Look Out for the Investment Gorilla

November 29, 2021
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Sometimes our attention is so glued to one thing that we miss what is glaringly obvious.

This is illustrated in the book The Invisible Gorilla and is recounted by Economic Sciences Nobel Prize winning author Daniel Kahneman:

Intense focusing on a task can make people effectively blind, even to stimuli that normally attract attention. The most dramatic demonstration was offered by Christopher Chabris and Daniel Simons in their book The Invisible Gorilla. They constructed a short film of two teams passing basketballs, one team wearing white shirts, the other wearing black. The viewers of the film are instructed to count the number of passes made by the white team, ignoring the black players. This task is difficult and completely absorbing. Halfway through the video, a woman wearing a gorilla suit appears, crosses the court, thumps her chest, and moves on. The gorilla is in view for 9 seconds. Many thousands of people have seen the video, and about half of them do not notice anything unusual. It is the counting task--and especially the instruction to ignore one of the teams--that causes the blindness. No one who watches the video without that task would miss the gorilla…The authors note that the most remarkable observation of their study is that people find its results very surprising. Indeed, the viewers who fail to see the gorilla are initially sure that it was not there-they cannot imagine missing such a striking event. The gorilla study illustrates two important facts about our minds: we can be blind to the obvious, and we are also blind to our blindness.1 (Emphasis added)

Though this study is focused on how attention to a specific task can blind us, similar things happen with how our minds make investment decisions. We can have all our attention fixed on one investment narrative and miss what should be unmistakable.

You might get sucked into a Reddit forum and get caught up on the latest investment mania and dive into the latest meme stock, and then get smacked by its sudden precipitous fall realizing that the emperor has no clothes. Or you might just watch one financial news source and be given one perspective on investing due to social networking algorithms and be surprised when the investment narrative you were convinced would happen doesn’t actually happen in the real world. The examples are endless.

All of us, as the authors reveal, are prone to be blind to the obvious and even blind to our blindness. (I know I can be!).

We are shaped by what our attention is set on. Our focused attentiveness can even distract us from other things happening right in front of us, so much so that we don’t even believe that what ishappening is actually happening.

This begs the question: What is your attention fixated on and how might that effect your investment decisions?

The gorilla might be hiding in plain sight.

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Source:

1. Thinking, Fast and Slow, 23-24.