Biases in feedback lead to CBA

I am fast adopting a bunker mentality. I know that listening to the opinions of others builds a sample set on which to base one's own opinions but the behavioural biases of social platforms make it all too much like hard work.

The only way my opinions can benefit me is through the actions I take based upon them. Yet in expressing them I am suffering from what follows. Demands to justify them or to defend them against evidence to the contrary. It is particularly interesting how people do expect an answer in response to their demands. Where did this expectation that anyone ever needs to respond to a demand come from? It's probably as a spin-off of the journalistic use of the term ‘demand’. We demand answers! Well, I’m not going to give them to you so whatcha going to do about it, do some more demanding? I have no incentive to invest time in persuading others that my views are correct. I will ultimately be judged by the future, not by those challenging me.

Looking at this through a bias filter, anyone who disagrees with an opinion will cite the views of others to support their case, affecting an arms race of ’someone more famous/respected/right agrees with what I say' citations. People appear to have stopped thinking for themselves, instead needing to select one of the thousands of academic papers on any subject to do their thinking for them. Academic papers are two a penny. There is always one that will support any view making their employment in discussion less and less effective yet they are used to attack either the evidence supporting the opinion or the opinion itself.

Yet anyone who agrees with the opinion will tend to stay quiet. I assume because there is a belief that an opinion doesn't need support if the author is already on board with it. So we have a bias. Lots of negativity versus little support. If I were to respond to the critics by adapting my actions to represent the balance of response I would ALWAYS have to change my mind as the ‘disagree’ pile of evidence always outweighs the ‘agree’. This is reminiscent of the famous Monty Hall problem where it's always best to change your choice. I assume that if I announced I'd followed popular feedback and reversed my position, the bias of feedback would swing to the other side supporting my original view. I could, at that point, step back leaving a barroom brawl between all participants as I sneak out of the saloon.

Or is all this disagreement supplied to me for altruistic reasons? Do people realy care whether I am right or not, just for my benefit? Naaahhhhh.

They care about whether THEY are right or not. If they have based decisions and actions on views that oppose those expressed and those expressed are right then they are wrong, resulting in a loss that includes the loss of the security of a narrative framework that they have hung their decisions upon. Rebuilding a broken narrative framework takes time, thought and effort and an admission of failure, which comes with its own psychological problems. Hence there is a preference to avoid this cost until its absolute necessity, which usually occurs as a phase change rather than a smooth transition. We hang on to beliefs because humans like certainty and hate uncertainty. We go through our lives craving certainty as certainty removes risk, to the point of preferring to believe in the models we employ to run our lives well past their sell-by dates. There is also pride. But being able to admit when you are wrong is essential to succeed in life and certainly if you are trading in the markets. If we never adapted our models for, say, crossing the road as cars evolved from 5mph to 60mph, we would be splats in the road.

Yet there is value in the volume of criticism of my financial market opinions. It's related to the fact that financial prices reflect the aggregate of the expectations of all participants (note it's expectations that drive prices, not the maths or data of the ‘now’). Prices change due to changes in those expectations. If I am deluged in criticism then I can take that as a good sign that no matter how logical their argument, the next move will be a reversal of expectation and a reversal in price.

This is particularly important in these times of virus as I believe the most important input into determining price direction is the watching of others, rather than studying deep reasoned analysis. Why? Because the complexity and detail of current analysis are camouflaging the error function of the primary input, which in these times is usually a big fat assumption, let's even call that a guess. The errors around this primary assumption are so huge they make further analysis worthless. Effectively polishing a turd with detail.

This type of analysis is over-relied upon. Normally as a crutch to support priors. It was only two years go when the last decimal point of forecasts of UK GDP out to 2030 was being quoted as gospel to support or decry Brexit, yet here we are deep in an ‘unforeseen’ that has made all of them worthless.

So what is it that drives the criticism. The desire to be perceived as right? Why? Does being right or the respect of others pay the bills? Not unless you are selling snake oil. I don't care about making an idiot of myself - no one pays me for my views, I have never had an offer of employment based on my publicly expressed opinions, nor am I a journalist needing a profile nor a following to ensure my continued employment.

It doesn't matter if anyone thinks I'm a moron, but as far as publishing financial market trades goes, I’m switching from 'transmit' to 'receive'.