This December in this year is much more than “that time of the year again” to offer perspective and outlooks. The New Year in front of us is more of a question mark than a certainty. Yes, we hope for a more positive, constructive, civil tone. We hope for an effective vaccine rollout. We hope for a revitalized economy that works for everyone.
A clear-headed, open-hearted, and historically relevant assessment would be ideal. But that’s a difficult challenge. Two formative biases need to be overcome: recency and confirmation.
Recency bias means we overweight whatever is happening right now. Trust me. Whatever we think is important right now will be far down the list a year from now. Remember what you said to people this time last year?
Confirmation bias is when we quickly accept that which agrees with our pre-existing beliefs or sentiments. To mask or not to mask is a good example. Lazily confirming our priors is a sure path to disappointment.
So, in the spirit of brevity-- because we know you have a lot of zooming and Amazoning to do-- here are the key take-aways for the next year:
- 2021 will look different but feel a lot like 2020. It will be volatile, uncertain, complex, and ambiguous. Be ready to adapt. Again.
- Financial markets themselves are as vulnerable now, if not more so, than they were a year ago.
- The use of time-tested principles, evidence-based strategies, and rules-driven discipline will remain our guideposts.
Now, recall what you’ve come to believe or re-member over the past year. What was a high point and low point? What inspired you? What gave you hope? What disappointed? These are valuable and useful insights. No matter what your age, they all matter in the arc of your life.
The next year will bring new challenges and changes. So, here’s a question to ponder during these last few days of COVID year:
Jim Cosgrove, Partner, San Jose, CA jimcos42@gmail.com 408-674-6315
