Cognitive Biases – Latitude Post

The latin phrase “nullius in verba” means “take no one’s word for it” and is the motto of the Royal Society.

It is important that we don’t take everything we read and hear as gospel and that we verify all information. This is more vital than ever today in the current “post truth” social media age in which we live. But it is not just within the realms of social media and the free for all ocean of misinformation. Whenever we are presented with or discover new information, it is always important that we do our own research.

In a way “nullius in verba” really means “find out for yourself” or “think for yourself”. It is an antidote to groupthink and encourages us to always draw our own conclusions on something regardless of how believable and credible it may seem to us.

The problem we often have as humans is that we are prone to cognitive biases. It is sometimes too much effort to always verify something and thus we sometimes fail to heed these words. Beyond the effort part, there is also a social stigma issue. That is why groupthink is often so popular. Many people don’t want to stand out and be seen as a tall poppy. They would prefer to fit in and not rock the boat.

But taking no one’s word for something and finding out for ourselves is worth the effort. It can be a rewarding path as we discover unique truths or even secrets. This is something I touched on in an earlier post of mine entitled Just Gimme Some Secrets. In this post I explore truths that very few people agree on, whilst simultaneously unpacking truths or statements that many people believe in yet contain lots of holes. However, I certainly do not advocate contrianism willy nilly. Contrarianism can also be a cognitive bias in itself if abused. Not all universal truths are untrue!

But this is something we have to find out for ourselves.

By Nicholas Peart

4th October 2026

Investing successfully requires a lot of boring fundamental analysis and often the best stocks to invest in are in boring overlooked, but undervalued companies with strong fundamentals and a decent margin of safety. These companies are not prone to hype.

On the other hand you have story stocks. Investing in a story stock does not mean that your investment will go down in value. On the contrary, a stock with a powerful story could make you very rich. Look at Amazon. Then again look at the multitude of other stocks, which had a powerful story behind them, but that was it. Fundamentally they were houses made of cards, which soon collapsed. The Dot.com crash from twenty years ago is littered with such casualties. More recently, the whole WeWork disaster is a prime example of company with an enticing and exciting story (as well as a charismatic and convincing leader), yet with very shaky and fragile financial fundamentals.

The problem with story stocks is that the stock valuation gets to a point where it is propped up much more by the goodwill of the story alone than by the company’s fundamentals. This is very treacherous territory as even a mild downtown or modest bit of bad news can send the share price crashing back down to Earth.

A stock with a unique story behind it is psychologically very alluring. Doing some solid due diligence such as analysing company reports and financial statements requires effort and if you dont have much experience on that front it can seem very daunting. However, with practice and learning you can become better at analysing and understanding all this nitty-gritty stuff, which also enables you to make better investment decisions with a cool head. Knowing exactly what you are investing in and having even just a modest understanding of the full financial health of a company is a very reassuring thing.

I suppose we prefer stories to analysis, because stories have much more of an instant cognitive resonance. Our minds can be lazy and it’s so much easier and more soothing to be swayed by a good story or glowing article in the media on a stock. More succinctly, sometimes a powerful mantra alone is enough to sway us. Software is eating the world or It’s the wave of the future or You are investing in a slice of history or Nobody else is doing what this company is doing are a handful of mantras that can make us overly bullish on a particular stock without questioning it further or taking it apart via some deep research.

The problem with such stories and mantras is that they activate and play to our emotions and making investment decisions based on emotions is never smart. We always have to have a healthy, balanced, critical and analytical mindset to investing without allowing our emotions to hijack and influence our decision making. A cool head always wins.

By Nicholas Peart

Image: 4.bp.blogspot.com

Tag: Cognitive Biases

Nullius In Verba

The Dangers Of Story Stock Investing