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This Day in History...

10/12/2020

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On October 12th, 1492, Christopher Columbus sights a Bahamian Island he believes to be part of Japan.

Columbus returned to Spain a celebrity, convinced he had discovered a new trade route to Asia. For a brief while, he was on top of the world. But after that first voyage, things started to go very wrong. Given control of the newly discovered lands, Columbus forced many of his new charges to look for gold, producing little but hatred for him and his compatriots. His third voyage saw a near revolt by settlers and back in Spain, Columbus was arrested and stripped of his titles. A fourth mission regained some of his prestige at court. The result of Columbus’ voyages was the opening of a new continent to good things like opportunities for trade and bad things like smallpox. It was then, and remains today, a complicated story.
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And it is also a glaring example of confirmation bias. Columbus wanted to believe the islands he found were off the coast of Japan. But the natives in the New World looked
and sounded nothing like the traders he had met from Asia, which might have given him pause. He saw everything that seemed to confirm his theories and ignored whatever didn’t. If that sounds familiar, it is how today’s social media algorithms work, feeding you more of what you like and agree with and none of what contradicts it. Investors beware. We, like explorers, need to examine all of the data, not just what we agree with. History can be unkind to those who don’t. 

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Patrick Huey is the author of two books:  "History Lessons for the Modern Investor" and "the Seven Pillars of (Financial) Wisdom"; this is considered an outside business activity for Patrick Huey and is separate and apart from his activities as an investment advisor representative with Dynamic Wealth Advisors.  The material contained in these books are the current opinions of the author, Patrick Huey but not necessarily those of Dynamic Wealth Advisors.   The opinions expressed in these books are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security. They are intended to provide education about the financial industry. To determine which investments may be appropriate for you, consult your financial advisor prior to investing. Any past performance discussed in these books is no guarantee of future results.  As always please remember investing involves risk and possible loss of principal capital. 
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