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3 Most Common Human Fallacies in Decision-Making

Our brain has evolved as the most extraordinary machine ever created by nature. On the other hand evolution makes our progresses happen in million of years, while humanity progresses at a much faster pace. For such reason our mind still carries some built-in biases and fallacies that are part of our nature (evolution did not wipe them out yet). Three of those fallacies influence our ability to make good decisions:

1. Availability cascade: A terrorist attack strikes in the central station of your city. No people died, just dozens of injuries, fortunately nobody’s life has been taken away. However the images of the event left a sign in your memory (a dear friend remained injured in the attack). You used to take train to work and because of the attack you decided to ride a car. Life is much more stressful now. You commute for almost two hours everyday since the traffic in the city is very bad. On the other hand you don’t mind it, since at least you feel safer now. One day, coming back from work, a push up notification on your (super-smart) phone distracts you for one instant from looking at the road ahead. Unluckily for you in that instant, a traffic jam is forming. You are not able to stop your car quickly enough to avoid the accident. Three people are killed and luckily you are just injured. However the burden of three people to carry on your conscience is too heavy to bear. In that moment you realized that probably it would have been better to take the train instead of driving. Statistics in US show that traffic accidents cause way more victims than terrorist attacks although we can’t help thinking about terrorism due to its emotional impact. Beware of statistics before making a decision.

2. Bias toward abstract situations: Our brain does not deal well with abstract situations. For example, even though we are averse to losses, this does not necessarily imply that we are averse to risk. Shouldn’t the two things be connected? Yes and Not. Of course a higher risk implies higher chances of losing money. The problem is that risk is an abstract concept and we hardly get it. Therefore, just when we are presented with the concrete loss that we finally realize the risk. In other words as psychologist Daniel Kahneman would state, although we think of Entrepreneurs as brave people, realistically they are not aware of the risk they are actually taking.      In other words it is not that most entrepreneurs are more courageous on average, rather they are not able to understand the implied risks of their investments. Kahneman uses an example to represent our bias toward abstract situations:

“If I say a vaccine will kill 0.001% is different than I say one on 100,000”

Why? In the moment in which 0.001% becomes one on 100,000 suddenly our brain is able to see the effective risk (a person will die, rather then a simple percentage). Therefore, our brain will represent it. Beware of our inability to understand abstract situations.

3. Hindsight Bias and Narrative fallacy: One day Carlo decided to invest some money in stocks. After performing an analysis on the stocks he wanted to buy and determined the purchasing price, he eventually bought a Company called “Fallimento.” The stocks were supposed to go up but unfortunately this did not happen. Actually, the stocks started to plummet right after Carlo bought them. What was wrong with the choice he made? Carlo recognized the analysis to be good, the timing also. Eventually the most popular business channel spread the news that the stock fell due to an offer made by another company, and the offer was deemed too low by the market operators. As soon as Carlo heard the news it made perfect sense to him. He told himself that Fallimento had strong financial ratios and the explanation given by the chief journalist was so well articulated that it made perfect sense. Therefore Carlo held Fallimento’s stock. Eventually though, the stock kept plummeting until the CEO of Fallimento interviewed at the local TV declared, “we just filed for Chapter 7, our institution founded 150 years ago was not able to repay its debt due to unexpected losses.” The news spread, newspapers, TV, Social Media harried up to condemn what had just happened. All agreed that Fallimento deserved to fail. For everyone was plain clear that this company was destined to failure. How could Carlo have missed it this time? This story carries two biases. First, when Carlo accepted the explanation of the chief journalist he fell in what is called “Narrative Fallacy” (our innate tendency to rationalize things). In other words, our brain is wired to find explanations to anything. In the second instance when Fallimento eventually failed, everyone seemed to find plain clear that it would have happened. The same Carlo was surprised not to have noticed it before. This is the power of the “Hindsight Bias.” Things make sense at hindsight, but in the moment in which the decision was supposed to be made things did not look so clear at all. Narrative fallacy and hindsight bias seem to come from the same kind of delusion, our propensity to rationalize. Beware of rationalization. You may end up justifying the unjustifiable.

 

The Black Swan

Have you ever wondered where our desire to learn comes from? The answer is not simple. Many of us want to learn for mere curiosity, some others to feel more intelligent or gain self-confidence. Whatever is the motive that pushes you to learn, be careful, it matters a lot.

Knowledge and uncertainty

Knowledge at times can really feel as a panacea against uncertainty, but is it really? Is that the case to assume that the more we know the more we can predict what is next? In other words, is it really worth to acquire this great deal of information to feel safer? Think of the many hours spent watching TV news, reading newspapers, talking of current events with people in our community? Is it all this information worth pursuing?

Information vs. Knowledge

In today’s world we often associate information with knowledge. Although it is true that part of being knowledgeable requires you to have information others don’t, which kind of information is the one that makes the difference? Social networks, TV, newspapers and Media in general give us a sense of “(mis)understanding” of the world. Indeed, most of the news reported is plenty of noise, in other words the information we get is unfiltered. You may say, “of course information needs to be unfiltered, otherwise it would be manipulated.” However, unfiltered means removed from noise. In fact, the more we try to be updated with current events the less we are able to get a real sense of what is going on. Think of when, something like a homicide of a famous person happens. As soon as the news breaks, journalists start to make dozens of conjectures, hypotheses, and so on. Assume that you watch the news and read newspapers several times a day, in that time window, you will get hundreds of different hypotheses, all of which probably wrong. Imagine this thing going on for several months. Until, eventually they find out that the person actually committed suicide! You invested dozens of hours of your precious time listening or reading to sensational news (that of course made you excited for awhile) that represented one hundred percent noise! How does it feel?

Taleb running after The Black Swan

Nassim Nicholas Taleb, an option trader from Lebanon. Which eventually became a New Yorker (this is a Platonized biography of our hero) spent his life running after black swans. Undeniably, his book “The Black Swan” is a pleasant work where the noise to knowledge ratio is inexistent. In short, you can expect to learn more about humanity from this book than form spending your entire life watching TV or reading newspapers. Taleb is a master of non-conventionality, and what he calls “empty suits” are often targets of his wit. According to Taleb:

“When you are employed, hence dependent on other people’s judgment, looking busy can help you claim responsibility for the results in a random environment, The appearance of busyness reinforces the perception of causality, of the link between results and one’s role in them.”

What he is referring to is the fact that many of us believe to live in a causal world where events can be easily explained. When it comes to many life phenomena, instead, this isn’t true. What we call causalities is just plain randomness. Therefore, we tend to deem predictable what is not.

Unicuique Suum (Everyone’s due)

Luke was admired in his community. He was a nice guy, with a nice job, and wife. He always smiled, and was charismatic, until one day (after ten years of marriage) he killed his wife and then committed suicide. When the journalists harried up on the crime’s scene, the people interviewed in the neighborhood seemed surprised of the occurrence. All of them declared to journalists “Luke was really a nice guy, we don’t have idea of how could this have happened.” That is what they declared, but in private when meeting with each other, all seemed clear now. The people in the community remembered of that time when Luke smirked to his wife, or the other time when he looked at his wife with frightful eyes. For sure, he was a terrible individual, but how could they have missed it? It was plain clear that there was something wrong with him!

This is the so-called “hindsight bias.” People suddenly see things that before they did not notice and apparently Luke was not anymore the good guy they believed but a killer ready to do anything.

The Platonic world vs. The Real world

What Luke’s story has to do with the Platonic world? As Taleb explains in “The Black Swan” (although the idea is matured from the philosopher Karl Popper) we love to Platonize everything. In other words, we have a built-in tendency for simplification. Part of it is due to our DNA; part of it was inherited from the Greek philosopher “Plato” (although Plato developed his theories from previous philosophers, he eventually became the most influential in the western world, therefore the one who caused many false beliefs). In other words, Plato and his theory of ideas gave birth to the historicism phenomenon. Historicists believe that the future can be predicted as a mere projection of the past. Though here we are simplifying (we apologize for our built-in tendency for Platonizing) Plato’s theories gave birth to many (wrong) dogmas that brought to superstitions and false beliefs.

False Experts

In many instances, such as predicting the future (economically speaking), theorizing is worthless. The so-called “experts” in this field are a bunch of people who “don’t know that they don’t know.” In other words, according to Taleb economics has had the propensity to develop theories and principles that used mathematics as an alibi, although those models were formed on wrong assumptions. The worst of all that, a model (a super-simplified version of reality) could be good enough to tell us what will happen in the future. The reason those models are not good at predicting anything (except what happened the day before) is because they do not take into account the black swans, or the rare events.

Theorizing is meaningless in certain fields 

Another tendency that we have as humans (and we can’t help it) is theorizing. We love to find patterns everywhere (particularly where they do not exist) because we have this innate necessity for order. This leads to mindless theorizing about anything that surrounds us. Although we feel more confident by doing so, it is an illusion. In fact, what we call objectivity in judgment gets lost in our “confirmation bias” and “belief perseverance.” For example, if you formed a theory about something, you will hardly leave it, since it is part of yourself (you would rather sacrifice your mother rather than your ideas!). Therefore, by navigating the world you will just pick up the things that you deem important (although irrelevant to others) believing that the world is like you think it is when it is actually not! (Sounds confusing?)

How to avoid noise and  theorization

One way to avoid noise is to watch less TV as possible (avoid the TV news where the noise to knowledge ratio is incredibly high), don’t waste time reading newspapers (jump the political and economical section) and repeat this mantra “I know that I know nothing.” This is not going to keep you away from all troubles but it is a good starting point. Thanks to Taleb and his skepticism. Join the circle of the “Modern Skeptics.”

Click below to enjoy the book: 

What I learned Losing A million Dollars

Have you ever heard someone to saying “I love to lose”? Of course, none would say that, we all want to win. But why do we take it so personally when we lose?

Am I a loser if I lost?

The problem lies on how we perceive losses. Ever since childhood our brain has been trained in seeking for winning situations. Why? Often win is associated with success. Of course between James Bond and Auric Goldfinger none wants to be the latter. And this has nothing to do with the fact that Bond is good while Goldfinger is bad. Instead, many of us think in terms of outcome. In other words, we assume that whom which eventually wins (outcome) is also the best, the brightest and the smartest.

The Book

In the book “What I Learned Losing A Million Dollars” Jim Paul, former president of the CME (Chicago Mercantile Exchange) describes his story trough Brendan Moynihan (part of Jim Paul’s team in the 90s). Jim Paul went from master of the universe (He become millionaire by trading commodities) to penniless in less than three months. The lesson learned through this experience are reported and analyzed in the book in a very crude way. Because in a world where we all seek for success few want to hear what failure implies.

The Dynamics of Speculation

Have you ever invested a dime in the Stock Exchange? If not you must be not aware of how it feels to lose money. The Stock Exchange is like a Casino operating no-stop 24/7. When you hold a (leveraged) position, even though markets close, there is always this feeling of danger in your stomach. The future market for example, is a market where things (such as commodities) are exchanged (on paper). And although you buy many contracts (for example of lumber) you don’t own any. The point of all is just speculating on the fact that the price will go either up or down. The problem with futures when a stop-loss (an option that allows the trader to get out of the market when the position hits a predetermined monetary target) is not placed stands in the fact that we don’t know how much many can we lose. In other words, imagine the scenario in which there are two parties. One part bets that the price of the lumber will go up and the other part bets that it will go down. Each part in order to invest has to put down what is called “ a margin.” This margin varies across several types of investments according the leverage and quantity of contracts bought. In the middle there is a clearing-house (an organ that guarantees that the margin are covered). This is a zero sum game. In short, at the end of the day the winner gets it all. When at the end of the day your margin gets swept off by the market the clearing-house will call to have you integrate it, or otherwise the position will be closed. For a trader having margin calls feels almost like a death call. The problematic starts when the trader personalizes the loss.

Difference between Net-Worth and Self-Worth

The most striking quote from “What I Learned Losing A Million Dollars” is “They (people who lose money) tend to equate self-worth with net worth.” But what is the difference between the two? For today’s standards wealth is the parameter trough, which we tend to measure anything. In a world dominated by corporations and where magazines such as Forbes, Fortune, and Bloomberg emphasize wealth over any other objective in life, no wonder we all use it as reference for success and therefore self-worth. Of course wealth is important and of course who became wealthy must have done something right. On the other hand, a wealthy person does not have to be also worthy. Business biographies are plenty of successful egotistic entrepreneurs that if they hadn’t become wealthy most probably would have been diagnosed as psychopaths. Furthermore traders who eventually blow up (psychologically) are those ones who most personalize market losses. In short, they assimilate a market result with a wrong decision. But what is the difference between being right or wrong, and taking a good or bad decision?

Being right versus making a good decision

One very interesting point analyzed in “What I Learned Losing A Million Dollars” is the difference between facts and opinions. Facts are objective things. For example, if it rained you say something like “today it rained” and that is a fact. But if you say, “tomorrow it will rain” this is an opinion since it did not happen yet. If eventually it rains you will say something like, “I was right in predicting that it would have rained.” But being right in this case does not imply that you take better decisions than others. In this context you were just lucky. Many of us have the tendency to determine whether someone took a good decision by looking at the outcome of that decision. On the other hand, although someone may be right in one circumstance it does not imply that this fellow also made a good choice. The paradox is that although the outcome is positive the decision made to attain that outcome may be a bad one.

Elon Musk, a modern hero (or a very lucky fellow)

Take Elon Musk, former PayPal investor. After selling PayPal to eBay for over a billion dollars he cashed over a hundred million dollars (he was the major shareholder). Now most of us would think that a good decision is to take the money and invest just a small amount of it in new ventures to avoid the risk of losing them all. Elon Musk instead, risked all his capital in a new venture called Tesla. Although this venture is now successful there was a time (late 2009) when Musk (and therefore Tesla) literally run out of cash (Elon Musk Personal Finances). Therefore, even though at hindsight Musk was right it does not mean he took a good decision in investing all his money in a business venture. In short he was extremely lucky! But if he was extremely lucky (rather than a good decision-maker) why do we emphasize his success so naively? We do that because of its outcome. In other words if Musk’s Tesla would have failed back in 2009 most probably none today would have spoken about this folk. Quite the opposite, most probably business schools would have treated him as the worst decision maker in the history of entrepreneurship. The humorous fact instead lies in the fact that Elon Musk “successful (bad) decisions” are treated like a business role model. Isn’t this tendency to emphasize bad decisions taken by folks who were eventually right (lucky) a way to incentivize (bad) risk-taking practices that may lead to some successful ventures but also to many more disastrous enterprises?

To Enjoy the Book click on the cover below: 

Blink – Book Review

Here you are, walking gracefully through the streets of your town. It is an amazing day outside. The air is moist, the sun shines and all seems perfect. You are crossing the street when suddenly you feel that something is wrong. Swiftly you jump on the side of the street providentially landing on a lawn. You don’t know what happened to you in that moment. But when you look back at the street you see a car that passes by at full speed. You are safe now but you could have been dead if it wasn’t for an invisible force that pushed you on the side of the street. Where did that invisible force come from? Was it your guardian angel? Unless you are truly religious you will not accept that explanation. Then, again, where did that invisible force, that instinct that saved your life come from?

The Evolution of the Survival Machine

What you deemed invisible was not so. Indeed, our brains have evolved to guarantee (as much as possible) survival to the human species. In fact, if we were to depend our survival on the genes alone we would have never thrived in an unpredictable and fast world like the one we live in. It is almost like our genes slowly built a machine (our brain) capable of “snap judgments.” Those judgments are formulated each instant of our day. But they happen so quickly that we don’t even realize about their existence until (in some cases) they save our life. But at what extent can we trust those snap judgments?

Blink

Malcolm Gladwell in this startling book, “Blink” helps us to assess three crucial points. First, when a “snap judgment” is better than deliberate thinking. Second, when our unconscious (judgment) fails instead. And third, how we can actually train and control our impressions to avoid failures. The first quest is about expertise. Where does it come from? And when can we trust it?

The Nature of Expertise

We often associate talent with genius. We do believe that endowed people have an innate ability that goes behind practice or nurture. In other words we attribute to DNA what instead is based on life experience. Therefore, what we call “expertise” is just the practice of countless hours spent mastering one’s skills about a particular subject. The physician looks at you and in the “blink of an eye” says that you are sick. Is he a magician? He is not. But of course he has seen so many patients throughout his life that he knows something is wrong although he might not be able to explain why. Therefore if in some cases we can trust the ability of what Gladwell calls “thin-slicing.” When is this ability fallible?

Associative Machine

Since childhood our brain grows sharper, faster and more accurate. This incessant improvement continues until the third decade of our life (although women reach the mental maturity earlier than men), when we reach our pick. During the first two decades the brain specifically forms an indefinite number of associations based on everything, which surrounds us (town, family, friends). Those associations eventually become who we are. Therefore, when as grown up we move to a new place, we tend to retain the associations we formed to a certain extent. In other words, although we do not realize it we bring with us this heavy baggage that influence our judgments in almost anything we do. How powerful are those associations? And at which extent can they influence us?

  Are you racist? (I bet you are)

If I ask you “are you racist?” I bet the answer will be “I am not!” But although your rational mind tells you that, your emotional mind doesn’t always agree with that statement. Given the speed at which your emotional mind operates over your intellect you may be biased although you hardly realize that. To show this point Malcolm Gladwell in “Blink” uses an intriguing tool called “Implicit Association Test” or “IAT.” The objective of this test is to understand how some words are associated in our mind. Many people who take this test discover their hidden (and wrong) associations formed throughout their existence.

Do you vote superficially? (I bet you do)

The new electoral campaign is on. You have to decide whom are you going to vote. Each time it is a very hard choice. In fact, you do not have a predetermined idea since you don’t belong to any political party. Therefore you decide to turn on the TV and look at the last political debate. You are watching the two candidates facing each other. The first candidate is a stout man, less than six foot high and with shaved face and bald hair. The second is a handsome man in his forties. He is solid, tall (well over six foot) and his dark hair is perfectly combed. You rationally think that the first candidate (the old fellow) would make a good president. Although your brain flashes images of the handsome candidate holding the hand of a foreign country’s president, appearing on TV and making your country look incredibly awesome. Thereby even if you promised yourself to vote for the old fellow, ultimately you can’t help it and you end up voting for the young and handsome dude. Eventually the handsome man turns out to be a disastrous president, which embarrasses your country in front of the entire world. This is how powerful your emotional brain is. How can we actually train our first (wrong) impressions?

Train your impressions to fit your rationality

Awareness is certainly the first step. While reading, “Blink” you will realize how powerful and accurate is in some cases your associative machine. But also how fallible it is in many other cases. Ultimately you will learn when to use your snap judgment and when to give space to your “slow thinking” in other more complex situations.

Enjoy the book by clicking on the image below: 

Fooled By Randomness – Book Review

The human brain’s greatest skill is to find patterns. We can find patterns anywhere. This human bias is not new. Same biases derive from the fact that humans try to attribute anthropological meaning to nature. Likewise the Aztec tribe performed the rainmaking ritual, where a bunch of males dressed up with weird costumes started performing disconnected dances to arouse Tlaloc (The Rain God) to save them from famine.

As a Yiddish proverb says, “To a worm in horseradish, the world is horseradish” (thanks to Malcolm Gladwell for this amazing proverb). Meaning that we are often so blinded by our beliefs that we are not able to see farer than our nose. But how is possible that the most intelligent species on earth, the same species that produced people like Descartes who once said “Cogito ergo sum” (I think, therefore I am) could be so biased?

Biases and Heuristics

Would you be happy to earn $100,000 per year? Of course you would! But would you really? What if I tell you that it all depends? Indeed, let play this thought experiment. Let’s say that you live in a neighborhood where all the people around you make $90,000 per year. Would you still be happy with your $100K? I guess so, right? But what if you lived in a neighborhood where most people make $105K per year? Would you still be happy? Chances are you will not. And this has nothing to do with your lifestyle, since $5,000 per year is not going to change your life. That is what is called “pecking order”. In other words we associate a higher salary with higher social status. Although, this may be irrational (driven by emotions) we can’t help to feel frustrated. This is just one of the many (built-in) biases that our “perfect” human brain carries. Also acknowledging the fact that we are biased may not lead to less frustration and more happiness for what we know. But why do we need to know our biases if reason alone does not make us avoid those mistakes?

A Modern Skeptic

Nassim Nicholas Taleb is what could be defined as a modern skeptic. According to Taleb in “Fooled by Randomness” the world is divided in two main categories of people, Utopian and Tragic that (metaphorically) fight against each other. The Utopian try to “simplify” the world in predictable forms while the Tragic attempt to bring a more complex view of the world. In this strife Taleb sides up with the tragic vision. As a modern skeptic he fights against the “screw-up” that life reserves us. How?

Experts, or lucky fools

Taleb performed for most of his adult life as a “quant” or a person who uses mathematical and statistical models applied to financial markets and risk management. Therefore, Taleb obsession has been to prove that there are no experts when it comes to financial markets. In other words, if we imagine a thousand traders in year one where fifty percent will win while the other half will lose (zero-sum game) at the end of year one we will have five hundred successful traders. Let’s imagine that this game will go on for five years. At year one we had a thousand traders, but interestingly enough at year five we will have sixty-three traders. The minority that made it to the fifth year will be extremely reach, and therefore successful. Everyone from the most blazoned business newspapers and magazine will frame them as “Market Guru”. The traders will believe that they made it thanks to their skills although their success was due to dumb luck! Just when all seem too good to be true screw ups happen. Indeed, keep in mind that if we continue the simulation we were playing not long ago, eventually the sixty-three traders will become two by the end of the tenth year! It means that the other sixty-one were swept out and lost everything. Those are just some of the biases that Taleb makes us aware of in his “Fooled by Randomness”.

How to avoid screw-ups

Taleb’s life quest has been that of avoiding screw-ups or the risk that is too big to bear. For example, if you jump from a cliff with no parachute how many chances do you have to survive? Very few, right? At the same time if you invest in the markets without consciousness of what Taleb will later call “black swans” eventually life will reserve you bad surprises. “Fooled by Randomness” is a research (not a conventional one) in the human biases and fallacies. The style of the book is neither (one hundred percent) a novel, neither (one hundred percent) non-fiction. The language used by Taleb is seldom moderate but the most enjoyable trait is Taleb’s wit.

Click below to enjoy the book:  

Outliers, Malcolm Gladwell – Book Review

Outliers: The Story of Success

Despite the fact that we tend to think that success is achievable by anyone. In reality just few people make it. Those “successful” are idolatrized and treated like semi-gods on earth. We all listen to them, look for their advice, and try to emulate them. In short successful people directly or indirectly influence our lives. Not by chance Malcolm Gladwell in his book uses the word “outlier” or statistically speaking “the observation that is markedly different value from the others of the sample”.

The myth of the Self-Made man

Each culture has its own way of conceiving success. In the western culture in particular there is a strong tendency to personalize success. We all would prefer to live one day as “hero” than an entire life as anonymous. Let’s not forget that we come from a culture highly influenced by ancient Greek philosophers and Roman writers. The father of all writers “Homer”(we are not even sure of his existence), author of the Iliad and Odyssey for first created the figure of the ancient hero. For example, Achilles and Odysseus (the protagonists of Iliad and Odyssey respectively) fought against other man although they were regarded as semi-divinities. While Homer introduced the concept of the hero he did not make us think of him as a “self-made man”. In fact, by the pages of the Homer’s stories you will notice how fragile was their existence. Depending at times on the grace received by one god or the other. In addition those gods acted in a way that none could predict who would be the next graced “Hero”. In other words the protagonist of those stories was the result of faith rather than his own power. But if the key point in Homer’s stories was faith; who then invented the concept of “self-made man”?

Plato and the theory of Leadership  

Before introducing where the concept of self-made man came from let’s give a look at the predominant theory existed before that. The Greek philosopher Plato was the one who strongly introduced the theory for which the born leaders are the ones who should lead our societies. Those leaders have innate abilities that distinguish them from the rest. They are heroes, enlightened, and should be idolatrized. In other words, you were either born leader or slave. Does this theory have any foundation?

Leadership is an acquired skill

The theory of the few elected to change the world does not have any scientific foundation. Indeed US was the country were the theory of leadership was abandoned to give space to the theory of the self-made man. In fact, ever since his declaration of independency from England, Northern America became the land of opportunities. Men without economical resources, heritage or any other kind of advantage thrived to build the greatest empires of all time. From Vanderbilt to Carnegie; Ford to Gates; Gates to Zuckeberg. America became the land of opportunities where all could become successful. But what determines success?

Opportunity is the Mather of success

As Malcolm Gladwell puts it in Outliers success is a matter of opportunity. In short, assuming the capability of all those who reached the top. What really makes the difference in achieving success are the opportunities given to people who eventually become successful. If we lived in a perfect society were all had the same opportunity how many Warren Buffet would we have today? Did those successful people have innate abilities that made them “special” since childhood or were they simply given opportunities that others didn’t have? And if success is a matter of opportunity was US as any other country a place where opportunity was given to anyone?

Those interrogatives and much more will be the quest of Gladwell in ">Outliers from the meanders of success.

The Art of Mentorship: Master the critical skills to thrive

The 4-Week MBA put together the first E-book with the purpose of making it available in a more intuitive format to you. The information has been organized so that it can be used in your daily life. The objective is to give you a toolkit of practical and technical skills that can improve your life on a personal and therefore professional level. Indeed, The 4-Week MBA is a platform which intent is to improve critical skills and to form great individuals first. We do not assume that career comes first. Or that one must sacrifice everything for his/her profession. Instead, our purpose is that to form balanced individuals who are able to unplug when necessary. For such reason we deemed necessary to put together “The Art of Mentorship.” Indeed, the first of “The 4-Week MBA series” will teach you some critical skills such as: Emotional Intelligence, Investing, and the art of influence. With no further ado we want to introduce the first of our series that we made available for free on amazon for a limited time – November 20th, and November 21st -to you.

Enjoy “The Art of mentorship” by clicking on the image below:

The Art of Mentorship: The Step by Step Guide to Change Your Life (The 4-Week MBA Series) 

Public Speaking? No thanks, I prefer to die!

The title of this article seems pretty odd, but it is not. Few days ago I was surfing on the Internet when I found out a shocking truth: Public Speaking is more frightening than death! At least those are the results shown by a survey conducted at Wilkinson College of Arts.

The survey was directed to a US audience. Thereby, since we can assume some similarities across western cultures the result can be extended to the western world. Although I am still skeptic about this public speaking thing we have to admit how scary we felt the first time we had to face a public audience. For most of us the fear is still there. Therefore instead of objecting whether the fear of public speaking is more frightening than death is true or not, I am proposing here some solutions to it:

1 Public Speaking is a skill (like walking, swimming, skating …): Many of us fear public speaking because we tend to have the belief that people are either good at it – so-called “natural” – or they will never be. The truth is that public speaking is a skill that can be acquired by anyone, therefore a process.

2 Entity vs. Incremental Theories of Intelligence: The book that opened my mind about the fact that anything is possible is The Art of Learning: An Inner Journey to Optimal Performance: Josh Waitzkin. The art of learning is about Optimal Performance in general. But the thing that most stroke me is the difference between two approaches of learning: entity vs. incremental theories of intelligence – the study was done by Dr. Carol Dweck for the first time. According to the entity theory, people who believe in it tend to personalize the learning process. In other words, when making mistakes they say things such us “I am not smart enough”. As you can imagine this creates a great feeling of discomfort and “performance anxiety”. On the other hand the incremental theorists believe that learning is part of a process. Therefore when an incremental theorist makes a mistake or does not achieve the expected result he will say things such as “I did not work as hard as I could have”. As you can imagine the incremental theorist will improve his performance next time.

How those theories apply to Public Speaking. Most of the time what gets in the way of our public speaking ability is our misbelief. Indeed, we tend to think that if we don’t make a great speech: “people will think I am not smart enough” or “people will judge me”. In other words what screws us up with public speaking is the tendency to personalize too much.

3 How to use your Body to Influence Your Brain: Intuitively we tend to believe that our brain is the cockpit of our organism – the ancient romans called it “deus ex machina”. Although, our brain has the executive functions over our body, in some circumstances the body is able to influence our mind. As showed by a research conducted at the Harvard University by Amy Cuddy (Your body language shapes who you are) the body has the power to change your mental state. How? Through the – so-called – power poses (Practice These Power Poses to Feel Confident in Your Body). In other words, those poses should help you to boost your confidence and usually they work instantaneously. Of course, this is not going to be a magic formula, but it is a good first step. Therefore before any public speaking practice power poses for a couple of minutes or so.

4 How to use your Brain to Reframe Your Body Feelings: In many cases what screws us up – before we speak in public or while we do so – is our tendency to label body feelings. For example, as soon as we feel that strange sensation in our belly we tend to label it by saying “I am feeling anxious”. In turn this self-talk brings us to think negatively. The negative thoughts increase the level of anxiety until the situation becomes unmanageable. A recent research conducted at Harvard University showed how to turn stress into an asset. One of best ways to do so is through “reframing”. All it takes is to change your self-talk while you start feeling that strange sensation in the belly. Instead of thinking “I am anxious” think instead “I am excited”. I did try this myself. The first time I did, my anxiety decreased although, I still felt it. Eventually I tried it in several other situations and it worked. Therefore before any public speaking try this out.

5 You are not perfect? So what? Another cause of anxiety is the desire to be perfect. We always try to impress others, to show them how smart we are. This tendency creates a gap between the “perceived expectations” (what we think others expect from us) and “actual expectations” (what people expect from us) and therefore anxiety. Indeed, none is expecting from you to be perfect or to be the best public speaker in the world. Thereby as personal advice “relax” and “enjoy yourself”, that’s it!

6 How to Practice Public Speaking without being judged: In most cases the thing that stops us from practicing public speaking in front of other people is the fear of being judged. Therefore it is crucial to find a constructive and relaxed environment where to test yourself. How? I would suggest you find a Toastmasters club in your neighborhood today and try that out. They will guide you throughout the process. In addition that is a non-profit organization and usually membership fee are very low. On the other hand, you can initially participate as a guest.

Here some inspiring and useful resources that can help you with your public speaking:

• Your body language shapes who you are

• The power of believing that you can improve

• Practice These Power Poses to Feel Confident in Your Body

• Toastmasters International -Find a Club

The common wisdom bias – How to avoid psychological pitfalls

Rational choices shape our future way less than we think

Common wisdom will tell you that “you choose” what, how, and where to be in life. The truth is that reality is much more complex than that. We are biased to think that “we” make rational choices, while “others” don’t.

Understanding human biases is crucial to understand ourselves as well. Here few biases that could shape your perspective in life:

What you see is not all that is. We tend to believe to understand the world more than we actually do. For example, if I ask you “are people in California happier?” chances are that you will answer,  “Of course they are”. One of the reasons for such answer (beside the favorable economic condition) is based on the weather. In other words, in our mind we tend to associate weather with happiness or good mood. Unfortunately weather does not really count when it comes to happiness. Indeed, if you have been exposed all your life to a sunny weather, chances are that you don’t even notice it anymore. Therefore, people in California statistically speaking are not happier than people in Norway (it is actually the opposite Does sunshine make us happier? – BBC News). This happens because we create associations (wrong ones!) in our mind that don’t have any statistical foundation. This in turn generates a strong reality’s misperception. As you can imagine this misperception increases the chances to make wrong choices in regard to our future.


Most of success is due to luck (sorry to give you a bad news). Let’ try to pick one of the two alternatives: is the author of a best-seller book a genius and therefore his book successful? Or the best-seller book became successful and therefore the author is considered a genius? I believe that the second is the most reliable choice. I am not saying that the author of a book cannot be a genius. What I am saying is that success makes you even smarter (perceptually speaking) than you are. For example, would anyone speak about Steve Jobs if Apple wasn’t so successful? I guess not. Of course, Steve Jobs was a very smart individual. But does he really deserve all the credits he had? Of course we must give credit where credit is due. None can deny how stubborn, tenacious, and perseverant Steve Jobs was. But my question is “was Steve Jobs a visionary because he invented the future?” or “the future unfolded in a way that made Steve Jobs look like a visionary?” How many stubborn, tenacious, and perseverant people you know that unfortunately did not make it? For me those people deserve credit as much as who eventually succeed.


We are not good decision-makers (sorry for the second bad news). Another huge bias we humans have is about decision-making. Most of us (including myself) believe to take many of our life decisions based on pure intellect and rationality. The truth is that we don’t! What if I told you that a person smile or frown could influence you at the point of changing your perspective on things? Or that you can be primed (subtly influenced) by messages that you don’t even realize they exist? Of course, you and me do not realize to have been subtly influenced (or manipulated). Therefore, we make up an amazing rational explanation for why we acted the way we did (we practically fool ourselves).


None can tell you how the future will unfold. Unless someone will come up with a time machine.  We love to believe that there are persons (so called experts) that have capabilities that others don’t. To avoid generalization, there are certain fields in which experts are really so. Wine or food tasters could be two examples. Those people could have trained their palates at the point to feel any subtle aroma or flavor that we don’t even realize they exist. Although, when it comes to future events, don’t get fooled by the so-called “experts”. Daniel Kahneman in his book “Thinking, Fast and Slow” tells the story of his encounter with a Wall Street fund manager. Kanheman, analyzed the correlation between the firm’s and the market’s results. Throughout a period of seven years he found out that the correlation was almost zero. In other words, the performance of the firm was mainly due to luck (although they were getting fat bonuses). Skills had nothing to do with it. This brings us to another lesson: Be aware of false experts who pretend to know how the future will unfold (they are a bunch of charlatans).

Those are just some of the biases that affect us on a daily basis. Be aware of them to avoid wrong decisions in the future.

SUGGESTED READINGS:

Thinking, Fast and Slow: Daniel Kahneman: 9780374533557: Amazon.com: Books

Blink: The Power of Thinking Without Thinking: Malcolm Gladwell: 9780316010665: Amazon.com: Books