“Understanding is deeper than Knowledge;
There are Many People who know you but very few who understand YOU”
I will add to the quote “not only very few people, but even you don’t understand yourself”.
Author Timothy Wilson in his sublime work “Stranger to ourselves” writes about the Temple of Apollo in Delphi, where almost two thousand years ago was written the maxim “Know thyself”.
One of the most powerful but underscored truth of all times.
It was left to Sigmund Freud to tell us that most of our mind operates unconsciously making it difficult to know ourselves.
There were several thinkers way beyond Freud who had talked about how a lot of our thinking is not only automatic but way beyond the realms of rationality as there are so many things that we just do despite what we think about them.
Explaining this complex phenomenon Mr. Wilson explains how our 5 sense take-in over 11,000,000 pieces of information per second with an ability to process only around 40 of them;
So where does the rest go.
The rest of it goes down the drain, hidden in our adaptive consciousness
From where it tends to influence our judgements, feelings and behaviour.
David Mcraney says in “You are not so smart” that:
“You are often ignorant of your motivations and create fictional narratives to explain your decisions, emotions, and history without realizing it.”
Our mind tells us stories to justify the reason for our actions.
So much of this becomes automatically applicable to the field of “investing” even without being expressed in as many words.
There is a process, a critical part of many a investment profiling questionnaires that talks about “Risk-profiling” which can be used to advice suitable asset-classes and products to investors.
More-often than not we find risk-profiling work very well till the time “everything is positive”;
The moment its negative compared to an alternate scenario, “risk-profiling” fails miserably.
They are nothing better than a journalist on TV telling us “Why did the market fall today”; or “Why would it go up tomorrow”.
The crucial question at this stage is how to use this information whether you are an “investor” or an “advisor”.
Viktor Frangel said “As long you have a goal, you can recover from anything”.
This is important. Till the time we can divest a situation from the “emotional power” that it has on us, we can overcome the effects of the same.
This is what I suggest:
- Set a process for each decision; especially important for the advisors;
- Understand “what you are trying to achieve” through a decision-Have a “GOAL”;
- Document the rationale for accepting or rejecting a decision;
- Review your decision periodically against the rationale and till the time the rationale stands
“KEEP AT IT”
“STAY THE COURSE”