To what? – you might ask.
To whatever you are somewhat interested in.
We are masters in paying zero attention to what we are not interested in.
All thanks to our inborn or learned biases.
Regular readers of Tacomob are aware that biases are important aspects of our factual inertia. Even if we are confronted with facts that should cause us to update our understanding of the way the world works, we often neglect to do so. We persist in only adding facts to our personal store of knowledge that jibe with what we already know, rather than assimilate new facts irrespective of how they fit into our worldview.
This is akin to Daniel Kahneman’s idea of theory-induced blindness: “an adherence to a belief about how the world works that prevents us from seeing how the world really works.”
Now, let’s take a break from this “heavy” reading and watch an entertaining 2-minute clip.
Do pay attention to this classic whodunnit and find out:
DON’T READ ON YET – WATCH THE VIDEO TO THE END FIRST
NOT YET
WAIT
FINISHED WATCHING THAT VIDEO?
So, how was it for you?
How many changes have you spotted?
Blame it on our inattentional blindness (aka change blindness). That quirk of our information-processing system. When looking for one thing, we completely ignore everything else around us.
It’s when we are paying attention to the wrong things that what we should have been paying attention to jumps up and bites us on the derrière.
Examples:
A) Wealth
It has little to do with how much you earn and a lot to do with how you live. We’re all investors – I assume – attempting to grow our net worth in order to gain more control over our time and possessions.
It’s a two-part equation: Wealth minus wants and needs.
We don’t give enough attention to the latter half.
The easiest way to grow wealthier is learning to live with less, because living with less has a higher success rate than attempting to earn a fortune, and fortunes tend to push aspirations and desires higher anyway.
B) Big vs. Small
We are more impressed by the fact that a particular unit trust had a 50% return last year than we are discouraged by the fact that the same fund has an expense ratio of 3% and a sales load of 5%. This tendency to pay more attention to big numbers than small numbers is called Bigness Bias.
C) Long-term vs. short-term perspective
We have a ridiculously short-term mindset. Whether you’re willing to admit it or not, one of the reasons that you often underperform simple portfolios is because you are far too impatient and undisciplined (this fact might apply to the author too, but I am consciously aware of it and working against it). All of this activity of checking your portfolio so often and buying and selling diverts our attention from the profoundly important long-term investment policy decisions on which we all should concentrate our time, energy, and thought.
D) News vs. reality
Now, if we can add that idea of inattentional blindness to our cognitive toolkit, we will be better able to pay attention to that not-so-obvious counterevidence – those anomalous bits of data that make our picture of the world a little weirder, more mysterious, less clean, less done.
Thank you for your attention.
I know, one of the rarest commodities today is time to pay undivided attention to anything, and the fact that you give me some of your attention and read up to here is truly humbling. Like me, most of you might just busy scouring the internet for new “stuff” at a faster and faster pace as our attention span is dropping.
I try to make my writing worth your time and to make you think …
… and remember to always look out for cyclists.
Am I successful in that?