Blind-Chart Bias Test
Hide an asset's identity to expose ownership and narrative bias
- Difficulty
- Easy
- Time to result
- ~days to results
- Steps
- 5
- Confidence
- 99%
Remove the company name and other identifying information from a chart, then ask the decision-maker whether the anonymous security should be bought, held, or sold. Require the answer to reference visible behavior such as rallies failing to reach new highs, declines failing to break lower, or evidence of accumulation and distribution. Only after the judgment is recorded should the asset's identity and the viewer's current exposure be revealed. Comparing the blind decision with the identity-aware decision exposes attachment, narrative dependence, and reluctance to sell an owned position. The method does not claim that charts contain every relevant fact; it creates an independent reading that can challenge a portfolio manager's existing story before a final decision is made.
Origin
Extracted from Masters in Business, where Alan Shaw recalled presenting unnamed charts to institutional portfolio managers to test their objectivity.
Core principles
- 01Ownership creates emotional and informational bias
- 02Price structure can be evaluated independently of a company story
- 03A blind judgment reveals whether identity changes the decision
- 04Failed rallies and declines expose shifts in supply and demand
How to run it
- 1
Prepare an anonymous chart
Remove the company name, ticker, annotations, and other clues that reveal identity. Preserve only the price evidence needed for analysis.
Pro tip Standardize the date range and scale across securities when testing several positions.
Watch out Do not manipulate the window to steer the reviewer toward a preferred answer.
- 2
Elicit an independent judgment
Ask whether the reviewer would buy, hold, reduce, or sell the unnamed security. Record the choice before allowing discussion of the company.
Pro tip Force a directional answer even if the reviewer also notes uncertainty.
Watch out Allowing identity guesses can reactivate the same bias the exercise is meant to remove.
- 3
Explain the visible evidence
Have the reviewer identify failed rallies, failed breakdowns, trend changes, or other supply-and-demand clues supporting the decision.
Pro tip Translate patterns into buyer and seller behavior rather than jargon.
Watch out A decision without observable evidence is not a useful bias test.
- 4
Reveal and compare
Reveal the security and compare the blind judgment with the manager's actual position and prior view. Investigate any material inconsistency.
Pro tip Ask what non-chart evidence legitimately justifies changing the blind decision.
Watch out Do not treat every disagreement as proof that the chart is right.
- 5
Choose a proportionate action
Integrate the independent chart reading with business and portfolio evidence. If reward has disappeared but major risk is not yet proven, consider reducing rather than making an all-or-nothing move.
Pro tip A half-position sale can convert a warning into a controlled experiment.
Watch out Do not let position size or embarrassment prevent action.
In the wild
Shaw covered Avon's name and asked an investment manager whether he would buy or sell the chart. He highlighted rallies that repeatedly failed to reach higher levels, then persuaded the manager to sell half of a million-share position.
→ The manager reduced exposure before Avon's major decline.
Shaw displayed unnamed technology charts to mutual-fund managers and asked whether they would own them. No hands went up, even though the fund was heavily invested in the same securities once their identities were known.
→ The exercise exposed a gap between the managers' objective chart reading and their committed portfolio stance.
Common mistakes
Revealing the identity too early
Once the reviewer recognizes the company, existing beliefs and ownership attachment can contaminate the independent judgment.
Treating the test as final proof
The exercise exposes bias and adds independent evidence, but it does not replace fundamental research or portfolio constraints.
Is it for you?
Best for
It is best for portfolio reviews involving concentrated, emotionally significant, or long-held positions.
Not ideal for
It is not ideal as a complete investment process because a blind chart cannot assess business quality or mandate constraints.
From the transcript
“I would go in with the charts without beings on them.”
“Sometimes you can be over informed, right, maybe just the reality of the chot picture.”
“A rally that fails to break out is selling into strength, like a decline that fails to break down is buying into weakness.”
From the episode
Alan Shaw Says the Days of Charting Stocks By Hand Are Over
Alan Shaw