Truthiness, Facts, Opinions, Alternative Facts, Manipulations, and Lies
I remember when I was about 16 years old, my dad, who was an elementary school principal, told me that one of his teachers had remarked that a particular student was “not worth the effort.” And then he said this to me: “Paul, kids are stupid. If you tell them they are smart, they will believe you.” Perhaps a more accurate statement might have been, “Paul, young children are naïve and impressionable. If you tell them they are smart, they will behave as if they are smart and will do better in school.”
Yet I understood what he was saying when he used the word stupid. I’ve also overheard someone call the person on the other end of the phone line a retard. One of the definitions of this word is: “a contemptuous term used to refer to a person who is cognitively impaired.” In our family, retard was and is a swear word. My parents had no tolerance for it, and while I’ve never heard it spoken in our family, I have no tolerance for it, either.
My friend, on the other hand, learned the second definition of retard: a person who is obtuse or ineffective in some way.
So who is right? The word for yes in Greek sounds like the word no in English, and I love spiced African tea, but I love Amy too. Is the word love a true descriptive with meaning? But readers will know that the love of tea is a much different love than the love I have for my wife, partner, and friend Amy.
Today there seems to be an obscuring of the meaning of words, opinion, truth and fact – kind of a rekindling of the word truthiness that was going around years ago on late-night satirical comedy shows.
But this is not funny, it is not good for our economy, and it is not good for peace. Looking at “intellectual integrity” and “truth seeking/fact checking” as some sort of alternative reality can lead to some pretty dumb conclusions.
As “smart” human beings, we make decisions. Decisions are made usually in a rational methodology that weights risks and rewards, and ends in an action. Marketers know this. They also know that if they can influence the “facts” that go into a decision, then they can influence the outcome.
So let’s get to investing. Here are some “facts”:
- If the economy is good, the stock market goes up.
- If the economy is bad, bonds go up.
- High interest rates are bad.
- Low interest rates are good.
- Inflation is bad for the economy.
- Deflation is bad for the economy.
- War is good for the economy.
- Government regulatory influence on the economy is bad for the economy and business.
- Government deficits, debts, and government spending are not bad, because we owe the money to ourselves and the government spending helps our economy.
- What is good for the economy is good for people.
So now I will tell you a secret: All those statements are wrong. There may be truth in them, and there can be experienced, rational thought put into those conclusions. But, on the whole, to embrace any of those statements as standalone facts would lead an investor toward doom (unless one has very good luck). We should view facts as “friends” that help us make good choices.
It’s About Brain Science
The reason we delude ourselves is quite simple: Our brains are lazy. We don’t want to think, because it takes too much energy. And, laziness aside, if our “thinking” is not consistent with your thinking, you might “unfriend” me, shun me, or even fire me, which is not good as we are also wired for self-preservation. And we are wired to avoid tension. Our brains use up more energy than any other organ in our bodies, accounting for only 2% of our weight but consuming 20% of our energy. You can see why, if we are excited or stressed, or if our emotions are “going” on any elevated level, we can end up feeling exhausted.
If I contemplate telling my friend, who is sitting across from my salad, that his bacon double-cheeseburger with extra mayo washed down with a diet cola is not exactly considered conscientious eating, he might just “unfriend” me, or he might fight back with “You heath nuts are fanatics!” He might go on, saying, “You take the fun out of eating and you eat boring stuff, so why not live a little? Here, have a fry!” This might get my fight-or-flight, social justice, truth, competitive spirit going. It also might hurt my relationship with reality, as I believe I am happier because my body feels better. I am also comforted based on the facts I have read that I will live longer and have fewer doctor and hospital visits as a result of my healthy lifestyle. All those thoughts, of course, run through my brain. Before I can form a reply to his initial response, he speaks an absolute truth that in his mind has relevance to our discussion: “We all are going to die anyway, so what does it matter what I eat?!”
How do I argue with that?
Mohammad Ali knew well that “Every great plan changes when you get hit in the face.” And teenage pregnancy counselors know that all the facts, lectures, and pamphlets about STDs, pregnancy, self-image, and social standing become distant memories in the back seat of the quarterback’s car.
The reality is, however, that facts are facts, truth is truth – and “alternative truths” are neither truths nor facts. They are labeled and marketed as “truth” but are opinions, no different than how saying “We all are going to die” gets me to change the subject rather than continue to debate what really is conscientious eating.
Opportunity Exists Where Perception Is Different than Reality
The goal of this essay is to communicate to you, our valued clients, that we believe facts matter, that truth matters, and that through hard work, inquiry, and analysis of the scientific sort, our decisions will be better and the result will be good performance.
John Templeton was a great investor. He believed values mattered, not only because of his faith that “as you sow, so shall you reap,” but because values influence behavior, behavior influences lifestyle, lifestyle influences spending, and the result becomes economic units in the economy. He also believed that investors were rewarded for finding the truth, and for making decisions based on those truths. One of his guiding philosophies was “Investment opportunity is where perception is different than the truth.”