How Cut Through The Bullsh*t

It's interesting (uh, well, to me at least) how writing a post on one topic often inspires a tangential post, then another tangential post, and then another... until you're totally orthogonal to the original topic. Two weeks ago I wrote a post on how we fool ourselves by reading and talking about things, then last week I pursued a tangent on how cooking is a beautifully action-based, low-BS domain.

Today is the orthogonal essay: it's a humble (and probably incompetent) effort on my part to structure my thoughts on BS in general, and how to cut through it. It's a bit of a mindwank, it has nothing to do with cooking, and worst of all it's probably too long. Feel free to skip it.

With that friendly warning out of the way, let's get into the BS.

Defining BS
First, let me spend a minute defining what BS is, at least by my thinking. It's when someone starts giving opinions that are:

1) Frequently without any serious knowledge of the subject, and
2) Typically unaccompanied by any concrete action, planning or goals.

Essentially, BS is talk ("tawk") with neither follow-through nor competence.

One other fascinating characteristic of BS: a person BS-ing never thinks he's BS-ing. That's how it works. If you realized you were outside your circle of competence and had no idea what you were talking about, you wouldn't offer an opinion! Or at the least you'd severely qualify that opinion beforehand.

Finally, the worst characteristic of BS: we all do it and we all like to think we don't.

Some examples of BS might be:

* I can't believe how greedy Big Food is. They make all these delicious, high fat foods just to make us all fat.
* Our government was so stupid to bail out the banks back in 2009.
* This summer Tom Brady and Bill Belichick are finally going to split up. I can feel it coming.
* The rich really ought to pay more in taxes.
* The stock market is overvalued and about to crash.

Two quick caveats: First, I'm not saying that these statements are true or false. I could have easily offered contra-statements to each of the above examples and they'd still be BS. Second, there is nothing necessarily wrong with making statements like these. At least from time to time.

But there is, however, something very wrong if this describes the vast majority of the statements someone makes. Why? Because they are all passive (even effete) statements, unaccompanied by personal action, personal growth, or personal accountability.

The single worst source of BS
Of course, the worst source of BS is media-packaged news, and TV news is the worst of the worst. A vast portion of the punditry opining on television, in editorials and in print and online media are spreading BS too, and this gets us into an important (and toxic) aspect of BS: typically, media pundits make highly confident statements with no accountability whatsoever if it turns out that they're wrong. This lack of accountability is important: it's why Nicholas Taleb angrily uses the phrase "BS vendors" to describe most punditry. It's deeply unfair and unethical if you attempt to persuade people around you to hold an opinion, but you yourself have no downside exposure if that opinion is wrong.

Worse still, the media (and its confidently-stated opinions) tends to be the source of most of the topics we talk about. Let's face it, most people need to be given things to think. Sadly, salient, attention-garnering topics like like crime, violence, inflation, unemployment, inequality, obesity, the latest in studies show science, politics, etc., is what the media gives us to think about. And talk about. This is true only to the extent we consume media and news of course.

A simple solution to BS
Now, let's move on to solutions. Let's say someone around you starts regurgitating opinions on some topic du jour. And you, well, you don't enjoy BS-ing. You don't enjoy trading effete opinions about the world or getting into debates over things that are entirely outside your circle of control. You're much more interested in learning something useful about how the other person thinks, or learning something useful about how to navigate reality. How best to cut through the BS?

Here's what to do: use open-ended questions to ask what specific actions others are taking. What specifically are they doing to prepare for the outcomes they consider likely, for the outcomes that will happen if their opinions are correct?

For a concrete example, let's say you're talking to someone opining confidently that the stock market is massively overvalued and about to crash. Useful open-ended questions to ask might be phrased in these ways:

* Tell me, what are you personally doing about this?
* Would you share with me what you are specifically doing in your personal situation to prepare for what you think is going to happen?
* If you think X is a major problem, what actions are your taking, then, to protect yourself and your family?

Suddenly, the conversation stops being about hand-wringing and pontificating and starts being about how to function more effectively in a world where we hold a given set of opinions. It becomes about how to better navigate reality. It becomes useful, actionable and solution-minded, and no longer just "tawk."

Then again, if the person doesn't have a ready answer to any of these questions, if they mumble, if they come up empty-handed and can't immediately offer any concrete actions they've taken... then they are BS-ing. Both themselves and you. It's time to smile, agree and deflect.

In my former investing career, we used a slightly more jargon-based phrasing of the same question: "Okay, so you think X [the stock market's going to crash/hyperinflation is coming/rates are going higher, etc]. How are you positioned?"

The opining person then has an opportunity to describe what specific actions they've taken: in this case it would likely be a list of the various investment actions they've taken to manage any exposure to their opinion set.

This is a gloriously BS-vaporizing question. It tells you instantly if the person is BS-ing your or not. If someone thought hyperinflation was coming and wanted to say so credibly, they'd be able to articulate specific investment actions they've taken to prepare. Instantly.

Thus if the answer is something like "I hold 25% of my assets in gold, the only stocks I have left are either of companies with very strong pricing power or of companies that have direct commodity exposure, I'm experimenting with some small investments in cryptocurrencies, and I recently bought some arable land in Upstate New York just in case" I can be fairly confident that this person is not BS-ing me. Why? Because it's not just "tawk"! He has taken meaningful financial actions to protect himself from the specific risks he's concerned about.

He might be right or he might be wrong, but at least he isn't BS-ing you.

This is totally, totally different from a pundit BS-ing on TV. Media pundits rarely disclose how they are positioned--and they are likely not positioned in any way at all. Thus they get the benefits of media attention today with zero downside and zero accountability if wrong about their opinions.[1] They get all the upside, while you--the consumer innocently seeking advice and counsel from "experts" in the financial media--suffer all the downside.[2]

We're all BS vendors now
If you think about it, the same thing happen in person-to-person BS as happens with media pundit BS-ing: Opining with no downside. Which is why the question "what specific actions have you taken?" is so clarifying and so anti-BS. It takes the conversation into specific solutions so you can see whether the person opining has any skin in the game, and whether their opinion merits being listened to.

One quick caveat: we probably ought to exclude high BS/low personal action domains like sports from this discussion. If someone spouts the opinion "I think Tom Brady and Bill Belichick are finally going to split up this summer." and you ask "what specific actions are you taking to prepare for this?" you'll get a blank stare. At best.

BS heuristics
I'll close this post off with a few more heuristics on high-BS domains:

1) Any domain where there exists jargon easily adopted and regurgitated by everyone (e.g., bump stocks, quantitative easing, tariffs, etc.) is likely a very high-BS domain. The jargon--and our easy use of it--tends to give us a dangerous illusion of knowledge.

2) Some domains are by definition non-action based and therefore high-BS: politics and economics are worst offenders here. See also professional sports. Again, it's totally fine to talk about these or any other BS-heavy topics! Just know it for what it is.

3) Anything heavily covered in the news or media is likely high-BS. Generally these subjects are laughably oversimplified, offer enormous illusion-of-competence risks, and typically the debate is already pre-framed for us, if not outright propagandized. This is a feature, not a bug, of media coverage.

And, to make this post a little more action-based, let me offer two heuristics we can use to detect and limit our own BS:

1) Try to not forget, ever, that we know very much less than we think we know.

2) It pays to drastically limit our strongly-held opinions. At the very least to limit them only to domains that we have actually performed at an advanced level.

These last two heuristics have a lot to do with the deliciously ironic Dunning-Kruger Effect, which essentially says that people vastly overestimate their competence when they are incompetent in a given domain. And once they actually start to get good at that domain, only then do they begin to realize how incompetent they are (and were). This is psychology's embodiment of Bertrand Russell's fabulous quote "The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt."

Which takes us to our final conclusion. In those (likely very, very few) domains where you have truly deep expertise, you will have tremendous humility about your opinions, and if you have a strong opinion it is a reliable indicator that in that domain you are BS-ing and do not know it.

READ NEXT: Using Your Sophistication and Great Taste Against You

[1] It's a useful exercise for practicing epistemic humility (and also like shooting fish in a barrel) to come up with examples of pundit wrongness. Here are three from the finance and investing media that stick in my mind:
a) "Legendary" investor Bill Miller repeatedly recommended bank stocks on CNBC mere months before the 2008 bank crisis;
b) After allegedly "predicting" the 2008-2009 crash, economic pundit Nouriel "Dr. Doom" Roubini continues, broken record-like, to predict doom and gloom for years afterward, keeping many investors out of one of history's best-performing stock markets.
c) The mother of all stock market "heads I win, tails you lose" BS artists might be Elaine Garzarelli, who after blindly lucking into predicting the 1987 crash became a nearly perfect contrary indicator thanks to the utter wrongness of all her market calls thereafter.

[2] Worse still, articles and interviews about crashes and bubbles get extra coverage, so of course the media brings those to us relentlessly. Think back over the past nine (nine!) years since the 2009 stock market bottom. Have you seen more negative or bearish stories than positive stories in the financial media? How many articles attempted to scare you out of stocks all the way up during this incredible, life-altering bull market? Astute readers might be able to deduce a heuristic here to help them improve their financial decision-making in the future.

[3] If you made it this far down the page, congratulations. :)

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