You know, when looking at financial reports, 90% of the content is actually noise. There are only two things worth focusing on: facts and commitments. But strangely, most people tend to fixate on those "opinions" and "expectations." Why is that? Ultimately, it comes down to psychological reasons.

People are naturally inclined to listen to stories and to have a bit of fantasy about the future. Opinions are like stories, filled with emotions and colors, making you feel that "this company has a sense of future." Expectations are even more exaggerated; a single prediction from management, even without any guarantees, can lead you to imagine a whole bunch of beautiful scenarios. The problem is that stories and fantasies have nothing to do with whether they can actually be realized.

In contrast, the facts are cold and emotionless. Terms like "declining revenue" and "increasing debt ratio" sound dull, but they represent the reality. Promises are the same; they speak of responsibility and contracts, not dreams. For this reason, many people prefer to focus on views and expectations because they sound pleasant and exciting.

Smart investors will think differently. The more appealing the story, the more calmness is required; the more substantive the facts and promises, the more attention should be paid. For example, some startups proclaim "doubling market share in three years," but when you check their financial statements and find that cash flow is barely enough to sustain operations, what use is that expectation? Conversely, consider old companies like Coca-Cola that have consistently paid dividends for many years; that is a promise supported by facts, making it much more reliable.