Over the past few weeks, I have posted on an eclectic assortment of items. That is keeping with the blog’s sub-title: Macro Perspectives on Capital Markets, Economy, Technology, and Digital Media. A few of you have commented (here and here) or emailed about this recently.

I want to take a few moments to explain the thought process behind what appears to be a random collection of posts, but actually, is not. Instead, it is part of a broader process that ranges across a variety of disciplines, interests, methodologies.

The broader mission of what I try to do is seek the Truth.

I define “the Truth” as being in accord with objective reality. Philosophers have argued we can never achieve that degree of perfection, so to me it means getting as close as possible to the Truth as any slightly cleverer, pants-wearing monkey can.

I do this for three reasons: The first is that I am interested in it intellectually. I am aware that our individual universes are mere constructs of a sophisticated cognitive process, the evolutionary apex of this planet. I am also all too aware it is filled with flaws and biases and error. So few people seem to understand what objective reality is that it is a rarified space to even get near, much less inhabit.

This means venturing far and wide in search of “enlightenment.” No one discipline has a monopoly on the Truth, and very often a brilliant insight from one field can be applied in another. Hence, Behavioral economics, music, neurophysiology, methods of data-depiction (aka chart porn), market history, even automotive innovations all part of the cross-discipline process.

The second reason is professional: Fund managers whose universe deviate from reality eventually come to major losses, under-performance, and professional ruin. The most public version of this was Bill Miller: His failure to understand the derivative situation, creaky Housing edifice, and the artifice of the 2002-07 finance rally led his fund to load up on banks, GSEs, investment houses — and ruined an incredible record. There are many other examples, but this one is the most acute. Note there is a distinction between those who play probabilities that do not play out, and those whose world view is so flawed as to make losses all but inevitable.

I believe in Variant Perspective as an investment thesis: Identify where most of the investing public is objectively wrong; determine what the best approximation to reality is; factor in timing, and invest accordingly. Value investors do this when they buy undervalued stocks; they are saying the public is wrong (the variance) about the lack of worth of an issue; short sellers do this as well, explicitly stating the opposite — that the variance is the public overvaluing a stock, and making their bets.

One of the surprising things this blog has taught me is how long it takes Reality to go viral. There are entrenched interests opposed to the Truth; they release their grip on their subjective fantasies very, very slowly.

When people said that Housing never falls in price, that is an example of entrenched interests pushing their false view of the world. Some argued that sub-prime mortgages were such a small part of the economy, they could never have much of an impact. That was not an error, or a difference of opinion, mind you, but a cognitive failure on their part to hypothesize a probable or likely outcome. Years passed before the Truth became known.

The inverted Yield Curve as an omen of impending recession? Dismissed as different this time (inviting our criticism). Erroneous discussions of how cheap home builders were, how expensive tech stocks were, how low inflation was, and how high employment were all subjects of discussions here as alt.universe fantasies. It took years before the Truth became widely accepted — and even that required a massive global crisis.

There are 100s of such examples. Some people claim that nobody forecast a possible housing/derivative/market collapse (a blatant lie to obscure their own failures). When the CRA or Fannie/Freddie are blamed for the economic crisis, I recognize this as false, a blatant attempt to obscure, rather than reveal the Truth. Arguments talking up or down the economy usually have a specific agenda apart from the objective reality of the situation.

Which leads us to our headline: Seeking the Truth — Or Obscuring It?

I have explained my motivations as a truth seeker. It is intellectually stimulating, and it can be profitable. The major investment houses have, for the most part, abandoned it as part of their model. I should be thankful they left that market niche open to smaller, nimble firms (like mine).

But what motivates people to pursue a narrative that is blatantly false, misleading or intellectually dishonest? Typically, it meets a powerful group’s specific agenda. There is a embedded interest amongst the entrenched to preserve the status quo. The thought process seems to be “Hey, its working for us, let’s not mess up a good thing.

Said another way, look at what it is they are selling.

We see this in a variety of areas: Politics are notorious for disregarding the Truth. Political objectives are to win votes, control public monies, amass power and influence. The Truth is an obvious casualty in this process.

Amongst corporate interests, the Truth can get in the way of sales, earnings reports, and profitability, impacting careers, stocks prices and of course bonuses. Regulation reduced profits. Impacting the debate to achieve a desired outcome is worth billions, even if the consequences to society costs trillions.

Even academia is suffers from this error prone tendency to obscure the Truth when it contradicts a long held theory or belief system. Look no further than the Efficient Market Hypothesis, and the way it was applied in real world discussions of policy, and self-regulation. Then consider the tortured route it took to go from the intellectual standard of academic capital market explanations to a partially discredited, somewhat outmoded belief system.

I initially mentioned three reasons. The third is simply that we live in a society where decision-making takes place with less and less reverence for the Truth, with terrible consequences. Those people who seek to obscure the Truth for personal gain do an enormous disservice to our nation. Public policy is made based on false pronouncements, monies are allocated based upon misleading arguments, laws are made, taxes levied, policy executed. The lives of 100s of millions of people is significantly impacted by our public policy.

When the entire edifice rests on falsehoods, mistruths, faulty assumptions, false premises, future  outcomes, as we have seen over the past few years, can be horrific. History teaches us that eventually, the Truth will reveal itself. When that happens, there can be terrible consequences: Economies collapse, wars occur, empires crumble, millions die.

Whenever I read a major policy piece, newspaper article, or OpEd, I ask the following question: Is this person a truth seeker, or a truth obscurer? When you see nasty posts that dissect/shred/fisk these, it is because I was not happy with the answer to that question.

Are you a truth seeker, or a truth obscurer?

Category: Apprenticed Investor, Investing, Psychology, Weblogs

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

117 Responses to “Seeking the Truth — Or Obscuring It?”

  1. gbgasser says:


    I was sloppy in making it sound like ALL religious thinking is the same. I’m a church goer myself and have found many open minded people……….HOWEVER, I also know first hand that lots (probably millions) of people do think the Bible IS the eternal answer book. I had a colleague (I’m a Masters degree in a health care field) tell me that the Bible has the answer to EVERYTHING, you just need to know how to find it. He got this from his pastor and his pastor is NOT a lonewolf. The fundamentalist mindset is pretty damn certain that god knows everyhting and wrote it ALL down in his holy book (Yes GOD wrote the book himself through selected humans) we just need to decipher it.

    You sound like your blaming A-theism for all the recent atrocities……………….. interesting.

    BTW I know many professed Christians (like myself) who have looked at the Buddhist journey view as consistent with much of Christian teaching as well. A lot of people ignore it though.

    I have no illusions about the world being a potential utopia, but I do know

  2. TakBak04 says:

    Well…there are many other folks who read the BIBLE who have different interpretations… So, yours is one of many.

    However, I really didn’t get where BR on this post was trying to point out that “Atheism” was the cause of Wall Street Atrocities.

    However, I’m glad to see that you are favorable to the “Buddist Journey.” Buddst philosophers and the teachings of BUDDA do have some very interesting writings. I think we might all have much to learn from some exposure to other “TEACHERS” about how Mankind relates to it’s own…and why we need some “organization” from whatever we perceive as the “Ultimate Teacher/Philosopher’s views” as to WHO ARE WE AND WHY ARE WE HERE on this EARTH and WHAT ARE WE SUPPOSED TO DO IN OUR JOURNEY????

    I just wonder about what you think about those folks you go to church with who think that the “BIBLE” has the ANSWER to EVERYTHING.

    I think in some sense the “Parables” have a clue……but then you can get those from reading, Greek , RomanMythology and other writings from Civilizations (Islamic/Egyptian/Assyrian, etc.,too) who were in some ways MUCH more enlightened than ours through the ages ,and yet their own civilizations are now disappeared or have been corrupted or co-opted.

    You didn’t finish your post so it’s hard to know your final conclusion.

  3. ubnutsagain says:

    “FrancoisT Says: August 21st, 2010 at 12:09 pm

    Quoting UB: “Which summarizes very well the reasons why those who believe that anthropogenic increases in atmospheric CO2 is driving the global temperature up have met with such resistance.

    “The misnamed “skeptics” in the scientific community are, in fact, simply looking for Truth.”

    FT says: “Houston! We have a Truth Obscurer!”


    Classic psychological projection!

  4. gbgasser says:

    From TakBak04

    “You didn’t finish your post so it’s hard to know your final conclusion.”

    I know. I started with that last sentence and then wanted to put the other stuff before it. After I finished I hit submit before going back to my unfinished sentence…………..sloppy…………but TRUE ;-)

    I was not referring to Barry btw with my atheist comment it was to the responder to my first comment and I agree totally with the biblical interpretation comment. I guess I wasnt clear that I was not saying anything about MY interpretations of the Bible, simply a coworkers.

    SOOOOOO to finish my sentence; I have no illusions about the world being a potential utopia, but I do know we can all leave it better than we found it in many ways. We can make it less violent, we can make it more forgiving, we can make it more just and we can make it less selfish….. the most we can guarantee we can make those changes is by changing ourselves in those ways….. its a start and everyone can do it. It will add up once millions and millions do it.

  5. The subject is highly relevant to child-rearing and academic study, as well as to our professional careers and investment activities. Others have addressed the impact on investing, so permit me to opine on the effect of raising and creating truth-seeking children and adults, and how continual study in a proper area of interest enhances your truth-seeking abilities.

    For better or worse, I studied at an excellent university and majored in Physics, taking quite a few Math classes along the way. It’s difficult to find two subject areas more concerned with creating truth seekers.

    The rest of my academic study, outside of engineering and foreign languages, was largely unsatisfying because so much of what was peddled was pseudo-truth or worse. So before anyone laments the deficiencies of the coming generation or our nascent workforce, look at how little exposure the average American has had to rigorous study in the physical sciences, math, and foreign language. People are mostly doing the best they can with what they got – and the societal result is what it is.

    My current area of study is Mandarin Chinese and I would advise most American parents to get their kids engaged studying Mandarin as well. The language is so old and primitive in its constructs that every time I study I feel I am being exposed to age-old intellectually satisfying truths. There is uniform agreement on what “standard Mandarin” is and is not, and there are no charlatans, few ambiguities in usage, and mastery enables you to more properly understand how 1/6 of the world thinks.

    As is true with most Physics and Math teachers, with Mandarin teachers there is no room for non-truths – none. Having this in your brain creates the most robust B.S. filter I can think of. Needless to say, I don’t find so many people in everyday life with this truth-seeking obsession. So the next time your child’s teacher or counselor tells you X, you might want to think about the decision process that person is employing to make recommendations or decisions about YOUR child.

  6. ToNYC says:

    How can one pretend to be a truth-seeker when production in financial engineering is fundamentally-based on asymmetric information? Why does the scorpion sting the frog halfway across the river after begging a desperate ride?

  7. Andy T says:

    Lao Tzu….Siddartha Guatama….Ghandi……Dalai Lama….

    ….Barry Ritholtz, the “Seeker of Truth.”

  8. NoWonder says:

    Real seekers of truth begin with the assumption that they are themselves obscurers. They “dissect/shred/fisk” themselves foremost.

  9. Matt S says:


    I was grinning from ear to ear reading your piece on “seeking the truth”. You’re a great service to our community.


  10. Doug S says:

    Thanks Barry. This is excellent. And, in light of concerns about obscurers of truth, it’s worth reminding your readers again to check out Agnotology. Best, Doug

  11. Paul B says:

    Good stuff, Barry.

    Careful, though. Truth is not commercial. Take it from me! I’ve learned over the last ten years that individual investors can actually act on the truth because they can invest strategically (they don’t of course because. They don’t have the confidence to turn off CNBC). Of course institutions with all the money are just fiduciary bureaucrats with embedded disincentives to care about the truth. Our method of dealing with this is to write the truth, expect it to be ignored, and ultimately profit on the back of everyone ignoring us (with what little we have).


  12. Heidi says:

    I, too am a truth seeker and know that the truth is sometimes the hardest thing to accept, so many of us monkies (whether we wear skirts or pants) prefer to cling to our beliefs, or our illusions. If we, as a nation, were to tell the truth, we would all be aware that today’s economic situation is worse than that of the great depression. We simply have more safeguards in place to prevent large-scale bank failures of the type we saw in the 30′s. If we were to look at the Truth, we would see that we are frighteningly dependent on other countries, who are NOT our friends for our fuel, our goods and many services and that our economy rests on the good will of countries who do not have good will toward us. These truths are scary, we do not want to face them. Leave us our illusions so that we can go happily about our lives and shop, and spend, and go into debt, and create an even larger deficit. Ignorance is bliss!

  13. Lee says:

    The most obscured truth today is the outrageous disparity between the stock of claims on wealth and the pool of wealth itself. The former exceeds the later by many multiples.

  14. Poll: One out of Five Americans Do Not Believe Obama Exists
    ‘Existers’ Movement Gathers Steam

    WASHINGTON (The Borowitz Report) – In what might be the most serious challenge to Barack Obama’s legitimacy as President, a new poll shows that one out of five Americans are not convinced that Mr. Obama exists.

    The poll, conducted by the University of Minnesota’s Opinion Research Institute, reveals that 23 percent of those surveyed “strongly agreed” with the statement, “I believe that Barack Obama’s birth was faked, just like the moon landing.”

    The poll results coincide with the recent rise of the so-called “Exister” movement, a group who believes that Mr. Obama is an optical illusion created by the Democratic Party to raise taxes and bail out banks.

    “The Birthers say that Obama’s lack of a birth certificate means he was born in Kenya,” says Jerrilene Rance, a leading Exister. “We believe it’s proof that he was never born.”

    Ms. Rance says that while President George W. Bush was criticized for disappearing every August, “Obama is never there to begin with.”

    Appearing Sunday on NBC’s “Meet the Press,” Sen. Mitch McConnell (R-Ky) made comments about Mr. Obama’s existence that only stoked the controversy.

    “I’ve spoken to him face-to-face, and I take him at his word that he exists,” he said. “Unless of course I was talking to a hologram.”

    At the White House, spokesman Robert Gibbs brushed aside a question about the President’s existence, saying that Mr. Obama had “no comment.”

    Exister leader Jerrilene Rance offered this response: “The reason he has no comment is that he has no mouth.”

  15. Expat says:

    Barry, re your comment “BR: Which is why we must be cognizant of our biases, flaws, and tendencies towards error .” Yep, but how many people do you know who are capable of doing so? I consider myself much smarter than the average bear (plus a dose of arrogance, of course), but even after eighteen years of commodity trading, I never really overcame my biases and flaws. That is perhaps why I know teach instead of trade, so at least I came to one major realization.

    Have you read The God Delusion by Dawkins? Or seen the BBC series? The very essence of religion is delusion. Since most people profess to be believers, it follows that most people are delusional. Perhaps you are religious but manage to avoid delusions in the rest of your life, but few others do.

    Just as being a non-believer can lead to unpleasant things (beheading, ostracism, arrest), being non-delusional in markets can lead to unpleasant things. It does no good to trade against the crowd because they believe fairies will make prices go up. You need deep pockets and more intestinal fortitude than more than a handful of people have to wait for the fairies to return to the bottom of the garden and allow the markets to return to “normality”.

  16. [...] their minds. They do not care about facts or data or input. They never admit mistakes. “Truth,” as we have discussed in the past, is an irrelevant [...]

  17. [...] Thinking in terms of pure verbal narrative leads to errors, bias and an imperfect version of the Truth. [...]