Today I stay put. No animals to save (others doing that!). I've many things to do around this house of mine. I do have that "clean desk once a week resolution". I will fulfill that.
I'm really enjoying my kittens. I lost them inside the house yesterday. They found me before I found them. As it turns out, they found that they could squeeze into the file drawer (of my wonderful Levenger rolling file cabinet and bookcase) which has a 1/2 moon cut outs as a drawer. In fact, they are doing it now.
I'm also trying to wrap up some unfinished books, one of which is Mauboussin's More Than You Know. Last night I read Chapter 13: Raising Keynes. When I tell you about it, you will immediately understand my captivation with it. But as you know, I have to build up to it a bit.
Maboussin talks about Keynes's General Theory of Employment. "Expectations are embedded in all decisions we make, especially investment decisions, but we rarely step back and consider how and why we form our expectations." (p. 87)
From Keynes' Theory, Mauboussin summarizes the following:
If no one else is rational, it doesn't pay for you to be.
After an event occurs, humans tend to overstimate their pre-event knowledge of the outcome. This hindsight bias erodes the quality of the feedback we need to sharpen our analytical skills.
I think the above is important to reflect upon. We often either beat ourselves up or pat ourselves on the back because "we should have (or did) know" X was going to happen. We sell a stock and it goes up! We keep a stock and it goes down! In both cases, we slap ourselves on our foreheads. "I should have known".
I ask you this: Are you prescient? Do you have a crystal ball? Sure, you can make an educated guess and line up as much empiricism as possible to support your thesis, but ultimately you don't really KNOW. The fullness of time answers either supports or negates your thesis. It's also worth reflecting on the comment that when everyone else is acting irrationally, it doesn't pay for you to act rational. I'm going to have to put that on my board by my desk.
Mauboussin closes his chapter--and a fitting close for this post-- with this:
One antidote to this bias is to keep notes of why you make decisions as you make them. Those notes become a valuable source of objective feedback and can help sharpen future decision making. (p. 91)