The body of Shelock Holmes' literature created by Sir Arthur Conan Doyle, is replete with a rich assortment of quotable quotes. Though they occur in the context of his narratives of Holmes as an investigator, they are applicable to all walks of life. I find that a lot of them apply to business management and financial markets. Below are some of my favourites:
1) "...when you have eliminated the impossible, whatever remains, however improbable, must be the truth..."
This is one of the recurring statements; It is mentioned in multiple stories with slight variations. Simple as it sounds, it's one of the cornerstones of any logical analysis.
2) "It is a capital mistake to theorize before one has data. Insensibly one begins to twist facts to suit theories, instead of theories to suit facts."
We all do this so many times. We have our own views, hypotheses, prejudices and biases. Once those are framed, we obstinately cling to them even when the evidence suggests otherwise. Many financial market traders make this mistake in particular.
3) "You see, but you do not observe. The distinction is clear"
4) "There is nothing more deceptive than an obvious fact."
This happens in financial markets all the time. When everyone "knows" something and takes it for granted, the markets end up moving the other way!!!
5) "The world is full of obvious things which nobody by any chance ever observes."
6) "It is of the highest importance in the art of detection to be able to recognize, out of a number of facts, which are incidental and which vital. Otherwise your energy and attention must be dissipated instead of being concentrated."
80/20 at its best. Humans tend to use inductive rationality to make decisions for the future, which is necessary. They cannot process all the information that is available, nor is it necessary. Merely processing additional information does not add to the quality of the decision that gets taken.
7) "We balance probabilities and choose the most likely. It is the scientific use of the imagination."
This is THE requirement of decision making. It is a mistake to construct only one scenario as a possible future outcome. There are multiple scenarios possible, each with differing probabilities.Construct, and then choose.
8) "It is impossible as I state it, and therefore I must in some respect have stated it wrong."
Many a times I have noticed, seemingly, one arrives at the same view or possible outcome, even in differing scenarios. For example, if inflation is higher, equities will react negatively, so buy USD-INR. If inflation is lower, interest rate differentials will narrow, so buy USD-INR. Clearly, we are missing out on what factors are really driving USD-INR.
9) "Education never ends Watson. It is a series of lessons with the greatest for the last."
Truly instructive on how important continual learning is!
10) "We must look for consistency. Where there is a want of it we must suspect deception."
While forming views, often people become subservient to it and try to manipulate opinions accordingly.There has to be consistency in what assumptions one makes. Assumptions are made in two areas: 1) What will happen, and 2) What will be its effect. We may mistakes in either or both at times.
11) "The more outré and grotesque an incident is the more carefully it deserves to be examined, and the very point which appears to complicate a case is, when duly considered and scientifically handled, the one which is most likely to elucidate it."
Beauty of a statement. Many a times we observe that market movements are contrary to the kind of correlations which we expect. Further examination and thought reveals that they actually make complete sense.
12) "I cannot agree with those who rank modesty among the virtues. To the logician all things should be seen exactly as they are, and to underestimate one's self is as much a departure from truth as to exaggerate one's own powers."