- Joshua M Brown
- February 23rd, 2014
We trick ourselves all the time in order to be able to function in this world. We sort of have to, it’s not willful, it’s an evolutionary trait that’s enabled our ancestors to get along and pass on their genes.
Unfortunately, this survival tool has ancillary effects on the way we act that, if unchecked, can be harmful.
David McGrane via Maria Popova:
Pay attention to when the cart is getting before the horse. Notice when a painful initiation leads to irrational devotion, or when unsatisfying jobs start to seem worthwhile. Remind yourself pledges and promises have power, as do uniforms and parades. Remember in the absence of extrinsic rewards you will seek out or create intrinsic ones. Take into account [that] the higher the price you pay for your decisions the more you value them. See that ambivalence becomes certainty with time. Realize that lukewarm feelings become stronger once you commit to a group, club, or product. Be wary of the roles you play and the acts you put on, because you tend to fulfill the labels you accept. Above all, remember the more harm you cause, the more hate you feel. The more kindness you express, the more you come to love those you help.
This kind of behavior is evident everywhere you look in the realms of investment and finance. It’s what forces traders and investors of all stripes to suspend rational behavior or to stick behind previously held opinions even as new evidence or a turn of events begins to invalidate them. It causes the clustering of like-minded investors into their own little ghettos of intransigence. It leads to the grouping and teaming up of those who favor a particular asset class, public company’s stock or have a particular predilection for one investing style over another, regardless of whether its pursuit at a given time will be favorable.
Popova takes on McGrane’s concept of the way we construct our own reality to make it agree with our belief systems at the link below. It’s amazing the lies we’ll tell ourselves so that we can move forward and get along with our surroundings and tolerate our situation. It’s astonishing the speed with which we’ll join up with a group or a cause or even an entire belief system if it pleases our need to align our inside self with its outward appearance.
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The Reformed Broker is a blog about financial markets and the economy. Joshua Brown is a New York City-based investment advisor for high net worth individuals, charitable foundations, retirement plans and corporations... More.