In theory there is no difference between theory and practice, but in practice there is. That’s because, for human mind, insights do not pass well from one field to another.
Picture the following. You are led into a room with a table. On the table are three items: a box of tacks, a book of matches, and a candle. Your job is to attach the candle to the wall so the wax doesn’t drip onto the table. You can take as much time as you need. How do you proceed?
If you are like over 75 percent of the participants in the now-classic study by a psychologist named Karl Duncker, who created this experiment in 1945, you would likely try one of two routes. You might try to tack the candle onto the wall—but you’ll quickly find that method to be futile. Or you might try to light the candle and use the dripping wax to attach it to the wall. Again, you’d fail. The wax is not strong enough to hold the candle, and your contraption will collapse. What now?
No one sees the solution at once. Some people find it after only a minute or two of thought. Others see it after faltering through several unsuccessful attempts. And many others fail to solve it without some outside help.
Here’s a hint – think outside the box. Isn’t that a cliché? Thinking outside the box is a phrase which is being overused, rather over-abused, by a parade of creativity experts since ages.
- Spotlight: Big ideas from Value Investing and why applying them in your investment decision making will be a great deal
- InvestorInsights: Interviews with experienced value investors, learners, and deep thinkers
- StockTalk: Thorough analysis of business models of companies (without any recommendations)
- Behaviouronomics: Deep analysis of human behaviour and how it impacts investment decision making
- BookWorm: Reviews of the best books on Value Investing and related subjects
- Free Course – Financial Statement Analysis for Smart People (otherwise priced at Rs 5,900)
- Archives: Instant access to our huge archive from the past three years