ahistoricality: Behavioral Economics and Politics.
And while we’re on modifying behavior, everybody’s linking to this one.
Rock Ridge, Rock Ridge…
Rockridge Institute – Bush Is Not Incompetent.
MSNBC%u2019s Star Carves Anti-Fox Niche – New York Times: Note the Stewie Griffin doll and the Family Guy calendar. Really, how anti-Fox can Olbermann be?
1. Stuff you know, that actually is true
Investors are historians not futurists. We’re overloaded. Even with the best data available, like our fund profiles, you’re dealing with 10,000 funds, each with 100 bits of data that’s actually old news, usually at least 3-6 months old. So you oscillate between a false sense of being well-informed, and insecurity about the truth.
2. Stuff you think you know, but is wrong
Economists, securities analysts and cable’s talking heads know our brains prefer positive upbeat news. Eternal optimists, they speak the good news. You know you don’t know the future, so you turn to the media and press for hints, thinking maybe if you just listen to CNBC long enough, or read one more newspaper, or research one more fund, you’ll figure out tomorrow. The blind are leading the blind. Your mind is rationalizing a bad idea.
3. Stuff you know you don’t know, but obsess about
Every day the media talks endlessly with hundreds of market gurus, economists, CEOs. You get all the contradictions, oxymorons, dilemmas, paradoxes, a daily torrent of conflicting data about tomorrow’s unknowns and unpredictables. So you obsess anxiously, trying to figure out what you can never really know until after the fact.
4. Stuff you know to be true, but deny
Our minds are masters at denying the truth, even when it’s staring us in the face. In hindsight any damn fool could have predicted the dot-com collapse. But greed drove us and we denied P/E ratios mattered. You’re fortunate if 25% of what you know is true. But the fact is, even when you feel you’re right, you might still be dead wrong, unable to let go of even a bad idea.
5. All the stuff you don’t know that you don’t know
Stuff you don’t see until after the fact, when it’s too late! Unknowns that unpredictably crash markets: Natural disasters, deficit collapses, homeland terrorist attacks, nuclear war.
(Via The Big Picture: What Do You Know?)
In response to the old question, “What do I put in my Portfolio?”: Read it, since there’s a decent chance I’ll be looking at your portfolio someday.