This is the eighth article in a series about Post Modern Security Analysis.

Truth, Fact, and Opinion

Fundamental concepts in open source research include “truth”, “fact”, and “opinion”. These ideas have occupied philosophers since the beginning of history.

Truth ... beyond our reach

Since Post Modern Security Analysis is meant to be a practical field, it is convenient to choose a rather arbitrary, but useful, definition for these terms:

  1. Truth: Objective reality in a theoretical universe that lies beyond human capacity of verification. Philosophers have many definitions of truth, but for practical purposes, we shall think of truth as a ideal — a goal that never can be obtained with certainty.
  2. Facts: Statements that would generally be accepted, universally, as representing truth, based on available knowledge at a particular time. At one time, that the earth was the center of the universe was considered to be true. Later, people thought it true that the sun was the center of the universe. Still later, the idea that the universe had a center at all was in doubt. Today, scientists ponder “parallel universes” and “membranes“.   “A fact is a pragmatic truth, a statement that can, at least in theory [to a certain degree], be checked and confirmed. … A scientific fact is an objective and verifiable observation, in contrast to a hypothesis or theory.[1]
  3. Opinion: Any statement that would generally be regarded as a belief or non-factual interpretation or position of a particular individual or group. An opinion may be based on fact, on conjecture, or on faith — but is still only an opinion. Theories and hypothesis are opinions, not facts. All belief systems have at the core a set of axioms or fundamental propositions that cannot be proven and must be taken on faith. That millions of people, or even a majority, may hold a certain opinion, does not make that opinion a fact, unless the opinions would almost universally be regarded as true.

Most open source information about capital markets is opinion. Prices in securities markets are expressions of opinion (among other things such as the forces of supply and demand). What passes for a “research report” in most investment markets is almost always a statement of opinion, which may or may not be based on fact.

Relevant facts

The central idea of Post Modern Security Analysis is to rigorously separate the gathering of relevant facts from the development of useful opinions based on the analysis and interpretation of these facts.

An early Ford: interesting but irrelevant

“Relevant facts” are those that help answer questions that the analyst poses at the start of the research process. Every research assignment should start out with express or “implied” questions that guide the researcher in sorting useful from irrelevant information.

See: Implied questions on Capital Market Wiki and Recommended formats for research projects.

Most information available on the Internet regarding capital market topics — both, opinion and fact — is irrelevant to the purpose of most research projects. For example, a research project on the Ford Motor Company will turn up thousands (or millions) of pages about the various automotive models produced by the company, information on car repair, tips on bargaining with car dealers, and so forth.

The fact that the New York Stock Exchange sponsored the racing car driver Marco Andretti is interesting, but irrelevant, to most capital market research projects about that exchange.

See: Open source analysis tradecraft.

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