Inductive Versus Deductive reasoning; the hidden benefits
Inductive thinking teaches you to actually look at the data provided with a different set of eyes and not to accept as factual any data, even if it seems to come from the most pristine of sources; it teaches you to break down everything, and reanalyze it all through a different lens. In applying this form of thinking, you dramatically cut the amount of flawed data that goes into your analysis.
Instead of simply blindly accepting raw data you actually decide to objectively look at this raw data and then decide whether it should or should not be used. It is widely known that government data is extremely manipulated (and this has never been truer. Since 2008, the Central bankers have manipulated the markets and the data in way never seen before in the history of the markets) and thus no matter how prestigious the company that provides the data, the data is and will always be flawed.
Advantages of Inductive Thinking
One of the main tenets of Inductive thinking is to build a comprehension of the basic rules of mass psychology; by reading past and present issues of the market update you will slowly but surely understand how to apply mass psychology to not only help you with your investments, but you will find out that it can be applied to improve all aspects of your life.
Remember the two most important principles for success are patience and discipline and so do not feel that you have to rush out and buy the plays in our portfolio; take the time to understand and learn our investment rules and the way we operate before deploying your money.
New opportunities are always presenting themselves so if you miss one, there are plenty more around the corner; the problem with most is that instead of embracing opportunity when it knocks, they are busy waving goodbye
New thoughts on the subject July 2017
Disadvantages of Deductive Reasoning
Understanding the basic concept of mass psychology is imperative as it is the only tool that pushes the mind to focus on inductive thinking as opposed to deductive thinking. Deductive thinking is where you are given a certain bunch of facts, and you use these facts to come up with a possible outcome. However, what if the facts given to you are faulty or worse yet fake. Then, no matter how thorough your analysis, the result will be flawed.
Benefits of Inductive Thinking
Inductive thinking involves using the higher part of the mind. Here you search for the facts and then use these facts that you obtained from your own observations to draw a conclusion. When it comes to the Financial Markets, Inductive thinking is far superior to deductive thinking. Very few are able to understand this process, let alone use it effectively.
The reason for this failure is that most market participants are trained to believe that they have to work very hard. they are also told that they need to spend an endless amount of time memorizing facts to improve their skills. Nothing could be further from the truth. The general concept can be summarised as follows, you should be very nervous when everyone is happy and vice versa. Once you understand this, you can then work on fine-tuning your understanding of this very powerful and invaluable tool.
The Tactical Investor Pays Attention to Mass Psychology and for that Inductive thinking is a pre-requisite
At TI our focus is on the behavioural patterns of the average individual (mass mindset). It’s the mass mindset that interests. Understand the mass mindset and you understand the markets. We would like to take the time to remind everyone that before one could walk or run one had to learn to crawl. Before one could crawl one had to want to crawl. Thus, if you seek to change you must first want change. Change is not something that comes about without some effort; effort is necessary because one has to deprogram one’s mind from old concepts that one was falsely led to believe.
Inductive Versus Deductive reasoning; think out of the box & set your mind free
Your mind has been trained for decades to accept what mainstream media and so-called experts deemed to be true. Here at TI, we view no one as an expert (this includes us). We are not in awe of any being on this planet nor shall we be in awe for anyone who claims to know it all. We do, respect the giants from the past and few from the present. These individuals usually go out of their way to state that they don’t really know much but are open and willing to learn as much as possible. Idiots are forever clamouring for attention while the wise desperately seek to avoid it for they know their efforts are best directed towards seeking more knowledge rather than wasting time basking in the light of false glory.
Thoughts from other individuals on Inductive thinking
The strength of inductive reasoning lies in establishing probability. You might observe that when it is very cloudy there is rain. Pure inductive reasoning would say that means it will rain on all cloudy days. You will observe days when this is not true, but through inductive reasoning, you establish the probability that it could rain on a cloudy day and prepare accordingly.
Another strength is that inductive reasoning allows you to be wrong. It is only through more observation that you determine whether your premises are true. Detectives use this method of reasoning when investigating a crime. They see patterns or make observations that lead them to certain conclusions. That sets their path in motion, and they will either prove their conclusion right or wrong with further investigation. The value is that this form of reasoning has at least given them some direction Full Story
Inductive reasoning begins with detailed observations of the world, which moves towards more abstract generalisations and ideas. When following an inductive approach, beginning with a topic, a researcher tends to develop empirical generalisations and identify preliminary relationships as he progresses through his research. No hypotheses can be found at the initial stages of the research and the researcher is not sure about the type and nature of the research findings until the study is completed.
As it is illustrated in the figure below, “inductive reasoning is often referred to as a “bottom-up” approach to knowing, in which the researcher uses observations to build an abstraction or to describe a picture of the phenomenon that is being studied” Full Story
Differences between deductive and inductive approaches to research
One of the most important issues in research is the research approach. Researchers usually use one of the two widely known research approaches i.e. deductive and inductive. Both of the approaches have their advantages and disadvantages and both impact on many aspects of a research. The aim of this article is to explore the differences between deductive and inductive approaches to research.
What is the deductive approach?
According to Gratton and Jones (2009), the deductive approach involves testing of a pre-determined theory, explanation or hypothesis. This approach helps researchers ascertain a hypothesis by using existing theories. Existing information is dissected to accept or reject the hypothesis in order to achieve the research aims (Gill and Johnson, 2010).
Advantages and disadvantages of the deductive approach
Deductive research is a focused method of testing hypotheses. However, some critics would argue that this approach does not encourage divergent thinking. It may also limit the scope of creativities.
What is the inductive approach?
According to Gratton and Jones (2009) inductive approach generates the explanation from the data collected. It is the opposite of deductive research. Aims at exploring a new theory. It is about moving from specific observations to broader generalizations and theories.
Advantages and disadvantages of the inductive approach
Inductive approach is flexible as the researcher does not have to follow any pre-determined information. However, critics would argue that if observations are incorrect, the researcher would end up in incorrect conclusions.
Deductive vs inductive approaches to research
There are some differences between deductive and inductive approaches to research. In the deductive approach, the researcher begins the process by considering past and present theories concerning the topic of the research. This helps the researcher develop some hypotheses. The new hypotheses will then be tested by the researcher in the process of conducting a new study. The collected data will either confirm or reject the hypotheses. Full Story
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