When we make decisions we tend to be swayed by what we remember. What we remember is influenced by many things including beliefs, expectations, emotions, and feelings as well as things like the frequency of exposure. The availability bias as it is known can substantially and unconsciously influence our judgment. We too easily assume that our recollections are representative and true and discount events that are outside of our immediate memory.
In 2016 insularity of opinion and experience led to shock and bewilderment for those on the losing side of two political events. People in the UK who voted ‘leave’ in the EU referendum were typically older and less active on social media than those who voted remain. If you only looked at activity online for the strength of opinion then you would have been forgiven for thinking that ‘remain’ had a strong lead. Similarly, in the US the geographical barrier between pro-Clinton seaboard states and the pro-Trump American heartland meant that few on the Clinton side would have been exposed to the concerns that encouraged Trump voters to come out in force.
In the past, traditional authorities and intermediate bodies brought disparate people together and so helped neutralise extreme positions. Today these traditional authorities of intermediation have largely crumbled, and new forms of interactions (social media and the web more broadly) have put people directly in touch with one another, and specifically with other people who share the same views. People became disconnected.
As the COVID-19 pandemic continues to roll across the globe new disconnects are appearing. Different countries around the globe face very different health and economic pressures depending on where they are on the curve, their ability to squash that curve and the economic and political cost that is borne.
Every country faces a unique set of experiences with that reality and its hopes and fears reflected back at them by the media. Once we’re past the worst we assume that every other country will experience something similar. We’re disconnected from seeing the full picture.
We also face a disconnect at home. Many of us are lucky enough to work from home, and for those work life carries on much as before. According to Peter Atwater this has resulted in a confidence divide between the real economy and the one we see from our home desk:
“To those to whom it applies, WFH provides a meaningful foundation for confidence. Certainty and control, the two required perceptions for confidence, are largely assured. While awkward, life goes on amid the storm, with regular paychecks to follow. For hotel and restaurant workers, though, certainty and control have vanished. WFH wasn’t and won’t be an option. Suddenly and involuntarily, those workers’ worlds have been upended. Service workers have been mugged by the outbreak.”
We’re disconnected from seeing the full picture.
Finally, we also face a temporal disconnect. We’re disconnected from seeing the full picture between our past, present and future selves. As so often happens after a monumental shock, ‘normal’ now feels like a world away, and yet we race to return to something that cannot be reclaimed. Anyone who has experienced a traumatic event will know that there are many false starts until a new normal is discovered.
Things never just bounce back to normal. There are no ‘V’ shaped recoveries. Everyone is different. Individuals, industries, economies and financial markets are all disconnected. They will continue to frustrate each other until that new normal is finally obtained. It promises to be a bumpy ride.
Related article: The Desert of the Real
Related article: Why investors need a diverse media diet