How To Build Resilience, with Confidence

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• We live in uncertain times. While it might be true, it’s a sentiment bordering on cliché.
• Peter Atwater, author of the book “The Confidence Map: Charting a Path From Chaos to Clarity,” points out that the future is inherently uncertain, so we need to learn how to navigate through uncertainty.
• What are the key elements of confidence? What does real confidence look like? Peter breaks down his framework for understanding how confidence affects decision-making, and how we can harness it to make better choices.

Music has an extraordinary power to echo our moods. And pop music in particular can mirror the mood of our collective consciousness.

In his new book, “The Confidence Map: Charting a Path From Chaos to Clarity,” researcher, speaker and writer Peter Atwater remarks on Billie Eilish’s surprise sweep at the Grammy Awards in late January 2020. She won in several major categories over the favored nominee, Taylor Swift. Peter notes that the same week, the Italian government made the decision to shut down the country’s economy due to the emergence of COVID-19. Most of the rest of the world was six weeks away from lockdown.

“The sudden rise of Billie Eilish, like the rise of indie music more broadly, cautioned that behind the scenes, consumer mood was already deteriorating,” Peter writes. “Even before the pandemic, we were getting anxious.”

Since my co-host Cem Karsan and I last spoke with Peter on the podcast in June of 2022, the world seems even more uncertain than it did before. But is it, really? 

“It seems like at every turn, there’s an advertisement, there’s a story, there’s something that suggests that we live in uncertain times,” says Peter on a new Global Macro edition of Top Traders Unplugged. 

“And what’s interesting to me is that the future is inherently uncertain. It always was, is and will be uncertain. And so all of these messages of uncertainty are telling me that the crowd feels inherently vulnerable in some way; that the media mirrors mood; successful advertisers mirror moods. So they’re just telling us we feel things are uncertain.”

What’s more, “that feeling of uncertainty is leading to lots of highly impulsive, highly emotional behaviors,” Peter tells us. “It’s also leading us to be followers.”

As investors, we strive to make rational, informed decisions. But because uncertainty is a fact of life — and we need confidence to be successful — how can we nurture our ability to trust ourselves?

Read on for highlights of our fascinating conversation with Peter about his framework for understanding confidence, as well as how confidence affects politics, our economy and even climate change.

‘Confidence theater,’ certainty and control

“Confidence is one of those words like pornography, that we know it when we see it. But people really struggle to explain it. And I’ve spent a long time trying to figure out what it really is,” says Peter.

In our modern world, people often mistake confidence for what he calls “confidence theater” — the appearance of being confident. Peter says we often see this trait in celebrities, both in business and in culture. 

But to him, “confidence is the feeling we have when we have [the related emotions of] certainty and control over our lives … but we need both of those [latter two] in order to feel a level of predictability to what’s ahead, and a sense that in that future we imagine, we have the skills, the resources, the tools, the preparation we need to be successful.”

That combination of certainty and control can change “all sorts of things in our lives, from how we think, to what we want, to what we do,” Peter adds.

Generational ‘change and fear’

In “The Confidence Map,” Peter writes about five natural responses to feelings of high stress: fight, flight, freeze, follow and nihilism — aka the “fuck it response.” 

He says that “following” is our easiest response to vulnerability — “we don’t need skills, we don’t need strength; just get in line,” he says. “Social media, I think, has compounded our following tendency. We see it in politics, we see it in culture, we see it in the markets.”

As the Baby Boomers retire and Millennials come to the fore, Cem wonders how that generation’s relationship to confidence and vulnerability will shape our economy. 

“In theory, we gain more confidence with time and some level of control as well,” Cem says. “As Millennials become more dominant, they don’t feel as confident [as prior generations]. They don’t have as much control. They’re at 40% of the wealth creation, 40% of the household formation.”

Peter says there are “all sorts of echoes of the late 1960s in terms of this generational change.”

He notes that a massive generational shift is taking place now, with a “huge gerontocracy at one end” and younger generations that, like their counterparts in the 1960s, “feel an enormous sense of change and fear.” But instead of the Vietnam War, they’re navigating things like systemic racism, economic inequality and climate change. 

“Like the generations before them, I have a lot of confidence that they’re going to become entrepreneurial leaders in society, because they have to,” says Peter. “They are going to create networks and grassroots activism, left and right, up and down, that transforms who we are as a culture going forward. They’re going to address the vulnerability that they feel in ways that are meaningful to them.”

Do we need a new New Deal?

What about climate change? Is it even possible to be confident in our ability to take on such a massive challenge? 

“When confidence was extremely high, our objective was to proactively address climate change. It was bold, ambitious, sort of like, We’re going to the moon … we’re going to accomplish this,” Peter argues. “As confidence falls, I think what we’re going to see is climate change coming off the table, but massive remediation coming onto the table. We’re going to acknowledge that we failed to address it. And now we need to deal with the consequences of it.”

Peter sees parallels between our current climate conundrum and the 1930s. During the Great Depression, “remediation becomes the backdrop for massive employment — government employment programs. … You know, we’re going to [bring] everybody together to build the Hoover Dam,” he says. Now, he predicts we’ll pour resources into “big defensive infrastructure because we didn’t address climate change.”

He doesn’t know what that might look like, but he thinks “the bold ambitions” of trying to prevent or minimize climate change are likely to be replaced by practical solutions to deal with the very real effects of a warming planet.

Comfort and cognition

In “The Confidence Map,” Peter includes a quote by “Thinking, Fast and Slow” author Daniel Kahneman: 

“Confidence is a feeling, which reflects the coherence of the information and the cognitive ease of processing it. It is wise to take admissions of uncertainty seriously, but declarations of high confidence mainly tell you that an individual has constructed a coherent story in his mind, not necessarily that the story is true.”

In the era of fake news, that’s cogent advice.

“We accept information that is most cognitively easy for us,” Peter notes. “And what is relevant to us, what resonates. So we will turn on the [news] channel that feels most comfortable to us. We will open the paper that feels most comfortable to us. I don’t believe that the media transforms how we feel as much as it simply mirrors back to us how we feel.”

In that sense, confidence doesn’t always mean comfort. The closer we get to objective truth, the more we might learn something we didn’t want to know. So how can we, as individuals, develop and nurture our confidence? 

Peter has a confidence-enhancing life hack that really works. 

“Anytime you’re not feeling confident, go volunteer,” he says. “Service to others is the best adrenaline boost to confidence I know. It’s counterintuitive, but it gets you out of your head, it gets you out of your environment, and there’s a level of gratitude that comes along with it.”

I’m confident — and certain — that Peter is right.

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This is based on an episode of Top Traders Unplugged, a bi-weekly podcast with the most interesting and experienced investors, economists, traders and thought leaders in the world. Sign up to our Newsletter or Subscribe on your preferred podcast platform so that you don’t miss out on future episodes.