Do Your Own Research… Better? (Part 2 of 2)
A subtle shift in your research approach can go a long way in helping you
A quick note from me: This is the second part of a two-part series on “data triangulation.” You can read the first part here, where I set context and introduce the concept. In Part 2, we go over how you can apply it at a high level to whatever you may be researching. Enjoy!
So “data triangulation,” huh?
That first part was a pretty long-winded way of saying that at least two to three disparate views or data points are needed to get a balanced and more detailed picture of a situation before making an observation, drawing a conclusion, or making a decision.
No problem, though.
All you would need is access to some bigshot executive for the “top-down,” be an Excel whiz at developing spreadsheet models for the “bottom-up,” and spend your hard-earned cash on independent experts to tell you that you're probably kind of close or maybe even way, way off.
Well, if you are or readily have access to any of these, then again, I wish I was more like you.
Applying triangulation to your own research
On a more serious note, the point of the digression in Part 1 was to give context and insight based on my own experiences. It was to highlight the importance of having at least two to three different approaches, data sources, or points of view when making decisions.
Now it’s kind of obvious that when researching, you should always be looking at multiple sources before forming an opinion or reaching a conclusion. And generally speaking, the more reliable sources and perspectives you have, the better.
“Well, what’s the difference then?” you may be asking.
The nuance with triangulation is that you should be making a concerted effort to scrutinize any kind of data or information you’re researching in order to be less susceptible to potential selection or confirmation bias (or even outright misinformation and scams).
This is especially the case for any sources that you’ve become accustomed to using.
Seeking information outside of your comfort zone, so to speak, is a key part of this process. And while you may end up disagreeing with some viewpoints, you’ll have at least understood and considered them, walking away with a more well-rounded view.
This is the subtle shift in thinking that I believe can have a drastic change in improving your research outcomes.
It is also a lot harder than it sounds to do in practice.
We’re instinctively wired to dismiss or reject any kind of stimuli—in this case, information—that goes against what we feel like we know or believe. It is part of human nature. But it is also part of human potential to acknowledge this limitation and be wary of it when seeking a balanced view with an open mind.
More often than not, you may just learn something new about the subject you’re researching or even about yourself.
I should also add that there can also be unintended benefits.
Not long after starting to work, I knew that at some point I wanted to begin investing for the future. By nature, I tend to be risk-averse, and when I was trying to learn more about the stock market from my peers, I actually became more intimidated.
Despite knowing that if I made the right moves early on, and that they would pay off nicely down the line, I kept pushing them back.
But it was literally just that: “How do I know if I’m making the right moves?”
Around the same time, I had been following the blogs and articles of two accomplished U.S. economists.
Their political and economic policy views were in two opposing camps, and as you can imagine, they would even sometimes call each other out indirectly through their publications.
While I enjoyed the occasional banter they had back and forth through their writing, more importantly, it was to maintain a barometer on each side so that I at least understood where they were coming from.
They would very rarely, on occasion, share their thoughts and views outside of their realms of expertise, including on personal finance.
By pure coincidence of being a regular reader, when both shared (at different times from each other) that they either had or have significant investments in Vanguard, a behemoth of a global asset manager and market leader in mutual funds and “ETFs” (Exchange-Traded Funds), it caught my attention immediately.
These guys never agreed on anything.
Now, Vanguard is widely known for spearheading index funds and passive investing.
They have become an easy recommendation for new and experienced investors that you often hear from experts today, as has the popular “Boglehead” investment philosophy (by John Bogle, from whom the term is derived, who was the founder of Vanguard).
But back then, major investment funds often had some form of barrier to entry in terms of capital requirements for retail investors, and ETFs, while known and popular within the industry, had yet to become more common knowledge.
You also had to factor in figuring out who to pick from a range of other well-known fund managers (e.g., Blackrock, State Street, Fidelity, etc.)
As a younger person, still reeling from the aftereffects of the Global Financial Crisis a few years on, it was intimidating and not at all obvious where to place my bets.
The revelation that two opposing forces were actually doing the same thing is what helped jumpstart my entry into the world of investing.
This would have never happened if I hadn’t sought out two opposing yet credible viewpoints and made an effort to consistently try to understand them to help round out my thinking.
To recap on research
Doing your own research is obvious and important when it comes to trying to make an informed decision on anything, including your own personal finances.
If it is within your means, seeking advice from a licensed professional is something else that should also be seriously considered, especially if the stakes are high.
Making change is never easy. We have picked up habits and routines over time, and because we are human, we can be affected by selection and confirmation biases without even realizing it.
This can be especially damaging when it comes to research if you’re not careful with who or what you choose to rely on (e.g., misinformation, scams, etc.)
Working on smaller changes over time is one way to make a bigger difference in the long run. Understanding that triangulation is just another “tool” is important; tools can help you mitigate risks, but they won’t be able to remove them completely.
No matter how robust you feel your research may be, or even if you have taken advice from the most experienced specialists out there, there is always a chance that it just doesn’t work out.
Instead of just “DYOR,” we should also think about how we can do our own research better. Oftentimes, taking a step back to evaluate and improve is what’s required in order to be able to truly move forward.
Looking back, while I’ve come a long way, I’m often humbled by the sheer unpredictability of markets and human nature. I still have and will always have more to learn.
The one thing I do take away whenever I reflect on this period of my life is that I should have made a more concerted effort to save faster in order to start investing sooner.
Thank you for seeing this through. See you in the next one!
#DYORB
P.S. And yes, as disclosure, I have long positions in Vanguard and BlackRock funds and ETFs. This article is for general information purposes only and expresses my own opinions. Always perform your own due diligence and research.