The Klarenbach Report, Jan 24
Human behaviour is fascinating. For the past seven years, I have focused much time and energy on understanding my worldview and how it impacts my behaviour.
A worldview is a collection of attitudes, values, stories and expectations about the world around us, which inform our thoughts and actions. A world view is not who you are. It’s what you believe. It’s your bias.
Bias, as defined by Wikipedia, is a disproportionate weight in favour of or against an idea or thing, usually in a way that is closed-minded, prejudicial, or unfair. Biases can be innate or learned.
Many common types of bias can influence how we think and act in our everyday lives, including Confirmation bias.
Confirmation bias is the tendency of people to favour information that confirms or strengthens their beliefs or values and is difficult to dislodge once affirmed.
This week I was reminded of the time I published a grain report presenting one bullish sign with an overwhelming emphasis on evidence supporting my bearish thesis. In my attempt to be unbiased, I prefer to acknowledge any signs counter to my thesis to serve as a self-check and an educational component for my readers.
A university buddy with unsold grain in storage sent me a message commenting that my newsletter sounded like there was hope for increasing prices. I was surprised by the focus on the two lines addressing potential price support levels while ignoring the seven times I mentioned that I was bearish or the six statements that my sell signal had triggered, each printed in bold to draw attention to the comments.
Our mind protects us by giving more weight to information that confirms our beliefs while disregarding or downplaying information that contradicts those beliefs. We all experience this, and it is essential to develop an awareness of when it occurs.
I was thankful for this conversation as it was a beneficial exercise reminding me to be aware of my own bias and the effects of seeing what we want to see.
To avoid confirmation bias in situations like this, we need to seek out and consider a wide range of information when making decisions. We can accomplish this by reading multiple news sources, talking to others, and consulting with experts in the field.
Additionally, we should be open to the idea that our existing beliefs about the market may be incorrect and be willing to change our minds in light of new information.
Trent Klarenbach, BSA AgEc, publishes the Klarenbach Grain Report and the Klarenbach Special Crops Report, which can be read at https://www.klarenbach.ca/