You want to be a good investor? Learn to ignore people

 There are times when effective investors need to flip a small switch that exists in each of our psyches.

When flipped, the investor possesses the capacity to ignore the pressures of society–ignoring some of the dumb moves that masses of people make, financially, in a sort of copy-cat unison that looks right at the time but can wind up being very wrong, and very expensive.

As an effective investor, it’s essential that you learn to ignore other people, at times. Some of histories smartest people have lost fortunes based on following the collective wisdom of the masses. We’re gregarious by nature–living in groups, following in groups, and generally, thinking in groups. Doing so assures average investment returns for most.

My dad made me aware of this switch.

And he orchestrated what I’ll call “impromptu humiliation sessions” to train me in this capacity. He honed in on a time when peer pressure and perception were my gods: when I was a teenager.

At times, my dad pushed me far from my comfort zone, where I had to repeat to myself, “It doesn’t matter what people think. It doesn’t matter what people think.”

I’ll never forget one such instance.

On my 15th birthday, my dad took me to the shopping mall to buy me a pair of soccer boots. There was a food court on the first floor, and on this particular Saturday afternoon, it was flooded with kids from my high school. Dad and I started walking past it, and like a hawk circling his vulnerable prey, dad swept in for an attack.

He started skipping like a ten-year old schoolgirl, flailing his arms from side to side, while bounding powerfully, and flopping his silver head back and forth. Of course, I did what any fifteen year old boy would do. I turned around and walked the other way. But I sensed the unforgiving eyes of my peers and could just imagine what they’d say: “Hallam’s dad’s a nut–some kind of fairy or something.”

But dad wasn’t satisfied with a Bud-Lite dose of embarrassment.

Spinning around, he tilted his head back like a figure skater (one of his patented moves) and bounded alongside me. Then he grabbed my hand with the vice-like grip conditioned from twenty years of pulling wrenches. “Let go of my hand.” I whispered sharply.

My forty one year old father was holding my hand, with a large, unforgiving teenaged audience looking on from the food court. Sensing my weakness, dad swept in for what would likely be the mother of all teenaged boy humiliations.

Flamboyantly tossing his head from side to side, he decided that– for our audience– we weren’t going to be “father and son”, but lovers. “Just because I’m so much older than you,” he flared, “ doesn’t mean you should be ashamed of our relationship.”

Having a father pretend he’s your gay lover while standing center stage with your peers is a bit like having malaria. It could either kill you or make you resistant.

Dad was having a demented laugh at my expense, but he also wanted to teach me something. It was something he often preached. You can’t let yourself be a product of other people’s perceptions, and you can’t be influenced by other people when you know that their perception, their decision or their advice is wrong.

One of the world’s greatest investors, the former Benjamin Graham, said something similar about investing: you are neither right nor wrong because other people think you are.”

And you don’t have to be publicly humiliated by anyone to grasp this concept.





Andrew Hallam

I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas. I’m also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School (2nd Ed. Wiley 2017) and The Global Expatriate’s Guide To Investing: From Millionaire Teacher to Millionaire Expat (Wiley 2015). My mission is to educate, motivate and inspire people on basic retirement planning and best practices for investing, using evidence-based strategies. I’m happy to comment on your questions. However, please read the Terms of Use, Privacy Policy and the Comments Policy.

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8 Responses

  1. DIY Investor says:

    Interesting. I have to think about it a bit. I recognize what you say about going along with the crowd and I'm sure we would agree that getting the approval of others prior to taking an action is something that has been hardwired into our brains. I believe that it wasn't as hardwired in for some as much as for others – i.e. the Warren Buffett's of this world. Warren Buffett's ancestors somehow survived despite not staying within the clan and going their own way.

    I would like to see you today if these exercises had not been carried out. You may be the same but it may have taken you longer to become an independent thinker.

  2. @DIY Investor

    Or, Robert, it just might have allowed me to develop a thicker skin. At least (I hope) I'm not damaged by my dad's antics.

  3. What a story. In reality, it is the ego that suffers most from antics like this, but our egos are overrated. Maybe your dad taught you something valuable, as embarrassing as it was at the time.

  4. @Kevin@InvestItWisely

    Perhaps you're right Kevin,

    It took me nearly ten years to really get him back for this one. I parked my car at a city bus stop–blocking a bus that he was on. He was coming home from work. The bus was packed and he was at the back, holding on to one of those leather straps, and I got on board and told everyone "not to panic" but that a somewhat dangerous patient had escaped the local mental institution—and that I believed he was on that bus. Everything went silent. Then I pointed him out and dragged him off the bus. I didn't go easy on him either because I didn't let him exit the back stairs. And just when I thought I had thoroughly embarrassed him, he started pulling a Jack Nicholson, shortly before I got him off the bus. We both laughed so hard when I "stuffed" him in my car. And two weeks later I said to my mom, "I thought I could embarrass him with that, but I totally failed." She replied, "I don't think you failed Andrew, he doesn't take the bus to work anymore."

  5. Good lil' story Andrew. The fact you remember the story quite vividly means those actions of his certainly had an impact on you – in a positive way. Surely there was a method to his madness 🙂

    Cheers,

    Mark

  6. @Andrew Hallam

    That's hilarious… at least on the bus it's in front of strangers, but man!

  7. Your dad was a bit extreme in his approach, but as Buffett has written "You Pay A Very High Price In The Stock Market For A Cheery Consensus"– http://www.forbes.com/2008/11/08/buffett-forbes-a….

  8. @The Biz of Life

    Hey Biz,

    Despite his "don't worry about what people think" "claimed" lesson, there's always the possibility that it was all just a result of his perverse sense of humour. He might just have been trying to embarrass me. But I'll choose to see the positive side. I'll give him the benefit of the doubt. He's a great guy, and we've had some super laughs together.

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