I have just returned from a few days on Hamilton Island and whilst standing around waiting to board the flight home I was talking to an American mother and daughter who coincidentally had also sat across the aisle from me on the flight up. I asked them where they were going next and after a few days in Sydney they were headed off to Kangaroo Island to off course see the kangaroos. I didn’t have the heart to tell them that you can see them in suburban Sydney – its not like they are confined to a special island. During the chat the daughter mentioned that she had meet some Australians in Miami earlier in the year and told her to watch out for the Drop Bears which plunged Kamikaze like from trees to attack you.
A myriad of thoughts went through my head ranging from that never gets old because we also did the same thing to Americans in our early 20’s to I probably should apologise and tell there there is no such thing. It doesn’t help that the Australian Museum has a page devoted to them.
To her credit the young girl took it quite well when told there was no such thing. However, it did get me thinking about the gullibility of people when confronted with a topic that is foreign to them, particularly when this topic is being presented by a perceived voice of authority.
It is easy to see the evolutionary advantage of such a strategy – it is a quick way to transmit information among a group. In simple terms we do it because it works. However, when you combine the power of the narrative with perceived authority you often have a recipe for disaster as both the narrative and the authority of the individual presenting it can be false. A good example is the current Royal Commission into the banking sector. The predatory behaviour of the banks towards their customers is undoubtedly based upon a mismatch in power but at its core it is dependent upon an abrogation of responsbility to a perceived higher authority. This is particularly true within the field of financial planning – most people are somewhat wilfully ignorant about simple aspects of financial planning. As such they look to others to fill their knowledge gap.
It is in looking for others to fill our knowledge gaps that we run foul of those who know only a little bit more than we do. As the old saying goes a little knowledge is a dangerous thing. However, there is a positive side to this – the seeking of knowledge form others is an admission that there is a hole in our level of comprehension surrounding a given task or field of endevour. I regularly hire people to fill the gaps in my knowledge either by simply outsourcing the problem or learning more about a given task or skill. One of the things I am fond of telling people who want to go into business for themselves is to expect a good many years of heartache, annoyance, frustration and total rage as you build a team around you that you can trust. This is the nub of the problem for traders – finding people to trust and I think the first part of the problem can be solved simply by accepting that you will make false starts and that the business is not easy. So in no particular order here are my list of things to look for/ideas.
1. Avoid someone who makes predictions. People who make predictions about markets clearly know nothing about markets or themselves.
2. I dont know is a good answer to get. There are limits on all our mental resources. For example to solve any problem is dependent upon three basic factors. The information you have at hand, your cognitive ability to process the information and the time you have to receive and process the information before having tom make a decision. None of these factors are infinite therefore our decision making is bounded and imperfect. This also applies to making decisions about people.
3. If they appear in the Australian media the chances they know anything about trading are pretty much zero.
4. Accept that you can trade, it really isnt as cognitively difficult as people make out. It is emotionally and psychologically difficult but it doesn’t require much brain power despite what you may be told. Therefore, ti is within the realm of most to be able to understand the basics of trading.
5. If someone cannot explain something in simple terms then they dont actually understand it themselves.For example my view of system design is based upon the notion of choose a concept, be able to teach a toddler that concept, identify gaps in my own thinking, review simplify and repeat.
6. You will need an advocate or advocates – these are people who will keep you on course and accountable. At present in the Mentor Program LB in concert with one of our mentorees is running an accountability project. I do think people were surprised that they would have to be accountable to someone. I somewhat think the name gave it away.
7. The person who will lie to you the most is yourself – this is an unfortunate fact of life.
8. Most people can actually trade using the native skills they posses. We all know that when you buy something you want to be able to sell it for a higher price. We also know that we dont want to go broke in the process by taking unnecessary risks. However, for a multitude of reasons people get in their own way.