{"id":3595,"date":"2022-04-16T23:56:00","date_gmt":"2022-04-16T15:56:00","guid":{"rendered":"https:\/\/www.granitefirm.com\/blog\/us\/?p=3595"},"modified":"2025-05-18T09:01:10","modified_gmt":"2025-05-18T01:01:10","slug":"vaguely-right-than-wrong","status":"publish","type":"post","link":"https:\/\/www.granitefirm.com\/blog\/us\/2022\/04\/16\/vaguely-right-than-wrong\/","title":{"rendered":"I would rather be vaguely right than precisely wrong"},"content":{"rendered":"\n<p>For amateur investors, it might be surprised to them, vaguely right is better than precisely wrong.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #ffffff;color:#ffffff\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #ffffff;color:#ffffff\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/04\/16\/vaguely-right-than-wrong\/#Practically_correct_is_more_important_than_precise\" >Practically correct is more important than precise<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/04\/16\/vaguely-right-than-wrong\/#Simply_Right_is_important_than_wrong\" >Simply Right is important than wrong<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/04\/16\/vaguely-right-than-wrong\/#Can_be_judged_by_common_sense\" >Can be judged by common sense<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/04\/16\/vaguely-right-than-wrong\/#Fingers_and_toes_investing\" >Fingers and toes investing<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/04\/16\/vaguely-right-than-wrong\/#Why\" >Why?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/04\/16\/vaguely-right-than-wrong\/#Related_articles\" >Related articles<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Practically_correct_is_more_important_than_precise\"><\/span>Practically correct is more important than precise<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In <a href=\"https:\/\/berkshirehathaway.com\/letters\/1993.html\" target=\"_blank\" rel=\"noreferrer noopener\">Buffett&#8217;s 1993 shareholder letter<\/a>, Buffett wrote: &#8220;<em>Academics, however, like to define investment &#8220;risk&#8221; differently, averring that it is the relative volatility of a stock or portfolio of stocks &#8211; that is, their volatility as compared to that of a large universe of stocks. Employing data bases and statistical skills, these academics compute with precision the &#8220;beta&#8221; of a stock &#8211; its relative volatility in the past &#8211; and then build arcane investment and capital-allocation theories around this calculation. In their hunger for a single statistic to measure risk, however, they forget a fundamental principle: <strong>It is better to be approximately right than precisely wrong<\/strong>.<\/em>&#8220;<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\"><span class=\"ez-toc-section\" id=\"Simply_Right_is_important_than_wrong\"><\/span><strong>Simply Right is important than wrong<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Warren Buffett saying quoted in <a href=\"https:\/\/www.amazon.com\/Warren-Buffett-Way-Robert-Hagstrom\/dp\/1118503252\" target=\"_blank\" rel=\"noreferrer noopener\"><em>The Warren Buffett Way<\/em> by Robert G. Hagstrom<\/a>, Wiley, November 4, 1994. Buffett admits, for the simple reason that calculating future capital expenditures often requires rough estimates \u201cI would rather be vaguely right than precisely wrong.\u201d <\/p>\n\n\n\n<p>Buffett quoted the famous saying of the economist<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/05\/01\/investment-master-john-maynard-keynes\/\" target=\"_blank\" rel=\"noreferrer noopener\"> John&nbsp;Maynard Keynes \u201cIt is better to be roughly correct than to be precise.\u201d <\/a>To compare intrinsic value as an estimate value, it is really appropriate to use it here now.<\/p>\n\n\n\n<p>Keynes believed that the accuracy of stock valuations was nothing more than a comforting device, perhaps an illusion intended to give a sense of certainty in an unpredictable world. Buffett actually has the same idea and opposes the use of false accuracy when estimating the intrinsic value of stocks. They all understand that doing so will not only over-emphasize the quantitative factors and underestimate the non-quantitative factors that may affect the stock price, but also because of the uncertainty, the valuation of any stock must not be very accurate, and will only fall within a possible range at most. In short, investors must incorporate errors into valuations.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\"><span class=\"ez-toc-section\" id=\"Can_be_judged_by_common_sense\"><\/span><strong>Can be judged by common sense<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>During Berkshire Hathaway Annual Meeting 2007:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Buffett (2007) said \u201cIf we see someone who weighs 300 or 320 pounds, it doesn\u2019t matter \u2014 we know they\u2019re fat. We look for fat businesses.\u201d<\/li>\n\n\n\n<li>Charlie Munger (2007) pointed out \u201cWhen you\u2019re trying to determine intrinsic value and margin of safety, there\u2019s no one easy method that can simply be mechanically applied by a computer that will make someone who pushes the buttons rich. You have to apply a lot of models. I don\u2019t think you can become a great investor rapidly, no more than you can become a bone-tumor pathologist quickly.\u201d<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\"><span class=\"ez-toc-section\" id=\"Fingers_and_toes_investing\"><\/span><strong>Fingers and toes investing<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In 1996 Berkshire Hathaway annual meeting:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Charlie Munger: &#8220;We have such a &#8220;fingers and toes&#8221; style around here. Warren often talks about these discounted cash flows, but I \u2019 ve never seen him do one . . .&#8221;<\/li>\n\n\n\n<li>Warren Buffett:That&#8217;s true. It&#8217;s sort of automatic. If you have to actually do it with pencil and paper, it \u2019 s too close to think about. It ought to just kind of scream at you that you \u2019 ve got this huge margin of safety.<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"158\" height=\"116\" src=\"https:\/\/www.granitefirm.com\/blog\/us\/wp-content\/uploads\/sites\/2\/2022\/09\/Frickr.jpg\" alt=\"vaguely right \" class=\"wp-image-13818\"\/><figcaption class=\"wp-element-caption\">credit: Frickr<\/figcaption><\/figure>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\"><span class=\"ez-toc-section\" id=\"Why\"><\/span><strong>Why?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Before clarifying the principles and general direction, or deciding on the wrong direction, doing things with a head cover desperately, no matter how serious it is, it\u2019s in vain \u2500\u2500\u2500 \u201cAfter all, things that are not worth doing, no matter how good they are, it\u2019s useless. &#8220;. The basic thumb of rule of our life, everyone with basic common sense knows that when used in investment, there is no difference, or even more serious, because you may lose all your hard-earned money; it may be because of this. Cause your family bankruptcy and you will never be able to turn over.<\/p>\n\n\n\n<p>Like Buffett said: &#8220;That which is not worth doing at all is not worth doing well.&#8221;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Related_articles\"><\/span>Related articles<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/03\/16\/risks-investors-should-face\/\">What are the risks investors should face up to?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/04\/16\/vaguely-right-than-wrong\/\">I would rather be vaguely right than precisely wrong<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/05\/17\/risk-vs-uncertainty\/\">Risk vs Uncertainty<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/12\/26\/complicated-math-stock\/\">Complicated math is not required in stock investing<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/12\/19\/investing-has-no-formula\/\" target=\"_blank\" rel=\"noreferrer noopener\">Investing has no formulas, but there are ways to invest successfully<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/10\/02\/investment-uncertainty\/\" target=\"_blank\" rel=\"noreferrer noopener\">The uncertainty in investment<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/11\/29\/price-and-value\/\" target=\"_blank\" rel=\"noreferrer noopener\">Misunderstanding of price and value<\/a><\/li>\n<\/ul>\n\n\n\n<p><em><strong>Disclaimer<\/strong><\/em><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><em>The content of this site is the author\u2019s personal opinions and is for reference only. I am not responsible for the correctness, opinions, and immediacy of the content and information of the article. Readers must make their own judgments.<\/em><\/li>\n\n\n\n<li><em>I shall not be liable for any damages or other legal liabilities for the direct or indirect losses caused by the readers&#8217; direct or indirect reliance on and reference to the information on this site, or all the responsibilities arising therefrom, as a result of any investment behavior.<\/em><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>I would rather be vaguely right than precisely wrong. Warren Buffett saying quoted in The Warren Buffett Way by Robert G. Hagstrom, Wiley, November 4, 1994. Buffett admits, for the simple reason that calculating future capital expenditures often requires rough estimates \u201cI would rather be vaguely right than precisely wrong.\u201d<\/p>\n","protected":false},"author":1,"featured_media":13818,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14,15,42,11],"tags":[],"class_list":["post-3595","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing-concept","category-charlie-munger","category-john-maynard-keynes","category-buffett"],"_links":{"self":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/3595","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/comments?post=3595"}],"version-history":[{"count":24,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/3595\/revisions"}],"predecessor-version":[{"id":36382,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/3595\/revisions\/36382"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/media\/13818"}],"wp:attachment":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/media?parent=3595"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/categories?post=3595"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/tags?post=3595"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}