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Success Story with Scott D. Clary
Lessons - The Hidden Psychology of Wall Street | Denise Shull - Performance Coach to Hedge Funds
00:12:06
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- [00:00]
A
In this lessons episode, explore how emotions shape decision making and why ignoring them leads to flawed outcomes. Discover how fear and embarrassment quietly drive bias and ego in high stakes choices. Understand why identifying what is being felt matters more than suppressing it. And uncover how acknowledging emotional signals early improves judgment, adaptability and long term results. But a lot of people probably were so awed by the work that you're doing because most people don't even know where to begin Looking like it's almost the decision making process is sort of taken for granted. I think that in our day to day we don't try and delve into why we make the decisions that we make. It's a scary concept because when you unpack that then all of a sudden if you, if you unpack the first bit of it and you understand that maybe why your decision making process is flawed, then that leads to the question, well then how do I make a good decision? And that's a question I have for you. So what do you recommend people after you, if after you sort of show them the light, so to speak, and they start to understand that every decision that they make has all these biases attached to that decision, then, then how do they go through life?
- [01:20]
B
Yeah. So the question to learn to ask yourself and to answer accurately, those are two separate tasks. But is what am I feeling and why am I feeling it? And you want the answers to be the truth. Now that's easier said than done. A lot of my coaching is like helping people get the accurate answer because what they think they're feeling or why they think they're feeling is generally not what it is. This will, by the way, circumvent the cognitive biases. So a thing in the behavioral finance, cognitive bias, confirmation bias, recency bias, literature is, well, yeah, your human brain is biased and there's nothing you can do about it. And you're stuck with that. It's not true. It's based on the wrong model of the brain. It's called behavioral finance or cognitive behavior because it's like thinking and doing, thinking and behaving, you know, like the juice is in the feeling. So the cognitive behavior world doesn't get that. So like confirmation bias, when you see the thing you want to see. Well, everyone talks about how difficult it is to circumvent that or to avert it. Well, all you have to do is like realize like what's that feeling and what that feeling is usually like if you. And this happens all the time with hedge fund managers. I mean I had a relatively new client yesterday Talking about, like, he went to his investment committee and he stated like, his viewpoint and he's in commodities, you know, and so this is my viewpoint of how commodities are going to play out. And then he said, you know, if he starts to look like he's wrong, you know, he doesn't really want to go back to the investment committee and say, you know, on second thought, never mind, I was wrong. Because why? Because it's embarrassing. He's afraid they'll react negatively. So people behave in what looks like confirmation bias. That is, they only see the data that supports whatever their viewpoint already is, not because they're just programmed to do that. Because at the moments that they're seeing conflicting data, they're predicting this future emotion that's unsafe, right? They're going to be embarrassed, their boss is going to be mad at them, and they're basically trying to avoid that scenario. Well, the truth is, if you face that scenario earlier in your process, whatever the chances that you end up with the embarrassment go down. Because, like, when you stated some prediction to your firm, whatever it is, I don't care, sales, investment, I don't care, whatever it is, and you start to get information that's not working out the way you thought. Well, the sooner you get that and the sooner you change course and address, you know, the better the odds of a better outcome, Right? But if you delay because you don't really realize you're predicting this future embarrassment, the outcome is probably worse. But people have no cognitive ability to override that underlying prediction of embarrassment, except to use their thinking to address, wait a minute, I'm really worried. I don't want to turn out to be wrong because I'm sounded like an idiot. It's going to be embarrassing and maybe I'll even lose my job because people have tendency to catastrophize. But the truth is, the earlier in a scenario that you can face, you know, alternative data that shows your prediction may not be turning out like chances are. You can course correct earlier, but it requires knowing that you're feeling like you're predicting this feature problem that's going to give you. It gives you the space to navigate that you don't have. If you're just like torturing the data to prove that your original prediction is correct while you're crossing your fingers and hoping and experiencing all this anxiety that, oh my God, I hope it turned out to be right.
- [05:35]
A
HubSpot Podcast network is a success story, partner. If you like success story, you are going to love some other great shows in the HubSpot Podcast Network. It is the audio destination for business professionals. One of my favorite is Business Made Simple. It's hosted by Donald Miller, an incredible friend, a great entrepreneur. Business Made simple takes the mystery out of growing your business. So if you're trying to figure out how to get to the next level, what Donald does is he gives you tactical steps that actually move the needle in your business. You can go listen to Business Made simple anywhere you get your podcast. Business Made simple, part of the HubSpot Podcast Network. Well, when you say, when you, when you lay it out, it actually makes a lot of sense, but you, I guess. So the issue that we're sort of uncovering is a little bit of like you mentioned, like we have biases, but after a certain point there's ego involved. Like you just don't want to be embarrassed. So when, when you speak to people that operate at this level, the things that are fears, are they valid fears? Like I, in my opinion they would be valid fears. Like if I make a sales prediction and it's totally off, at any point when I bring that up with my board, they're probably going to have some level of, there's going to be some thought like as to whether or not I'm competent. That's something that I feel like if.
- [06:57]
B
You walk through this scenario, it's like completely logical, right? Like, so this is the thing. Like an emotion, particularly like fear has a totally bad rap, right? Like you're not supposed to feel fear or give in to fear or whatever. And it's not true. Like if it weren't for fear, there's a lot of accomplishments we all have that we wouldn't have accomplished. Like who would really graduate from college if it weren't for fear? You do all this other stuff, you know, but you're afraid of the outcome of only partying and not getting the actual degree. Like, so you do the work. You know, you rarely do the work just because you want to do the work, right? Like you do the work because you're afraid of what will happen. Like in their pure form, fear, frustration, disappointment, have information for us. So we've got two problems. We've been told not to recognize any of them and we've certainly been told not to focus on the so called negative ones. In their pure form, they're actually trying to help us. They're trying to keep us safe, trying to help us get what we want. Like frustration is something's going wrong. Take the extreme form of frustration. Well, the extreme form would be like rage. But let's take an interim anger. Why do people get angry? Because they feel as if something's wrong. So sometimes it is, and sometimes it's their own personal expectation. And that's like, the next layer of this. What part is real and what part is your own personality? But we can come back to that, like, at its core, like, if you're angry about something, your psyche is telling you that something isn't the way you think it should be. And maybe you should try to research yourself and find out what that is, as opposed to saying, I shouldn't be angry. Because what the research actually shows is you suppress those emotions, particularly the negative ones. The voice in your psyche gets louder, so they become more disruptive, not less disruptive.
- [09:03]
A
And research actually shows this, if you suppress it, that this will.
- [09:07]
B
I mean, there's, you know. I mean, the truth is, you know, in psychology research, you can probably find research to show whatever you want, but that's fair. Yes, but there's a good body of research that shows that understanding your negative emotions, acknowledging them, leads to better outcomes, particularly if it matters to you. Like, there was when I first heard of this research, it was probably 2008, and I met this woman who at that time was a postdoc PhD, and she had done this research project to show that reframing situations was a net positive. And to her credit, her research showed that wasn't true. That if you reframed, in other words, you know, took a positive viewpoint of something on something that didn't matter that much to you, it worked. But if you did it on something that actually really mattered to you, your anxiety levels went up and it didn't work. Why? Because your psyche, like, your psyche really is trying to keep you safe. And that kind of includes more than safe. Like, it includes thrive. So if you have some unpleasant feeling, it's like. Like, you know, all of a sudden you, like, feel this horrible pain in your leg, and you look down and you know you've got a gash in your chin for whatever reason. You know, like, what's the point? The point of the physical pain is, like, so that you do something about it. Why is it any different with emotional pain?
- [10:51]
A
Thanks for tuning in. If you found this valuable, don't forget to hit that subscribe button so you never miss an episode. And if you want to dive deeper into this conversation, check out the links in the description to watch the full episode. See you in the next one.