Truth, Facts, Opinions and Absolutes

Guest Article written by Robert Kramer

Smile Robbie, or it might never happen, my grandmother used to say to me. Which usually only pissed me off and made me not want to smile, ever, at anyone. Why should I have to smile if I didn’t want to? It wasn’t like I was sitting alone in the back yard, crying, screaming, jamming sticks into my eyes. I wasn’t doing anything to hurt myself or anyone, so why was it so important that I walk around everywhere I went, lips parsed, baring teeth? It has been my experience in life that people who walk around smiling all the time are either supremely well-adjusted (though not usually), or hiding some form of deep suicidal depression. The point, though, is that I was just being who I was. As a kid I used to think a lot, daydream a lot, and ask a lot of questions. And if I wasn’t smiling it usually meant I wasn’t thinking about anything particularly funny.  Imagine that. But if something was funny or amusing, then guess what – I would smile.  At least a little.

Now I am thirty-four, and am still constantly amazed how so many people I talk to have this underlying belief or attitude that their way in the world is the way in the world.  It may sound like a semantic argument, but there can be significant real-world consequences that come from this rigid type of thinking. Granted, there are many people out there who have the education, experience and ability to understand the difference between an opinion and a fact. But it is disheartening to see how many people speak in absolute truths about different subjects without acknowledging that what they are really talking about are their beliefs. The old saying goes, you are entitled to your own opinions [beliefs], but not your own facts.  Know the difference.

For the purpose of this discussion, a fact is something that exists that can be touched, viewed, heard, measured and verified by others. We can save the Master’s Thesis for later, but many people accept their opinions as facts, and an opinion is not a fact. Someone’s opinion might be their truth, but it is not a fact. I will give you an example. I have a friend who said to me, “We are the only life in the universe – someone has to be at the top of the food chain.” I know I should probably keep better company, and I did attempt to offer some perspective to his statement. I talked about the trillions of other stars that exist and the statistical possibility that some of the planets that orbit those stars might be suitable for some form of life. But those possibilities were immediately rejected. In his mind there were no other perspectives. His belief was his truth, unsupported by any facts (or reason). My response (supporting the possibility for extra-terrestrial life) was also a belief, but at least I acknowledged it as such, presented facts to support my view, and was receptive to further information. To me, there was a definite difference in the quality of thinking in that exchange. As the other adage goes: his mind was made up, don’t confuse him with facts.

You may be asking, who cares about your random geek-level discussion about extra-terrestrial life, or Star Trek, or any other topic? Well, it is not about extra-terrestrial life or Star Trek per se, it is about the process by which people come to conclusions, and the decisions they make based on those conclusions. In the life exists, no it doesn’t discussion, there were no practical, real-world consequences to our beliefs. There were no decisions that had to be made, so our reasoning skills and conclusions were not important. But if you apply my friend’s same rigid, belief-oriented way of thinking to say, government or religious problems, or investment decisions, or any other person or group who has the power to effect real-world change, then all of a sudden those thinking and decision-making processes become very important.  Why you believe something becomes extremely important. What if The Church (using the term generally) believed again that some women are witches and returned to a policy of burning them alive? That’s a pretty real consequence to an unsubstantiated, poorly-reasoned belief. No, of course we don’t burn ‘witches’ (anymore!), but rigid, unsubstantiated, belief-oriented thinking is still everywhere: Jesus is the son of God, gays shouldn’t marry, aliens do or do not exist, democracy is the best form of government, stock markets are or are not efficient, etc. Examples abound. And there are many people who are either unaware of, or do not care about, how much of their world-view is based on this type of thinking — until they find themselves on the detrimental side of it. On an individual basis, someone’s beliefs may not impact me directly. But cumulatively, our thought processes and beliefs are what we call culture, and culture has a massive impact on the world and how we fit into it.

Speaking of culture, if I may digress for a moment, I actually rather like Star Trek, and the character Spock in particular. For those that do not know, Spock is a Vulcan, a race of ‘people’ who are extremely logical and keep their emotions under tight control. I like him not because he lacks emotion, but because I identify with his approach. There is a logical receptiveness to everything he does. I know logic is not an end-all be-all way for every situation, because a person’s logic can be and often is a product of their individual education and experience. I also know emotion and belief are both necessary, healthy, vital parts of the human condition. Beliefs help create value and structure, and give meaning to people’s lives (believing in a higher power, for example, can be a catalyst for positive change in someone’s life, or it can bring strength in times of need). I just think the process of how you come to your beliefs can be equally as important as what your beliefs are. Process matters.

The point I am making is that I didn’t smile at my grandmother simply because she was my grandmother and she told me to.  From my grandmother’s perspective, kids who didn’t smile were considered not well-adjusted.  Those were her experiences and beliefs, learned or taught to her over her eighty-plus years of life. I was only five or six, but even at that age I knew I didn’t want someone telling me what to do, at least not without offering me (what I considered) good reasons for why they were telling me what they were telling me. I never accepted people’s rules “just because.”  Just because why? Because you are my mother/father/grandmother? Because that’s the way it is? Because that is what you were told? Who told you?  What if you are wrong? What if they are wrong? I don’t understand.  I’m not doing it. At which point I was usually threatened with having my video games taken away.  I believe it is necessary for people to evaluate where their beliefs come from and why are they accepted.  This is a learning process which is important. Your beliefs will impact everything you do.

So the question that follows is: do you know where your beliefs come from (assuming you know what they are) and how they impact the decisions that you make? What decisions are you trying to make?  Are you trying to get a job, start a business or go back to school? Maybe marry that girl or guy you’ve had your eye on. But why are you wanting to start that business or marry that girl or guy? These are all questions with real-life consequences. Please tell me that your attitude, opinions, processes and beliefs are yours — that when you speak (like my friend did) and make choices, your words and actions are not simply the noxious, regurgitated by-products of someone else’s bad ideas. No, not everyone is as feeble as that last sentence makes it sound.  But enough are. And I’m just saying that people are people.  Some are good and some are bad and some are well-intentioned and some are misinformed. Pay attention and make your own decisions, that’s all.

It is better to grasp the Universe as it really is, than to persist in delusion, however gratifying or reassuring.

Carl Sagan said that, and I believe it.  It is my truth. It’s just not a fact. Imagine that.

You might like my 2017 epic release: Trend Following: How to Make a Fortune in Bull, Bear and Black Swan Markets (Fifth Edition). Revised and extended with twice as much content.

22 thoughts on “Truth, Facts, Opinions and Absolutes

  1. I’m really surprised I’m the first person commenting on this post. There is a correlation to thinking about trend following and how one person perceives the right course of action. Sometimes they conflict.

    When I first read about trend following, I thought to myself, it can’t be this simple. It’s impossible.

    It took me awhile to grasp the difference between what “I think” works in the markets & what “actually works” based on evidence given. Your books provided evidence. The hard part was accepting it as truth. So it was a war with my truth vs. your truth. You won, and in the end, so did my bank account.

    This article is the essence of what makes trend following so hard for people to accept. People want to believe that trading in the markets is a complicated ordeal. You have proven IT IS NOT. Simply follow the trend.

  2. Robert, great theme for an article! I also see this problem with people in today’s society. It is so much easier to accept than challenge. Though, challenging perception that has been turned into fact is not for the meek. This article reminded me of a quote from Atlas Shrugged by Ayn Rand: “Rationality is the recognition of the fact that nothing can alter the truth and nothing can take precedence over that act of perceiving it.”
    In my experience, being rational takes a willingness towards verbal confrontation. Many people think I love to argue. Wrong! I love to understand what is true and not afraid to pursue it with anyone. Any thoughts?

  3. Jonathan,

    I agree. And it takes a person confident in their own abilities and sense of self to be able to have that type of truly honest, open discussion. The ironic thing is that so many people hate to be wrong, but it is in the process of being wrong that allows you to come, often, to correct or effective conclusions, decisions, etc…

  4. In the spirit of your article, Benjamin Franklin once said: “It is a citizen’s first priority to always question authority”.

    Most people simply don’t…

  5. This is an excellent article. The tool for someone to be able to analyze the validity of one’s belief system is the art of critical thought. Critical thinking requires rationality, self awareness, honesty, open-mindedness, discipline and judgment. In order to use this method of thought one must be taught how to. Unfortunately, there are several factors in out contemporary society not only impeding on the art of critical thinking, but outright discouraging it.

    First, our school system has turned overly career centric. The subjects that have been tantamount to teaching most of the greatest thinkers of all time are falling out of vogue. Subjects that teach you how to think are being replaced by subjects that teach you certain skill sets.

    And while job skills are certainly important, the pendulum has swung too far away from the humanities, philosophy, and history- the subjects which have reigned supreme in educating the brightest minds for thousands of years. People aren’t learning HOW to think. A recent study that followed 2,322 undergrads from 24 universities in the U.S. throughout their 4 years in college and found that in the first 2 years, 45% of students showed no improvement in critical thinking skills, and after 4 years 36% still showed no improvement.

    Aside from the art of critical thinking being accidentally assailed by our schooling model- it is being directly assaulted by the rise of the evangelical movement and its model of faith. The congregation is expected to suspend belief in lieu of faith. This becomes a problem when the congregation applies this belief system to other areas of life-such as politics or crime and punishment. I’ll forgo specifics to avoid being controversial, but I certainly attribute that staunch partisanship in this country to the suspension of independent thought and a lazy reliance on faith in demagogues.

    Sigh. Every year we are getting closer to future the Narrator of Idiocracy described: “The years passed, mankind became stupider at a frightening rate. Some had high hopes the genetic engineering would correct this trend in evolution, but sadly the greatest minds and resources where focused on conquering hair loss and prolonging erections.”

  6. Both trading and Internet startups have a 90%+ failure rate. It ain’t easy and we can’t all be “winners” (talk about wishful or illogical thinking)!

  7. @Armando- According to your logic, you must be the most special and/or luckiest person you know! Assuming you are still trading.

  8. @Heather: this is very true (critical thinking being assailed). There are a multitude of factors for this, with self-serving political interests being close to the top of the list. My response here is not meant to be a political post, just suffice it to say that teaching critical thinking is far from being a priority in schools (at least in Florida, and I am speaking of high schools in particular). Passing the FCAT test is top priority. Regurgitating facts and plugging in numbers into an equation is top priority, with no understanding (or caring) of the context of why learning those skills is important (and sometimes learning those skills is not important). The impetus is for schools to produce students who ‘get it right.’ They teach conformity. Who cares how much knowledge you can retain if you do not know the context of that knowledge and how to apply it. Again, this is where I agree with Heather – the humanities, and History, if taught ‘correctly’ (with an eye towards thiking critically), are the subjects that require you to think globally, to understant context, and to support opinions with critical thinking skills. In my high school I.B. program, I did not have a single multiple choice test in four years. Not one. Because the point of that program is to teach students to think, explain and solve problems in all disciplines with a critical eye (and then to use this skill to be productive citizens in the world). This should be the standard, not the exception. But it is not, and we see the results everywhere.

  9. Love this post – we all need to use critical thinking in ourlives. Is also extremely interesting that many corporate offices dont want critical thinking. People think that challenging one views or challenging a person above you in the corporate latter is not appropriate and you will definitely will be label as not being a team player. Or a trouble maker.

    I dont undestand the logic of leaders not allowing for challenge – not allowing people question things – either you want zombies obeying orders or you want people who can think critically and add value.

    But the current society does not allow that – either you go by yourselve in the world or ust accept and conform

  10. A great post.

    It’s what good science and zen have in common. They both utterly detest anything coming between the fact and ourselves.

  11. In my own experience, when looking at the beliefs that I have lugged around through my life to date; Most have been stories, and quite a few of them absurd, in my opinion.

  12. Armando,

    My commodities broker tells me more than 95% of accounts close out with a lower balance, and often a zero balance.


    The fact that SOME traders repeatedly win year after year to the tune of millions and millions of dollars tells us that it CAN be done. Which is why this article is so important.

    The FACTS of how to succeed are written plainly and simply in Michael’s books. But I maintain that 95% of people refuse to follow them. I have always said that we could hand out Ed Seykota’s stock picking software to anyone who wanted it…and 95% of people would STILL lose money because they would be unable to accept the facts of positive expectancy that are sitting in front of them. They would be swayed by their own perceptions of what SHOULD happen…backed up, as usual, by CNBC, Bloomberg, and Cramer.

    I have observed that most people would rather FAIL in good company than SUCCEED on their own. Hence, they follow what the read and hear on TV. And because we are on our own in these markets…most people fail. They then call up their buddies and have a great story about the one that got away…but they continue to lose money, often until there’s none left.

  13. Modern Science what a joke. If you have a dissenting view you don’t get funded. If you have a view that differs from the “official view” then you are not worth listening to. Even in China a communist country you can question evolution but not in Yee old Good USA. It is stated as fact but you can’t bring up any comment despite its many holes. Critical thinking is not simply about facts. Godel the great theoretical physicist showed that facts are contextual as well. His incompletness theorem changed the face of science and how we think. You can be critical in both sides of an argument and both sides usually have facts associated with them. The above article shows a bias towards the author being right. The fact is that the universe could be infinitely large and we couold be the only life in the universe. Thinking that there is other life does not make it so. Hence the fact remains that as far as we know – emphasize KNOW – the only place there is life is here (for the most part). If you want to be OBJECTIVE and speak about FACTS, then what you know is that life is HERE. When you have PROOF of another alien intelligence then we can discuss that FACT. Enjoy.

  14. hideo,

    I agree…there are no “facts.” We are always limited by the grossness of our senses and the ability of our instruments to measure. Someone might say the desk this is being typed on is solid, it’s just “common sense.” But a physicist and an x-ray machine can show clearly that it is, in fact, made up mostly of empty space. Yet, we perceive solids as “solid.”

    A belief in entropy and random probablitlity are the bases that a successful applicator of trend following needs to develop. Those “guaranteed” patterns that chartists think they see in the charts are figments of their imagination, a gut response to the human need for understanding. We think we see repeatable patterns everywhere…but they are non-existent and will lead us astray.

    The best we can do is to play the beginning of every trend and cut losses when we are wrong. There is nothing that says we deserve to be right, no pattern, no analysis of “facts.” But when the planets among billions of planets line up for a time, we make some money…until they misalign once again and the trend comes to an end.

    Anybody who thinks they can figure out all the “facts” in a multi-variable investing universe and arrive repeatedly at a successful conclusion is mistaken.

    And I will bet my portfolio that that individual is losing money, especially if he/she is highly intelligent.

  15. @hideo: I agree that facts are contextual, and reference that point in my earlier comment. My discussion with my friend about alien life referred to thought processes. I never stated that I know for a fact alien life exists. I stated it was my belief, supported by facts that are generally accepted. I was not referring to being right, I was referring to having a better process, in the context of that discussion. And PROOF, to use your capitalized word, is also contextual.

    @DGDye: this gets a little more complicated, but philosophically speaking, I agree that there are no “facts.” Again, they are contextual, which is why I reference a definition, for the use of the article, as to what constitutes a fact. In everyday life, for utlity purposes, there are facts (per the article’s definition). The road exists, the tree is there, etc. This acceptance of the “facts” serves a purpose for us in our everyday decision-making and thinking. My article questions thought processes more than the other (but no less intriguing) discussions of “what is a fact?” or “what is the difference between fact and knowledge?” You mention “the best we can do is play the beginning of every trend” and cut losses, etc. I agree. But you also mention charts are a figment of people’s imagination. Well, a chartist might have a mathematical way to discern a pattern. How is this different than someone defining, per their own experience, what the they believe the beginning of a trend looks like? Those are two belief sets — how is one any less valid if it has a positive expectancy and also uses the metric of price?

    Again, it is important to not confuse a belief with a fact, or facts with knowledge. Interesting topics for sure. And again, real world consequences, for sure.

  16. @hideo hamaguri: good science, not modern science.

    Before we speak about facts it’s essential to directly abstract from our senses, and consider things in themselves, distinct from what we may “think” about them. I think this is what Robert Kramer is pointing at.

    And yes critical thinking is all about facts. To arrive at the fact chip away at the inessentials(mental fragmentation and differentiation).

  17. I have to say this is a very stimulating thread. I can see why some would say there are no facts. Some philosophers of science like Karl Popper actually denied the existance of positive evidence. They declared learning from experience to be not by positive evidence but by negative evidence.

    We discover facts by “backing away” from untruth. It’s a negative process. In this sense one might say there are no facts since there is nothing to discover but only to drop. In a world of opposites, no frontal assault on facts is possible.

  18. @ rob kramer

    You and I agree…I give no more credence to trend following’s methodology than I do to astrology…and I say that as a successful TFer.

    In fact, I’ve read all of George Soros’s books, for example, in which he gives very detailed accounts of his analytical genius (quite justified, by the way…he’s a very smart man). But then in the minor paragraphs, almost as an aside, he shows how he is ruthless with his losses and lets his winners run. After reading his books, I’m left with the view that all the philosophical and analytical explanation is just filler…piles of gibberish to make yet another human feel that he is able to ascertain a cause for his effect.

    In fact, the real secret to his success appears to be dipping his toe in when things appear to align, and then placing massive bets once he is favored by momentum. Yet he manages to rationalize his success through his long, after-the-fact, analyses.

    So, I would suggest that even random market entries after which one cuts losses and lets winners run will produce positive results. This is why I get a chuckle over screen addicts who watch their computers and CNBC for hours/days/weeks at a time looking for the golden impetus for a trade.

    You can have three traders…a bull, a bear, a neutral…enter the same market at the same price and ALL of them can make money: the bull when the market goes up over the next three months; the bear when it falls in the first week; the neutral guy who plays the oscillations throughout the entire course of his trade. To paraphrase Clinton’s campaign slogan: “It’s the EXIT, stupid!”

    In other words, the “facts” behind one’s entry are irrelevant and, just like Soros’s rationalizations, are there to make us feel like we’re contributing to the winning team, when in fact we are just placing bets on multiple model occurrences and sticking with the reflexive ones (to use Soros’s terminology) that result in trends and bubbles.

    We think we’re the star quarterback, when, in fact, we’re the water boy.

  19. @DGDye: Van Tharp mentions that in one of his books – that a random entry, when combined with money management and rigid adherence to the trading system, results in a positive expectancy strategy (though with large drawdowns in his testing).

    The price is what you can measure, the rest is conjecture, in my opinion.

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