In my readings I came across the following chart and it got me thinking about the nature of delusion –
It is no secret that we lie to ourselves, we have a strangely filtered view of all of our qualities and flaws. My guess is that most of the time these delusions serve to protect our psyche from the realities of the world, otherwise why would most people get out of bed on a Monday morning to head off to another week of doing something that most if they don’t actually hate probably dislike. The power of these delusions obviously keep people going long after any form of motivation has evaporated. Most are probably coaxed along by the delusional belief that someday they will win the lottery and everything will be better. With that somewhat depressing notion out of the way it is interesting to see how traders deal with the realities of trading by creating their own delusions. For example over the years I have noticed that most peoples record keeping is appalling – my much younger and much more judgemental self used to attribute this to a character flaw. They were just lazy disorganised bastards. However, over time I began to take a more nuanced view. Most traders record keeping is terrible because they have a delusional belief that they are a good trader. Keeping good records would undoubtedly shatter this notion for them as they watched their account slowly circle the plug hole. For all the perceptions of being a rigorously disciplined and somewhat quantitative profession trading is littered with delusions on both the micro and macro scale. Being unable to track your performance is obviously a micro issue but on a grander scale commentators believe they can predict the future and fund managers believe they add value. Both populations cling to their beliefs like a drowning man clings to a life raft and no evidence to the contrary will dissuade them. This is the power of delusions they generally don’t respond to any form of evidence to the contrary; to do so would completely shatter ones world view.