Bias and Perspective

I had an interesting conversation with a friend of mine this week, a brilliant thinker, and a technology genius. Our conversation focused on how words matter and how perspectives can be impacted by belief filters.

Bias and Filters

Values filters impact conclusions when it comes to interpreting investment information and economic analysis. Networks are filled with prognosticators that attempt to make sense of oftentimes unprecedented conditions. They imagine what conclusions one might draw from certain headlines. I know this role well as I often appear on CNBC providing my perspective.

It is bewildering to investors to hear a headline about unemployment or a company's earnings numbers and see drastically divergent articles describing the meaning of the data point. Just this week a company reported earnings and two different headlines (listed on the same website) believed the news to be positive AND negative based on their perspective.

Perspective Recognition is the Key

That's really my point; perspective matters. Just as political conclusions can be drawn based on which news sources you value (combined with your core beliefs), the same can be said for those that provide opinions and judgments about markets and an appropriate investment strategy. This is not a statement of who is right or wrong. It is merely a reminder that the bias and perspective of the source of information can impact the conclusion offered.

We tend to be mid to long-term investors, skeptical and borderline paranoid, and generally conservative in nature. For that reason, my answers to questions posed by the media tend to be tainted by this perspective. Additionally, this perspective impacts our investment strategies, and we believe this is appropriate based on our judgment that risk factors are higher and more extreme in a rapidly changing environment. That is our opinion and perspective.

On the other hand, there are those that consider long-term a seven-day period. That’s not our view.

Understand the Filter

What matters when you digest media is understanding that the information you are receiving is inherently compromised by perspective and values filters. You will hear people talk as if what they believe is fact when it is simply their opinion. You will hear differing viewpoints based on time horizon, investment philosophy, self-interest, etc. In short, you will hear people's opinions based on their values that may not necessarily match YOUR values.

Opinions will clash, conclusions will vary. That's to be expected given every person (and company) has a different agenda and philosophy. Make sure you do your best to understand the philosophy of the opinion provided. It will go a long way towards helping you decipher what YOUR truth is regarding the facts.  That's what really matters.