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.