The blame game – whom to blame?

Yesterday I wrote about “The blame game“. It is a common human trait. However, there is another pattern if you consider who gets the blame. In “Beyond Greed and Fear”, Hersh Shefrin continues:

Of course, for this to work, the person to whom responsibility gets shifted must be seen to have expertise. Otherwise, the client will feel just as much regret for having relied on a novice for advice.

 The person to be blamed must be known as an expert, else the blame comes back in a different form, “How could you trust such a person?” But with an expert, there is a comfort that there is no mistake in trusting the expert.

It’s all in the mind, after all.

#RidingTheRollerCoaster – 258


Roller Coaster in the mind – “Success-confidence-overconfidence-ego inflation-mistakes-fall-lessons-right actions-success”

“The 22 Immutable Laws of Branding” – a wonderful book by Al Ries and Laura Ries has some superb lessons for CEOs, entrepreneurs, marketing managers and brand managers. I found some lessons for the investor, as well. Here is a short excerpt that I liked:

“Success in business doesn’t just show up on the bottom line of the profit-and-loss column; it also goes to the top. Success in business inflates the egos of top management.

Supremely successful companies believe they can launch any product into any market. They can make any merger work. It’s just a question of having the willpower and the resources to throw into the task. What is it that we want to do? is the question that management usually asks itself.

History hasn’t been kind to this type of thinking. Overconfident management has been responsible for most of the marketing disasters of the past decades.”

The above paragraph talks not about the skills and abilities of the successful managers. It talks about the way the human brain works. Success leads to confidence – that turns into overconfidence – which inflates the ego. Ego blinds the brain and misguides it.

It’s all in the mind – after all.

Now replace successful top managers of a successful company with a successful investor and you see the point that I am making. The moment an investors gets small successes, the “success-confidence-overconfidence-ego inflation-mistakes-fall” cycle must follow. Very often, the success of an investor is not a function of what the investor was capable was, it’s a function of the investor being at the right place at the right time. To make it short, “investor was at the right place at the right time” can be replaced by the words “investor was lucky”.

This can be turned to the investor’s benefit if the investor adds some steps to the cycle. The cycle should not end at the “fall”, but continue from there to “… fall-learning the right lessons-taking the right actions-success”.

#RidingTheRollerCoaster – 172


It is not just about nervous nineties – it’s all in the mind

A brilliant piece on what goes on in the mind when one is just short of the personal milestone.

Nervous Nineties

This article is a must read for the lovers of cricket, language, statistics and psychology or any combination of the three.

It is evident from the article, even the greatest of the batsmen, save for Sir Don, have fallen in the nervous nineties. It is not that the greatest bowlers came to bowl only when the batsman reached the nineties, or that one bowled unplayable deliveries. It is just that the mind started playing games.

Cricket is not the only place where we see this. It happens in investing, too. Read the chapter “It’s all in the mind” in the book “Riding The Roller Coaster – Lessons from financial market cycles we repeatedly forget”.