor, this means reading the actual report, re-doing the return sum, and asking 'how would I know if this were false?' before you act.
A worked example
An advisor tells Arjun a fund 'always beats the market'. Instead of just trusting him, Arjun pulls the fund's own fact sheet. He compares its five-year return of 11% against the index's 13%, and finds the claim is simply not true. [illustrative]
How to spot it
- ·Re-doing the numbers before you act
- ·Asking 'how would I know if this were false?'
- ·Checking the real documents, not the sales pitch
Edward O. Thorp · A Man for All Markets