Cognitive Concord is a free weekly investment newsletter.
It’s designed for intelligent readers, not necessarily experienced investors. Our mission is to be informative, useful, and entertaining. Most weeks we hit one of those criteria but every once in a while we land a trifecta.
That’s great, where does the name come from?
Cognitive biases are shortcuts our brains use that make us draw incorrect conclusions. We have these biases because our brains like shortcuts more than heavy-duty thinking.
Cognitive dissonance is a bigtime bias that’s especially dangerous for investors. It’s what happens when people receive hard evidence that directly contradicts their previously held beliefs. They react in strange, irrational ways.
The classic example is Aesop’s fox. The fox sees some grapes up in the tree but can’t figure out how to get them. The evidence that he can’t climb the tree creates disharmony in his little fox brain. It frustrates him. So to make all those bad thoughts and feelings go away, he concludes incorrectly that the grapes are sour. As you can imagine, when you get money involved, that kind of bias and data-rejection can get expensive.
The opposite of cognitive dissonance, of course, is Cognitive Concord.
The goal is to get our analysis and the data to sing in harmony. It takes a bit more thought, but that’s how you make better investments.
OK, smart guy, just who do you think you are?
Jeffrey Dow Jones has spent his entire life trying to live up to his namesake.
In the past he’s worked with a bunch of bond guys at UBS PaineWebber, as a commodities broker with a small firm, and as a financial analyst with Ford Motor Company. For a long time he co-managed a couple of hedge funds but can’t really talk about all that because of rules and stuff. Like a lot of people in this economy with interesting backgrounds and an ability to solve problems, he acts as a consultant to firms who need the sort of stuff he can deliver.
He writes this newsletter because it’s fun.