We all like to see ourself as objective, but believing that we are 100% objective about our investments can cause a false sense of security. Instead of just assuming that we are completely objective and rational, it is better to acknowledge cognitive bias is a common trait in all of us. Two steps that we can take in order to not let our subjectiveness hamper our investment decisions is to identify our weak spots and actively invite other views.
Identify your weak spots
Are there situations where you know that you tend to react very strongly?
Are there specific arguments that tend to get under your skin?
What are the situations where you just feel like giving up and throwing in the towel, even though the task at hand isn’t objectively that though?
What are the situations where you will stubbornly keep fighting, even though other solutions would have been better for you?
These are just a few examples that can help you identify your weak spots. Weak spots doesn’t have to be weak as in bad or improper, they are just facets of our personality that can cloud our mind a bit when it comes to making decisions.
Let’s for instance say that you are a people pleaser. That isn’t necessarily a bad thing to be. In fact, a lot of good can come from wanting other people to feel good. But it can also become a problem if it goes overboard and you start pleasing people to the extreme. Rather then using your people skills and good reputation to find good investment options, you may end up making investment choices based at least partly on a need to make someone else happy, avoid conflict, follow the herd, look good in the eyes of other people, and so on.
Invite other views
Learn how to listen to other people’s views without either following them blindly or reject them at first glance.
A good start is to chose a few selected people in your network whose opinions and actions you see as smart and favorable. When you are pondering a decisions, seek input from on or several people within this little exclusive group of people whose knowledge and insight you respect. It must be people who will give you their honest opinion rather than just try to humor you or give you a cliché answer.
Next, start practicing the art of inviting opinion and advice from a broader circle of people. You don’t have to tell them upfront that you are seeking investment advice, just politely ask for their opinion regarding adjacent fields. Who knows, you might run into someone at that party that actually turns out to be a treasure chest of knowledge about geology, but that isn’t in the habit of sharing his valuable facts and opinions unless someone seems genuinely interested.
Make sure others feel comfortable talking to you, and keep in mind that there are a lot of people who will shrink back and immediately turn into “idle small talk” mode if they sense that you are getting argumentative. Just because someone doesn’t want to defend their opinion in an argument (or “discussion”) with you it doesn’t mean their opinion and their knowledge isn’t valid. It’s not always the people that are the most eloquent or the most rhetorically skilled that has the best knowledge about subjects that could be useful for you when you make your investment decisions.