Unmasking the Mind’s Wild Ride
Ever feel like your brain sometimes takes you on a wild roller‑coaster, throwing decisions out sideways? That’s what psychologists call psychological biases – those sneaky habits that push us toward illogical conclusions.
The Brain’s Two Speed Limits
- System 1 – the “fast lane.” This instinctive driver helps us react on the fly: a sudden shout, a sharp noise, and we jump back in an instant.
- System 2 – the slow, deliberate co‑pilot. It handles more complex puzzles, like figuring out a tough math problem or planning a vacation itinerary.
Usually, these two systems play nicely together. But when System 1 runs the show alone, it can jack up our reasoning—telling us we’ve found the culprit before the evidence is ready. That’s the birth of biases that mess with our judgment.
From Theory to Award‑Winning Fame
Back in the early ’70s, Daniel Kahneman, Paul Slovic, and Amos Tversky first mapped out these mental shortcuts. Kahneman later snagged a Nobel Prize—and, in 2011, dropped the bestseller Thinking, Fast & Slow to share his findings with the rest of us.
His book broke the mind’s twin‑speed system into plain language, letting readers see why we sometimes act too fast and why that can backfire.
A Friendly Reminder
Next time a sudden absurd hit heads your way—whether it’s a surprising score reveal or a meme—just remember: you’re likely riding System 1. Pause, cue System 2, and see if the squeaky intuition was actually a joke or a real twist.
What is confirmation bias?
When Your Brain Teaches Your Wallet a Little Lesson in “I See It, I Believe It”
Ever get that gut‑feeling that a particular stock is going to skyrocket, just because it’s been on your radar for a while? You give it a high‑score, ignore the warning signals, and decide it’s decision time. That’s the classic “pick what fits” mindset we all unknowingly wear as investors.
The Party Whisper & the Quick‑Grab Trade
Picture this: you’re at a lively gathering, the music’s pumping, and a buddy leans in. “This company is about to explode, you’ve got to buy.” So you’re buzzing with anticipation. Once you head home, you fire up your laptop, and the search begins…
The catch? Your brain is a great gatekeeper. It filters out anything that doesn’t marry your pre‑existing story. Negative reports? Gone. Positive ones? Kaput. After what feels like a marathon of “yay” facts, you’re convinced you’ve done your homework.
Why is it so Easy?
It’s like picking a favorite dish from a menu—your stomach naturally tells you what to order. Your mind is built to cling to the narrative that feels right. The more you search, the more you’ll convince yourself you’re a data‑savvy hero.
What Experts Say (Rewritten for Fun)
- “Big‑data picks you up if it says yes, but if it says no, your brain shrugs it off.” – Shane Parish, in a witty take on the Farnam Street mantra.
- “Prejudice that looks like logic can be more dangerous than outright emotion.” – Edward De Bono, turned up a bit in his “Six Thinking Hats.”
Three Quick Fixes to Dodge the “See It, Believe It” Trap
- Ask a stranger to give you a negative perspective. Trust a friend who disagrees, or flip a coin.
- Set a pause—review each fact twice, once from your angle, once from a skeptic’s.
- End each research session with a blank sheet—write down what you actually want to learn before you look at the data.
Think of it as a mental pop‑quiz: Are you ready for the other side? If you can treat your own beliefs like a test score that’s open to re‑testing, you’ll keep your portfolio from going on a “naïve high‑school” spree.
Bottom Line
Investing should feel like a balanced conversation between your gut and the market—it’s not all about sticking to what feels familiar. By consciously opening up to the contrary, you’ll give your money the smartest opportunity to grow.
Why do we suffer from confirmation bias?
Ever Feel Your Brain Just Won’t Admit It’s Wrong?
When you’re convinced you’re spot on and no one’s getting you about it, you’re probably dancing in the confirmation‑bias club. It’s the brain’s little habit of picking out the facts that prove you right and ignoring the ones that say otherwise.
Why It Feels Like a Personal Victory
There’s a split in what fuels those “I’m right” feelings:
- Desire to be right: That sweet thirst for truth. It’s the kind of drive that can lead you to breakthroughs and, frankly, makes you feel competent.
- Desire to have been right: The pride that gets stuck on the sidelines. This pride blocks you from seeing you’re off track and locks away any chance of updating your knowledge.
According to Willard V. Quine and J.S. Ullian in The Web of Belief, separating those two desires is key. The first helps you reach real insight, the second? Well, it’s a roadblock to learning.
What “Knowing” About the Bias Does (and Doesn’t) Do
Just saying, “I know I’m probably being biased,” isn’t enough to pry the bias away. It’s like having a doorbell that rings but not actually opening the door.
- First step: don’t just search for opposing data;
- Second step: open your mind to the possibility that the other side might actually hold valuable truth.
In short, the problem isn’t that we’re not hunting for new information. It’s that we’re stuck in the old habit of never truly considering a fresh perspective. The challenge? Let your brain catch a break and listen to that alternative voice.
How do we overcome it?
Give Yourself Time
First off, pause and breathe. Don’t rush the big life moves. Take a sec to do the official research, chat with the experts, and wander into alternate angles. Darren Matthews says it like this:
- “It seems logical to add time to making decisions, slowing things down. Time offers a perspective that brings with it the capacity to bring other steps into play.”
In plain English: time = clarity, and clarity = better choices.
Search the Dark Corners
Don’t stay in your own echo chamber. Actively hunt down the counter‑arguments. Dive into the other side of the internet and grab the arguments that scream “I don’t agree!” Then, if it’s convincing, be ready to flip your mind.
- Find the opposing side.
- Stamp out the “yes‑maybe‑yes” feeling – let the evidence lead.
It’s the “open‑mind” approach that gets you the real grit of decision‑making.
The Hard Truth About Changing Minds
As Sia Mohajer notes in The Little Book of Stupidity, it’s tough to shift beliefs:
- “Research has shown that attempts to ‘enlighten’ believers can be either entirely useless or serve to bolster their current belief systems.”
- That’s called entrenchment – you’re basically a fortress, blasting away any contradictory info.
So the key takeaway? Come prepared for the mental gymnastics. Recognize how hard it is to change a mind, and give yourself—and others—a fair shot.
Final words
How We Got Hooked on Confirmation Bias (And Why It’s a Sneaky Party Crash)
“What the human being is best at doing is interpreting all new information so that their prior conclusions remain intact.” — Warren Buffett.
Ever notice how it’s like that friend who insists the pizza topping you already love is the best, even when the new mayor’s salad combo looks promising? That’s confirmation bias, the brain’s way of sticking to its favorite story.
What’s Confirmation Bias, Really?
- Politics & religion – our “favorite” parties or faith styles get a free pass for being right, while the fresh arguments get a quick look‑aside.
- Investing – you buy that shiny new stock because it fits the “big win” narrative you already have, ignoring the red flags.
- In short: the brain’s idea of “why bother thinking differently?”
First, Admit It’s Here
Step one: own it. “I’m not a perfect decision maker. I sometimes swear my gut is right even when the numbers scream otherwise.” Acknowledging it gives us a secret super‑power: actively fighting it.
Guardrails for Your Portfolio (and Your Life)
- Set a skeptical timer. Pause for 30 minutes after you get a new piece of data before making a call.
- Invite a contrarian. Ask a colleague or friend who’s usually on the other side of an issue to weigh in.
- Data dashboards. Keep a visible, up‑to‑date list of your investments’ real performance—like a reminder that ‘A’ isn’t always A.
Just a few tweaks, and your risk of being the “human filter” that turns whole markets into a biased story hub is slashed.
This article originally appeared in The Good Investors and is meant for general info. It’s not formal financial advice. Enjoy learning and stay curious!
