Practical analysis for investment professionals
06 December 2013

Weekend Reads for Advisers: Psychophaths, Bubbles, and Black Holes

Posted In: Weekend Reads

Most Americans of a certain generation (and I suspect other nationalities, too) recall 22 November 1963, and exactly where they were and what they were doing when they heard President John F. Kennedy had been shot. As a South African, I experienced that moment on 5 December, when I saw a tweet that Nelson Mandela, 95, had died. Disbelieving, given the rumors swirling his health in recent months, I frantically scrolled through my Twitter feed to find an official source. I grew up in Apartheid South Africa during a time of great injustice, of police in riot gear chasing people with guns, tear gas, and sjamboks (whips). There were acts of heroism and treachery. And so many searing images of unspeakable cruelty and sadness that it is impossible to recount them. But above it all was Nelson Mandela. There have been so many images of Madiba, and so many words of tribute, that it is hard to single out the best. But several passages of Bill Keller’s obituary in The New York Times stood out for what they revealed about his grace and leadership:

“When the question was put to Mr. Mandela in an interview for this obituary in 2007 — after such barbarous torment, how do you keep hatred in check? — his answer was almost dismissive: Hating clouds the mind. It gets in the way of strategy. Leaders cannot afford to hate.”

“In his autobiography, Mr. Mandela recalled eavesdropping on the endless consensus-seeking deliberations of the tribal council and noticing that the chief worked ‘like a shepherd’. ‘He stays behind the flock,’ he continued, ‘letting the most nimble go out ahead, whereupon the others follow, not realizing that all along they are being directed from behind.’ That would often be his own style as leader and president.”

“Still, Mr. Mandela said he regarded his prison experience as a major factor in his nonracial outlook. . . . Above all, prison taught him to be a master negotiator.”

“Mr. Mandela was sworn in as president on May 10, and he accepted office with a speech of shared patriotism, summoning South Africans’ communal exhilaration in their land and their common relief at being freed from the world’s disapproval. ‘Never again shall it be that this beautiful land will again experience the oppression of one by another and suffer the indignity of being the skunk of the world,’ he declared.”

Now on to the roundup of weekend reads. If you are a regular reader of these posts, you won’t be surprised by this week’s headline and range of articles. But if this is your first time, and you’re wondering what psychopaths, bubbles, and black holes have to do with being a professional investor and/or financial adviser, the answer is simple: “Investing demands that you be a polymath — knowing a lot about many things (including nonfinancial topics) and how those things interconnect into an organic whole.” Or as Haruki Murakami said: “If you only read the books that everyone else is reading, you can only think what everyone else is thinking.”

Firm Culture

  • From “Corporate Psychopathy: Talking the Walk“: “Psychopathy was positively associated with in-house ratings of charisma/presentation style (creativity, good strategic thinking and communication skills) but negatively associated with ratings of responsibility/performance (being a team player, management skills, and overall accomplishments).” (Behavioral Sciences & the Law)

Behavioral Finance/Economics

Math

Retirement

Investing

  • Phil Pearlman (@ppearlman) had a great line in his article, “Here’s Why Everyone Is Warning about Bubbles“: “My gut is that we have less bubbles relative to the bubble mongering but that is just a guess too.” (phil pearlman’s tumblr)
  • A tweet about the post prompted @behaviorgap, aka The Sketch Guy, to point out his sketch on exactly this phenomenon of “bubble spotting”:

Philanthropy

And Now For Something Completely Different


Please note that the content of this site should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute.

Photo credit: ©iStockphoto.com/hocus-focus

About the Author(s)
Lauren Foster

Lauren Foster is a content director on the professional learning team at CFA Institute and host of the Take 15 Podcast. She is the former managing editor of Enterprising Investor and co-lead of CFA Institute’s Women in Investment Management initiative. Lauren spent nearly a decade on staff at the Financial Times as a reporter and editor based in the New York bureau, followed by freelance writing for Barron’s and the FT. Lauren holds a BA in political science from the University of Cape Town, and an MS in journalism from Columbia University.

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