The tragedy in Japan is still unfolding. To those of you who are curious as to how your own brains operate, and what various reactions mean to your investments, this is what we might call a teachable moment.

Back on March 13th, Ron Dodson sent me a Tweet touting an “MIT scientist’s take on Japan.”

I clicked over to read this blog post — titled “Why I am not worried about Japan’s nuclear reactors” — and was immediately suspicious. It was the FIRST and ONLY blog post from this individual. It had 100+ comments in a few hours (so much for taking years to develope a following).

Given it was only a few hours old post, I was surprised to see that Google showed it been reposted over 30,000 times elsewhere on the web.

Many of the sites were of right-leaning (Volokh, Freerepublic) and lots were of the wingnut variety (BraveNewCLimate, ClimateSanity, abovetopsecret, liberty’sflame). Business Insider even posted it bylined by the “BI Nuclear Expert” whoever that might be (Business Insider has a Nuclear expert?)

My curiosity sent me to MIT’s site, to look up their faculty list. The author of the post was Josef Oehmen “LAI Research Scientist.” The first paragraph made clear what his Nuclear Physics bonafides: He had none. “The main research interest of Dr. Josef Oehmen is risk management in the value chain.”

WTF? Value Chain?

That was where my search ended. There was no expertise in either Nuclear energy, Physics, or anything else even remotely relevant, and I tweeted as much (here).

I thought that would be the end of it, but smart people who should know better (Cramer, Tom Keene) kept on Retweeting it.

Last last night Rob Bullerwell gave me this heads up that Oehmen’s post was a sham: Posted on the site Genius Now was The Strange Case of Josef Oehmen (it has exceeded its bandwidth; I have it temporarily posted here until they are back up online).

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You might be wondering: What does all of this have to do with investing?

The answer, it turns out, is a lot. It is very revealing about confirmation bias, about the sources people rely upon, and the assumptions we make. These are all errors investors make that will ultimately cost you money.

Consider the following about the original post:

• The author was a Research Scientist at MIT

• It claimed that there was no chance “significant radiation leakage”

Now consider the details of each of these; think about what you might have overlooked if you liked what you read, if it supported your existing portfolio, and what you might have ignored because of that :

• The author had zero expertise in Physics or Nuclear Energy, but was affiliated with a prestigious Tech School

• A forecast was presented as fact, not opinion

• The post was rapidly disseminated by politically active sites

• A “friend” attested to its validity

• Interested firms within the industry were affiliated with its wide dissemination

• A brand new and unverified site was credited as a reliable source

I find it important to understand what my own biases are.

Those of you who blindly believed this post, or retweeted it, should consider looking at how your own biases might be impacting your investing results.