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Things I DIDN’T Learn in College: Part 4 – How I Learned to Stop Fooling Myself
Posted By Ron On February 15, 2008 @ 12:01 AM In Book Reviews,Goals,Life,Management,Personal Development | Comments Disabled
In his book, Stumbling on Happiness , author Daniel Gilbert examines a few of the techniques that humans use to make themselves happy. One of these techniques is to see only what our brains want to see. We have a tendency to overlook risks if those risks get in the way of what we want to do anyway. The conspiracy between these two components, our eyes and our brains, allows us to live on the fence between reality and illusion. Too many times we allow ourselves to fool ourselves, looking through life through those proverbial “rose colored glasses.”
So many times in my life I have ignored the risk associated with certain activities because I wanted to achieve a particular outcome. One example was investing in stocks. There are definite inherent risks with investing in single stocks but I have ignored a lot of those risks because I was quite confident of a particular outcome. I have been right on some occasions, making huge sums of money, but I have also been spectacularly wrong, even though I was fully confident I was correct.
One of the dangers that Gilbert points out in his book is that we willingly seek out information that matches our existing viewpoint while ignoring any information that contradicts it. This danger manifests itself when we make our New Year’s resolutions, estimate the amount of time we will spend “Stumbling,” predict just how far that stock will go up (or down if you’re interested in shorting stocks ), or forecast our ability to exercise every day. We are generally terrible at predicting most events or outcomes because we bring a large amount of bias into our prediction.
Every action has its unintended consequences. Every action has unintended results. Every action has unintended outcomes. Regardless of the amount of planning, there will almost always be an unaccounted variable in the mix. Mike Tyson used to say, “Everybody has a plan until they get punched in the mouth.” Don’t let your plans be so inflexible that you cannot adjust to the unintended events that will pop up and don’t let your plans only include the possibility of success. Every good business plan has a section of what ifs, items that could happen and the intended course of action under those circumstances.
I remember buying a certain used vehicle  as a result of wanting it pretty badly. That “wanting” caused me to ignore a little oil leak, ignore the slightly over book value price, and ignore things like the cost of new tires (over $800). Over the course of three years, that vehicle lost over 70% of its value. I never looked at that vehicle as a potential cost center and by allowing my rose colored glasses to dictate what I saw, I had to take a loss of a lot of money.