Did you know that when looking at financial reports, 90% of the content is actually noise? The only two things worth focusing on are 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 born to like listening to stories and have a bit of fantasy about the future. Perspectives are like stories, filled with emotions and colors, making you feel "this company has a sense of future." Expectations are even more exaggerated; a prediction from the 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 fulfilled.

In contrast, the facts are cold and emotionless. For example, "declining revenue" and "increasing debt ratio" sound dull, but they reflect the real situation. Commitments are the same; they speak of responsibility and contracts, not dreams. This is why many people prefer to focus on opinions and expectations, as they sound pleasant and exciting.

Smart investors will think the opposite. The more appealing the story, the more calm you need to be; the more substantial the facts and promises, the more you should pay attention to them. For example, some startups claim "to double their market share in three years," but when you look at their financial reports, you find that their cash flow struggles to maintain operations. What good is that expectation? Conversely, look at an established company like Coca-Cola, which has consistently paid dividends for many years; that is a promise backed by facts, making it much more reliable.