DEEP RESEARCH · PROBABILISTIC THINKING
“Likely” vs. “70% Probability”
Why investment hypotheses should be recorded as numeric probabilities rather than vague wording
0. Bottom line first
It is better to write “there is a 70% probability that next year’s revenue growth will exceed 10%” than “it is likely that next year’s revenue growth will exceed 10%.” Numbers align meaning, reduce self-justification, and make it possible to track forecasts against actual outcomes and improve estimation skill.
1. Numbers Are Better Than Words
Likely
Different people can assign different meanings to the same phrase, and it becomes easier to rationalize after the result differs.
70% probability
The meaning is shared more consistently, and forecasts can be compared with actual outcomes to correct estimation errors.
The phrase “likely” is interpreted differently by different people. But writing “70% probability” makes the meaning more consistent for everyone reading the same statement.
Interpretation: In investment judgment, a numeric probability is a better unit of record than an ambiguous adjective. It allows me to check later whether the call was right or wrong and how the probability estimate should be adjusted.
2. Four Advantages of Writing Probabilities
- People assign different meanings to the same phrase, but numbers create a shared meaning.
- It reduces the problem of unconsciously rationalizing a vague statement.
- By tracking predicted outcomes against actual outcomes, I can correct errors in probability adjustments. Feedback from the tracking process improves estimation ability.
- When the result differs from the forecast, it is easier to accept. If an ongoing investment turns out to be wrong, decision-making becomes easier.
3. Application in Work
Please refer to this for work. When writing an investment hypothesis, it is better to use numbers such as 70% where possible, rather than phrases like “high,” “low,” or “there is a possibility,” and then compare them with actual outcomes later.