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Quarterly Commentary

Perspective versus perception … what’s the difference?

Andrew Bustamante, a former CIA Officer and combat veteran, was recently asked by Lex Fridman, a podcaster specializing in computer science and artificial intelligence, “As a former CIA Officer, what is your favorite spy trick?”

He replied, “Something called perception versus perspective.” He explained that perception is your interpretation of the world around you, shaped by your life experiences, emotions, and knowledge you’ve gained over time.  It is from this viewpoint that you formulate your own opinions and try to persuade others to see your point of view. 

Perspective, on the other hand, is the ability to view the world from outside of yourself by placing yourself in the ‘perceptions’ of others. It involves asking, what is the other person’s point of view? What would they be thinking and feeling? What has their life experience been like? It’s not just about empathy or understanding their feelings; it’s about comprehending their life experience. Gaining perspective gives you an informational advantage, as few people are able to frame their thoughts this way. 

Putting ourselves in someone else’s shoes and seeing the world through their eyes is valuable outside the spy world as well. His point is that if you can communicate from a place of perspective—whether with your spouse, a friend, or on an online chat board—it improves communication. This is because so many people are only able to focus on their own perception.

Practicing perspective can be difficult – after all, don’t most of us want the world to see things our way? Of course we do; we all want to be understood. However, it seems that many people focus on influencing others’ perceptions rather than understanding perspectives different from their own. Billions of dollars are spent annually in marketing, media and politics to do just that.

But what about economics? Is perception reality? We don’t want to discount the perception (and reality) of events around us, whether global conflicts, the continued recovery from the bear market in 2022, the political climate and more. These things all have an impact on us, but they rarely form the basis for long-term financial decisions. Our primary concern is the constant pounding of information shaping the perceptions of many investors, often with increased negativity.

A study by the Brookings Institute earlier this year measured economic performance over the last few decades and compared it to public perception. The research showed that negativity is increasingly common. Brookings scholars Ben Harris and Aaron Sojourner documented a rise of negative economic news coverage, adjusted for underlying conditions, since 2018. They cited a growing body of literature linking the tone of news coverage to consumer sentiment.

 So, news is negative and increasingly so – no surprise there. Does the financial ‘news’ create perceptions, or does it simply report them? We’ll leave that for you to decide. With social media in the mix and increased access to information, the increased negativity is understandable. The challenge for most investors is that they often make decisions based on these negative perceptions rather than on perspective. Perspective requires disciplined, long-term, big-picture thinking.

Thankfully, our investment portfolios are structured based on perspective, not perception.  We believe this strategy and mindset will certainly prevail over time. As always, reach out to us with any questions.

Fort Vancouver Investment Management, LLC