We can easily forgive a child who is afraid of the dark; the real tragedy of life is when men are afraid of the light.”
I have just retuned from the AIA Conference on the Gold Coast. Speaking as such events is always interesting since the audience represents a departure from the normal crowd I speak to. Whilst you don’t spend all your time preaching to the converted, most of the people I speak to about trading have an understanding of my world view. From my perspective trading is an internal endeavour where you try and control your most basic instincts in order to achieve sufficient clarity where get to a point where you can listen to what the market is telling you. In short you have to clear your mind long enough to let the data talk to you.
However, for the most part those who attend the AIA Conference come from a different mindset. My observation from watching other sessions is that they tend to be captive to the narrative of investing. The things that appeal to them are statements such as a lot of people are wearing beanies this year so Kathmandu would be a good investment. The story matters more than the data or technicalities of trading/investing even when the data is correct and the story is not. I am loath to label it as a generational issue but there does seem to be a certain philosophy that goes along the lines of – I have always thought this way so will continue to think this way. We have a group that is hamstrung by the notion of the narrative fallacy and this does in part explain their resistance to new fangled ideas such as data.
However, there always seem to be some who operate from a basis of personal incredulity, that is I cannot understand it therefore it cannot be true. We all at some stage run into cognitive roadblocks where we simply lack the brainpower to understand a given topic. For example, I have no facility with languages at all and I am forever grateful that my phone can speak every language in the world. But this doesn’t mean that I don’t accept that other languages exist or that having a working knowledge of these languages might not be of some utility. It is the inability to accept the utility of data that I find most interesting and the most controversial slide you can show someone at the AIA is that time in the market is a stupid idea that needs to be binned. Showing such a slide clashes so severely with their existing world view that it is instantly rejected even when no argument cannot be mounted against it. The attendees have been so indoctrinated by the traditional fund manager/broker speak that all evidence to the contrary is dismissed.
It is this inability to accept evidence that intrigues me and it is a general human trait – we are not very good with data particularly when it clashes with our world view. We do possess a wilful ignorance about not only facts that are inconvenient to us but which also question our very basis for belief.