Dazed and Confused
It was the early 1980’s by the time I was discovering many of Led Zeppelin’s songs and albums like Dazed & Confused. Of course, many of them had been released a decade or more earlier but that didn’t matter, they were still great. Matter of fact, I’m listening to the above-named track right now. Some form of “love gone wrong” was a common theme in their music and that experience apparently had the effect of leaving the song writer in some sort confused state. Let’s “camp-out” right there for a minute.
Cognitive Dissonance is a term expressing a state of mental disruption or confusion when a person is presented with information or a set of facts that contradict their existing beliefs or positions. The concern that we have at our Firm is how behavioral biases and changes in attitude affect decision making.
I have observed that when a 13-year old expresses some opinion bounded in ignorance that they are swiftly corrected and expected to accept and comply with the new and correct information. When a so-called adult, however, commits the same violation – and is challenged – the defense is that they are entitled to their opinion. To me, that seems to be a dangerous position to take.
I am certainly not suggesting that one should just simply accept “new information” as absolute, but it should be addressed with questions that begin with words like: “why, where, when, how”. From there one can investigate further and with an open mind make better, more informed decisions.
In my opinion, it’s going to be more complicated in the months ahead to earn a return from stocks and bonds. Interest rates are not tolerable to most folks I work for and I don’t expect that to change anytime soon. It’s interesting to watch the expressions of most retired folks when I suggest that they increase their equity exposure in order to increase or maintain their income streams. Everybody, whether they know it or not, is being forced to make decisions that can be summed up with the statement: “pick your poison”. Hey, gentle reader, which do you like best: Market volatility, low/unacceptable interest rates or cash balances that lose value daily due to inflation?
On a somewhat regular basis I hear the comment that “perception is reality”. I tell you now, that’s baloney. Maybe ignoring reality is the basis for the expression “ignorance is bliss”, but I am always reminded of the famous last words of General George A. Custer: “What Indians?”.