Your Biases and Market Perception

Take a long look at the blue-ring image on this post. Keep your eyes focused on the red dot in the center. Stare for a bit and see what happens.... Did you notice the blue ring fade from your vision?  This is a trick of the eye, of course, but goes to prove a point about investor behavior as well.  In this modern age of information overload, there are opinions, statistics, and even a few facts scattered across the internet and media.  But the way we interpret all this noise is dependent upon our internal beliefs and opinions.  As humans, we filter out the information that does not support our current position and focus only on the information that buttresses what we want to believe, just like you focused on the red dot and the blue ring faded from sight.  This is called cognitive bias and can be an enemy of disciplined investing and portfolio management. I believe that a good financial advisor should know what the financial press is saying to their clients, but to always recognize that this bias exists -both in their clients and themselves.  Woe is the client whose advisor continually acts upon their "gut" as I've worked with too many clients whose advisors followed their bias to the financial detriment of those that hired and trusted them.  Success is most probable when you stick to a sound long-term strategy and stay stoic in the face of those whose opinions attempt to sway you from your course.