Gleb Tsipursky, Ph.D., is on a mission to protect leaders from dangerous judgment errors known as cognitive biases by using business experience, behavioral economics, and cognitive neuroscience to develop the most effective and profitable decision-making strategies. Tsipursky is the author of several books, including:
- The Truth Seeker’s Handbook: A Science Guide
- Never Go With Your Gut: How Pioneering Leaders Make the Best Decisions and Avoid Business Disasters
- The Blindspots Between Us: How to Overcome Unconscious Cognitive Bias and Build Better Relationships (released in April 2020)
Connect with Dr. Gleb (aka Mr. T):
- Why should we listen to Mr. T?
- What is a cognitive neuroscience?
- Behavioral Economics vs. Classical Economics
- Why should we never trust our gut?
- Can you spot a liar?
- Improving Your Circle – Building Better Relationships
- Emotional Cognitive Biases
Links mentioned in this episode:
[00:00:01] All right. Glib, welcome to the show, you’re ready to dive into this. All right. So what are the things it. And this is funny.
[00:00:10] And so we were kind of chatting everybody about before I hit the record button. And I did not mention this, Glenn. But you are, I think, the third psychologist that I’ve had on the show, Exile. Everybody seems to be talking about similar stuff. And I don’t know if because this is one of those things where the more I get into investing, the more I start saying, OK, this is more of a what’s the word I’m it’s more of a psychological thing.
[00:00:38] Absolutely. But you also know third time’s a charm, right? Absolutely. Absolutely. Before we dive into some of the material.
[00:00:47] One of the things I want to make sure is we establish your credentials. Right. So as Dhobi to Kabbalist, we’re looking to invest. Right. And we’re looking to make very smart decisions. Yes. But why should I? And why should folks listen to you? Consumer Konta, some of the amazing books you’ve put out and say, OK, this is real. This is what I should base my investing activities on. So what? Why should we listen to no one? Right.
[00:01:19] Yeah. So I’ll start with an interesting study that was done by one of the large banks. I know I won’t name which one it was studied.
[00:01:27] It was studying which of its investors made the most money. And what I found was that the investors who made the most money, literally the investors, was a large investment firm. You know, I’m sure some of the listeners are using that one. It found that the investors who made the most money were two types of investors. One, people who died forgot they had an account with them. Literally that and that should tell you everything you need to know about investing in the psychology of investing. So now the baseline, the typical way we invest, we go with our gut intuitions. And that is a typical way that people invest. They inevitably result in buying high and selling low just because of the way our brain works and the way the market cycle works. And that’s and there’s a lot of reasons why we do that. But there’s basically we put bad bets on companies, make bad decisions. And that’s pretty terrible for investing. Now, one of the reasons that Warren Buffett famously is ahead is that he learned to spot people’s errors in thinking and go against those errors. And that is a very hard thing to do. That is not an intuitive thing at all. Right. Definition goes against your intuitions. So if you want to actually get ahead in investing and not be like those losers who basically lost us, they kept doing day trading when they shouldn’t have. You want to be the kind of person who actually learns when your mind, when your gut is going to play tricks on you and make bad decisions. That’s kind of like the reason you should listen to me. Now, my background is that I have over 15 years in academia. So in cognitive neuroscience and behavioral economics, cognitive neuroscience studies, why our brain causes us to make certain decisions. So I study that branch of cognitive neuroscience and decision making branch. So that’s my cognitive neuroscience background. Behavioral economics explores how we as human beings behave in economic situations, which of course investing is so darn right at the intersection of where you want to go making the right decisions in financial situations.
[00:03:36] So glib. It’s Dr. Glub.
[00:03:40] So yeah, that’s that’s my formal name. And you can call me up. I’m fine. No, no heart to your heart or you. Or if you like it, you can call me Mr. T. That’s also good.
[00:03:50] I like Mr. T. That’s pretty cool, right? I pity the fool who tries to pronounce my last name.
[00:04:00] So young old enough.
[00:04:01] You’re old enough to get the joke. I mean, I’m pretty sure a number of your listeners are going to be like, what he talking about?
[00:04:07] Yeah. So if you can’t tell if you’re listening, Mr. T does have an accent here. He does pity the fool.
[00:04:14] But that’s because you’re originally from the Republic of Moldova, right?
[00:04:19] Yes. So, yeah, my parents immigrated when I was 10. So I got here in 1991 when the Republic of Moldova was freed from Soviet domination.
[00:04:28] Suddenly understand what it’s like to be in a country that doesn’t have a capitalist marketplace. Man, I was 10 when I left. I still have my parents natural heritage. So I very much appreciate the opportunities we have here and to actually get ahead using smart financial decisions.
[00:04:45] Awesome. So so listen, I’ve been to this whole thing that’s called cognitive neuroscience and behavioral economics.
[00:04:53] All right. So just for the just so the most basic and I do this with people at work who are much more. Tactically smarter than I am, I might explain it to me like I’m five because I can get that. And when my son, who is five, comes up and asked me a question, I tried to figure I had a way to explain it to him. Now he’s in some ways smarter than I am. But when it comes to cognitive neuroscience and behavioral economics, what are you actually talking about?
[00:05:21] Their cognitive neuroscience. Like I said, is the way that our brain cause us to make. There’s a lot of stuff that people study within the broad field of cognitive neuroscience is basically about the brain structures that, you know, are part of our brain.
[00:05:35] So if you’ve heard about MRI studies where they look at various areas of our brain and what flashes, you know, what flashes when you see someone who was attractive for you, what parts of your brain flash, what part of your brain flashes when you think about money, what are your brain flashes when you think about whatever, whatever how you feel? So what part of your brains are brain is activated when various things happen? Of course, the various structures are we perceive things, how we see things. So anyway, so that’s what cognitive neuroscience is about, how the various parts of our brain are actually implicated in our decision making, not thinking and feeling in our behavior. So that’s the cognitive neuroscience. Now, the behavioral economics part is how do we as human beings behave in actual economic situations and that’s different from classical outlooks. So I might have heard of classical economics, things like supply, demand, what you’re supposed to do. Let’s kind of get a rational human model.
[00:06:30] So where if anybody has ever taken a any kind of course my macro or micro, whether it be in college or probably down in high school, you were introduced to supply and demand. Right. And so that’s that’s a great I’m now starting to get a clearer picture. So thank you for using that.
[00:06:50] No, no worries. Well, what we now know in using in using behavioral economics is that the classical economics is macro wrong.
[00:07:01] Basically, when you think of actual human beings, they don’t function on a steady supply and demand curve. That’s not how people actually function. That’s how people actually do things. So the assumptions of classical economics have been shown to be really incorrect in very many ways that we make actual actually our decisions are not based on simply having the desire for a thing and then slowly increasing. You know, when you have the core cost increase, then more people, less people buy. That’s just not how we think. That’s how we work with money. So our money because what the recent research on this show has shown is that our decision making is about 80 to 90 percent emotional. So, again, going to repeat that our decision making is about 80 to 90 percent emotional, not rational. We don’t think things through. We what we do is actually rationalized. We think things through after we already made a decision emotionally. So that is just how we are wired. And that’s how we keep being. Why? That’s that’s what we actually tend to do unless we correct for that tendency. And that’s why so many people buy high and sell low. And so many people place bad bets when they shouldn’t run. Lots of people make bad decisions when out. I’ll give you a store. I’ll give an example of how things work. So let’s say I talk, come to a person and say, hey, person, hey, listen to this podcast here. Here’s $40. There you go. Just take the 40 dollars. Now, will you give me back this 40 dollars that you now have in your pocket for a chance to have a coin flip and win one hundred dollars. If the coin flip is heads and nothing if it’s tails, that’s which you know, the trade. You’re forty dollars. Which gave you the forty dollars. Correct. The forty dollars for the coin flip chance of getting $100 or zero. Now what would you what would you do it.
[00:08:55] I would, I would say let’s flip. It was right.
[00:08:59] So I’m glad that you said that you would flip it.
[00:09:01] That’s unfortunately the large majority of people would not. They would say, you know what? You see about 80, 90 percent of people would want to keep the 40 dollars. And that’s what the studies show. So that’s one of the many reasons why people make bad decisions. They don’t want to feel safe. They hey, this money’s in my pocket. I’m safe. It’s all good, right? Well, what happens? Think about the consequences. The equivalent of the $100 coin flip. That’s 50 percent to 50 percent chance of winning or losing. So the equivalent is 50 percent of $100. And that’s $50. So your chance so your ex essentially keeping dollars instead of exchanging it for the equivalent of $50. Let’s think about what happens when you have an many coin flips. Let’s say a thousand flips. That is a difference of, you know, forty dollars four thousand. That’s forty thousand dollars versus fifty thousand dollars or. You think about a million conflicts. That’s the equivalent of, of course, 40 million versus 50 million. So think about that consequence of what you’re doing in the long term. It all adds up, even though it feels safe to take the keep the $40 in the long term. It’s a really bad idea to keep the $40. And really, our life is made up of a million conflicts over the course of your life. You could choose to make 40 million dollars or 50 million dollars. So if you don’t commit to taking the little bit more risky course, that feels less safe, but actually has the much higher long term return that you’re dooming yourself to making a lot of bad decisions. That’s just one out of the many, many judgment errors that we tend to have as a human beings.
[00:10:47] Got you. Let me ask you this, though. So 40 bucks is not a whole lot for me. Right. 100 bucks is not a whole lot for me. But let’s say limitless increase those odds. Let’s say you give me four hundred thousand and the chances to win one million dollars. Yep. I’m probably going to hold on to that money.
[00:11:03] It depends. Does that mean I’m making a bad decision?
[00:11:07] How often how important the money is for you. So I said this is why I gave them example of a million conflicts. So most of us this is the kind of decisions we make. An investing is not for you unless you’re Warren Buffett again. You know, you’re not making of the four hundred thousand versus a million versus 50 percent chance of winning a million position. Right. You’re making the 40 dollars versus 50 percent chance of winning $100 decision or 4000 versus, you know, versus ten thousand. That’s the kind of decisions you’re making in your investing. You know, when I go to my portfolio noise, I buy or sell. That’s the kind of decision I’m usually I’m not making, you know, the hundred thousand dollar decision. So it’s not something you shouldn’t think about this in the way that it’s going to critically impact your bottom line. Got to make that decision. But it’s the kind of everyday decisions. This is what matters. Because when you do investing, it’s the everyday decisions that really make a difference over the long term. And this is what people don’t think about, you know, the everyday decisions that make a real difference over the long term. Huge difference. This is, again, just one out of many cognitive biases that we have. And cognitive biases are the decision making.
[00:12:19] That’s what all problems. This is called loss aversion, where we as human beings are much more likely to try to avoid losses than golfer gains, because this is how our brain is wired. And that’s what we’re never go with. Your gut comes from. The title of my book, Never Go With Your Gut. How Pioneering Leaders Make the Best Decisions to Avoid Business Disasters, because our gut reactions, according to this research, are really not adapted for the modern world environment. Well, in this event environment, we needed to preserve all the food we can, all the resources we can. You know, if we kill the mammoths, right, we can freeze the rest of the meat. Suddenly, you know, we can’t invest that in a bank. So, yeah, we didn’t it was bad for us to have too many resources. It wasn’t helpful. Whereas if we gave up the small amount of meat that we had, if we took risks, we were likely to die. So in that sort of savage, primitive environment. So that’s our own right. Yeah. It’s a really different world. It’s our instincts, our intuitions or reactions are adapted for a different world. And this is just one out of the many ways that they tend to go wrong with loss aversion.
[00:13:33] Let’s circle back to how classical Technomic Suze is. I think your phrase was classical. Classical economics. Is macro wrong? That’s right. So I’ll keep these. So you’re thinking, OK, when I was in school, Pluto was a planet at some point time. It wasn’t a planet. Now it’s planet again.
[00:13:51] I think it’s have an identity crisis. I don’t know. But, you know, macro economics, the classical economics that you and I probably were taught in school is now wrong or. So my question is, has it always been wrong?
[00:14:04] We just didn’t have another way of you know, it was it was always wrong because the presumption of classical economics, again, is that people are rational.
[00:14:13] That is the fundamental fundamental presumption. I’m not rational. Exactly. So already, you know, it doesn’t make I mean, a guy like you and I, we’re rational every decision. Let’s just not get medical.
[00:14:27] I mean, we’re all thinking, you know, 80, 90 percent of our decisions that are emotional is just about how you train your emotions. Because, you know, let’s take another example of emotional decision making. Our gut intuition is take as much sugar as possible, as much sugar as possible. So that’s kind of we needed to do that in the Savannah when we came across. Let’s say, you know, the honey, whatever to eat as much as possible in order to thrive and survive and flourish. And we are the descendants of those who eat as much sugar as possible because they’re the ones who survive and thrive. Now, in the current world, if you get a box of dozen donuts that you just had, you’re not going to fry. You’re not going to flourish. This is one of the reasons why we have the obesity epidemic here in the United States. Because of that gut intuition to eat as much sugar as possible. And the food company is way too different or of the food companies are feeding that gut intuition. Right. And so that’s a problem. But hopefully many of the lists there’s a front all have learned that, you know, if you eat more than two doughnuts, you know, the third doughnut is too much to say, OK, but that third down that you’re going too far.
[00:15:39] So hopefully you’ve learned that, you know, similarly, you’ve hopefully learned that you can’t just sit on your couch and watch Netflix all day, even though it might feel fun and get into that environment, was really important for us to preserve our energy for the hunt. We are males, you know, or finial gone foraging for women and lost them, you know, in terms of gender balance. Right now, right now, it’s really important for us to actually get off our butts and go to the gym, you know, put on our sweats or go walking once a day. Now 30 minutes. Right. That is something we had to learn over time. And that’s what medicine taught us. Now, if you think back to medicine about 100 years ago, that’s when doctors were selling snake oil, which was a mixture of cocaine, alcohol and sugar stuff.
[00:16:26] Today, that’s Coca-Cola. I mean, that’s Coca-Cola. That’s what Coca-Cola. I mean, literally Coke.
[00:16:33] Coca-cola came from cocaine. That’s where that’s where that used to be. So this is kind of the consequence of that. So this is the this is the kind of advice, you know, if your doctor told you right now to go into that box of dozen donuts and just, you know, sit and watch Netflix all day, hopefully you would fire the doctor.
[00:16:53] I don’t know. I might keep him around. I know. I know.
[00:16:58] But unfortunately, people who tell us to go with our gut and follow our intuitions, kind of the Tony Robbins of the world, the Malcolm Gladwell’s will tell us to blink. They are selling the snake coiled of business advice or financial advice of investing in device. That’s the equivalent of snake oil, because the research on business decision making and financial decision making is only right now beginning to be popularized. Is only right now coming to the fore because we’re only now, you know, the body is much easier to understand of the mind. So we’re only now starting to understand how the mind works. And just like the doctors or using evidence based medicine, we’re fighting against the snake oil sales people. Doctors are the end of the 18th century, beginning 19th century. I’m doing the same thing against the snake oil sales people of business and financial investing advice right now who unfortunately are the folks who get all the money because they tell you to do what’s comfortable. They tell me to do what you like to do anyway, you know, buy high and sell low. That’s what we want to do. That’s what feels good to us because it’s scared. It’s scary to take profits when we should take our profits. And it’s scary to kind of, you know, keep on to stocks when we know when we feel like, oh, we should sell the stock. So, yeah, some of the bad advice is to deal with every day. This is the bad thought patterns and feeling patterns we need to deal with if we’re actually going to succeed, not invest.
[00:18:26] So what are some of the things you mentioned this earlier about? You know, our decision making process, 80 to 90 percent of those decisions are made from emotional standpoint. Right. Which is bad news in most cases. Right. There’s probably there’s probably some exceptions to those rules. Right. But for the majority of the of those decisions, how can we especially so we’re talking about investing, right. We’re not talking about how you treat your loved ones or anything like that. We’re talking about investing. Right. Trying to get away from that buy high. So we want to flip it on its head. How can we train ourselves to not listen to those emotions? Right.
[00:19:10] So the first thing you need to understand is learn about these cognitive biases and cognitive biases are all deviations away from ideal decision making.
[00:19:18] So that’s what cognitive biases are. So if you you’ve probably heard of them, these are the kind of problems we need to deal with. And you need to learn about, of course, in order to actually deal with them, to learn about them. And then once you learn about them to figure out which ones you personally are most prone to get, loss aversion is one example. I’ll give you another example called optimism bias, where people tend to be optimistic about the future. People are who are optimistic, tend to be risk blind. They tend to think that, hey, you know, everything will be hunky dory. This will be great. This will be a great buy. But, you know, things will go great. They tend to be have too high expectations for what stocks are. Now, what new career or whatever job, whatever the. Usually sells people. Those people are usually soulsby, so actually people who are optimists tend to be people in leadership positions. They tend to they tend to have more charisma. So if you are a small business owner, you’re very likely to be an optimist because you attend. It’s very it’s kind of hard to open a business business. You have to deal with a lot of failure. I mean, I guess I know this myself. I run a consulting coaching company. Disaster avoidance experts of six people.
[00:20:29] So I had to deal with a lot of failure as I was starting up the business. So I know that and I am myself very optimist. So I know that this is a problem for me. I tend to think the grass is greener the other side of the hill. Very often tends to be yellow. So it’s something that you need to learn about yourself. You need to learn about which of these biases you personally are most proud of. And then how you can correct for them. So you need to learn how optimistic, you know, things tend to be too optimistic by 50 percent. They tend to be optimistic by 80 percent or 30 percent. E To learn that about yourself need to learn which biases you are most prone to and how much how prone you are to them. Because each one of those is a spectrum. You know, there’s pessimists in the world. And that’s the opposite bias where you tend to have to you’re too too risk averse. You know, you would definitely keep the $40. You’d probably keep the $20 instead of trading in for clipped for a flip of the coin. So you. So that will be a big problem for you. You will tend to have too low expectations. Pessimists almost never start businesses because I mean, if you look at the statistics on small businesses, about half of them fail within the first five years and about two thirds of them fail within the first decade.
[00:21:42] Yes, I must look at those statistics and I’ll say no way. Optimists say, hey, now I’ll take a chance. Right. So both of them can make a lot of mistakes. But you need to learn where you are and how you can correct for those mistakes. And again, those are just two supplanting fallacy, optimism, bias and pessimism bias. Just three out of 100 over 100 problemfor biases. My book Never Go With Your Gut. I think we just make the best decisions and avoid business disasters. Talks about the 30 most dangerous cognitive biases for investments for decision making business and I can address them. That’s the first part. And the second part. There are some science based strategies that you could use to address each of the cognitive biases. In the book, I talk about five questions. You can ask for everyday casual decisions and the eight steps for more thought or decision making that the eight steps will take about an hour to do takes. It’s a pretty thorough step. The five questions should take about a couple of minutes to do for more casual, everyday decisions if you want to decide about investment or anything like that.
[00:22:44] Gotcha. And you’ve mentioned that book a couple of times and it has a very lengthy title, which I appreciate because it tells me what’s inside the book and I’ll make sure to make that link to that.
[00:22:54] In the show notes, it looks like every one of those are all available on Amazon where you can even preorder your you’re doing this about to come out right to the heart just at the name of the blind spots between us.
[00:23:07] So, yes, that that’s that talks about professional relationships and personal relationships.
[00:23:12] Higher manage those and how you address problems. You know, there is a reason there’s a 40 percent divorce rate in this country. And this is, you know, the book. That’s one of the things the book talks about. And of course, people screw up their professional relationships a lot. That’s another thing that the book talks about.
[00:23:29] Yeah. So I want to I want to jump in to that real quick. But before we do, I want to go back to the never trust your gut. So it’s kind of phoneys. We had our mastermind lead and I’ll do brief commercial. You’re interested in knowing about it. Just go to Debbie to campus dot com slash mastermind and you can sign up and then whoever. I’ll have a 30 minute console with you, see if the mesmer is good for you or or or not. Right. But basically in there, it’s real saying that it’s dubie to campus. It is the name, right? It’s it’s people who work a regular deputy job who are focused on building their real estate empire or just wanting to add additional streams of income. And we’re talking this morning about one of the members in there who’s been there for about a year, a little over a year, actually.
[00:24:20] And it’s been amazing to see him grow. And he’s been working with these folks. They’ve put together this deal. And he this morning he was like, I just don’t I just don’t know about it. Like, I. Anyway, we talked about it for a while. And now basically we basically some summarize and said, well, you really like the people that are in this deal. You don’t like the deal itself? No. So why are you doing this deal? Because I don’t know. I want to be able to trust my gut. And just back out of it. So when we say trust your gut and that feeling. He’s actually trust in his brain and the merits of the deal. Right. He’s not going off of those negative emotions and say, hey, you should do it anyway, right? A little bit different. But.
[00:25:12] When it comes to things of that nature, when your gut telling you, is it really your guy just told me that? Or is it your brain? We’re just we just had the two confused. Does that make sense? I kind of went around.
[00:25:22] It’s a very it’s a very useful question. Again, one of the things that you want to realize is that the gut is a very fuzzy concept.
[00:25:29] Yeah, we have a lot of trained instincts. What you want to do. What I talk about in the book a lot is how do you retrain your instincts to go from the bad instinct of eating a dozen donuts to the good instinct of stopping at two donuts.
[00:25:44] But I instinctively know sitting on the couch all day to the good instinct of putting on the sweats and going to the gym. Right. Those are things you’ve probably learned about. You know, the same way you’ve learned to not eat with your hands when you’re a baby. I mean, the primitive Savannah environment, you have to learn how to do eat with your hands. That was just the thing. You probably learned how to eat with your fork and knife. You know, everything except pizza and the food that with a fork and knife. You’re weird.
[00:26:09] But. Or your job. Right.
[00:26:16] But so what do you want to do is learn what are the right things to retrain yourself? So, for example, a lot of people think they can spot liars. Lots of people. You know what? There was a really interesting study done on the security forces, say FBI and the CIA. The Secret Service and so on. It found that those people who are specifically trained to spot liars and so on, they succeed at the rate of about 52 percent.
[00:26:44] That’s about a coin flip. For example, our inbox was full it.
[00:26:51] They think they can spot liars. They overwhelmingly like Kennedy’s Secret Service is actually the only branch that can spot liars that a significantly higher rate than average because there aren’t a lot of signs that people say, look right, look left. People have a lot of anxieties and insecurities. Those can come through as people being unconfident or liars. And those don’t necessarily indicate a. But you’re the person you’re speaking to is a liar. So our God, our intuition often reads people wrong. And, you know, sorry to tell you this, but that’s what happens. So what do you want to do is learn the actual things that cause you to make bad decisions. And one of the things I’m talking about, this guy who’s making the deal, one of the things that cause people to make bad decisions is last minute insecurities. You know, when you bride or groom flees the bride before the wedding. Same thing. And it doesn’t mean that the marriage was a bad idea. It means that they were feeling anxious. And the anxiety, of course, is one of the emotions that we are all prone to. 80 to 90 percent of our decision making is emotional. So this person I don’t know if he’s feeling last minute cold feet, whether that’s coming from a sense of anxiety or whether it’s coming from, hey, there was actually something wrong with his deal and he likes the people and therefore he doesn’t want to acknowledge there’s a part of him that doesn’t want to acknowledge that there’s something wrong with the deal just because he likes that piece.
[00:28:17] So the social conformity is one of the cognitive biases that we suffered from very much. When other people do something, we really want to do the same thing that they do. If we like those people, that’s called tribalism. And tribalism, of course, comes from the Sioban environment was incredibly important for us to be tribal in order to survive. Because if we were going if we were kicked out of our small tribe of fifteen to 150 people, we would die in the savanna. Right. We are very conformist by nature. And that’s something that we all tend to be. So if people we like and trust the respect, tell us to do a deal, we will tend to do that deal regardless of the quality of the deal. Sometimes that deal will be bad and sometimes a deal will be good.
[00:29:03] So you want to be able one of the things that I would strongly recommend to this person is Switchfoot. So here’s what this was. Here’s what the specific technique would involve. Imagine that he was doing this deal with somebody who doesn’t know. He doesn’t know these people kind of neutral completely doesn’t know these people and what he do to deal with these people. If he doesn’t know them. That would be the kind of question I would have that person ask some of them put themselves in the mind of somebody they don’t know. Would they do the deal if they wouldn’t do the deal with people they don’t know?
[00:29:37] Well, maybe you should do a deal with these people in some way. And that is one of the ways that we address cognitive bias, talks about the mental habits that you can develop to address cognitive bias. And this is one of the mental habits replace the thing that causes you to be emotionally attached to whatever you’re trying to do with something that gets your way from that emotional attachment. And if he are, the emotional attachment is specifically the group of people you want to replace. That was something mutually imagined, trustworthy people. We don’t know. And therefore, that will help you address the problem.
[00:30:14] And, you know, we talked about. He talked to these folks and said, look, I don’t like to deal, you know, and expresses concern or some issues. They basically said, look, if you don’t like the deal, don’t do it right there. That does not mean that we’re going to kick you out of the tribe as you’re talking. It doesn’t mean we’re together tribe. Plenty of the deals come along in these days basically said, look, if you don’t like the deal, don’t do it. And I look D’ATTOMA I said. If that were me, that would make me want to do the deal. You know, just. So what is that called? Is that.
[00:30:52] That’s kind of reverse psychology where people are maybe trying to persuade you with saying, oh, don’t do this.
[00:30:58] And you know, you want in. Yeah. Cause of a sense of scarcity that something will be taken away from you. And that’s one of the cognitive biases that football prone to that. Again, this the environment stuff with scars. So we have many less opportunities than we have right now and we would jump on those opportunities. Whereas in the modern world, we have we met lots and lots, lots of opportunities. We are overwhelmed by opportunities so much less our city than we actually experienced the social environment. Right now, the challenge is where do we invest our resources of time, money, capital and so on. But we still have those primitive instincts of causes to be triggered by scarcity. And that’s something that you want to be able to different to distance yourself from. Able to say, OK. This is a scarcity impulse. What you want to do with all of these cognitive biases, you want to learn that, hey, this is a thing that’s happening right now. Let me distance myself from this emotional thing and let me use my head instead of using my gut. What’s what I do in this situation? If I had 100 deals like this or similar, what I would I still choose to do this one or would I choose to not do it? Or you know what?
[00:32:10] Yeah, patience is patience is a part of being a good investor, right? Again, the best investors you talk about are the bank.
[00:32:18] When they did their study was they were either dead or they forgot they had an account, which is incredible. Incredible. And I don’t want to I don’t wanna compare our scarcity to, you know, trying to survive on the primitive savanna, as you keep referred to. But in today’s real estate market there, the deals are pretty scarce. Right. And certain local regional markets.
[00:32:42] But so that does come into play.
[00:32:45] I know. Of course it does. So here I mean, I live in Columbus, Ohio, which is one the hot markets. And so I know what you’re talking about. But the crucial thing is opportunity costs.
[00:32:54] Now, when you have when you have a deal, let’s say let’s, you know, a hundred thousand and let’s say you owe five hundred thousand to play with. So a deal would cost you one hundred thousand of your five hundred thousand. That means you can only take five shots. And that means that you want to be very careful with the shots you take. This is the Warren Buffett strategy we talked about. Warren Buffett at the big earlier onward. You know, one of the reasons that he is successful is he’s very picky about his deals and he wants to make sure that he will have a very strong return likelihood of high return on his deals because he understands how limited its resources are. And this is Warren Buffett. We’re talking about, you know what? You’re not Warren Buffett unless you’re Warren Buffett, in which case, you know, I’d like some of your money.
[00:33:41] Warren Buffett.
[00:33:42] I would be very cautious about how he’s going to invest with you. All right.
[00:33:46] That’s right. So, you know, think about the Warren Buffett kind of mentality. You think about that upper what’s called opportunity cost, you know. So where else can you invest your money and how much would that cost? You always want to be thinking about alternatives right now. You can be pretty safely making at least 5 percent, probably more in the stock market. So that’s kind of one choice of your investment. And you want to be thinking about where you can make more money and how much money this deal will take you. How long it will take you to pay off, how fixed, how locked in your money will be, because your money in the stock market is like locked out and you can always take it out. Those are all things you want to be thinking about. And you don’t want to be triggered by sparsity into doing a deal that you don’t want to do, that you actually would not make sense for you yet.
[00:34:35] So let’s talk about the stock market a little bit. Right. And let’s talk about what you see in your crystal ball, because the stock market and we’re recording this early twenty twenty forget what year was is early. Twenty twenty. The stock market has been on a sore right, hitting record highs for quite some time. I don’t know the last six months last year to something like that. Seems like every other day new record high comes out. There’s a lot of skepticism out there that says this can’t go on forever. Right. And even so, when I compare it, I don’t think this is the right thing for me to do. But when I hear about what the stock market’s going to do, I feel like that’s eventually going to the drill state. So I tend to watch the stock market to see what it’s doing, but I don’t necessarily advance very little on the stock market because what you said earlier, I buy high and so low and just get emotional about those deals where real estate, I can step back and I can look at the merits of the deal and say, am I gonna do this or not?
[00:35:37] And based on our formulas that we use, we’ve been pretty. Fair. Right. I would say what? Last year we sold a property at a loss. I just wanted to get rid of it. I bought it on an emotional decision and it did not pan out like I wanted it to. So I’ve I’ve learned from that. But for the most part, we’ve done we’ve done very, very well when it comes to this. So where do you see the stock market going in the next six months or a year? And what should you be doing to kind of head ourselves off against any kind of a change? Right. Negative change.
[00:36:12] Well, it’s January 19th. Two thousand and twenty right now. Right. Looking at the stock market as it is right now, I’d definitely say it’s overvalued. And you want to take a profits.
[00:36:21] So you want to exit it right now? I’ve no idea where it will be a month. I mean, I I don’t I think probably a month from now it will be lower than it is. But I’m not confident. I’m pretty confident that in six months from now will be lower than it is just because it’s it’s way too overvalued compared to the current compared to the reality of the situation. And if you look at who is making the big moves, you’re not going to see really big players like pension funds and so on. Invest into lot into stocks. They’re actually going out of stocks. And these are people who kind of know what they’re doing. So I would recommend that people if, you know, January 19, 20, 20 and you can record the date. You know, you probably should be going out of stocks right now.
[00:37:13] Gotcha. All right.
[00:37:15] So we’re getting close on time. But I do want to talk about your new book is coming out against available on Amazon. I put a link in the show notes. It’s called The Blindspots Between US. How to Overcome Unconscious Cognitive Bias and Build Better Relationships, which is one of the things that I’m focused on this year. Again, I don’t remember if I hit the record button, but you reach now and say, hey, I want to be on the podcast. When I started, I was like, yeah, absolutely. I want to talk to you. A different gonna grow. This is weird too, because most of the time I’ve already read your books. Right? And we chat about stuff specifically in the book, so maybe we can do a follow up show. But one. And so the other day where I was at work and we have a question of the day amongst the most a team there and question of the day was, hey, what are you focused on right. For this year? And mine was build better relationships. Yeah. And so I want to end. It is not necessarily the quantity, but it’s the quality. Right. There are some relationships that I know I’m not being the best person in that relationship that I need to focus on because I think I can help them. And they’re definitely gonna help me or they’re already helping me. Their fair share or or every effort you want with that. But from your studies and your findings and putting together this book.
[00:38:40] What are some of the things we can expect or get our hands on it?
[00:38:44] One of the things you can expect is learning how to be the emotional adult in the room. So this is a big problem.
[00:38:52] Probably one of the biggest problems with relationships, if not the biggest, is that people let their emotions run rampant in the relationships, whereas they don’t let their emotions run rampant in professional interactions or in financial investing or other life areas. They say, well, I feel anxious or something’s bad or I feel sad. Therefore, this person is making me sad or I feel angry and therefore this person is making me angry. And you want you don’t realize is that your emotions are honestly coming off from you. You. It’s about it’s all about your beliefs, what you think is the right thing to do, what you think is the right thing to happen, and your emotions are causing you to react to external stimuli. So you see somebody doing something and you feel angry. You see someone doing something. You feel anxious or you feel sad. It’s most likely not at all about that person. It really is about you when people say, you know, it’s not me, it’s you.
[00:39:49] The only most likely wrong. If I could spot a liar, I would call your life.
[00:39:57] So this is a problem that people need to realize that they’re dealing with. And what you want to do is be able to differentiate very carefully and thoughtfully your emotions about the situation from the reality of the situation. This is a fundamental skill that the large majority of people don’t have. They are not able to say, hey, I feel anxious. Well, OK. I feel anxious that it’s too bad. I probably don’t want to feel anxious. Let me step back from this anxiety and think, well, what’s happening here? Am I anxious that this person will stop liking my anxious, that this person will leave me? You know, let’s say you’re invited to a party and you are you want to go to that party, but you kind of don’t. You’re like, well, you know, I have lots of work to do at home. I don’t actually want to go to the party. And you finally end up going to the party, even though you kind of go to the party and you’re miserable at it. Really? I was doing the work. How did you go to the party? Because you feel like your relationship with this person would be hurt and ruined and they wouldn’t like you because you went to the you didn’t go to their party. How many people listening to this party as go to parties because of this? How many people do events because of this feeling of anxiety now? How wonderful would it be to learn to say that, hey, you know, I’d really like you.
[00:41:18] This is a wonderful opportunity. I’m just way too busy right now to go to the party. But, you know, I’ll meet with you sometime or something like that. That is a skill where you need to be like, OK, I’m feeling anxious about the situation and I want to distance myself from the anxiety in order to make the right decision for me and for my goals. OK. This is the decision that I make. So that’s kind of one out of incredibly out of very many skills that you need to learn about in order to have better relationships. You want to be the emotional adult in the room, which means understanding your emotions, understanding other people’s emotions. So that is a critical skill that I would strongly encourage other people to be able to develop. Because if you don’t develop that skill, if you don’t develop the skill of emotional awareness and emotional management, you’re not really going to get ahead in your relationships. You’re not going to preserve and build those quality relationships that you really want to make sure to build.
[00:42:17] I’m so glad my wife’s not listening to this. Right.
[00:42:23] She would be punching me. They are saying, you hear this. You’re not paying attention. Can I get this book? Let me get my lighter for you. There you go. You did a great job there. By the way, I had to step away from the bite to grab something. I give you a little motion, which I hope you understood as keep it going until I get right back.
[00:42:42] Well, that was pretty cool. So the book basically focuses on. Not necessarily. Building better relationships outwards, a focus on where I’m lacking inwards, right, and making those things aware. And one of the things that I’m trying to remember.
[00:43:00] It’s not.
[00:43:02] But we the way of the Warrior Kid is it’s a book by Jack. It’s a kid’s book by Jack o’ wailing that I’m reading my son. And it talks about and I love this, by the way, but he this kid goes through. He’s getting bullied. Write a song about it. Don’t be a bully. Take up for kids who are getting bullied and that sort of thing. But the kid in the book who’s about six or seven years old, starts getting really mad in certain situations.
[00:43:28] And his uncle in the books as well. That’s your read. That’s your red flares when red flares go off. You need to take a minute and pause. And so my son actually stopped me in this and he said, so what does it mean? I was like, well, you know, and I had a very specific situation where he and his sister as middle sister got into an argument. I’m sure it was over some some toy. And I said, do you remember did that happen and how you clenched your fist in your face got really red. You just started. I think those are flares. I said, so when you clench your fist, you just need to sit there and start taking deep breaths.
[00:44:06] So. He’s warning that. And there are times where he takes all of a sudden now just see him taking real deep breaths and.
[00:44:19] I love that he’s grasping the concept, but it sounds like this is very similar, right? You’re becoming aware of those squares that are going to make that you’re having those Donnelley or you make an emotional investing decisions, but you’re making emotional quote-unquote outburst. Right. And which is tearing down that relationship.
[00:44:36] Yeah, it’s more in berst where you are causing yourself to wear your beliefs.
[00:44:41] Your perceptions are causing yourself to have negative reactions to situations, harmful reactions. Again, as I mentioned, there’s a reason there’s a 40 percent divorce rate in this country. There is a re I mean, let’s say, you know, fights, conflicts. Did you know that a large majority of them come from misunderstandings, miscommunication, where people miscommunicate misunderstand each other and then they make assumptions about the miscommunication, misunderstanding that caused them to have really unnecessary conflicts within professional relationships, whether in personal relationships. I mean, somebody and I. I hate to see people suffer, but and they see those sorts of things happen all the time. What you’re doing for your kid. Is wonderful for your son. You’re helping him learn emotional management. I wish more parents did it for their children. Those are things that we learned. But they know can’t punch other kids or other adults or it’s a bad idea to do so.
[00:45:36] Well, it’s gonna be a certain situation. I’m not saying you can’t do it right now.
[00:45:41] I wish we most of the time we shouldn’t unless we know can get away with it.
[00:45:45] Of course they deserved it. Yes, they led me down. A bad investment, is it? No, they don’t. I don’t text because the textbook decision ultimately comes down when it comes down to investing.
[00:46:00] Right. You can never get in. This is whether it’s your marriage or whatnot. Ultimately, our fractured jacker willing is you are the person who’s responsible for that decision. Right. So if you’re getting mad at anybody, it’s gonna be yourself. Right. You need to look in the mirror as the old saying goes. So.
[00:46:20] Gleeb Mr. T. I’ve enjoyed this thoroughly.
[00:46:25] I’ve got your Web site here, disaster.
[00:46:32] Disaster avoidance experts that come.
[00:46:35] There you go. I couldn’t even. Disaster avoidance expert dot com so suppose can reach out to you there. Where else can you folks get in touch with you?
[00:46:46] Well, folks can get you can get in touch with the air. A disaster avoidance experts have come. So there is a blog, videos, podcasts, training, consulting, coaching that you could check out.
[00:46:55] There is a caller called Wise decision maker, of course, decision making 1 to one on your financial investing and other things that you want to learn about and avoid screwing up. And it’s going to be a disaster avoidance. Experts have come forward slash subscribe free course of eight video based modules, disaster avoidance experts com slash subscribe. Now my book Never Go With Your Gut How Pioneering Leaders Make the Best Decisions. The White Ancestors available in bookstores everywhere right now. So check on physical bookstores, online bookstores, Amazon, Barnes Noble. And my next of the blindspots, which means we’ll be out on April 20 20. And finally, I’m pretty active on LinkedIn, so I suggest you connect with me there. Dr. Glub Sikorski. Gee, I’ll be GSI.
[00:47:37] You are S.K. Wine and I’ll make it easy for everybody. I’ll put links in the in the. It’s just for that before we get out of here. What I had to step away from to get I’ve got a jar of coins here.
[00:47:50] We’re gonna flip a coin, not just for fun things that we have to trust me that I’m not doing anything abnormal because the camera doesn’t go very far. But you call it. All right, you’re ready. OK. Heads. It’s it is Tell’s, actually.
[00:48:06] Ok. Lost the money.
[00:48:11] Dr. Ghaleb, I’ve enjoyed it thoroughly. I hope we get to do this again soon. Our again post everything links to everything we mentioned here in the show notes.
[00:48:20] And we’ll see you soon. Excellent. Thank you for having me on.