If everything is justifiable, what is correct?

September 08, 2026

One problem with AI chatbots, as you've probably noticed, is that you can push them around to reflect back to you almost anything you want. Sometimes they'll dig in a little, for example when I told Claude it was violating the securities laws (which it was), it got defensive. Teenager Claude.

In the financial markets, this is not new. Financial search queries for the past two decades have generally returned something in line with the query. In markets themselves, one problem is that enough information exists to back up almost any idea or thesis. So how do you know what to do, if everything is justifiable?

In a way, indexing punts on the whole problem. Instead of trying to figure it out, indexers just give up and say, "We can't, we're done, it's 5 o'clock somewhere." It feels weird to say that giving up is a smart thing to do, as that is not how all of us were raised. But in this case the indexer just says, "Let monkeys throw darts to pick stocks; they outperform the professionals anyway, and all those fancy financial towers exist because the salespeople are good at convincing Americans otherwise."

But are we all to withdraw like Heraclitus of Ephesus, who in 500 BC became depressed and misanthropic as he pondered the unreachable nature of truth? And Heraclitus was 60 years old when he died--admittedly a good run for his era, but let's face it, he didn't have to worry about exhausting his retirement portfolio.

For those of us who have the reality of money and life to deal with, decisions do need to be made, if not at the individual stock level. For example, indexes track many asset classes. Ratios between them, rebalancing, index construction--these things matter, and hence require decisions, which demand critical thinking.

This is where things get difficult.

The chancellor of Vanderbilt, Daniel Diermeier, recently quoted the Kalven Report:¹ "The university is the home and sponsor of critics; it is not itself the critic." Internally, as investors we have to be the sponsors of critics, but also have enough conviction in our thinking to choose a path forward. In that regard, we're different from a university, which should both discover and continually embrace differing ideas.

One way you can clarify financial decisions is to invert your thinking. This was an approach championed by Buffett's partner Charlie Munger. In the summer of 2025, energy trader John Arnold posted on Twitter a good example of thought inversion. He used the example of federal land ownership, as the feds were talking about selling publicly held land. Many people were opposed. The opposition group thought a lower amount was bad. But inverting this, there were few people in that group saying, "the feds should actively buy more." Did this mean, Arnold asked, that a large chunk of America thought federal land ownership percentages were, somehow, exactly correct?²

This same type of critical thinking underpins personal financial decisions. You must be the university, open to differing ideas. But as you approach adoption of an idea, which you have to do if you don't want to end up wallowing like Heraclitus, inverting the question can expose logical weaknesses.

That critical thinking creates conviction in investing, so you aren't just being pushed around.

~Dan Cunningham

1. The Kalven Report is a famous 1967 University of Chicago policy document that establishes institutional neutrality on political and social issues.
2. There are other explanations, such as maybe people thought more land is better, but knew it wasn't going to happen, so didn't say anything.