14 May 2006

Who's In Charge?

Four or five years ago, I read a book called Consilience by Wilson – you can google “consilience wilson byrn” to read what I wrote back then.

The book touches on a wide range of topics but the two that have stuck with me:

a – genetic modes of expression: our genes determine who we are; nurture/environment impact us in determining the extent to which our preprogrammed traits are expressed.

b – free will: our brains are a sophisticated array; if you understand the inputs and biases then you’ll be able to predict thought/actions. We are far less “free” than we realise – many (most?) of us are prisoners of our programming.

The concept of a lack of free will can be a bit daunting. Many of us certainly pride ourselves on the control we are able to exert over our lives. Athletes honing our bodies; parents passing their “good traits” through spending time with their kids; and other areas.

As I’ve touched on earlier, I’ve been studying behavioural psychology because I want to make better decisions in my own life. To do that, I decided that I needed to understand how people generally make decisions. Some of you have asked for the titles of what I’ve been reading. Well here are a few to get you started.

** Fooled By Randomness, Taleb
** Influence, The Psychology of Persuasion, Cialdini
** Hedgehogging, Biggs
** Irrational Exuberance, 2nd Edition, Shiller
** How to win friends and influence people, Carnegie
** Deep Survival, Gonzales
** Collapse: How societies choose to fail or succeed, Diamond
** The Wisdom of Crowds, Surowiecki
** Freakonomics, Levitt & Dubner

All of the above were excellent on their own. Taking them together and viewing them through Wilson’s concepts made it even more evident to me that we make many decisions without thinking. We also make a lot of “poor” decisions. Even when we try to make good decisions, we are up against some strong automatic programming.

One of the clearest examples of automatic responses is people that get angry for no apparent reason. I’ve had a few (short term) training partners and (even shorter term) acquaintances that fit this profile.

Without exception – they:
** greatly underperform when stressed
** lack consistency in their approach to life
** wonder why progress is so difficult in their lives
** truly wish that they had better emotive control

Maybe they are stuck? However, my own experience is that while we’ve been dealt a certain hand, it is up to us to play the cards. Specifically, how our genetic traits are expressed will be based on the people/environment around us and our own actions (or inaction).

Even the most “unconscious” and belligerent people that I know have moments when they are clear, reasonable people.

Within these moments of clarity is where we must take action to note our nature and build patterns/reinforcing actions that help us head the direction that “we” want to go. I think the new age folks call this following our “true selves”. To me, it’s simply tapping into the moments where we are most sane and not running on autopilot.

The books above talk a lot about the nature of our autopilots. If you can’t see it in yourself then you’ll certainly be able to spot it those that are close to you.

When I notice the self-sabotaging traits in those close to me… I look within to see how I am doing the same thing to myself. Odds are, the people around us are quite similar to ourselves.

My success in athletics is built on making fewer mistakes than the guys that I am racing – errors in pacing, nutrition, training, intensity, preparation, race selection – the entire package. The further an athlete strays from an extremely dedicated process, with low attachment – the more space he creates for his competition.

In watching my own approach to athletics and seeing my blindspots within my sport – I have learned valuable personality insights that I can apply back to my finance and investing careers.

THE KEY – the patterns that we create in one area of our lives are likely to be found across ALL areas of our lives.

As a recreational athlete, the lowest stress project that you are managing is likely your athletic career. The patterns that you create in sport exist in your workplace; your home; your bedroom.

That is one of the best things about coaching adults – I don’t have to “teach” anything. My athletes and I learn a tremendous amount about ourselves from the endless case studies that each season provides.

With my highly motivated athletes – I help them practice relentless moderation with periods of goal specific overload.

It’s no different in business.


Back to decision making…

Much of what I’ve done in my life (academics, finance, project management, athletics and coaching) involves making informed guesses with imperfect information.

While I work in finance, I don’t consider myself a professional investor in the classical sense. To me, the classical investor (the institutional investor) is running a portfolio and making daily decisions on asset allocation and specific purchases. I’ve never been attracted to that – possibly because it seems like a mugs game to me. Margins are low, as well.

When I was doing buy-outs, we’d make zero to four investments a year. Our record was pretty good but not surprising given that we had superior information; good people; and solid advisors. It was a time of limited competition, favourable economics and great returns. It was also a lot of fun – “buying” is something that nearly all people have in-built “joy” in doing.

People love to buy. Nobody every wants a bull run to end. Easy money is popular with the masses. Our decisions today are heavily weighted on our experience of the last three years.

Conversely, people HATE to lose, even a little. We find losses highly stressful. When under stress nearly all people will make poor initial decisions.

This is why I’ve decided to wait and see with my personal investing. I’ll probably miss out for a while but that’s OK. I plan on being around for a few more years, yet.

Next up, why I changed my mind on affirmative action.

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