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The Motley Way to Investing Successfully

The ex-chief executive of Microsoft, Steve Ballmer, once said that his kids have been “brainwashed” into avoiding the use of Google Search, a competitor’s product.

In contrast, Alphabet co-founder Sergey Brin had said that he’s a user of all search engines – and that includes Microsoft’s competing Bing search engine. At first glance, it may sound like Brin does not support his own company’s products. (Alphabet, previously named Google, is the parent company of the business that runs the Google search product.)

But, there may be a method to his madness. Using all types of search engines helps Brin keep tabs on the competition. In Brin’s view, it is possible to learn from his competitors. His way of thinking could be superior in this battle between search engines, as Google holds a dominant position in search worldwide. It’s also something useful to note when it comes to investing.

Motley views

I subscribe to Brin’s view in an investing context. I believe that it is possible to draw a bull thesis and a bear thesis for every company.

Take Vicom Ltd (SGX: V01) for instance. I own shares of the vehicle inspection outfit and would naturally have a bullish thesis for it. But in taking a cue from Brin, I had decided to ‘visit the competition,’ and wrote a bear thesis for Vicom a year ago. In fact, I had outlined four possible things to be wary of with the company.

Why would I do that, you may ask?

Confirmation bias

As human beings, we are susceptible to the confirmation bias. This would be the tendency to seek information that only agrees with our point of view. In the process, we may also push away any other information which does not conform to what we believe in.

Confirmation bias can be a dangerous behavioural quirk in investing. That’s because it may blind us to important risks that lurk in our investments. Fighting it may not be easy, but we can try to minimize the effects of the confirmation bias through the use of a bear thesis for stocks that we own.

A Foolish investors, we may want to try to welcome as much useful information from different points of view – a Motley variety of opinions – into the mix. By inviting both the good and bad together, it could well help us think about a company’s investment thesis in a broader way. Doing so may help us spot trouble instead of having our head kept in the sand.

Like in the case of Google, Brin’s way of thinking may well help our own portfolios become dominant outperformers over time.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong owns shares in Alphabet and Vicom.