Sunday, May 5, 2013

Psychology... or Psychosis?

John Mauldin, quoting Nietze:

"To trace something unknown back to something known is alleviating, soothing, gratifying, and gives moreover a feeling of power.  Danger, disquiet, anxiety attend the unknown – the first instinct is to eliminate these distressing states.  First principle: any explanation is better than none…. The cause-creating drive is thus conditioned and excited by the feeling of fear…."  –Friedrich Nietzsche
"Any explanation is better than none." And the simpler, it seems in the investment game, the better. "The markets went up because oil went down," we are told. Then the next day the opposite relationship occurs. Then there is another reason for the movement of the markets. But we all intuitively know that things are far more complicated than that. As Nietzsche notes, dealing with the unknown can be disturbing, so we look for the simple explanation.


"Ah," we tell ourselves, "I know why that happened." With an explanation firmly in hand, we now feel we know something. And the behavioral psychologists note that this state actually releases chemicals in our brain that make us feel good. We literally become addicted to the simple explanation. The fact that what we "know" (the explanation for the unknowable) is irrelevant or even wrong is not important to the chemical release. And so we look for reasons.
That is why some people get so angry when you challenge their beliefs. You are literally taking away the source of their good feeling, like drugs from a junkie or a boyfriend from a teenage girl.