We received a letter snooty letter recently accusing us of confirmation bias. Maybe we are only capable of seeing the bearish side of the story?

According to good old Wikipedia, confirmation bias is “an irrational tendency to search for, interpret or remember information in a way that confirms one’s preconceptions or working hypotheses.” Put simply, it means you look for information that agrees with your own perspective.

In our case, we guess that means ignoring idiots like Paul Krugman, who tells us that we can spend our way out of a depression and the do-gooders in the Obama administration, who tell us that everything will be okay and that we’re about to witness a miraculous V-shape recovery. (Just like when President Hoover told Americans in 1932 that “prosperity was just around the corner.”)

And we guess it means paying attention to those who called this crisis ahead of time… guys like Will’s father, Bill, Porter Stansberry, Peter Schiff, Nouriel Roubini, Marc Faber, Doug Casey, James Dale Davidson and the rest of the “doom and gloomers” the mainstream ridiculed during the boom years.

Do we seek out information that agrees with our perspective? Of course we do!  And we’re not the only ones. Is this healthy behavior? Perhaps not. But the important thing is we’re aware of it... and we sincerely hope you are, too.

See, here at Notes our mission has always been to give you the other side of the economic story. The real danger, in our humble opinion, of succumbing to confirmation bias is to only listen to what the mainstream has to say. Because if you fully swallow what the mainstream has to say you’re going to get killed in the markets.

That doesn’t mean the underground always gets it right. It doesn’t. But it gives you a fighting chance, at least. Don’t forget, at the height of the boom years, you didn’t hear the talking heads on CNBC talking about the coming depression… or the Fed for that matter… or the geniuses in President Bush’s economic team.

To have had any ideas what was coming, you would have had to tune into a very different stream of opinion. You would have had to read Will’s father’s The Daily Reckoning, for instance, where Bill told readers of his “Trade of the Decade” (to sell stocks and buy gold). If you’d done so, you’d be sitting pretty right now.

But it is important to be aware of the tendency for self-confirmation, whatever you’re reading or whoever you’re getting your information from. Here are five things you can do to overcome confirmation bias (hat tip, The Financial Philosopher):

1. You can begin by attempting to give equal time to information sources with which you agree as to those with which you disagree. No mind has ever grown without stretching beyond its comfort zone. Is it not the blunt stone that sharpens the blade?

2. Also beware of the mainstream media because it tends to attach itself to the bias of the herd. Have you noticed a recent shift in the media’s overall sentiment from bearish to bullish? The popular view seems to be shifting toward stating “The Recession Is Over.” This is the same media that said, less than one year ago, that the US Economy was headed for “The Next Great Depression.”

3. When you find yourself overwhelmed with reasons to make a decision to do something, force yourself to come up with reasons why you should not do it (or remember the third alternative – deferring the decision to a later time).

4. Simply be aware of what information you consume. If information were food, would your “diet” be healthy? Is it balanced?

5. Don’t be mentally lazy. Complacency is a breeding ground for other potentially damaging behaviors, such as greed and hubris.