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Howard Marks โ navigating the crisis - creed, preparation and control
What kind of mindset and organisational culture does it take to survive and to thrive in market turmoil?
Letโs be frank, there are a vanishingly small number of people who have navigated multiples crises successfully and have something interesting and reflective to say it about it.One person who does is Howard Marks. Founder and Co-Chairman of Oaktree he is, for our (and Warren Buffetโs) money, one of the most thoughtful and experienced investors in the market today.
In the latest episode of Decision Nerds, we got to speak to him in the middle of recent market craziness. We had a fascinating chat - not about tariffs, Trump or trade wars, but the inner game; what individuals and firms need to succeed in this environment.
Joe's writing on investment decision-making is here.You can find Paul on LinkedIn here.
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The Disruptor in Chiefโs blizzard of executive orders, tariffs and foreign policy positions and his propensity to change them is making life difficult for investors and clients.
Things look and feel uncertain, perhaps more so than in living memory.
In this bite size episode, we discuss the science and practicalities of dealing with uncertainty.
The Electric shock study refernced in the discussion.
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As the wordly philosophers of Coldplay suggest, getting what you want, but not what you need, might leave you in need of fixing.
Leaps in investment platform technology give investors more information, more choice and the ability to act more quickly and easily. We want that, but is it what we need? As Joe points out, many of the positive developments in tech are double-edge swords. He thinks from a behavioural perspective, now is one of the worst times ever to be an investor.
๐๐ฒ๐ ๐๐ฎ๐ธ๐ฒ๐ฎ๐๐ฎ๐๐:
#๐ญ ๐๐ฎ๐ฐ๐ธ ๐ผ๐ณ ๐ณ๐ฟ๐ถ๐ฐ๐๐ถ๐ผ๐ป โ it takes me less than 10 seconds from launching my platform app on my phone to being able to deal. Is that a good thing? In one dimension yes, but the overarching story of behavioural finance is people doing irrational things that create bad outcomes. Slick and seamless tech combined with noise, FOMO and a constant barrage of stimulus has the potential to exacerbate these problems.
#๐ฎ ๐ ๐ฐ๐ผ๐บ๐ฝ๐ฒ๐๐ถ๐๐ถ๐๐ฒ ๐ฑ๐ผ๐ผ๐บ ๐น๐ผ๐ผ๐ฝ โ tech providers exist in a highly competitive environment and 'faster, easier, more' are key facets of the battleground. No one wants to lead a pitch with, โandโฆ.this is how we reduce information available to clients and make it harder for them to tradeโ.
#๐ฏ ๐ฅ๐ฒ๐ณ๐ฟ๐ฎ๐บ๐ถ๐ป๐ด ๐๐ต๐ฒ ๐ด๐ฎ๐บ๐ฒ โ whilst it might be possible to get providers around a table to agree a common approach that helps investors manage their worst impulses, a market-based solution is likely more workable. This needs those who advise on these platforms to be changing the conversation and including behavioural design as part of any selection process. Imagine a world where providers compete on how they help clients beat their biases as much as how slick the tech itself is.
๐ฃ๐ต๐ฟ๐ฎ๐๐ฒ ๐ผ๐ณ ๐๐ต๐ฒ ๐ฑ๐ฎ๐? ๐๐ป๐๐ฒ๐น๐น๐ถ๐ด๐ฒ๐ป๐ ๐ณ๐ฟ๐ถ๐ฐ๐๐ถ๐ผ๐ป
โIntelligent friction,โ is a concept from the payments industry which focuses on interventions based the risk level of a transaction. It aims to balance a good user experience with effective security. Buy a coffee in a new country when you land there fine, buy a laptop, expect an intervention. There are some obvious investment analogies here. And of course this is only one tool in the arsenal, getting better at education and helping clients help themselves is also pivotal.
We donโt want to lose all the good things that tech brings, but to mangle Coldplay, we should perhaps be trying to help people want what they need.
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Joe doesnโt like performance fees - but why? Are they innately problematic or just badly and perhaps cynically implemented in the mutual fund industry? In this bitesize episode, we get into alignment of interests, bad design and investor behaviour.
๐ง๐ต๐ฒ ๐บ๐ผ๐๐ ๐ถ๐ป๐๐ฒ๐ฟ๐ฒ๐๐๐ถ๐ป๐ด ๐ฝ๐ฎ๐ฟ๐ ๐ผ๐ณ ๐๐ต๐ฒ ๐ฐ๐ต๐ฎ๐?
Performance fees are most often discussed in the context of alignment and risk sharing. Joe raises an interesting question - can they also be used to nudge investors away from unhelpful behaviour?
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We all have things in our working lives that drive us insane. Anyone who regularly listens to the pod will know that there are a few subjects that consistently raise Joeโs blood pressure to unhealthy levelsโฆ
In the interest of Joe's and our future guestโs wellbeing, we wanted to find a way of dealing with these issues productively.
Our solution, Decision Nerds: Room 101
Room 101 is the torture chamber in George Orwellโs classic book, 1984. For those who cross its threshold, it contains, โthe worst thing in the worldโ.
Many Brits will remember the Room 101 TV and radio shows where celebrities suggested what they thought was the worst thing in the world and competed to have their pet hate consigned to oblivion (my personal favourite being Jimmy Carr and tax avoidance schemes).
Our take on Room 101 is slightly different. Like the celebrities, Joe, I and our guests will discuss the issues that make our eyes roll. But it wonโt be just a winge-a-thon, weโll try to get to the heart of the issue and start a productive discussion.
๐๐ต๐ฎ๐ฟ๐๐ฐ๐ฟ๐ถ๐บ๐ฒ
We're kicking-off with โchartcrimeโ and something that particularly riles Joe - the overlaying of time series, such as inflation, from different periods and looking for predictive patterns. Are these charts a problem, or is it how they are used and framed?
In the episode, we discuss:
๐ฃ๐๐ป๐ฑ๐ถ๐๐ฟ๐ ๐ฎ๐ป๐ฑ ๐ฝ๐ฟ๐ฒ๐ฑ๐ถ๐ฐ๐๐ถ๐ผ๐ป and how different investor types might confuse the two
๐ง๐ฒ๐ ๐ฎ๐ ๐๐ต๐ฎ๐ฟ๐ฝ๐๐ต๐ผ๐ผ๐๐ฒ๐ฟ๐ ๐ฎ๐ป๐ฑ ๐ฐ๐ต๐ฎ๐ฟ๐ ๐ฐ๐ฟ๐ฒ๐ฎ๐๐ผ๐ฟ๐ - are they the same thing?
๐ง๐ต๐ฒ ๐ฎ๐๐ธ๐๐ฎ๐ฟ๐ฑ ๐พ๐๐ฒ๐๐๐ถ๐ผ๐ป that might stop people producing these charts
Our Room 101 episodes are bite-sized and designed to provoke a conversation. Hot takes, or deeply considered meditations are both welcome. https://www.linkedin.com/posts/paul-richards-34965883_%F0%9D%97%A5%F0%9D%97%BC%F0%9D%97%BC%F0%9D%97%BA-%F0%9D%9F%AD%F0%9D%9F%AC%F0%9D%9F%AD-%F0%9D%97%96%F0%9D%97%B5%F0%9D%97%AE%F0%9D%97%BF%F0%9D%98%81%F0%9D%97%B0%F0%9D%97%BF%F0%9D%97%B6%F0%9D%97%BA%F0%9D%97%B2-we-activity-7282682076963733504-tB9s?utm_source=share&utm_medium=member_desktop
And of course, feel free to submit the most egregious example of chartcrime you have ever seen (if you want to raise Joeโs blood pressure).
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If youโve been around the block, you will likely have seen some eye-rolling use of evidence during meetings. Evidence can be used badly for many reasons; a misunderstanding of what conclusions can be drawn from it, or perhaps it has been cherry-picked to support a particular position.
In this episode, we unpick these issues with Professor Alex Edmans of London Business School. Alex recently published a book, โMay Contain Liesโ, which discusses the methodological, psychological and incentive problems surrounding evidence use.We spend a decent amount of time on a core idea from the book, โThe Ladder of Misinferenceโ. If you think scientifically, there are no earth-shattering revelations here, but I really like it because it is a simple teachable framework that groups can adopt. Alex gives some great examples that everyone can understand and internalise.
The Ladder deals with the challenges of method, but thatโs only half the story. We also have to beat the behavioural cards that nature has dealt us, e.g. confirmation bias.
And even if we beat the first two traps, incentives can nudge us away from saying what we really believe.
Key insights:
- How Alex tries to move beyond black-and-white thinking and engage with complexity - getting the right mix of data and stories
- Why do bad ideas stick - do you still 'Power Pose'?
- Changing minds โ the power of good questions (thereโs a great experiment on pianos and toilets that you can try at home).
- Trading off the short and long-term - why he chose the most critical agent to help him publish his book.
- Understanding neurological carrots and sticks - what happens when we put people in a brain scanner and give them statements they like and donโt?
- The state of debate around ESG and DEI โ ideology, identity and pressures to conform.
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Lying โ itโs something that all humans do. Most of the lies we tell are small and harmless. But deceptive behaviour in the investment industry lowers trust and increases costs and complexity.
We are deceptive for many reasons and one of them is that we can get away with it. This is because, despite what we might believe, most of us are pretty terrible at spotting lying โ including highly experienced financial analysts.
But what would happen if we all had access to AI-powered technology on our phones that could spot deception with a high degree of accuracy? Would that change how the industry behaves?
This is no idle speculation โ in this episode of Decision Nerds, we explore research that suggests that AI is significantly better at spotting lying than humans. And as we all know, AI has a habit of surprising us by appearing in the wild far faster than we might expect.
How would this technology impact the investment industry? We discuss:
๐๐๐ ๐ข๐ค๐ฉ๐๐ซ๐๐ฉ๐๐ค๐ฃ ๐๐ค๐ง ๐๐๐๐๐ฅ๐ฉ๐๐ค๐ฃ ๐๐ฃ ๐ฉ๐๐ ๐๐ฃ๐๐ช๐จ๐ฉ๐ง๐ฎ โ the entirely logical reasons that we donโt always tell the truth
๐ฟ๐๐๐๐๐ง๐๐ฃ๐ฉ ๐ ๐๐ฃ๐๐จ ๐ค๐ ๐๐๐๐๐ฅ๐ฉ๐๐ค๐ฃ ๐๐ฃ๐ ๐ฉ๐๐๐๐ง ๐ง๐๐ก๐๐ฉ๐๐ซ๐ ๐๐ข๐ฅ๐๐๐ฉ๐จ โ what are the traps that managers fall into and why
๐ ๐ช๐จ๐ฉ ๐๐ค๐ฌ ๐ข๐ช๐๐ ๐๐๐ฉ๐ฉ๐๐ง ๐๐จ ๐ผ๐? โ the results might surprise you
๐๐ค๐ช๐ก๐ ๐ ๐ฉ๐ง๐ช๐ฉ๐ ๐ข๐๐๐๐๐ฃ๐ ๐๐๐จ๐ฉ๐ง๐ค๐ฎ ๐ฉ๐๐ ๐๐ฃ๐๐ช๐จ๐ฉ๐ง๐ฎ ๐ค๐ง ๐ข๐๐ ๐ ๐๐ฉ ๐๐๐ฉ๐ฉ๐๐ง? โ our take on โcreative destructionโ
๐๐๐๐ง๐โ๐จ ๐ฃ๐ค ๐ฉ๐ง๐ช๐ฉ๐ ๐ข๐๐๐๐๐ฃ๐ ๐ฎ๐๐ฉ - we discuss a few better questions that we can use today.
Affectiva facial recognition demo
Paper on analysts' ability to spot CEO deception
Paper on AI's ability to spot CEO deception
Lying on CVs -
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๐๐ผ๐ ๐บ๐๐ฐ๐ต ๐๐ถ๐บ๐ฒ ๐ฑ๐ผ ๐๐ผ๐ ๐ด๐ถ๐๐ฒ ๐ฎ๐ป ๐๐ป๐ฑ๐ฒ๐ฟ๐ฝ๐ฒ๐ฟ๐ณ๐ผ๐ฟ๐บ๐ถ๐ป๐ด ๐ถ๐ป๐๐ฒ๐๐๐บ๐ฒ๐ป๐ ๐บ๐ฎ๐ป๐ฎ๐ด๐ฒ๐ฟ?
1. Hire a manager after a period of strong performance.
2. Watch in horror as you donโt experience that outcome, maybe the opposite.
3. Spend a huge amount of time and emotional labour deciding on whether your initial thesis was wrong, something has changed at the manager, or with market dynamics.
4. After sucking up a huge amount of governance time, decide to sack the manager.
5. Rinse and repeat with potentially similar outcomes.
Now that might not be you, but it is a story that plays out regularly.
Experiencing underperformance is one of the unavoidable realities of hiring an active manager. And itโs painful for everyone; clients, managers and advisers. And badly managed pain creates some predictably bad outcomes for all parties.
One important and manageable issue is time horizon mismatch. And this is what and I explore in the latest episode of Decision Nerds. We discuss
๐ช๐ต๐ ๐ถ๐ป๐๐ฒ๐๐๐บ๐ฒ๐ป๐ ๐ฒ๐ฑ๐ด๐ฒ ๐ถ๐ ๐ป๐ผ๐ ๐ฒ๐ป๐ผ๐๐ด๐ต โ managers need an appropriate amount of time to let their edge play out. It may be longer than you think.
๐ง๐ต๐ฒ ๐๐๐ ๐๐ผ๐ป ๐๐ป๐ฑ๐ฒ๐ โ a simple way of articulating time frames that would help everyone.
๐๐๐ฒ๐ฟ๐๐ผ๐ป๐ฒ ๐ต๐ฎ๐ ๐ฎ ๐ฝ๐น๐ฎ๐ป ๐๐ป๐๐ถ๐น ๐๐ต๐ฒ๐ ๐ฎ๐ฟ๐ฒ ๐ต๐ถ๐ ๐ถ๐ป ๐๐ต๐ฒ ๐ณ๐ฎ๐ฐ๐ฒ โ we posit that most peopleโs ability to predict how they will deal with the pressure of underperformance wonโt reflect reality when things get tough.We talk about the distinct behavioural pressures facing clients, advisers and managers and what they might consider doing to make things easier. A couple of takeaways if you donโt have time to listen.
๐๐น๐ถ๐ฒ๐ป๐๐ - what is your real capacity for tolerating underperformance, how do you know this?
๐ ๐ฎ๐ป๐ฎ๐ด๐ฒ๐ฟ๐ - have a clear view of the timeframe your results should be judged over. Whilst this a tough problem, if you donโt have a view, one will be forced on you.
๐๐ฑ๐๐ถ๐๐ฒ๐ฟ๐ - is your role to be a behavioural bulwark and help clients through this period, or just keep them happy? They are not always the same thing.
More information on the Buxton Index is here: https://lnkd.in/eHXDfkfe
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Thinking and talking about failure can be tough, especially when itโs us whoโs failing. But itโs important for us as individuals and investment teams to find a way to do this in an effective manner that allows us to both learn and evolve. In this episode of Decisions Nerdsโฆ
- Joe pits his inner Brian Blessed against an AI auto-editor
- We examine Joeโs framework for thinking about errors around investment beliefs, processes and outcomes.
- We then think about this in the context of broader research that thinks about different typologies of errors; basic, complex and intelligent.
- We then discuss the practical steps that can make life easier.
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We downed some eggnog and decided to record an impromptu Christmas special. We have a chat about how insights from behavioural science might help the festive holidays proceed more smoothly:
๐ Why Joe's team might think (in his own words) that heโs an โegotistical a*&holeโ.
๐ง A simple way to feel better about Christmas (but you might not like it).
๐ The nudges that retailers use to get us to buy.
๐ต Gift cards or cash as a present โ to constrain or not to constrain?
๐ค Do New Yearโs resolutions get a bad rap and how can we can structure them to give a better chance of success?
๐ฟ Our favourite Christmas movie as a metaphor for decision-making and a gift that helps people understand their value to the world.
Wherever you are, however you celebrate (or donโt), we hope that you have get some high-quality time with family and friends over the festive period.Weโll see you on the other side.
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Following the publication of a new book, 'The Fund', Ray Dalio and Bridgewater have been getting attention for all the wrong reasons. The book alleges a toxic culture where the reality of day-to-day life doesnโt match that described in Dalioโs book, โPrinciplesโ.
In this episode of Decision Nerds, we dive into the sludge and extract some key points that are relevant for organisations and teams. Key takeaways:
#๐ญ ๐๐ผ๐ปโ๐ ๐ฎ๐๐๐๐บ๐ฒ ๐๐ต๐ฎ๐ ๐๐ผ๐ฟ๐ธ๐ ๐ณ๐ผ๐ฟ ๐ผ๐๐ต๐ฒ๐ฟ๐ ๐๐ถ๐น๐น ๐๐ผ๐ฟ๐ธ ๐ณ๐ผ๐ฟ ๐๐ผ๐
Itโs tempting to look at something that appears to be working for someone else and try and replicate it. This is harder than we think โ especially when it involves culture.
#๐ฎ ๐๐ผ๐ ๐ณ๐ฒ๐ฒ๐ฑ๐ฏ๐ฎ๐ฐ๐ธ ๐ถ๐ ๐ฎ๐ฝ๐ฝ๐ฟ๐ผ๐ฎ๐ฐ๐ต๐ฒ๐ฑ ๐บ๐ฎ๐๐๐ฒ๐ฟ๐
We all need feedback to learn and develop - how it's given matters. Systems like 'Radical Transparency' may work for some people, but not all people. Probably not most people.
#๐ฏ ๐๐ฐ๐ฐ๐๐ฟ๐ฎ๐๐ฒ ๐ณ๐ฒ๐ฒ๐ฑ๐ฏ๐ฎ๐ฐ๐ธ ๐ถ๐ ๐ฝ๐ฟ๐ผ๐ฏ๐ฎ๐ฏ๐น๐ ๐บ๐ผ๐๐ ๐ถ๐บ๐ฝ๐ผ๐ฟ๐๐ฎ๐ป๐ ๐ณ๐ผ๐ฟ ๐น๐ฒ๐ฎ๐ฑ๐ฒ๐ฟ๐
We often focus feedback on helping junior colleagues learn. Of course that is valuable. However, leaders make key decisions and set the cultural tone and strategic direction. Their greater impact means that they need clear feedback on whether what they are doing is working/where they could develop.
#๐ฐ ๐ฃ๐ผ๐๐ฒ๐ฟ ๐ฎ๐๐๐บ๐บ๐ฒ๐๐ฟ๐ถ๐ฒ๐ ๐บ๐ฒ๐ฎ๐ป ๐๐ต๐ฎ๐ ๐น๐ฒ๐ฎ๐ฑ๐ฒ๐ฟ๐ ๐ผ๐ณ๐๐ฒ๐ป ๐ฑ๐ผ๐ป'๐ ๐ด๐ฒ๐ ๐๐ต๐ฒ ๐ณ๐ฒ๐ฒ๐ฑ๐ฏ๐ฎ๐ฐ๐ธ ๐๐ต๐ฒ๐ ๐ป๐ฒ๐ฒ๐ฑ
Almost every person giving feedback upwards will be making some conscious, or unconscious, calculation of career risk. Leaders need to recognise this. For some people this will be a positive (they donโt want that feedback). For others that do, they need to recognise that they still might not get it. You may need to go the (emotional) extra mile to convince people that you really want to hear about what you could do better.
#๐ฑ ๐ช๐ฒ ๐๐ต๐ผ๐๐น๐ฑ ๐ฑ๐ฒ๐๐ถ๐ด๐ป ๐ณ๐ผ๐ฟ ๐ต๐๐บ๐ฎ๐ป๐ ๐๐ถ๐๐ต ๐ฎ๐น๐น ๐ผ๐๐ฟ ๐ป๐ฒ๐ฒ๐ฑ๐ ๐ฎ๐ป๐ฑ ๐ณ๐น๐ฎ๐๐
For many of us, it can be a struggle to give and receive feedback, acknowledge weakness, mistakes, etc. We can try and design cultures such as Radical Transparency and recruit for people who can live with it, or try simpler approaches that reflect individual needs.One simple tool is a feedback profile, which can be found here.
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In this episode we discuss how we can make better forecasts with Professor Paul Goodwin.
We tackle everything from the techniques available, to human problems around understanding, bias and incentives. See the chapter headings for full details.
Notes
Philip Tetlock's book is Superforecasting: The Art and Science of Prediction
A paper that describes the key concepts can be found here. -
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Does fear of getting things wrong stop you from making decisions?
If so, youโre not alone. Regret can have a profound impact on our choices.
In this short episode, we unpack the challenges, discuss some solutions and use the timely case of thematic investment funds as a case in point. We tackle:
The psychological nature of regret โ why it can be useful, but also harmful.How regret can impact the best and bright of us โ smarts and market knowledge are no defence.
How it can hurt our choices from FOMO to delayed decisions โ we discuss the case surrounding thematic funds.
Some simple tweaks that can reduce the fear of getting things wrong โ the value of processes, monitoring choices and justifiability.
How we can help other people help us โ self-knowledge and Joe and my challenges in this area, including Joeโs parentsโ day race travailsโฆ
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A bitesize episode with some thoughts from this year's Glastonbury festival.
We tackle:
Lana Del Rey - the need to understand who's got the power (literally in this case)
Van Halen reconsidered - from divas to behavioural gurus via brown M&Ms
Elton John - the peak-end rule and what set lists can teach us about being remembered. -
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It is incredibly easy to be cynical when we hear businesses talk about culture. At one point or another, most of us have shuffled into a room with colleagues to experience a PowerPoint presentation on our firm's culture. They can often be (a) generic, anodyne and marketing-led, or (b) aspirational, unrealistic and not reflective of leadership and/or street-level behaviour.
We often end up with some version of the caricatures above not through bad intentions, but because building, maintaining, evolving and communicating an effective culture is hard. Understanding how to do this well is absolutely critical for any organisation or team.
It's important for many reasons, but particularly because our decision-making doesn't occur in a vacuum. It is inescapably framed by the environment and culture in which we operate. If you want to encourage good behaviour and decision-making, thinking about culture is essential. Just not that easy.
To try and make it easier, in this episode of Decision Nerds, we tackle culture and decision-making with WCM Investment Management. They have some fascinating insights as the assessment of a company's culture forms a key part of their decision-making. They have also thought exhaustively about how to structure their own culture to make better choices.We cover a range of important topics:
The need for alignment between culture and strategy
Is scale the enemy of culture?
Should culture evolve through different business/operating environments?
Where and how can culture go sour?
What does management often get wrong when talking about culture?
Is Glassdoor data useful?
How does culture impact decision-making at WCM?
What's the most practical way to take the cultural temperature of a company?
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Our guest today, Tom Gosling, is a committed and thoughtful supporter of D&I. He's a practitioner turned academic who helps build bridges between researchers, policymakers and those at the coal face.
He has an interesting take on some important strategic and practical D&I issues that often get no, or very little, air time. If you have any interest in D&I and how it impacts decisions, thereโs something here for you.
In this episode, we discuss:The business case for diversity - why consultants might have different positions than academic researchers - consultant research and selling services vs. requirements of peer-reviewed research.
The four risks that overstating the business case for diversity can create.
What is the wider economic, moral and economic case for diversity and should we give more weight to this?
Diverse teams can generate the best or worst performance - why?
Understanding the role of social integration in making diversity work.
What should the corporationโs role be - social actor or adherent to the Friedman doctrine?
What are we not talking about that we should be?
1. The value of being clearer about the differences in demographic and cognitive diversity.2. The strategic value in thinking about equilibrium diversity in a world free of bias and restrictions, i.e. would all occupations mirror societal demographics?
3. Do we have an undiverse approach to diversity - can there be many different types of diversity that we are not currently discussing?
Our reflections - Joe's 'Lefty lentil-eating-liberal rant' + Paul channelling 'Jerry's final thought'
Joe talked about the lack of diversity in the asset management industry and has written a blog post about it here: Why Are So Many Fund Managers Men?
Research mentioned by PaulAlice Eagly
This paper gives a good overview of the advocacy/consultant-led approach vs. an academic one and notes factors discouraging research:
Fairness vs. EqualityThis paper synthesises various strands of research to explain why we might prefer unequal societies
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F&^% ups โ how they happen, how theyโre judged and how we can sort them
At some point in life, all of us will make some kind of toe-curling mistake. In our work lives, weโre going to make smaller ones, or have to manage or deal with colleagues' errors on an ongoing basis.
Understanding how errors happen and how they can be managed is important. But we also want to think about how others judge us, it might not be in the way we want or expect.
In this bite-size episode of Decision Nerds, we tackle this by examining the curious case of the ultra-runner who got in a car. Getting in a car wasnโt the problem โ the fact that it was in a race and that she took a podium position was. Several days later, she had to apologise and explain what had happened with all the grief, Twitter pile-ons and general angst that you might expect.
Was this a case of a cynical cheat getting caught, or an example of when a poor decision leads to an escalating series of events that go sideways?We discuss:
The crucial role of the decision environment โ the impact of factors such as tiredness, anxiety, etc.
Short-term, โin the moment', thinking โ how we often donโt act rationally
The compounding effect โ how small errors can become big problems
How our mistakes are judged โ why you need to understand โthe fundamental attribution errorโ
Sharing the burden โ how getting others involved quickly can make things easier, but why we might need strong incentives to do thisGot a problem that youโd like to see discussed? Let us know at [email protected]
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All investment decision-makers need feedback to improve. The key question is how can we give feedback in a way that allows people to meaningfully engage with it and ultimately change unproductive behaviour.
In this episode, we chat with Clare Flynn Levy, CEO of Essentia Analytics. The core of Essentia's business is using tech to help investors understand their behaviour. A key element of their work is getting investors to engage in a process that, by design, will show where they need coaching.
Clare shares her experiences in this area and our discussion includes:
- Why don't investors want feedback?
- How to avoid spooking the horses
- The power of framing
- The role of culture carriers
- What leaders should and shouldn't do to create openness and drive engagement
