It’s Just Business

I am certain that people want the same things from life.  Safety, health, shelter, food, recreation, relationships, opportunity for themselves, better opportunities for their children.  Peace.

I am equally certain if people were exposed to all the methods to get these, they would evolve a sound answer in the context of their knowledge, skills and preferences. Why then do people tend to choose weaker answers over better ones even when exposed to the better one.

Cartoonist Scott Adams has a partial answer to that question.  It deals with climate science for its discussion, but the idea relates to many more areas. It is worth thinking through the implications of his idea.

Watching The Climate Science Bubbles From The Outside

His point is simple. Once we hold a particular view on a subject we become immune to all information that conflicts. We think we already know all that and so need not burden ourselves with examining it.  We easily assimilate new information with which we agree.  The flaw is that we hold “strong information” in respect to our preferred position and “weak information” in respect to its opposite.

The weak information usually has been provided by the purveyors of the strong information and is by design, biased and or incomplete.  It ignores the fact the the opposing argument may include strong information that we do not possess.

Unbiased positions include strong information on both sides. With weak information on either or both sides,  no opinion should be the position of choice. 

That tendency, Adams calls it cognitive blindness, means that we have the ability to make large mistakes when we could easily have avoided them based on the information to which we are blind.

The caveat is “Don’t believe everything you think.”

In a different context, a good trial lawyer prepares both sides of the case.  If the judge ordered the lawyers to switch sides at the beginning, the good ones would have little trouble adapting to the change of viewing point.  From the two-sided position, strong arguments from either side can influence our decisions.

Financial decisions work like that too. Opposing worldviews can be ignored, but only with a reason. Defeat the proffered information with evidence.

In olden times it was called the contrary view investment approach.  In that context, if the idea is invest in equities, build the case for that, but also build the case to invest in bonds or gold or real estate.  When you do that your investment choices will display comparative advantage. They are the best available, given context.

Knowing how you came to a decision allows review and revision as times change.  Losses minimize, profits run longer. Best of all, like trial lawyers, there is little emotion.

It’s just business.

Don Shaughnessy arranges life insurance for people who understand the value of a life insured estate. He can be reached at The Protectors Group, a large insurance, employee benefits, and investment agency in Peterborough, Ontario.  In previous careers, he has been a partner in a large international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business.

Please be in touch if I can help you.  don@moneyfyi.com  866-285-7772

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