Written by Anthony Demangone, Powered by NAFCU
I love reading anything by Ben Carlson. His blog never seems to disappoint.
While it is aimed at investors, I find his thoughts and counsel applicable to nearly everything.
Last week, he touched upon "The Curse of Intelligence."
Through the years, Ben noticed that intelligence rarely translated directly into being a good investor. In his words:
It became apparent that the smartest person in the room isn’t always right. In fact, most of the time their intelligence works against them because they’ve become so sure of themselves and their investing abilities that they’re unable to change their mind or accept the fact that the markets don’t care what your IQ is.
Some of the smartest people outside the world of finance can also be terrible investors. Doctors, lawyers, and engineers are some of brightest, most educated people around. They have all put in years of study and advanced training and are compensated handsomely because of it. Yet my experience with many in this group (not all, of course) is that they tend to be horrible investors.
Because they assume success or wealth in one arena (their job) will easily translate into another (the markets). Smart people are often the most dangerous in terms of poor decision-making ability because they tend to be overconfident, make things too complex, and over-think things.
This really struck me.
I've read similar things in the past. The Black Swan touches on the fact that people rely and act upon what they know far too much. Past experiences lure people into thinking that similar things will continue to happen. We plan to fight old wars when new ones demand new tactics. The author, Nassim Nicholas Taleb, argues that everyone should focus more on what they don't know. Look for your blind spots. Focus your efforts there.
All this reminds me of something I read in a history book long ago. When triumphant Roman generals returned to the capital city, there was a massive parade and festival in their honor.
As you might expect, all the pageantry could make one heady - especially when such a party was thrown in your honor. But the Romans had another tradition.
A slave traveled with the general during the festivities, whispering a phrase into his ear again and again.
"Remember, you are mortal." (Actually, they said memento mori.)
Nothing could be truer. We are mortals. We have biases. We have strengths. But we have weaknesses.
As we work, lead and manage, it is important to remember that. Past successes are wonderful, as are strengths. But healthy doses of humility, curiosity, and self-awareness go a long way.