“Don’t confuse me with facts”

David MoonBlog

This column will not change your mind about anything. However, perhaps it will explain the connection between global warming, Donald Trump, the Pope, Tesla and your investment decisions.

When running for president, Donald Trump famously claimed he could stand in the middle of 5th Avenue, shoot someone and not lose any voters. Trump proved to be prescient. A recent Monmouth University poll found that 61 percent of people who approve of President Trump’s performance as president couldn’t think of a single thing he could do that would change their mind. Among those who disapprove of Trump’s performance, 57 percent said there is nothing that could happen that would make them approve of his performance.

Do you ever talk about investments with a Tesla shareholder? Tesla is a religion, not a company. It doesn’t matter that the company made less than one percent of the 10 million cars General Motors produced in 2016. “Teslamics” are convinced their company is already worth more than GM. They are also convinced that anyone who drives a Ford or Audi are morally inferior to the handful of Tesla drivers in the world.

Few people think like scientists, examining data before reaching a conclusion or allowing new information to change their position. Instead, most people approach decisions with a bias – sometimes rooted in experience and other times based on something as silly as “if he’s for it, I’m against it.” Climate change clearly falls into that latter category. Had Al Gore not been the original poster boy for global warming, climate change might remain a solely scientific construct – much akin to whether or not a neutrino can travel faster than the speed of light. If George Bush had championed climate change, many people’s positions on the topic would be reversed.

Despite what many people believe, the mind’s default approach to decision-making does not involve a sophisticated reasoning process. Instead, it uses a patchwork of rules and shortcuts called heuristics. These heuristics have evolved over both our individual lifetimes and the lifetime of our species to help us make quick decisions and conserve resources. We use our intuition, and then back into the math.

The principal problem with either rigid heuristics or ideology is that people are reluctant to change their mind even when given new information that conflicts with their beliefs. Think of it as a human version of sunk cost – after investing a portion of your life in something, changing your mind is hard. After all, it took the Catholic Church 350 years to formally admit that Galileo was right in positing that the Earth revolves around the sun. The church simply had too much invested in its earth-centric description of the universe to easily reverse its position.

Thinking like a scientist – remaining objective and seeking evidence that challenges your assumptions – will help minimize biases and improve your decision-making.

Over time, how you think will improve what you think.

David Moon is president of Moon Capital Management. This piece originally appeared in the USA TODAY NETWORK.