Business people and investors in the United States have a reputation, even after the spectacular crash of 2008, to be worldly, no-nonsense, bring-it-on types. They’re supposed to know what is going on in the world and to react to the news with dispatch, making the hard decisions that lead to efficient outcomes.
However, they’re actually like a council of monkeys, sitting on a pile of cash: hear no bad news, see no bad news, speak no bad news.
According to Jeremy Grantham [ht: ja], cofounder and chief investment strategist of Grantham Mayo van Otterloo, a Boston-based asset management firm, business people and investors actually have a “preference for good news over accurate news.”
a while ago I came up with a list of propositions that are widely accepted by an educated business audience. They are widely accepted but totally wrong. It is my attempt to bring home how extreme is our preference for good news over accurate news. When you have run through this list you may be a little more aware of how dangerous our wishful thinking can be in investing and in the much more important fields of resource (especially food) limitations and the potentially life-threatening risks of climate damage. Wishful thinking and denial of unpleasant facts are simply not survival characteristics.
Grantham then proceeds to show how wrong they are—with a series of arguments and charts that, in his view, challenge an “educated business audience.”
Here’s a slideshow of the twelve charts Grantham uses to provide the “bad news” about the United States the
monkeys business people and investors commonly deny or ignore.
Regular readers of this blog will, of course, recognize the charts. Thus, you will have no problem accepting the news regularly rejected by the council of monkeys.