Group Think

This contradicts their claim to sovereign power by way of their superior intellect, business prowess, hereditary entitlement, military strength, political power, majority consensus or whatever story they can pull out of their hat.  

The pain we feel when balanced at the cliff’s edge is entirely of our own making and completely within our control to extinguish. All we need do is to abandon the certainty of belief that is presently stuck in our craw.

Dispassionate discussion of some of the vexing issues.  

Only a week ago, the consensus among most mainstream economic analysts and even some alternative analysts was that a government shutdown was not going to happen. The Republicans would fold in the shadow of President Barack Obama’s overwhelming drive for socialization, spending would continue to grow unabated, and the debt ceiling would be vaulted yet again to feed the bureaucratic machine with more fiat. Today, there is no consensus, very few people continue to be so blithely self-assured and even the mainstream is beginning to wonder if a much bigger game is afoot here.

Be it BBQ judging, investing, picking out an outfit, or even choosing whether or not you’re going to show up for work tomorrow – ConvergEx's Nick Colas notes that there’s a decision making process occurring.  Quite simply, decision making is the cognitive process resulting in the selection of a final choice among several alternative scenarios.  Final choices can be opinions (as in “This brisket is an 8”) or actions (such as “I will invest in tech stocks”), and decisions are both conscious and unconscious.  For investors, financial decisions and how we tend to arrive at them are of particular importance.  The following is a cautionary tale of the 'Top 10' common biases that creep into the decision making process.  Recognizing and eliminating these biases from your financial choices will make you a sharper and smarter investor... or BBQ judge... or whatever it is that you do.

Ben Bernanke blames fiscal policies out of Washington.  However, it is starting to look more and more like Fed policy is equally to blame for the lackluster U.S. GDP growth.

The Military mind is a dangerous mind. It promotes a lack of critical thinking.

Turning your growth trade into a value trade is the quintessential sign of a losing trader on Wall Street. 

One cannot see clearly while in the midst of the madness using only the cognitive tools and worldview assumptions supported and promoted by the madness.

A complete & thorough explanation of how many (if not most) levered college diplomas are overvalued assets with fictitious values - that's including you too HBS and the ivy league! No wonder the education bubble in the US is about to collapse.

While a gold standard could work, we remain sceptical that it will be considered (barring a serious financial crisis, perhaps associated with highly volatile inflation). In large part we blame the low probability on culture. The world economy has, over the past century, morphed into a highly integrated, government dominated system guided by conventional wisdom (group think). The self-reliant, individualism of the free market has been left behind in favour of a ‘new age’ of coddled consumerism. Culturally this represents a very powerful force in our view, one which minimises creative options/solutions to economic impasses. On this basis we are cautious of predicting such a radical solution to monetary imbalances.

Gold may have its worst week in 2012 as it is currently down 3.5% for the week in dollar terms and nearly 3% in euro and pound terms. However, gold is still higher so far in June and the fundamentals suggest we have bottomed or are very close to a market bottom prior to a summer rally.

However, further short term weakness is possible as speculators go to cash and support is at $1,540/oz (see chart above).

GroupThink! GroupThink! GroupThink!

Imagine pensions not paying retiree funds, insurers not paying claims, and banks collapsing everywhere. Sounds like fun? I will be discussing this live on RT's Capital Account with the lusciously locquacious Lauryn Lyster at 4:30pm.