The false choices fallacy, also known as the false dichotomy or either/or fallacy, occurs when only two options are presented as the sole possibilities, despite the existence of other viable alternatives. This fallacy misrepresents the issue by oversimplifying the choice, often by excluding middle ground or alternative solutions.

Many of us tend to view a limited number of options as if they were the only ones available. It’s like seeing everything in life through a black-and-white lens, when in reality, there are a million shades of grey in between.

In a difficult situation, you may be presented with two choices: be silent or tell the truth, and these are presented as the only possible options. However, you can also choose to be silent.

Having a mindset fixated on either/or choices leads to a limited perspective when trying to navigate a situation. It results in a narrow view of the issue, neglecting other potential solutions or compromises.
Another issue that the false dichotomy leads to is misguided decision-making among investors. Investors often feel forced to choose between two unappealing options or ideas, rather than considering alternative paths.

Markets have changed dramatically since many of the greats wrote about styles of investment. While there is a time and place for every investment style and philosophy, we are faced with more choices than ever. Businesses are different, exchanges are different, product ranges are vast, and the financial landscape is constantly evolving.

Investors often suffer from False Choices.

I believe many investors face a dilemma when it comes to investing styles. They tend to align with one particular approach and stick to it rigidly. I used to be like this, and it caused me to miss out on opportunities and led to biased thinking. I was so narrow-minded and couldn’t see the bigger picture.

For example:

• Are you a Value Investor or a Growth Investor? Why not both?
• Do you believe in Fundamental or Technical Analysis? Why not both?
• Are you an Active Investor or Passive Investor? Why not both?

Why not use whatever strategy suits the opportunity instead of rigidly sticking to one style of investing? I have a preferred style, but I am open to using other techniques when the situation demands it. I have suffered from this narrow mindset and I’ve realised that being flexible and adaptable to different market conditions is essential.

That’s why I encourage learning, studying, and trying out a variety of strategies throughout your investing journey. Every successful investor I know has experimented with different approaches and has become more open-minded. They have avoided false choices.

Every style and technique has its place.

I believe that all styles, techniques, and investment philosophies have their time and place. The goal is to make as much money as possible while minimising risk.

Bruce Lee says, “Absorb what is useful. Discard what is not. Add what is uniquely your own.” I like to align my own Investment Journey with this quote. I’m always learning, absorbing, discarding and adding what makes sense to me. Removing False Choices has helped me to become a more well-rounded investor.

I think it’s important to be adaptable and flexible in how we perceive opportunities. Every market and business cycle has a style or strategy that is best suited for that environment. Bear markets present value opportunities, bull markets present growth opportunities, and sideways markets may be better suited to passive dollar cost strategies while we interpret where the markets are moving.

Everything has cycles, the idea of eliminating false choices is grounded in adaptability so we can make money in ALL MARKET CONDITIONS.

Short-term trades have their time and place, and reacting to short-term market sentiment and panic by other shareholders could present buying opportunities. I primarily engage in long-term investing but always keep an eye out for opportunities. So, whilst I stick to a rigorous strategy grounded in how I see and view markets, I am prepared to let these beliefs go if I evaluate rewards elsewhere.

I believe in evaluating every idea, market, or asset class with an objective and open mind. I also like to be concentrated but am always open to adding positions when opportunities arise. Adapting is key.

🌊 Adaptability is the name of the game.

Ben Graham, known as the father of Value Investing, was famous for his value-driven and margin-of-safety approach to investing. Nevertheless, when presented with the opportunity to invest in GEICO, a growth business that didn’t align with his usual style, he took the chance and it paid off. This investment in GEICO ended up being more profitable than his entire investing career. His willingness to adapt and seize an opportunity outside his typical approach enabled him to amass a fortune.

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Be like water making its way through cracks. Do not be assertive, but adjust to the object, and you shall find a way around or through it.

Bruce Lee

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The story of Ben Graham serves as a powerful lesson about flexibility in investing. While having a defined investment plan and style is important, being open to adjusting and evolving in response to different market conditions and opportunities is crucial. Whether it’s embracing growth investing in bull markets or adopting a value approach during downturns, the ability to adapt is key to success as an investor.

Ben Graham was not paralysed by False Choices.

Personally, I stick to what I know and what works for me. However, I’m always open to exploring opportunities beyond my usual approach. I believe in evaluating each investment on its own merits, regardless of whether it falls within my typical style or not. Flexibility in approach is essential in seizing potentially lucrative investment opportunities.

Do not let Black or White thinking stop you from alternative options and a more compelling investment idea.

In conclusion, when presented with an opportunity that may be outside of your usual approach, it’s important to consider the options and remain open-minded. You never know when a deal like GEICO could come your way.