Avoid Clueless Investing With This Thinking Strategy

Avoid Clueless Investing With This Thinking Strategy

When you see the big picture, you can plan your next move. Learning how to do this is called “Blue Hat” thinking, a thinking strategy explained by Edward de Bono in his remarkable “Six Thinking Hats” model. I recently blogged about Red Hat thinking, an intuitive grasp of what something means by relying on the right hemisphere of the brain’s skill at seeing patterns at a glance.

Blue Hat thinking lets you do the same thing—see the whole pattern—but this time using the more sequential approach of the left brain, the logical side of your cerebral cortex. Blue Hat thinking tries to grasp the dynamics of a process. It translates data into usable information and asks a series of questions to grasp the big picture and develop a focus. This helps maintain the discipline necessary to complete a project.

Blue Hat Thinking In Action

In chess and investments, patterns are a part of the game. With Blue Hat thinking, you can become very good at evaluating emerging patterns. As any chess player knows, no two games are alike. Each game has innumerable variables that lead to infinite permutations. Like a snowflake or a fingerprint, one game of chess does not resemble any other game. So how can you develop a Blue Hat approach to a game of chess? One example of a Blue Hat approach is to become conversant with the literature on chess openings. By studying chess openings – say, the Ruy Lopez, or the Réti Opening— you have a clear idea of how to open with your white pieces and anticipate black’s moves; and, if you’re playing black, you have a good idea of what white is trying to do and whether to accept or decline a gambit.

Like chess players who study the patterns involved in opening moves, investors don’t simply try one thing after another hoping that something will work out. Instead, they perform a thorough analysis of market conditions before investing. Investors might, for example, observe technical indicators on charts; or, they might stay abreast of a company’s performance in the news; or they might study seasonal variations on a particular commodity, product or service. Depending on the nature of their investments, they use Blue Hat thinking to understand market fundamentals, evaluate emerging patterns, and estimate probabilities.


Blue Hat thinking in chess or investments improves probability thinking. It helps you anticipate a probability by recognizing patterns and observing changing trends in a particular marketplace so you know how to respond. There’s just one more hat to go to close this series on how investors can benefit from Six Thinking Hats, so stay tuned.