Value Judgement

A value judgement is an assessment of something being right or wrong based on the personal values or personal opinion of the person making judgement.

In simple language, it refers to a biased opinion.

Value judgement is one of the things that investors and business people constantly seek to avoid when making business decisions.

This is because the economics of profits and losses are based on numbers. Bringing emotional baggage and biasness into the picture can often induce an individual to make the wrong decisions.

For example a person who loves to eat waffles might think that there is a constant strong demand for waffles everywhere throughout the year. He therefore starts a waffle QSR without conducting research on the actual demand for the food item. Only after opening the store 3 months later does he realize that the losses made does not reflect the true nature of the demand for tasty waffles.

There could very well be a big demand. But maybe the location is a very bad one.

Traders on the stock market especially, needs to practice discipline to avoid passing value judgement on the trades they make.

Emotional attachment to certain counters can often huge losses.

For example, a trader might feel emotionally attached to a blue chip stock as he loves the products that the company makes. This could cloud his judgement in his trading activities such as holding onto the shares even though the financial performance has been on the decline for 4 straight quarters. Even though fallen stock might eventually rise back to it’s high levels, failing to identify fluctuating trends would mean that the trader lost the opportunity to make a profit should he had shorted the stock.

Value judgement in startups

It must be said that even though value judgement is generally something that business people want to avoid, sometimes decisions made from bias preferences tend to turn out as correct, and everyone else is wrong.

For example, many entrepreneurs started their business with a sole belief that their products or services would be in high demand and would eventually hit critical mass.

And despite everyone else telling them that they are holding onto a lemon, they persevere and eventually built their companies into billion-dollar empires.

On top of that, investment outliers who constantly outperform the market often have their own opinions about how a market is doing and the factors that are driving it.

This leads them to make investment decisions that most people don’t.

Resulting in profits and capital gains that are way above the market average.

If there is no value judgement, there would be no gurus and experts for students and newbies to learn from.

Should everyone behave and make business decisions based on what is generally described as correct or wrong, then there would be no thought leaders to learn from and revere.

So in many cases, value judgement should be valued. Especially when we are learning or being trained by people who have a proven track record of success.

When judgement lacks any form of bias, then it can be considered as value-neutral.

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