Mr. Martorana,
Thank you for this timely article on recognizing our own biases and interpreting information and news. Timely because these uncertain and emotionally charged times probably exacerbate the degree to which emotions and bias influence people's decision making and investing. That influence is always there. A couple of centuries ago David Hume pointed out that reason is a slave to the passions, and recent experimental evidence appears to confirm this. Even if we understand and accept this principle on an intellectual level, we can still fool ourselves into thinking that we are above the influences of emotion or limited knowledge. In 1974, the physicist and Nobel laureate Richard Feynman recognized the propensity of scientists to jump to incorrect conclusions from experimental data and proposed the first principle of scientific inquiry is that you must not fool yourself — and you are the easiest person to fool. The ongoing success of conmen and conwomen relies on their ability to fool people. So there seems to be a perpetual need to recognize the limitations of our knowledge relative to the complexity of the world, as well as the limitations of our abilities to apply reason to solve problems and make good investments. Your article provides some practical steps that advisors might employ to recognize their own biases as well as the biases in the news they and their clients read.

In my mind, the discussion about investors shifting away from the US because of unrest and instability also brings up the issue of investor goals. If an investor’s primary goal is to maximize return at reasonable risk, then the unrest and instability in the US may discourage investing in US ventures, as you point out. On the other hand, if an investor wants to use some or all their investment to bring about positive social changes in the US, they want to learn about opportunities to do so. Of course that is a very complex topic and perhaps the focus of a future set of articles, but I think it speaks to the importance of understanding the investor’s goals.

Thanks again,
Gregory McIsaac, PhD