The human mind seeks to “confirm its pre-existing beliefs while ignoring warning signs that we might be wrong,” writes Jason Zweig of The Wall Street Journal.
He uses the example of the surprise Trump win to illustrate how people avoid admitting that they were wrong. “If it requires fibbing to ourselves,” writes Zweig, “so be it.” Psychologists define the brain’s tendencies using the terms confirmation bias and hindsight bias. The first drives us to find support for our pre-conceived notions, and the second compels us to believe that, once an outcome is known, we knew it was coming.
Zweig writes, “This past year showed how tightly most of us cling to our preconceived notions, how fiercely we resist evidence that we might be wrong and how adept we are at deluding ourselves into thinking we were right all along.”
He offers techniques to help counteract these cognitive biases:
- Shun peer pressure from social media or the Internet. Instead, search for a second opinion from those you trust.
- Listen for signals you might be off-base. Instead of trying to find people who agree with you, seek alternative viewpoints “that could alert you when your strategies are going astray.”
“To be a good investor,” writes Zweig, “you have to be right much of the time. To be a great investor, you have to recognize how often you may be wrong.”