How To Foolproof Yourself Against Salesmen & Media Bias

8/9/2019 How To Foolproof Yourself Against Salesmen & Media Bias

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V V t t | | t t \ \ x x ] ] t t An insiders peek into the minds of contrarian investors who strive for atypical excellence

How To Foolproof Yourself Against Salesmen & Media Bias

Understanding the common psychological pitfalls that makes you vulnerable


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Table of Contents

Copyright 2010 Contrarian Investors Journal ( http://cij.inspiriting.com ). All rights reserved. 2

INTRODUCTION ...................................................................................................................... 5 MENTAL PITFALL: ACCURACY-PRECISION CONFUSION ......................................... 9

MENTAL PITFALL: ANCHORING ..................................................................................... 10

MENTAL PITFALL: BIGNESS BIAS................................................................................... 12 MENTAL PITFALL: CONFIRMATION BIAS.................................................................... 14

MENTAL PITFALL: CORRELATION-CAUSALITY FALLACY.................................... 15

MENTAL PITFALL: ENDOWMENT EFFECT .................................................................. 16 MENTAL PITFALL: HERD BEHAVIOUR ......................................................................... 17

MENTAL PITFALL: LAZY INDUCTION ........................................................................... 18

MENTAL PITFALL: LUDIC FALLACY ............................................................................. 21 MENTAL PITFALL: MENTAL ACCOUNTING ................................................................ 24

MENTAL PITFALL: MONEY ILLUSION........................................................................... 27


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Table of Contents


MENTAL PITFALL: NARRATIVE FALLACY .................................................................. 28 MENTAL PITFALL: OVERCONFIDENCE ........................................................................ 31

MENTAL PITFALL: RECENCY BIAS ................................................................................ 32

MENTAL PITFALL: STATUS QUO & LOSS/REGRET AVERSION BIAS.................... 33 MENTAL PITFALL: SUNK COST FALLACY ................................................................... 34

MENTAL PITFALL: SURVIVORSHIP BIAS...................................................................... 36

MENTAL PITFALL: TURKEY THINKING........................................................................ 38 MENTAL PITFALL: WISHFUL THINKING...................................................................... 40

MEDIA TRICK: CONTEXT TWISTING............................................................................. 43

MEDIA TRICK: HEADLINE JUDGEMENT....................................................................... 44 MEDIA TRICK: IMAGES...................................................................................................... 45

MEDIA TRICK: NAMES, TITLES, WORD CHOICE & TONE ....................................... 46


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Table of Contents


MEDIA TRICK: SELECTION & OMISSION ..................................................................... 47 MEDIA TRICK: SOURCE BIAS ........................................................................................... 48

MEDIA TRICK: STORY PLACEMENT .............................................................................. 49


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Introduction

How useful are the mainstream mass media in making you more informed? As you may havealready suspected, the hidden biases, vested interests and veiled agendas are taking you for aride.

Like it or not, the mainstream mass media exerts tremendous influence on our lives by shapingour beliefs and attitudes. It also affect our awareness (or lack of awareness) of certain issues.Those who can control or influence the media are in a very powerful position to shape publicopinion. Obviously, vested interests (e.g. salesmen, politicians, advertisers, public relationscompanies) are jockeying around to take that role.

One very important source of the medias revenue comes from advertising. As a result, there isan issue of conflict of interest. For example, Journalists have long faced pressure to shapestories to suit advertisers and owners . the vast majority of TV station executives found their news departments cooperative in shaping the news to assist in non-traditional revenue

development. (McChesney, Robert W. The Political Economy of Media: Enduring Issues,Emerging Dilemmas. Monthly Review Press, New York, (May 1, 2008), p. 43, ISBN 978-158367161-0)


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Introduction

To make matters worse, among the different media, newspapers are facing a secular decline in profitability. As Warren Buffett said,

For most newspapers in the United States, we would not buy them at any price. They havethe possibility of going to just unending losses.

As the profitability of newspapers decline, their dependence on advertising revenue increases.That means the problem of conflict of interest will grow. As a result, newspapers will be under increasing pressure to bend to the interests of their advertisers. Often, these advertisers have avested interest in promoting certain viewpoints, to the detriment of readers. As long-time readersof Contrarian Investors Journal (http://cij.inspiriting.com ) had seen it again and again, the

mainstream media is full of misinformation and bias.

Therefore, it is more and more important for all of us to critically assess media reports,advertisements, infomercials in this age of increasing hidden bias, vested interests and veiledagenda. To be able to do so, one must at the very least develop an awareness of common mental

pitfalls that the human brain is hard-wired to be susceptible to. The media and advertisingindustry, whether intentionally and/or directly or not, introduces bias by exploiting our susceptibility to mental pitfalls. Therefore, only with such self-awareness would we be able to

proceed to the next step of assessing what we read.


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Introduction

There are two parts to this report. The first part is the most important partit opens your eyes tothe common mental pitfalls that the human mind is vulnerable to. It will require constant practice on your part to strengthen yourself against them. The second part lists some of the tricksthat are often used to sway your opinion.

Learn the content of this report thoroughly, and it will serve you well in the years to come!


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Part 1:

Common Mental Pitfalls


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Part 2:

Tricks Of The Media


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About Contrarian Investors Journal

Copyright 2010 Contrarian Investors Journal ( http://cij.inspiriting.com ). All rights reserved.

Contrarian Investors Journal (http://cij.inspiriting.com ) is a web journal for atypicalinvestors who are not afraid to think differently. It is one of the rare few investment publications that dare to think outside the box, violate the status quos, challengeconventional views, criticise mainstream opinions and offer in-depth insights that arehighly original in nature. Having said that, this is an investment journal not for everyoneits contrarian style of thought goes against the grain of conformist thinkingand crowd emotions.

But in the long run, it is such kind of thinking that separates the legendary investors of excellence from the average. As Robert Kiyosaki said in his book, Rich Dad's Guide toInvesting, "Don't be average!" you will not find the thoughts of the average in theContrarian Investors' Journal. Be warnedexperience shows that not everyone canaccept its thinking and sarcasm or have the patience to understand its underlyinganalysis!

But for those who want to understand how the best of the very bests investors think (and they think differently from the rest), this publication is highly recommended.

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How To Foolproof Yourself Against Salesmen & Media Bias