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In late April, drivers in Toronto began turning confidently onto Winona Drive, which Google Maps declared a northbound one-way street. The only problem: The road signs clearly showed that traffic ran the other way.
Near-collisions followed. Frustrated neighbours complained to the city, to police and to Google itself. When none of that moved quickly enough, residents took matters into their own hands and posted homemade signs reading “GPS is wrong,” but even those failed to fix the situation. Eyes fixed on their navigation screens, drivers made their way past the road signs as though they weren’t there.
The question isn’t why Google Maps got it wrong. The more interesting question is why, even with the right road signs staring them in the face, did so many drivers fail to notice? The answer reaches well beyond Toronto traffic – it even has important implications for investors.
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It lies in a concept psychologists call inattentional blindness: the well-documented human tendency to miss things that are plainly visible when our attention is focused elsewhere. The Winona Drive situation is a near-perfect real-world demonstration. The drivers weren’t careless or reckless. They were paying close attention – just to the wrong thing. And in doing so, their brains effectively filtered out the signs that contradicted what the app was telling them.
The most famous illustration of this phenomenon comes from a 1999 experiment by psychologists Christopher Chabris and Daniel Simons. Participants were asked to watch a video of people passing around a basketball and count the number of passes made. Midway through, a person in a gorilla suit walked directly through the scene, stopped, thumped their chest and walked off.
Nearly half of the participants never noticed the gorilla. They weren’t looking for it. Their attention was consumed elsewhere and the gorilla, right in plain sight, was effectively invisible. The experiment reveals a fundamental truth about human perception: We do not see the world as it is, we see what we are looking for.
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Markets are full of gorillas. They appear as warning signs hiding in plain sight. A deteriorating balance sheet is overlooked because revenue growth is strong. A regulatory risk is buried in footnotes while headline earnings are designed to impress.
Consider Theranos: For years, investors, board members and the media fixed their attention on Elizabeth Holmes’s vision of revolutionizing blood testing. The road signs pointing to trouble – persistent questions about the technology’s accuracy, unusual operational secrecy, a board with no medical or scientific expertise – were there to be read. But with investors’ attention locked onto the disruptive promise, those signals were filtered out. The result was one of the most consequential frauds in Silicon Valley history.
WeWork was a similar story. Investors poured billions into what was, at its core, a real estate company trading at a technology company’s valuation. The road signs were visible: mounting losses, a chaotic governance structure, a business model that depended on cheap capital to survive. Yet, the narrative of workspace disruption held market attention so firmly that the obvious warnings barely registered, until the collapse of its initial public offering made them impossible to ignore.
The same phenomenon plays out in the periodic bullishness for individual sectors. Today, chip stocks such as Intel and AMD are enjoying renewed investor interest, buoyed by the AI build-out and optimism about semiconductor demand. That enthusiasm may be warranted in the long run.
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But Michael Burry, the hedge fund investor made famous by The Big Short for identifying the 2008 housing collapse before almost anyone else, has pointed out something that tends to get lost in the excitement: The semiconductor industry is cyclical. Booms are reliably followed by busts. When investors are captivated by the upswing, the road signs pointing toward the eventual correction become very easy to miss.
There are concrete steps investors can take to guard against inattentional blindness. The first is to deliberately look for the gorilla. Before any significant investment decision, it is worth pausing to ask: What am I not seeing? This kind of a structured second look can surface risks that focused analysis routinely misses.
The second is to diversify not just assets, but perspectives. A portfolio review conducted by someone who wasn’t involved in building the portfolio is far more likely to surface blind spots. This is the real value of a trusted adviser or an objective second opinion, not as a substitute for the investor’s own judgment, but as a check against the narrowing of attention that deep focus can produce.
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Third, investors should be wary of the false confidence that a sophisticated navigation system provides – whether that’s a financial model, an algorithm, or a compelling investment thesis. These tools are genuinely useful, but they can create exactly the kind of single-minded attention that renders the surrounding red flags invisible.
The drivers on Winona Drive were not reckless. They were too concentrated on their task. They were so absorbed in following one set of directions that they lost awareness of what the road signs were plainly telling them. Markets punish that same kind of tunnel vision, and often at the worst possible moment.
The gorilla doesn’t announce itself. It simply walks through the room while everyone is busy counting passes. As Nobel laureate Daniel Kahneman observed, “We can be blind to the obvious, and we are also blind to our own blindness.” In a world of information overload and ever more sophisticated navigation tools, that reminder has never been more valuable.
Sam Sivarajan is a speaker, independent consultant and author of three books on investing and decision-making. He writes two free Substack publications on decision-making and the good life: theuncertaintyedge.com and thegoodhumanpractice.com