By Bill Bonner
Uh-oh… We’ve got good news and bad news. But you’ll have to figure out which is which.
We also have what is probably the most important thing you will read this year…
Yesterday, the Dow fell again – 81 points. Gold went up – by almost
$10 per ounce. Gold does not seem inclined to go down much more… at
least, not immediately. And though some big players seem to be dumping
gold – we won’t mention any names – most of the gold orders are buys,
not sells.
Here’s Paul Tustain, CEO of physical gold storage business BullionVault, on gold’s recent correction:
[H]ere are some BullionVault
statistics from the last few days, which I think offer a useful
reminder about how markets work. Remember, first of all, that for
all those people who sold in a bit of a panic, someone bought.
1. Monday and Tuesday were our strongest 48-hour period for new customers this year.
2. Since Friday, the gross value of
customer bullion sales increased markedly. About 1% of gold we look
after was sold back to the main market. That was characterized by a few
large sellers. Holders of 99% of BullionVault inventory were not
panicked.
3. Those who did sell have mostly
not withdrawn their cash from the BullionVault system. To me, that
suggests they may be intending to buy back into gold sooner rather than
later.
4. We normally have about 230
deposits a day (300 on a Monday) and about 100 withdrawals a day (120 on
a Monday). Mondays are usually higher because they include weekend
activity. On Monday, we had 723 deposits versus 284 withdrawals. On
Tuesday, we had 732 deposits versus 150 withdrawals.
5. Monday was a record day for business transacted, beating the previous peak of September 2011.
And now… here’s why you really shouldn’t pay attention to any news.
It’s “public information” – with little integrity, little quality and
little usefulness.
Here’s our friend, the Swiss novelist Rolf Dobelli.
News is bad for you. It’s like sugar.
It gives you a rush. It’s a distraction from your own concerns. It’s
easy to digest. But this “candy for the mind” can be toxic.
In the past few decades, the fortunate
among us have recognized the hazards of living with an overabundance of
food (obesity, diabetes) and have started to change our diets. But most
of us do not yet understand that news is to the mind what sugar is to
the body.
News is easy to digest. The media feeds
us small bites of trivial matter, tidbits that don’t really concern our
lives and don’t require thinking. That’s why we experience almost no
saturation. Unlike reading books and long magazine articles (which
require thinking), we can swallow limitless quantities of news flashes,
which are bright-colored candies for the mind.
Today, we have reached the same point
in relation to information that we faced 20 years ago in regard to food.
We are beginning to recognize how toxic news can be.
Take the following event (borrowed from
Nassim Taleb). A car drives over a bridge, and the bridge collapses.
What does the news media focus on? The car. The person in the car. Where
he came from. Where he planned to go. How he experienced the crash (if
he survived). But that is all irrelevant. What’s relevant? The
structural stability of the bridge.
That’s the underlying risk that has
been lurking and could lurk in other bridges. But the car is flashy,
it’s dramatic, it’s a person (non-abstract), and it’s news that’s cheap
to produce. News leads us to walk around with the completely wrong risk
map in our heads. So terrorism is overrated. Chronic stress is
underrated. The collapse of Lehman Brothers is overrated. Fiscal
irresponsibility is underrated. Astronauts are overrated. Nurses are
underrated.
We are not rational enough to be
exposed to the press. Watching an airplane crash on television is going
to change your attitude toward that risk, regardless of its real
probability. If you think you can compensate with the strength of your
own inner contemplation, you are wrong. Bankers and economists – who
have powerful incentives to compensate for news-borne hazards – have
shown that they cannot. The only solution: Cut yourself off from news
consumption entirely.
Out of the approximately 10,000 news
stories you have read in the last 12 months, name one that – because you
consumed it – allowed you to make a better decision about a serious
matter affecting your life, your career or your business. The point is:
The consumption of news is irrelevant to you. But people find it very
difficult to recognize what’s relevant. It’s much easier to recognize
what’s new. The relevant versus the new is the fundamental battle of the
current age.
Media organizations want you to believe
that news offers you some sort of a competitive advantage. Many fall
for that. We get anxious when we’re cut off from the flow of news. In
reality, news consumption is a competitive disadvantage. The less news
you consume, the bigger the advantage you have.
News items are bubbles popping on the
surface of a deeper world. Will accumulating facts help you understand
the world? Sadly, no. The relationship is inverted. The important
stories are non-stories: slow, powerful movements that develop below
journalists’ radar but have a transforming effect. The more “news
factoids” you digest, the less of the big picture you will understand.
If more information leads to higher economic success, we’d expect
journalists to be at the top of the pyramid. That’s not the case.
It constantly triggers the limbic
system. Panicky stories spur the release of cascades of glucocorticoid
(cortisol). This deregulates your immune system and inhibits the release
of growth hormones. In other words, your body finds itself in a state
of chronic stress. High glucocorticoid levels cause impaired digestion,
lack of growth (cell, hair, bone), nervousness and susceptibility to
infections. The other potential side effects include fear, aggression,
tunnel vision and desensitization.
News feeds the mother of all cognitive
errors: confirmation bias. In the words of Warren Buffett: “What the
human being is best at doing is interpreting all new information so that
their prior conclusions remain intact.” News exacerbates this flaw. We
become prone to overconfidence, take stupid risks and misjudge
opportunities. It also exacerbates another cognitive error: the story
bias. Our brains crave stories that “make sense” – even if they don’t
correspond to reality. Any journalist who writes, “The market moved
because of X” or “The company went bankrupt because of Y” is an idiot. I
am fed up with this cheap way of “explaining” the world.
Thinking requires concentration.
Concentration requires uninterrupted time. News pieces are specifically
engineered to interrupt you. They are like viruses that steal attention
for their own purposes. News makes us shallow thinkers.
But it’s worse than that. News severely
affects memory. There are two types of memory. Long-range memory’s
capacity is nearly infinite, but working memory is limited to a certain
amount of slippery data. The path from short-term to long-term memory is
a choke point in the brain, but anything you want to understand must
pass through it. If this passageway is disrupted, nothing gets through.
Because news disrupts concentration, it
weakens comprehension. Online news has an even worse impact. In a 2001
study, two scholars in Canada showed that comprehension declines as the
number of hyperlinks in a document increases. Why? Because whenever a
link appears, your brain has to at least make the choice not to click,
which in itself is distracting. News is an intentional interruption
system.
As stories develop, we want to know how
they continue. With hundreds of arbitrary story lines in our heads,
this craving is increasingly compelling and hard to ignore.
Scientists used to think that the dense
connections formed among the 100 billion neurons inside our skulls were
largely fixed by the time we reached adulthood. Today we know that this
is not the case. Nerve cells routinely break old connections and form
new ones. The more news we consume, the more we exercise the neural
circuits devoted to skimming and multitasking while ignoring those used
for reading deeply and thinking with profound focus.
Most news consumers – even if they used
to be avid book readers – have lost the ability to absorb lengthy
articles or books. After four, five pages they get tired, their
concentration vanishes, they become restless. It’s not because they got
older or their schedules became more onerous. It’s because the physical
structure of their brains has changed.
If you read the newspaper for 15
minutes each morning, then check the news for 15 minutes during lunch
and 15 minutes before you go to bed, then add five minutes here and
there when you’re at work, then count distraction and refocusing time,
you will lose at least half a day every week. Information is no longer a
scarce commodity. But attention is. You are not that irresponsible with
your money, reputation or health. Why give away your mind?
News stories are overwhelmingly about
things you cannot influence. The daily repetition of news about things
we can’t act upon makes us passive. It grinds us down until we adopt a
worldview that is pessimistic, desensitized, sarcastic and fatalistic.
The scientific term is “learned helplessness.” It’s a bit of a stretch,
but I would not be surprised if news consumption at least partially
contributes to the widespread disease of depression.
Finally, things we already know limit
our creativity. This is one reason that mathematicians, novelists,
composers and entrepreneurs often produce their most creative works at a
young age. Their brains enjoy a wide, uninhabited space that emboldens
them to come up with and pursue novel ideas. I don’t know a single truly
creative mind who is a news junkie – not a writer, not a composer,
mathematician, physician, scientist, musician, designer, architect or
painter.
On the other hand, I know a bunch of
viciously uncreative minds who consume news like drugs. If you want to
come up with old solutions, read news. If you are looking for new
solutions, don’t.
Society needs journalism – but in a
different way. Investigative journalism is always relevant. We need
reporting that polices our institutions and uncovers truth. But
important findings don’t have to arrive in the form of news. Long
journal articles and in-depth books are good, too.
I have now gone without news for four
years, so I can see, feel and report the effects of this freedom
firsthand: less disruption, less anxiety, deeper thinking, more time,
more insights. It’s not easy, but it’s worth it.
[This is an edited extract from an essay first published at dobelli.com.]
Regards,
Bill
To learn more about Bill visit his Google+ page or Bill Bonner’s Diary