Being Right Isn’t the Only Thing That Matters
My real expertise is in portfolio construction and understanding the world of saving/investing. And as I’ve evolved and matured during my career I’ve been forced to become comfortable with one truth:
You will be wrong in this business. A LOT.
That’s just a simple reality. But those who tend to succeed in this business versus those who don’t tend to be the ones who learn from their mistakes and accept that being wrong is inevitable and therefore build a plan around this reality.
I’ve been through an interesting transition in the last 5 years where I was forced to alter many of my market strategies to confront the reality of unprecedented government interaction and a changing macro landscape. So I became more of a macro expert than a micro expert on many things. And that required a vastly different view of the world. And in learning that view of the world I was forced to realize that I knew a lot less about macroeconomics than I needed to. The road to developing Monetary Realism has been fraught with lessons, some mistakes and a maturation process. Most importantly, it involved me understanding how wrong I was about many things.
In the past, I’ve said “it’s only in being wrong that we can learn to be right”. So I loved this piece I saw over at Josh Brown’s site on how our need to be right can often be our biggest downfall (via Harvard):
“All are harmful because they prevent the honest and productive sharing of information and opinion. But, as a consultant who has spent decades working with executives on their communication skills, I can tell you that the fight response is by far the most damaging to work relationships. It is also, unfortunately, the most common.
That’s partly due to another neurochemical process. When you argue and win, your brain floods with different hormones: adrenaline and dopamine, which makes you feel good, dominant, even invincible. It’s a the feeling any of us would want to replicate. So the next time we’re in a tense situation, we fight again. We get addicted to being right.”
I wish more of our leaders, co-workers and neighbors would open their minds to this simple truth. You will be wrong about many things in life. And it’s easy to fall into the trap of trying to confirm all of your biases. But what if we all started to recognize that improvement often starts with understanding how to be wrong? Imagine how much more we’d all get accomplished. I say embrace being wrong. And more importantly, be open-minded enough to learn and adapt around being wrong so you can be right more often.
Cullen Roche
Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.
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16 Comments
Your open-mindedness and pursuit of the truth is what keeps me coming back.
Humility is a much underrated attribute, having the ability to ignore the many people who see it as a sign of weakness rather than a sign of strength is key.
Landing on two feet each morning and moving on your own power, along with your loved ones… well, that fills the glass about 90%. The last 10% of human folly is just extra fun, right or wrong.
Perspective. Along with pragmatic, one of my favorite words.
“The trouble with most of us is that we’d rather be ruined by praise than saved by criticism.”
― Norman Vincent Peale
Thx CP! I work with both business and education leaders, and young athletes, and plan to steal this one….thx!
I read the Glaser piece from HBR and it reads more like a primer for being more open to the opinions of others and empathetic to their views. For me this falls a bit short. The pursuit of truth is what cures us of the addiction to being right, because it is an endless exercise in humility. Glaser doesn’t really touch on that, and I don’t believe that is the goal of her piece. She recommends that people stimulate the release of oxytocin (aka the “love hormone”) through their desire for more openness to human connection as opposed to constantly promoting the fight/flight hormones which arise during periods of conflict. I’ve seen studies however that oxytocin also promotes more conformist behavior. While a mindest that promotes the release of oxyctocin may perhaps reduce conflict, group bias will most likely remain. Are people addicted to being right? Maybe. We need however to ask ourselves why. I tend to think it has more to do with insecurity in an increasingly complex world. Being right is not so much a “hormone high” as it is a security blanket. In the end, what matters is the pursuit of truth. It always makes room for more questions, encourages openness as well as critical thinking and helps individuals remain individuals in pursuit of higher ideals.
I could be wrong of course…
Just be careful on this path, Cullen. With bias confirmation etc, we misinterpret reality, but we feel good. Looking for the truth SOUNDS good, but being rational can lead to viewing world (and yourself) as it is… Which can be quite depressing. Of course, you can try to limit your rationality within monetary realism
… Just a friendly advice from a fan.
I think Andrew Mason’s exit letter is kinda what Cullen is getting at.
A few quotes to ponder on Groupon’s former CEO:
” I was fired today”
” As CEO, I am accountable”
”
I’m OK with having failed at this part of the journey”
”
This leadership change gives you some breathing room to break bad habits and deliver sustainable customer happiness – don’t waste the opportunity!”
When was the last time a CEO OR politician (current President included) took responsibility for thier failure?
http://www.guardian.co.uk/technology/blog/2013/mar/01/groupon-andrew-mason-fired-letter
Great piece Cullen! I can relate….been there myself more times than I care to admit! Thx, krb
I’ve thought for a long time that the trading grind makes traders more realistic than most other people.
I remember watching shark tank one time and a family came on that had a terrible business. No clients, losing money and no chance of getting a deal.
It was so bad that one of the sharks took it upon themselves to try and break the business up by pitting one family member against the other. It was completely unsuccessful and the family fought on and on for what they believed in. In the end, they left without a deal, probably went out of business, and the shark just shrugged his shoulders and said “I really thought I could break it up, but I was wrong.” It really hit home how the unsuccessful fight for something that wont work, while the successful can just shrug their shoulders and move on.
If you’re quick, you’ll be right soon enough.
Hi Cullen,
Part of the problem with admitting being wrong is that this becomes an open invitation for lawsuits.
When money mgrs and traders contact me for performance coaching one of the most common issues they cite is some variation of: ‘I have a strong need to be right and its getting in the way of my performance’
Once they get comfortable with me and drop their guard, what I usually find is that this ‘need to be right’ is often not the problem. The problem is usually a symptom of something deeper. Often something in the realm of a deep seated (usually subconscious to a degree) fear of not being good enough on some level, such as not feeling accepted enough or respected enough by others. Prince Alwaleed is a nice example…..he so desperately wants to be respected by others.
I expect the usual slams and other unaware comments to my comment. Just to put a little context on my comment (I know this sounds like boasting)….but my comment is based on my work with some of the worlds top traders. This isn’t some psychobabble theory.
I happen to agree – insecurity plays a very prominent role. I could take this line of thinking farther – and this may be too much of a deviation from your line of thinking – but I can see the damage caused raising a generation of children that have been taught that everything they do deserves a compliment as a contributing factor. We no longer teach our kids that being wrong is not such a bad thing if you learn from your mistakes. They grow up thinking they are always right.
You are right in that wealth managers and investment advisers will be wrong a lot of times, and I would like to add with the subjectivity on which they are graded on. I am always suspicious of any report due to their subjective nature. Just looking back into 1, 3, 5 and 10 years does not tell you the whole picture and does not provide you enough insights to evaluate the performance of any fund. What do you think about this?