Seeing Causes and Intentions
Let me start an experiment with 3 sentences.
“Fred’s parents arrived late. The caterers were expected soon. Fred was angry.”
Take a guess on why Fred was angry? Was he angry because caterers did not show on time? Or was he angry because his parents took more time to arrive?
In our network of associations, anger and lack of punctuality are linked as an effect, we immediately start making assumptions for possible causes. However, sometimes there is no such link between anger and the idea of expecting someone. A coherent story is Fred was angry because the flower agency was not picking up the calls.
Finding such causal connections with available limited data point is our automatic operation of System. Such CAUSES AND INTENTIONS immediately start playing role in case of any major international events. Media starts playing their role in randomly connecting dots with limited data points. Remember Covid time in 2020 when everyone was coming to immediate conclusions with limited data points.
In fact, all the headlines do is satisfy our need for coherence: a large event is supposed to have consequences, and consequences need causes to explain them. We have limited information about what happened on a day.
In Investment situation, Investors apparently take decisions by looking at the headlines. If the headlines read, “Some country went for election and someone from leading party will become top most leader in that country”. Investor start taking actions based on the available and limited sources of information.
Investors should have single agenda to follow process of investment at various market levels. Single or random occurrence of events do not alter our and our investor’s confidence.
