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Biases and Medical Market Investing: Part Two

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Our brains have not evolved to seek the objectively true but function as a belief generating machine. We then twist empirical evidence to fit our beliefs. The problem is that the process of evolution that has produced the human brain can never produce optimal design as it can never throw the old and outmoded out. Evolution has added on to primitive animal brains to create human brain but it has not replaced. What evolves is a quick and dirty system good enough to produce reproductive success and not necessarily anything better. Magical thinking seems to be the default mode, critical thinking has to be learned.

Steven Schafersman, a geologist active in opposing pseudoscience has written.” Children are not born with the power to think critically, nor do they develop this ability naturally…. Critical thinking is a learned ability that must be taught. Most individuals never learn it…Critical thinking can be described as the scientific method applied by ordinary people to the ordinary world. This is true because critical thinking mimics the well-known method of scientific investigation: a question is identified, an hypothesis formulated, relevant data sought and gathered, the hypothesis is logically tested and evaluated, and reliable conclusions are drawn from the result…. Critical thinking is scientific thinking. Most people indulge in wishful, hopeful, and emotional thinking, believing that what they believe is true because they wish it, hope it, or feel it to be true. “

In academia, the breeding ground of “post-modernism”, where objective reality is the “western illusion” universities today are a place where some academics are unraveling the human genome and others consider genes to be a patriarchal western myth. Academics are the first to live in a total world of the motivational biases- the proverbial “ivory tower”. Alan Cromer, the late physics professor, wrote ” Most of humankind, for most of its history, never learned to distinguish the internal world of thoughts and feelings with the external world of objects and events. … Cutting this connection, which is necessary before science can develop, goes against the grain of human nature.”. But academics unless they are in the sciences, can afford to indulge in and glorify purely subjective thought, its where there is no bottom line and Uncle Sam is there to throw billions around. This situation is quite different in say investing in medical diagnostics where the investor is on their own to reap the benefits or take the loss. As put by Professor William T. Daly “the critical thinking movement in the U.S. has been bolstered and sustained by the business community’s need to compete in a global economy.” Let’s look carefully at what this means, critical thinking isn’t a frilly academic toy, like so many frilly academic toys, but a cold hard necessity of survival in the business world. As put by Alan Cromer, “This hostility to science, in the face of its obvious triumphs and benefits, is additional evidence that it is something outside the mainstream of human development, perhaps a fluke.” But scientific thinking is essential to successful investment banking and business development, which is why capitalism and scientific development have gone together.

By Alexander Nussbaum, PhD
Adjunct Full Professor
St. John’ s University
For Analytic MedTek Consultants, LLC

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