Macro Minute: Week of January 1, 2024
As we start 2024, I want to begin by saying thank you.
Thank you to all who read my rambling thoughts each week. I want to thank Jessica who proofreads these and Andrew who posts them and sends them out. I have gotten great feedback from clients and peers in the industry. I am humbled that you take time to read these. I will continue to try and provide visuals and keep things brief this year because I know your time is precious.
Since I have broken my leg, I have watched more TV than I normally do (by a large margin). It is unfortunate timing with less new content due to the writer’s strike. This led me to stumble onto a new reality TV show that I would not normally have seen. I will admit it, I watched The Traitors.
It is a mix of reality TV stars and the general public living in a castle in Scotland together. Some betray others. There are vote offs and the traitors have to “kill” off people each night. The premise is irrelevant to my point today.
My point is really about confidence.
In all of these types of shows they do interviews with the participants. It never fails how confident the individual participants are in their ability to be great at this or that game.
This is how many of us operate day-to-day.
We overestimate our ability and underestimate the general population’s ability. This can lead to many undesirable outcomes. I will just highlight a few bad outcomes and highlight some actions we can take to overcome this.
Bad tendencies of overconfidence:
- Chance is attributed to skill making oneself believe they are better at something than in reality.
- Overconfidence may allow someone to make a risky investment because they overestimate their ability.
Ways to combat overconfidence:
- Be analytical in measurements of performance; put numbers on it, not just feelings.
- Consult an outside party. This can be working with a financial advisor or talking with a spouse or friend.
We all tend to overstate our abilities at times. It has reminded me how prevalent this is in society as I have watched TV this past month.
I hope everyone has a joyful and prosperous 2024!
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