April 7, 2025 • 72 mins
In this episode of The Blunt Dollar, I sit down with Sébastien Page, Chief Investment Officer at T. Rowe Price, where he oversees over $500 billion in assets and leads a global team of investment professionals.
But today’s conversation isn’t about markets. It’s about leadership, psychology, and what makes people thrive under pressure.
We dive into Sébastien's latest book, The Psychology of Leadership, and unpack the habits, mindsets, and mental models that separate high performers from the rest.
We cover:
🧠 Why measurable goals can backfire
🎯 How to develop mastery without falling into ego traps
🏋️♂️ What investing and sports psychology have in common
🫀 The neuroscience of stress and how elite performers use it
🤝 Why feedback feels awful (and how to fix it)
🏔️ What climbing Everest has to do with blind ambition
🔄 How to quit or pivot without guilt
💬 And what makes someone a truly contrarian thinker
Whether you're managing portfolios, leading teams, or trying to level up your own thinking, this episode is packed with real, practical tools from someone who leads at the highest level and still finds time to reflect deeply.
Oh, and if you haven't already... subscribe to The Blunt Dollar for more raw and honest finance conversations.
New episodes drop every other week! Available on Spotify, Apple Podcasts, and wherever you get your podcasts.
And last, but not least, don't forget to follow me on LinkedIn: https://www.linkedin.com/in/ignacio-ramirez-moreno-cfa/
Enjoy the episode!
Disclaimer: This podcast is for informational and educational purposes only. It does not constitute financial, investment, or legal advice. Listeners should consult a qualified financial professional before making any financial decisions.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
You should ask for feedback.
When people ask for it, thefeedback process goes down.
We all hate it, but it'simportant.
Speaker 2 (00:07):
Welcome to a new episode of the Blunt Dollar.
Sebastian Page is here with ustoday.
He's the head of globalmulti-asset and chief investment
officer at T Rowe Price,overseeing more than $500
billion in assets.
He's also an award-winningresearcher, cfhr holder and the
author of multiple books,including his latest, the
(00:28):
Psychology of Leadership 81% ofAmericans, they want to write a
book at some point in theirlifetime.
Speaker 1 (00:34):
And when I was writing, it was a journey for me
to improve myself as a leader.
Embracing stress is asuperpower.
Optimal performance does nothappen at zero stress.
It requires a certain level ofstress and activation.
In fact, if you were neverstressed or never anxious about
anything, you would not performas well as you do.
(00:56):
If you learn to manage it, youcan drive your performance
higher, your team's performancehigher as well, higher your
team's performance higher aswell.
Speaker 2 (01:12):
This is the Blonde Dollar with Ignacio Ramirez.
Quick disclaimer the views andopinions expressed in this
podcast are those of thespeakers and do not constitute
financial investment or legaladvice.
This content is forinformational and educational
purposes only and should not berelied upon as a substitute for
professional advice.
Always do your own research andconsult a qualified advisor
(01:33):
before making any financialdecisions.
All investments involve risk,including the potential loss of
capital.
And now let's get started withthe episode.
Hello everyone, and welcome toa new episode of the Blunt
Dollar.
Today, I have the huge privilegeof sitting down with someone
who knows both sides of the gamehow to manage billions and how
(01:55):
to manage people.
Sebastian Page is here with ustoday.
He's the head of globalmulti-asset and chief investment
officer at T Rowe Price,overseeing more than $500
billion in assets.
He's also an award-winningresearcher, a CFA charterholder
and the author of multiple books, including his latest, the
(02:15):
Psychology of Leadership.
In this episode, we're divinginto a topic that's often
overlooked in finance, which ishow leadership, psychology and
even sports performance shapethe way we think about investing
, resilience and decision making.
Why do measurable goalssometimes backfire?
How can we rethink success, andwhat does being disagreeable
have to do with being a greatleader.
(02:37):
Sebastian has some fascinatingtakes in all these questions,
and I can't wait to unpack themwith him.
So, whether you're a portfoliomanager, a startup founder or
just someone looking to level upyour leadership game, this
episode is for you.
Sebastian, welcome to the show.
Speaker 1 (02:58):
Thanks, Ignacio.
I'm fired up.
I love doing podcasts becausewe have a little bit more time
to talk.
I just love the format.
Speaker 2 (03:06):
And you're such a natural.
For those of you, by the way,that are not following Sebastian
already, please make sure tocheck him out in socials,
particularly LinkedIn, becausehe's sharing content on a daily
basis pretty much, and it's very, very high quality.
Speaker 1 (03:22):
And you too.
You share great content too,Ignacio.
Speaker 2 (03:25):
Yeah, I'm trying to learn from the best here, you
know.
So before we get started, tellus a little bit about you.
What is it that you're doingexactly nowadays?
Speaker 1 (03:35):
So I'm head of the Global Multi-Asset Division at T
Rowe Price and I'm ChiefInvestment Officer for the firm.
I oversee a team of investmentprofessionals and I represent
the firm.
I oversee a team of investmentprofessionals and I represent
the firm and, as a member of themanagement committee, I help
our CEO run the entire firm aswell.
T Rowe Price.
We have over 7,000 employees,1.6 trillion in assets under
(03:58):
management and we're in over 20countries.
So busy times these days withmarkets.
As you might expect, ignacio,it requires a lot of resilience
100%, although we're not goingto be talking about markets
today.
Speaker 2 (04:12):
You know a lot of stuff about them, but today
we're going to be focusing on acompletely different topic, on
which you're also an expert,which is the psychology behind
leadership and investing.
And, of course, we're going tobe talking about your book.
And I'd like to start with that, because finance is an industry
driven by numbers, performance,metrics, data.
(04:33):
However, some of the mostsuccessful investors and leaders
really can recognize thatpsychology, so the way we make
decisions and we manage stressis just as crucial as technical
skills, and I wanted to ask youwhat inspired you to write this
book about the psychology ofleadership and what is it?
Speaker 1 (04:53):
that you're talking about in it.
Well, I was struggling a littlebit at work and I just wanted
to become a better leader myself.
So in the intro of the book Isay to my readers you're reading
this book for self-improvement.
I wrote it for the same reason.
And let me tell you, ignacio,nowadays you don't write a
(05:18):
nonfiction book for money.
That was not the motivation andI can tell you.
I looked into it and I don'treally believe the numbers and I
don't know if there are goodnumbers on this.
But if I were to ask you,ignacio, how many nonfiction
English language books arepublished per year, you think oh
, that's an excellent question.
Speaker 2 (05:40):
I have absolutely no idea.
Speaker 1 (05:42):
It's a crazy number.
The lowest estimate I've seenis 500,000.
And I've seen estimates of 1million books published every
year.
Per year.
It's a tough business.
Thank you for getting me onyour webcast to talk about the
book.
81% of Americans in a surveyresponded that they want to
write a book at some point intheir lifetime.
(06:04):
Wow survey responded that theywant to write a book at some
point in their lifetime, so Ireally genuinely think the book
will help a lot of people.
I'm not doing this for themoney, and when I was writing,
it was a journey for me toimprove myself as a leader, so
that was the inspiration.
Speaker 2 (06:21):
That's a great inspiration, I would say.
And yeah, hopefully we can getyou a few purchases with this
episode.
You for sure have one over herethat is going to place an order
and finance.
(06:45):
In recent years, top financeprofessionals have turned to
sports psychology to enhancetheir performance, and they've
looked at things ranging frommental resilience to
decision-making on the pressure.
So I wanted to ask you what arethe links between sports
psychology and finance, and howcan investors and leaders apply
these principles to improvedecision making?
Speaker 1 (07:04):
It's fascinating how closely related sports
psychology is with thepsychology of money management.
Think about it In sports, youcontrol your process, but you
don't have full control over theoutcome.
You don't control the weather,what your opponent is going to
do, whatever sport you play,there's a luck component, just
(07:27):
like in money management, andwhat you need is a little edge
that you can replicate over time.
Just like in money management,you need to focus on your
process and understand thedifference between luck and
skill.
Luck and skill and you know,what's remarkably similar is
(07:51):
both disciplines moneymanagement or sports entail a
lot of losing, ignacio.
There's a lot of losing, and sosports psychology is
fascinating because it'sactually about losing more than
winning.
Winning is fine, you know, it'sgreat, but losing is the
opportunity to learn and grow.
Doesn't that sound similar toinvestment management, where you
make a bad decision, you have abad outcome?
Did I follow my process and wasI just unlucky?
(08:16):
Or, which is much harder, was Ilucky on a decision that didn't
follow my process andnecessarily wasn't really good?
You know, I put all myportfolio in crypto and it went
up 100% in two months.
That's you know.
You got lucky, maybe, and I'mnot bashing crypto whatsoever.
I'm just saying like it's apretty concentrated position if
(08:38):
you are, say, saving forretirement, so so many, so many
things are the same.
And I'll just say this aboutsports psychology it's all the
rage right now.
And if you go back to 2012,ignacio, I have this story in
the book.
It's in the intro about FelixBaumgartner.
Have you heard the name?
(08:59):
He's actually done somethingamazing in 2012.
He went up on a balloon 24miles up to the edge of space.
Remember that.
Was it the Red Bull sponsored.
Yeah, I remember now base andreach 840 miles per hour First
(09:23):
person to do that Great storyright.
He was actually trained thewhole time by a sports
psychologist and if you lookinto it, you'll find that all
the pro sports teams now have asports psychologist on staff.
The statistic is something like80% of them use a sports
psychologist, say, the MajorLeague Baseball, but I think the
(09:44):
20 percent are just not tellingyou that they're using them.
So there's a lot of research.
I explore this in the book andit's fascinating the links that
you can make with moneymanagement.
Speaker 2 (09:56):
So many questions on the back of that.
But just one side comment likewhen I saw the video of the guy
jumping from space, I got veryscared because at some point in
the middle it looks like he'slosing control, but then by the
end he stabilizes and makes it.
It was absolutely amazing.
I remember everyone around mewas on the phone, you know,
looking at it, it's one of thosemoments where everyone is
(10:17):
together just for a few minutes.
Speaker 1 (10:19):
And we should give credit to his sports
psychologist.
His name is Michael Gervais.
He publishes great books thatare worth reading as well.
Speaker 2 (10:27):
Yeah, absolutely amazing.
So first question on the backof that do you think there's a
specific sport or a type ofsport that it's closer to
investing than others?
Speaker 1 (10:41):
than others?
That's a good question.
I talk about this in the book.
Roger Federer went viral whenhe made a commencement speech
and he talked about losing and,in a sense, sports psychology.
So let's take tennis.
That's such a good speech, bythe way, I'm investing in the
team sport and there's probablybetter analogies.
But Federer's speech wasfascinating because he said look
(11:06):
as the best tennis players ofall time.
He's played 1500 matches andhe's won 80% of those matches.
But then he said and askedrhetorically what percentage of
the points do you think I lost?
This is Federer talking and helost almost half the points.
(11:31):
He only won 54% of the points.
So that's a small edge, but asmall edge that he repeated
throughout his entire career tobecome one of the greatest
tennis players of all time.
When I think about investing, ifyou have a small edge but a
really good process and you canreplicate it over time, then you
(11:53):
can deliver it with skilledactive management.
I don't really care, ignacio,about average active management.
I think that's kind of not a sointeresting statistic is what
can you get from skilled activemanagement?
That's, repeatable processbased over time, and if it's a
small edge but you can repeat itover time, you'll do well.
The takeaway is you're going tolose, and this is what he said
(12:18):
to the students, right?
They're all excited likethey're starting their
professional lives and he goes.
Whatever you do in life, you'regoing to lose pretty often and
that happens in investing.
Speaker 2 (12:30):
Yeah, 100%.
It's funny you were talkingabout tennis, because it's one
of the sports that I thought youwere going to answer.
The other one that came to mymind is golf, because I play a
lot of golf and a lot of peopledon't notice, but golf is like a
really, really psychologicalgame.
Like I would say the mentalaspect of it is more important
(12:51):
than the technique.
Arguably, when you get to acertain level and I see a lot of
parallels also between golf andinvesting, namely, you've got
to have a plan, you've got tostick to it whenever things go
wrong, because I can 100%guarantee that at some point
things are not going to go asyou thought they would go.
(13:11):
It's impossible to play 18 holeswithout making a bad shot and
it's impossible to investwithout having days where the
market corrects.
So, yeah, definitely, I thinkit's very, very accurate to make
a connection between sports andinvesting.
And what are the specifictechniques from sports
psychology, uh, have you foundparticularly effective in the
(13:35):
investment world?
Is it a visualization?
Is it mental rehearsal?
Is it performance routines?
Speaker 1 (13:42):
The number one thing is to understand and manage your
motivation for what you do.
There's a lot of research ongolf Ignacio in sports
psychology, because it's verymuch a mental game and the
sports psychologistsdifferentiate between two types
of golfers that have twodifferent motivations.
(14:03):
One is ego-driven, and this isa golfer who wants a very low
handicap, wants a trophy anddrive a Ferrari and impress
others.
And, by the way, before I gofurther into this, we all have a
bit of ego motivation inourselves.
Let's not just bash the egomotivation.
(14:24):
It's there and it's amotivational force.
But if you're almost entirelyego motivated as a golf player,
when you lose you're going tosuffer and you're not
necessarily going to use theopportunity to improve.
The second type of golfer that'sdescribed in sports psychology
is one that is mastery oriented,and with mastery, let me know
(14:50):
if it applies to you, ignacio.
Do you get excited if you getbetter at your swing?
This has nothing to do with thescoreboard, nothing to do with
people looking at you making anice shot.
Do you intrinsically getexcited by improving your swing?
You're out there, you'repracticing and you're like, oh,
my swing is getting better.
That is a mastery orientation.
(15:12):
That is getting excited overgetting a better process.
I'm going to pause and see yeah, what.
What percentage do you thinkwhen you play golf Cause I don't
play, I I'm really, reallycan't believe to save my life.
What percentage would you sayis ego, in your case, versus
mastery?
Speaker 2 (15:30):
I would say it's probably like 70% mastery and
30% ego, but ego in a differentway to the one you described.
So not necessarily driving theFerrari and so on, because when
you're an amateur there's noFerraris whatsoever but it's
more about proving to yourselfthat you can achieve a certain
(15:53):
outcome if you put in the reps.
And what I find really, reallycool about golf is that all your
efforts are crystallized in asingle number, which could at
times feel a little bit unfair,but there's rarely any other
sports where a number reallyshowcases all the blood and
(16:13):
tears and sweat that you've putin there.
And in golf you have handicap,and seeing that number going
down after training for hoursand hours and hours is just like
something very tangible andsomething really cool.
And I'm not going to lie, it'ssomething that I personally look
at very closely, but it is notthe most important part of the
(16:35):
journey, at least for me.
All right.
Speaker 1 (16:37):
Let's tell our audience what your handicap is.
Oh my.
Speaker 2 (16:41):
God, you know that like the the worst question that
you can ask anyone, yeah, likewe can skip over it, if you
don't know no, no, I'm, I'mhappy.
You know I'm 5.9, um, which isis decent, but I'm I'm hoping to
break five this uh, this yearhopefully I go below five at
(17:02):
four point something, and thatwill be a good season for me.
Speaker 1 (17:12):
Awesome.
And, by the way, metrics andgoals and some ego orientation
are all part of a highperforming attitude towards what
you do, and it's not black orwhite, it's not ego or mastery.
But to the extent you canimprove or increase your mastery
focus, you're going to have amuch better time doing this and
you're going to have a muchbetter time handling a down day
in the market or a down day inyour portfolio.
(17:34):
But let's translate that tofinance.
We have our metrics and we arepretty ranking metrics oriented
oriented, but at the same time,for example, what I'm trying to
do in my organization is alwayscome back to the process and get
people excited about having abetter process all the time.
Are we fostering a culturewhere the best ideas surface?
(17:59):
If not, what can we do?
And isn't it exciting to improveour culture in terms of getting
the ideas to collide andgetting the best thinking into
the portfolios?
Are we running meetingsefficiently?
Are we using the right research?
Are we allocating our resourcesfor proprietary research in the
(18:21):
right way?
All those things in investing,they're all mastery.
Research in the right way, allthose things in investing,
they're all mastery.
You won't see these effects inthe alpha over the next six
months.
But if you can bring yourthinking or your organizational
thinking around more of amastery orientation and don't
fool yourself, there is egoeverywhere and that's okay but
(18:42):
more of a mastery, tip it 10,20%, more mastery, longer term A
you'll have a better timemanaging money with the ups and
downs and B you will get betterat it than if you just focus on
ego goals.
Speaker 2 (18:59):
Yeah, 100%, and it's crazy how sometimes the best
things happen after asking very,very simple questions.
But yeah, so we're talkingabout handicaps.
We're talking about measurablegoals.
Obviously, working in thefinance industry, that's
something we love.
We live by numbers, right, andmeasurable goals give you
(19:22):
clarity.
But they also have a downside,which is they can lead you to
what you call goal-inducedblindness, where short-term
targets overshadow long-termsustainability.
So why do you think there arethese side effects of measurable
goals and how can we rethinkgoal setting and attainment in
(19:44):
finance to make the whole thinga little bit more healthy?
Hey there, quick favor to askIf you enjoy the blunt dollar,
the unfiltered takes, thestories and the laughs.
The easiest way to support theshow is by tapping that
subscribe button right now whileyou're listening.
And here's my promise.
(20:13):
And here's my promise If you do.
Speaker 1 (20:18):
I'll keep bringing you honest conversations, fresh
perspectives and the kind of andalso includes basically losing
sight of everything else butyour goal.
And that means that people willcheat, people will sacrifice
(20:38):
their well-being.
Nothing else matters than yourgoal, and that is
(21:04):
well-documented in thepsychology literature.
It's called goal-inducedblindness.
I mean, ignacio, I was justlooking into this we just had
one of the deadliest seasons forEverest climbing ever and
nothing special happened noweather, no storms, nothing,
right?
So let's do a thoughtexperiment, no-transcript.
(21:40):
So that's the thoughtexperiment.
And I'm asking you how muchmoney would you take in exchange
for the challenge of eating oneof those gummies, knowing that
four of them out of 100 willkill you?
And I could say would you do itfor a million dollars?
Would you do it for $100million?
Would you do it for a billion?
(22:01):
And this thought experiment Imean, I don't know, I don't
think I would do it, but this isa thought experiment because if
you want to summit Everest,your chance of dying is 4%.
It's the four gummies that cankill you out of 100.
And those deaths are notpredictable.
So that's the classical example.
Is Everest summiting 4% chanceof dying?
(22:24):
And people do it because it'ssuch an attractive goal, and
some of them is just bad luck,but some of them, if you read
about it, is pure goal-inducedblindness.
They know they're not going tomake it, they lose sight of
their oxygen supply or whatever,and they just see the summit.
And so we do that in businesstoo.
(22:45):
We do that in business.
We have these KPIs, theseearnings targets.
You have all these companiesthat ended up Volkswagen,
cheating on their emissionsnumbers and testing Wells Fargo,
creating dummy accounts, justboosting their account numbers,
just to meet some goal, somemeasurable goal.
(23:06):
You know this stuff Enron wasdoing, and WorldCom, and on and
on and on and on.
So I talk about this and Idon't, you know, I don't.
The book is not minimizingambition and measurable goals,
measurable goals.
You know we send people to themoon with goals.
That's the goal.
We're going to do it, and youachieve a lot, but you have to
expand and add goals on process,on mastery, and add goals that
(23:31):
are not measurable, such asfostering a culture of high
performance.
You can't measure that, but itmight be your most important
goal, because everything elsewill follow be your most
important goal, becauseeverything else will follow.
Speaker 2 (23:49):
I am still thinking about the question of the
commies.
I think I'm gonna go to bedtonight like okay, for how much
would I actually do this?
I, I don't know.
Speaker 1 (23:57):
I have to feel you, but for the everest thing it's.
It's actually pain andsuffering, right, but it's just
such an irresistible goal for alot of climbers.
Speaker 2 (24:08):
Yeah, and it must be heartbreaking being there and
knowing, for example, that ifyou go to the top, you cannot
make it back for some sort oftechnical reason, or oxygen in
the tanks, or things like that.
Speaker 1 (24:23):
And, by the way, there are people who have like I
think the world record issomeone summited over 30 times,
and those that have multiplesummits are the best at quitting
.
They know exactly when theyneed to quit.
Speaker 2 (24:37):
Yeah, which makes sense.
Speaker 1 (24:39):
For leadership that's underrated.
Annie Duke has a fantastic booktitled Quit.
It's such an underrated skill.
You know, when you have so muchinvested in a project but the
market has changed and you knowthe market is moving from mutual
funds to ETFs and separatelymanaged account but you have so
(24:59):
much invested behind your mutualfund infrastructure, you need
to not quit but at least be ableto pivot some of your resources
from A to B Underrated skill inbusiness and it's also very
much related to psychology of it.
Speaker 2 (25:13):
Wouldn't that be what the economies refer to as a
sunk cost, really, exactly?
Speaker 1 (25:18):
Exactly, and that's what Annie Duke talks about in
her book.
Speaker 2 (25:21):
I explore that in mine as well so for for readers,
uh, for listeners sorry, that'ssome cause.
What is what, basically, whenyou've invested some money, uh,
but that you should consider itas uh, as lost, and it shouldn't
be part of your uh thinkingprocess anymore, because, no
matter what the outcome is, thatmoney you know, um, you're
(25:41):
basically not going to get itback.
Is that kind of how it?
Speaker 1 (25:44):
works.
It's gone and and Annie Duke'sexample is fascinating it's
about the high-spiel railproject in California.
It's already cost billions andit's now evident that the
projections were completelywrong and the best decision is
probably abandoning the project.
And I know there's somepolitical stuff around that
(26:05):
project as well, but it's a goodexample of it's just not going
to work.
You know you have to stop, butit's hard when you say we've
already paid 10 billion to startbuilding this rail, but you
know the next 10 hundred billioncould be spent somewhere else
(26:27):
10 hundred billion could bespent somewhere else.
Speaker 2 (26:28):
Yeah, it's.
I mean, obviously we're talkingabout psychology here, and, and
leadership, but this clearlyapplies every day to investor
psychology, um, um, and, and,especially when you're losing,
uh money on that position, um,why?
Well, because feelings andemotions influence everything.
Uh, we do in, do in in markets,right, and, and as a result of
(26:48):
that, we have stock bubbles, wehave panic selling during
downturns, and so on, um.
So I think that ties verynicely to my next question for
you, which is how can financeprofessionals apply leadership
psychology to manage theseemotions both their own and
their clients' particularlyduring periods of market
(27:09):
turbulence?
Speaker 1 (27:12):
Look, it's about resilience and managing stress,
or, if you're financial advisors, helping your clients manage
the stress of market drawdowns,which is real.
We all have this view that weshould drive stress down towards
zero, but that's impossible.
You will not go through life.
(27:35):
In fact, optimal performancedoes not happen at zero stress.
It requires a certain level ofstress and activation.
Stress, it requires a certainlevel of stress and activation.
So Tim Ferriss wrote I lovethis quote.
I have it in the book embracingstress is a superpower and that
is relevant to investing, tocounseling clients to take
(27:56):
advantage of difficult moments,for example, to buy equities
when they're down 20%, insteadof panicking and selling
equities.
We all want zero stress andstress will kill you.
Right, there's the researchthat shows that stress will kill
you.
In the book I talk about theideal of resilience.
(28:18):
I use Neil Armstrong for thefirst manned moon landing.
It's a well-known story, butthere's a little background
story behind it that'sfascinating.
So during the first manned moonlanding, famously everything
went completely wrong.
The communication between themodule and Earth did not work,
(28:45):
the module veered off course,the computer stopped working and
they were running out of fuel.
Armstrong took over and landedthe module somewhere else than
it was supposed to land.
Here's the remarkable thing,ignacio he was hooked to a heart
(29:10):
rate monitor.
His average heart rate duringthat entire mission was 75,
which for a lot of people isactually a resting heart rate.
So Neil Armstrong hadincredible being a jet fighter
pilot incredible resilience tostress, and that's kind of the
model and we want to be likethat.
(29:31):
By the way, his heart rateactually spiked to 150 just when
he landed, but then it's verypeople-specific.
Other people will have lowerresilience to stress,
people-specific Other peoplewill have lower resilience to
stress.
And starting to learn tounderstand people's resilience
to stress and their attitude andwe call this, the psychology
(29:51):
researchers call this your levelof neuroticism will really help
you build empathy andunderstand how people react to
things.
And also going back to embracingstress for yourself, you might
realize, nacio, if you'replaying golf and it's not going
well, or if you're in adifficult situation, or if you
have an issue with yourportfolio in the markets, you
(30:14):
might realize that this zerostress, this Neil Armstrong
example, is just not possiblefor you.
And here's the trick that youlearn from sports psychology.
And here's the trick that youlearn from sports psychology you
reframe it as something moreakin to activation, motivation,
and you embrace it, you acceptit.
(30:34):
You're not going to livewithout stress.
And when you start doing thatand you learn that from sports
psychology but other areas ofresearch in psychology you're
going to become more resilient.
So the bottom line, it's notabout this ideal state of zero
stress.
In fact, if you were neverstressed or never anxious about
(30:57):
anything, you would not performas well as you do and you
wouldn't be alive.
Speaker 2 (31:03):
I mean, it's part of life.
Speaker 1 (31:04):
You would be bored out of your mind and there's
research on flow that shows thatthis is also in the research in
psychology.
If you went through life withzero stress you would not have a
5.9 golf handicap.
You would be bored out of yourmind, you would not be motivated
.
And, by the way, if you'regoing to get surgery or if
(31:24):
you're going to get in a carwith a race car driver or
anything similar where there'ssort of you need full attention
and skills, you kind of wantyour surgeon to be a little
anxious about what they're aboutto do.
You don't want that to be atzero stress.
So we have to realize that,embrace it and recognize that it
(31:47):
differs by person we're not allNeil Armstrongs and also
recognize that optimalperformance is achieved at a
certain level of activation orstress and that that level is
different depending on the task.
The more complicated tasksyou'll perform better at lower
(32:08):
stress level.
Archery, you need toconcentrate.
Pop psychology will call itstress, but powerlifting I mean
there's no amount of stress youcan have that is not actually
going to increase yourpowerlifting performance.
(32:38):
Increase your power liftingperformance, right.
So it depends on the task, itdepends on the people.
It's there.
The optimal is not zero.
If you learn to manage it, youcan drive your performance
higher and your team'sperformance higher as well.
Speaker 2 (32:56):
It's funny what you were saying about embracing it.
I was recently watching thisgolf documentary on Netflix
called Full Swing and you see alittle bit of the behind the
scenes of how players approachbig tournaments and so on.
And if there's one common thingthat most of them said, is that
you know, obviously, Sundayfinal day big tournament, you're
(33:19):
in the lead, very stressed, ifyou're going to win a major or
something like that bigtournament.
You're in the lead, verystressed if you're going to win
a major or something like that.
And instead of trying to calmdown, they all say that they
actually embrace that stress,that fear, and try to use it to
fire them up in some way,Because if you try to reject it,
it's not going to happen.
It's part of human nature.
(33:39):
It's impossible to remainoblivious to all the things
going around you.
Speaker 1 (33:44):
I think that's the key right.
The top athlete, the golfer, ismaking the critical shot.
The basketball player needs tomake the three-point shot at the
buzzer.
They get incredibly stressedand anxious but they don't beat
themselves up over it, becauseif you start stressing about
(34:05):
stressing, you're adding anotherlayer of it.
For the research, for the book,I spent a lot of time with a
sports psychologist and he alsohappens to have 40 national
titles in the sport of handball.
His name is Dr Daniel Zimit.
So the sport of handball iskind of like squash, but you
whack the ball with your hands40 national titles, four zeros.
(34:28):
He's a sports psychologist.
He's mastered his sports mentalgame in practice as well, and
Ignacio told me every top and hetrains top athletes Every top
athlete is high in neuroticism.
They get really anxious andthat's part of what motivates
(34:49):
them, but at some point theystop beating themselves up over
it and try to turn it intoexcitement and motivation and
activation.
Speaker 2 (34:59):
Yeah, a hundred percent.
Use it instead of fighting it.
Love it.
I want to talk about somethingelse related to what happens in
our brains when we're inspecific type of situations,
which is the concept of flow,which is when someone is fully
immersed in an activity and isperforming at their highest
(35:19):
level, be it in sports, in musicor even in my personal case,
I've experienced that many timeswhen I'm programming, for
example.
Yeah, could you tell me a bitabout engagement and
psychological flow and howfinance professionals use this
concept to improve focus and howcould they use it for their
(35:43):
decision making?
Speaker 1 (35:45):
For me, it's writing.
I used to write some codeearlier in my career, so you
still code, ignacio, it isdefinitely a flow activity
because you're just fullyengaged and you lose track of
time.
For me, it's actually writing.
There are other activities thatwill get me in flow, but this
dovetails with the priordiscussion on stress and I want
(36:07):
to clarify something on stressand it relates to the psychology
of flow.
We talk about embracing stress.
It's actually an inverted,u-shaped curve and the optimal
performance point is at acertain stress level.
Point is at a certain stresslevel, but beyond that point it
(36:29):
becomes what we all know aboutstress unhealthy and it is bad
for you and you will choke andyour performance will go down.
So those are calledYerkes-Dodson's curves.
They've been studied fordecades in psychology and sports
psychology.
Why I clarify that?
Because we were all here justsaying embrace stress.
Embrace stress If you sufferfrom anxiety.
(36:50):
You don't want to hear that andyou need to really manage it
differently from a clinicalperspective.
But why does this relate toflow?
Flow is an optimal point.
It's kind of like thoseYerkes-Dodson curves.
Flow is when you're engaged insomething and you get immediate
(37:14):
or frequent feedback and thetask is matching your skill
levels.
You're pushing your skills justto meet the difficulty of the
task and below that you getbored and you're not as
productive Above it.
(37:34):
When the task is too difficult,it might be stress or something
else, but when a task isdifficult, too difficult, you're
just going to give up.
So when the research was doneon this years ago, it kind of
changed how people think aboutpositive psychology.
But they hooked people up tosurvey, to monitors and to
(37:54):
survey data.
So they would ask them everyfive minutes for weeks how do
you feel?
How do you feel?
And then they looked at whatthey were doing and that's how
they found this definition offlow.
The writer who came up with it,the psychologist who came up
with it, started to pronouncehis name as Mihaly.
It's since Mihaly, I think.
I always struggle with the lastname.
But that's what it's about.
(38:16):
And I recall, you know, myfirst job, ignacio, was in
general building maintenance Italk about this in the book and
it wasn't a fun job.
I was a teenager, I hadn'tdeveloped any kind of work ethic
, so it was difficult for me.
But all day long, all week long, we were doing different tasks
(38:38):
in general building maintenance.
We were mowing the lawn,painting apartments.
We're going from building tobuilding, scrubbing the parking
lots.
We went to factories and we hadto scrub the ceilings.
It was tough and, looking backon it, there's some tasks where
(39:04):
time would fly and there areother tasks where it would be
excruciating and I'd just bewaiting for the break when we
could have our lunch or snackand if I think about what type
of tasks would be engaging and Iwould lose track of time, those
are the tasks where I could seeprogress in real time.
It wasn't necessarily aboutdifficulty or being hard enough,
(39:25):
it was just the process ofmowing the lawn, for example.
I would get lost in it becauseI could see very clearly how I
was making progress.
But scrubbing the ceiling of afactory where I know we weren't
even making a dent and Icouldn't even see the progress,
that was not a state of flow.
(39:46):
So you can think of flow inthat way, but it's much broader.
It also applies toorganizations.
Teams can get in flow.
You can get in flow inconversations.
I think we're kind of in flowright now because the neurons
are firing and we're having aconversation, I think of an
orchestra.
So there's a team concept toflow.
(40:14):
That's not as appreciated, Ithink, in popular culture.
And look at the end of the day,there is an engagement crisis
in companies.
I don't know if you feelengaged in your work.
I'm sure you feel engaged withthe podcast, but when the last
survey that came out I have ithere only 23% of employees for a
(40:38):
survey responded that they'reengaged at work Only 23, that's
like 77% that are either notengaged or actively disengaged.
And I I think there's somethingwe should think about with flow
get people more feedback,gamify the work, um, organize
(40:58):
the work in a way that generatesa state of mental engagement.
Uh, it's not that hard.
Small rewards along the way,smaller milestones and building
relationships too, which is abig, big component.
Having positive relationshipsat work, I think, would increase
engagement as well.
And again, this concept thatyou can be in flow when you're
(41:19):
in a conversation.
Speaker 2 (41:21):
That's fascinating and that's pretty important,
perhaps a key to startincreasing engagement at work so
my answer to the questionespecially because I'm pretty
sure some of my bosses arelistening to this very engaged,
very happy, very, very happy and, um, I hope to be in the
(41:42):
company for many, many moreyears.
Um, but, jokes aside, I thinkwhat you mentioned about flow
not being something that justhappened within your brain, but
also with other people, isfascinating, because I tended to
think about flow just yeah,within myself, but now that I
think about it, it's also I mean, there's also a romantic side
(42:05):
of it, right, and?
And when you find a partner,someone that you love, you get
into that state of flow in someway when you talk to that person
, because you don't see the timepass, and I never thought about
that, you know, like, what Ifeel with my wife is that state
of flowing in some way.
So, yeah, thanks for addingthat perspective.
Speaker 1 (42:26):
And also at work.
Sometimes I'm with ourleadership team.
People are discussing ideasMaybe we're debating markets,
maybe we're debating businessstrategy and I just look, I step
back and I look at the ideasflying around back and forth,
the intellect's fully engaged,and I think, huh, the team is in
(42:48):
flow right now.
Speaker 2 (42:49):
The soccer team is in flow, yeah, and if they're not
doing that, I guess your role asa manager is to get them there
right, trying to trigger certainpeople asking certain questions
and get them going.
So you need to have theemotional intelligence to
identify the rhythm of theconversation, the levels of flow
, to get them there.
(43:11):
That's pretty cool.
So we've talked about the stateof flow, we've talked about
stress, and intimately relatedto all of this, obviously, is
the concept of rest, I thinkalso especially in finance.
Right, because in financethere's this culture for long
hours, early mornings, marketobsession, which is often worn
(43:36):
as a badge of honor.
But research from fields likeneuroscience and performance
psychology shows that the restand the recovery processes are
very crucial for sustainedcognitive functions, even like
hedge fund managers like RayDalio have openly discussed like
how they use meditation tosharpen their focus.
(43:56):
So what have you found about therole of rest and recovery in
leadership and investing?
Hey there, quick ad break.
Do you work in the financeindustry and have a genuinely
interesting story to share?
I'm always on the hunt forgreat guests who bring raw,
unfiltered insights to the table, or maybe you know someone with
(44:17):
a story worth telling.
Please put us in touch.
You can reach out to medirectly via LinkedIn.
I'd love to hear from you.
And now back to the show.
Speaker 1 (44:32):
I gave this advice to students recently.
I had all this career advicefor them, but at the end my last
piece of advice was take goodcare of yourself.
And here's the thing for methat clicked.
There are three things youreally need to be mindful of and
(44:53):
no one's perfect, but you needto be mindful of your sleep, you
need to be mindful of your dietand you need to exercise.
But the most fascinating partthat I've applied this to my
life that is really important isnone of these work really,
(45:17):
unless you have all threeworking together more.
But I'm not going to change mydiet and I'm still going to
sleep only five hours a night.
That's not as good as if yousay I'm going to improve my
(45:38):
sleep by 10%, I'm going toimprove my diet by 10% and I'm
going to improve my exercise by10%.
Same 30%, say, of your time.
But this balance, these threethings work together and that's
really important for long-term,sustained high performance,
whether it's in sports or lifeor business.
(45:58):
If you exercise, you're going tosleep better at night.
All else you might have othersleep issues, but if you
exercise, generally speaking,it's going to help your sleep.
When you sleep well, it turnsout your hormones and your gut
bacteria.
They're all in balance and withgood sleep you actually can
(46:19):
control your appetite better andthat actually helps with the
diet.
That might be a link thatpeople don't realize.
Think about it If you onlyslept two or three hours, you
kind of randomly get superhungry.
So the sleep helps you controlyour diet.
The sleep and the diet give youenergy to exercise.
(46:39):
So there's three legs of thestool and you can't take one
away Again.
No one's perfect right and it'snot about just losing again
goal-induced blindness.
Don't get goal-inducedblindness, but try to find some
good balance.
Speaker 2 (46:54):
It makes a huge difference like people are
obsessing about, uh, I don'tknow like tweaking little things
in in a process or in a line ofcode and so on and so forth,
(47:17):
and they would spend hours andhours trying to find.
But you know like I canguarantee that just by getting a
little bit more sleep you canmake things or, yeah, make
things progress a lot more, um,than than you could possibly
imagine.
I I read it once from adesigner.
I follow on on LinkedIn Um, andI think it's true, like
(47:40):
sleeping is the number oneproductivity hack.
Speaker 1 (47:43):
Um yeah, I mean, look , there's a book by Matt Walker
out there why we sleep.
I refer to his book in my bookin the psychology of leadership.
But good sleep will improveyour entire physical and mental
health, actually, be mentallymore resilient, you'll be less
prone to disease.
(48:03):
I mean, it's that simple.
Speaker 2 (48:06):
So we're circling around this whole concept of
mental health, I feel, and thefinance industry has
historically been reluctant, Ithink, to acknowledge mental
health struggles.
Yet in recent years, firmsstarted addressing the mental
toll of high pressure roles notonly managers, but also like all
(48:29):
types of employees, I'd argue.
There's companies now offeringin-house therapy and mental
resilience programs and thingslike that.
So do you think the financeindustry is finally changing its
approach to mental health, oris there still some sort of
stigma around discussing thesechallenges?
Speaker 1 (48:47):
I think we're making progress.
Nikolai Tanchin, when he tookover the gigantic Norway fund,
first thing he did he hired asports psychologist to support
his investment staff.
We have a program like this youcan always call on someone and
talk.
My book is about positivepsychology, it's about sports
(49:07):
psychology and I also have afascinating things about
personality psychology.
So it's not about the clinicalside, and I think the clinical
side is incredibly important.
But when you start looking atthe research, the positive side
of psychology is almost asresearched as the clinical side.
(49:30):
And in removing the stigma as anindustry, we just need to focus
, not ignore, mental healthissues.
Right, it's just a wholedifferent thing.
So I don't cover mental healthin my book.
I cover the positive side ofpsychology, but I think that's
the roundabout way that ourindustry is coming around the
(49:50):
positive side of psychology,high performance psychology,
right.
I told my team yesterday we'retalking about, you know, just
improving our presentationskills and doing a training for
our teams.
And I said look, you know,don't, don't think, don't ever
think you're too good to gettraining or counseling or
(50:12):
coaching.
The world's top athletes havecoaches and, increasingly,
mental coaches.
So I think it's coming to ourindustry.
Ignacio, I think it's easierwhen you take the positive route
to it.
Think about the fact that allthese baseball teams all have
now a sports psychologist onstaff.
(50:32):
Shouldn't like all.
And you see this.
It's kind of caricatured insome TV shows.
You know that they have asports psychologist there.
I guess there's one in TedLasso, for example, but also in
some investment TV shows.
But I think that's the way.
Speaker 2 (50:46):
I think we're moving in the right direction
(51:10):
no-transcript, and I feel theworld is changing the way it
looks at this whole thing.
People are now realizing that,yeah, the same way you bring
your car to the garage whenthere's something going on, or
just like once a year to reviewthat everything is working, the
same way you go to the fitnessroom just to exercise and move a
(51:31):
little bit.
It makes a lot of sense to.
You know, hire someone or workwith someone to to look at
what's going on in your brainand and and and your
psychological state in general.
I think it's um, yeah, it's,it's uh.
It's definitely a positivetrend and I'm looking forward to
see how more and more peoplestart doing this in the future.
Speaker 1 (51:54):
Really, I think it can make you a better leader, to
understand positive psychology.
I think it can make you moreresilient, and you know my
entire book.
I have 18 principles, butthey're all about applying the
positive side for betterperformance, resilience and
leadership, and I have a bunchof stories and some attempts at
(52:15):
humor there as well, so it's notjust pure research.
I tried to make it a fun read,so we'll see how it's received.
It's just about to come out.
Speaker 2 (52:26):
I'm sure it's going to be fantastic.
So you're talking aboutleadership.
I'm sure it's going to befantastic.
So you're talking aboutleadership.
Many firms struggle balancingdirect constructive criticism
from leadership and managementwith maintaining trust and
strong relationships withinteams.
Can you give some tips abouthow you see the whole feedback
(52:51):
process and could you explain tous how prioritizing
relationships has helped you inyour work and managing teams in
general?
Speaker 1 (53:09):
There's one trick that is introduced in the
research by Dr David Rock.
He specializes inneuroleadership and the trick to
make feedback easier is to askfor it.
And as a leader, you shouldmodel that you should ask for
feedback, and it turns out thatwhen people ask for it, the
stress of the feedback processgoes down.
Otherwise, everybody hates it,everybody hates it.
(53:32):
I mean, ignacio, if I call youafter this and I go, can I give
you some feedback?
How's that going to feel?
Just that sentence, right?
Speaker 2 (53:43):
Can I give?
Speaker 1 (53:43):
you some feedback.
It's hard, it's almost like afight or flight response, but
feedback is how you improve.
It's hard, you know it's almostlike a fight or flight response
, but feedback is how youimprove.
It's important.
We all hate it, but it'simportant.
So if you start modelingbehaviors and if people get used
to asking for it and asking forit in a forward-looking way.
So what I should do after thepodcast is call you and say hey,
(54:06):
you know, if we do a next one,what should I do better?
What could I tweak for the nextone?
You make it forward-looking.
It comes from you.
It's going to be easier for you,too, to give the feedback when
there's someone asking forfeedback, because feedback is
hard for the giver, not just forthe receiver.
Everybody involved hates it,you know.
(54:27):
It's important.
It helps with self-awareness.
It's also incredibly biased.
Oftentimes you receive feedbackand it reflects more on the
person giving the feedback,their attitudes, their concerns
than yours.
And so you know we all careabout what other people think,
but we have to develop our owntrue north, our own values, our
(54:52):
own goals, and take somefeedback and leave some.
It's been hard for me in mycareer.
I take feedback very, verydeeply seriously, but over time
I've had to learn yeah, some ofit.
I should just ignore.
Speaker 2 (55:10):
Someone told me about this feedback technique, which
I find kind of useful, which iscalled the sandwich technique.
So if I have to say, to givesome feedback, particularly when
it's something that I know isgoing to be a little bit hard
for the other person to hear,you do this sandwich where you
start with something positive,you put the negative, harder
part in the middle and then youwrap up with again something
(55:32):
positive, and that way themessage goes through a little
bit better.
Speaker 1 (55:37):
I think that genuinely helps and I've been
guilty myself of not using itenough and just firing.
And when you reach a certainlevel in an organization, you
have to be really careful,because you might not mean
something, to be too critical,but it's going to maybe ruin
someone's week right Justbecause you didn't use the right
tone.
(55:58):
So it is useful, but it has tobe genuine.
It has to be genuine.
So you have to say somethingthat's genuinely positive about
the situation or whatever you'regiving feedback on, that you
believe in.
Then give the constructive andthen go back, but don't just
(56:21):
make it up.
But it's actually a goodexercise because you pause and
you ask yourself okay, this teamthat I'm giving feedback to,
they're actually doing reallygood work overall.
I'm just annoyed with somefailure that just happened here.
So incredibly helpful tosandwich things.
(56:41):
I've had my own journey on this.
I do it more and more, but youhave to do it genuinely.
Speaker 2 (56:48):
Yeah, I think it also depends a lot on the culture.
I think some cultures are moredirect than others.
Americans, I think, are morestraightforward.
Europeans, southern europeansprobably, are a little bit more
indirect.
Um, but yeah, it's.
It's interesting and that's awhole different conversation,
like maybe for another day thecultural differences when it
(57:11):
comes to management styles andso on.
So I have a question about thetraditional role models in
finance, because we're talkingabout leadership.
I'm assuming a lot of people inthe industry perceive you as a
role model, someone that like toemulate in some way, and
(57:34):
particularly in finance.
I think many investors look athigh profile investors think of
Buffett, dalio, soros, all thesefolks out there as role models,
but following blindly theserole models can also lead to
unrealistic expectations and,more importantly, to poor
decision making.
So what's one common mistakethat we make that you've seen
(57:58):
when considering role models toguide our work in finance and,
most importantly, what can we doto avoid that type of mistake?
Speaker 1 (58:06):
I have a little bit of a fascination with
billionaires.
I've read so many biographiesof billionaires and I talk about
billionaires in the book, Italk about their motivation.
And the fascinating thing, themore you look into it is most of
them are pretty horrible atrelationships.
And you know, the study fromthe longest study on happiness
(58:32):
ever made is from Harvard showsthat the number one factor of
your long-term happiness isgoing to be positive
relationships.
That's it.
So I think there are twomistakes we made.
I know you asked me for one.
One is we don't realize howmuch role models influence our
(58:54):
thoughts and attitude.
It's not just teenagers whowant to dress like Taylor Swift.
The research shows that in oneway or the other, your role
models influence your behaviorsand attitude probably more than
you realize.
Behaviors and attitude probablymore than you realize.
And the second mistake is justto admire people because they've
(59:16):
had so much success, ignoringsomething some of your listeners
will quickly grasp, assumingyou have quantitative analysts
in your audience ignoringsurvivorship bias.
There's people who have beenreally successful because of
incredible luck or really oddcircumstances, or in spite of
(59:41):
being horrible at relationships.
And the fact that they're beinghorrible at relationships
didn't really is it the reasonwhy they've been successful.
So I think when we pick rolemodels, especially amongst
people who have traditionalmetrics of success, we ignore
the fact that there may be amillion people who took the same
kinds of risks and theseweren't the right risks to take,
(01:00:02):
but we're looking at the onesurvivor, the one who flipped 20
heads in a row.
So I think that we make thatmistake.
So what I do in the book is Italk about my parents and what I
admire about each of them, andI had to cut some of it because
I was going on a tangent.
My editor called and said okay,go back to leadership, but you
(01:00:24):
find role models not necessarilyamongst billionaires, but
people who are really good atrelationships, who do really
good work, who keep their headdown, who have lifelong
motivations, that are drivinghow they perform, that are high
achievers by all means.
But it's just a different wayto think about it.
(01:00:46):
So that's one of the takeawaysdifferent way to think about it.
So that's one of the takeawaysthere's a lot about.
I talk about Elon Musk and JeffBezos in one part of the book
where what's your motivation?
If you have all the money inthe world, why do you keep going
(01:01:06):
.
It clearly is not money, and Italk about some of it as social
comparison.
And when they start arguing,this is several years ago, but
they start arguing with eachother on Twitter now called X
about their rockets and you knowwhat?
Bezos wrote a tweet about aself-lending rocket, not giving
(01:01:29):
credit to SpaceX at all forhaving done that 15 times.
So they start arguing back andforth.
They have some of that dialoguein the book, but that shows a
different motivation for them,right?
A social comparison motivation.
It can be powerful, it can beused the right way, it can be a
good thing, but it's not always.
Sometimes.
These aren't perfect people.
Speaker 2 (01:01:49):
By any means it's not always, you know, sometimes you
know these aren't perfectpeople by any means.
So I didn't know you had afascination for billionaires.
But I'm going to recommend youa podcast that I absolutely
loved from the BBC.
It's called Good BadBillionaires, and each episode
talks about a differentbillionaire.
They cover their story, howthey make their money.
Some people you have no cluethey're actually billionaires
(01:02:11):
and all of a sudden you're like,oh wow, some people you've
never heard about.
And at the end it's funnybecause they say is it a good
billionaire, is it a badbillionaire, or is it just like
a neutral?
Did they do something good forthe world or not?
And it's really, reallyinteresting.
But yeah, talking about socialcomparison, do you think?
But yeah, talking about socialcomparison, how can finance
(01:02:33):
professionals leverage thissocial comparison to their
advantage, and when does itactually become a risk in your
view?
Speaker 1 (01:02:39):
So the research shows that 10% of your thoughts in
general, on average, are socialcomparisons.
So you think about how goodlooking you are, how much money
you make, how fast you'rerunning, whatever.
So it's part of human natureand it can get very unhealthy
and it is weaponized, if youwill, through social media,
(01:03:02):
where you're getting socialcomparison through your veins
directly.
But it also has advantages as apowerful source of motivation.
So, ignacio, I like to run andthere's an intrinsic motivation
for me to run.
You go outside, it's cold anddark, you're on your own, you're
(01:03:22):
not impressing anybody and youneed to be self-motivated to run
.
But at the same time, my fastestrunning times were during races
which are completely organizedaround social comparison.
It's like your handicap scorethat you like to look at right.
There's a ranking there,there's an implied ranking, and
(01:03:43):
it's not a bad thing.
So you can do things like, forexample, in our business, I want
us to find efficiencies throughartificial intelligence.
So I can use a little bit ofcompetition, social comparison
to make it interesting and toactually make it relevant to our
business and say something likeover the next three months,
(01:04:05):
we're running a contest to findthe most interesting productive
sources of efficiency leveragingAI, I give my entire team
access to the right tools andwe're going to rank the top
three and celebrate them.
So you know, you can positionit like in a race or you can
(01:04:28):
position it as a healthy sourceof motivation.
There's a lot of nuance,Ignacio, around social
motivation.
It's good, it's bad.
There's a lot of nuance aboutall the psychology concepts that
I explore here.
Speaker 2 (01:04:42):
Well, I mean, there's so much stuff.
We're getting close to the endof the call, so I have to be
very selective with my questionsnow.
But I feel we could talk aboutthis for hours, I agree, but I
think one of the also implicitconcepts when you talk about
social comparison is, yeah, howyou perform against others and
(01:05:03):
in finance.
When I think about that, thefirst thing that comes to my
mind is the power of contrarianthinking, that the first thing
that comes to my mind is thepower of contrarian thinking.
We've all heard WarrenBuffett's philosophy of being
fearful when others are greedy,and so on.
I'd like to hear from you whatdoes it take to be a successful
(01:05:23):
contrarian person in the financeindustry and how can
professionals developindependent thinking generally
speaking?
Speaker 1 (01:05:34):
Now we get partly into personality psychology,
which we didn't talk about muchtoday.
But to be a successfulcontrarian, you need to have a
certain personality trait thatallows you to be disagreeable in
a good way.
So you need to be able to lookat things differently and not be
(01:05:55):
worried about what other peoplethink and act contrary to the
consensus.
Now that sounds obvious andeasy, but in practice it's
incredibly difficult.
Speaker 2 (01:06:09):
So just to clarify disagreeable how do you define
it?
Is it just challenging thestatus quo, asking difficult
questions?
What is it exactly?
Speaker 1 (01:06:19):
So there's a personality we all know
extroversion, introversion.
That's an example of apersonality trait.
There's another one calledagreeableness.
If you're high in agreeableness, you're a people pleaser.
It's difficult for you todisagree and you just like to
get along with people and goalong.
If you're high indisagreeableness or if you're
(01:06:42):
low in agreeableness, thenyou're someone who tends to be
skeptical, who's comfortablewith confrontation and so on.
So in general, to be acontrarian investor, it's going
to be easier for you if you tendto not score too high on
agreeableness.
You're going to have to befacing your clients, facing the
(01:07:05):
media, facing your colleaguesabout a decision that you have
conviction is, but that's out ofconsensus, and that's easier to
do if you have that personalitytrait.
But at the same time, as Iexplain in the book, personality
traits are not set in stone.
They're maybe 30, 40% heritable, so part of your genetics, if
(01:07:28):
you will.
But they depend on thesituation and you can work on
them, which is fascinating whenyou think about it.
Speaker 2 (01:07:38):
So it has to do a lot with conflict avoid-ing-ness.
Speaker 1 (01:07:43):
Exactly.
That would be another way ofdescribing agreeableness.
Are you a people pleaser andyou can go online and take some
tests, like take some questions.
Those are pretty obvious, butwhat's interesting is to compare
how you score yourself relativeto how thousands of other
people score themselves.
So, ignacio, I don't know, Idon't know you that well, I
(01:08:04):
don't know if you score high orlow in agreeableness.
You seem like a fairlyagreeable person to me, but you
can go online and test it andget a score relative to how
others score themselves.
Speaker 2 (01:08:15):
The truth, the truth.
Another thing to do after thiscall I have to think about the
gummies.
And now I have to think aboutmy level of agreeableness.
Speaker 1 (01:08:25):
I don't think you would do the gummies for any
amount of money, right?
Speaker 2 (01:08:28):
Yeah, it's tough when you have kids, even if it's uh
a very small chance yeah, it's,uh, it's.
Yeah, I don't.
I don't think there's anyamount of money really.
Yeah, you will risk that for um.
A couple last questions.
Um, so one important questionactually, because the reason
we're talking today is becausewe're going to be meeting at the
(01:08:51):
CFA Institute Live, which isthe annual event in Chicago.
I'm very excited about that.
What are you going to betalking about there and what are
you most excited about thisevent?
Speaker 1 (01:09:03):
We're going to have a similar discussion.
We're going to talk about moneymanagement, but with a focus on
psychology leadership.
I'm going to prepare somestories to illustrate the
concepts and, Ignacio, I can'twait to be there.
I love being part of the CFAInstitute.
It's been part of my engagementwith the industry for a couple
(01:09:25):
decades now.
Speaker 2 (01:09:28):
Yeah, I think it's going to be absolutely a blast.
If you work in the industry,make sure you come from the 4th
till the 7th of May in Chicago.
There's going to be above athousand professionals, there's
going to be panels left andright, there's going to be
events every evening and there'sgoing to be super smart people
to talk with, like Sebastian.
So make sure you come and maybeto close this conversation,
(01:09:51):
sebastian, if you had to leaveour listeners with one takeaway,
one main lesson from your bookand maybe, to tease them a
little bit, to buy the book andread the rest, what would it be?
Speaker 1 (01:10:15):
what would it be?
The initial title for the bookwas the End in Mind and this was
a nod to Stephen Covey'sprinciple.
Stephen Covey famously wrotethe Seven Habits of Highly
Successful People sold 40million copies.
But my one takeaway would be totake a long-term perspective
and think about, over thatlong-term perspective, where you
(01:10:35):
want to be at the end, the endof your project, ultimately the
end of your life, and this leadsyou to question yourself on
your goals, your values.
I think it makes you moreresilient, so that's the one
takeaway.
So that's the one takeaway.
As far as a teaser, I talk aboutin the book, a story about I
call him the human piranha onsteroids.
(01:10:57):
So buy the book if you want tohear that story.
I have plenty of other storiesabout my own careers, some
projects that did not go welland why.
I talk about Metallica.
I talk about the TV showSuccession.
I talk about Game of Thrones.
There's a lot of hopefullyinteresting things to read that
(01:11:19):
make the journey with meinteresting and also, at the
same time, real research behindthis.
So hopefully people will likeit.
Speaker 2 (01:11:29):
I'm sure they will.
I can't wait to read it,Sebastian.
Thank you so much to all of you.
Make sure to follow him onsocials LinkedIn namely if
you're not doing so already andI'll see you in Chicago.
Thank you so much.
Thank you.
The Blunt Dollar is written,produced, hosted and edited by
me, Ignacio Ramirez.
Everything you hear concept,script, sound, design and
(01:11:52):
production comes straight frommy desk and, occasionally, my
kitchen table.
Thank you so much for listening, and join me in the next
episode of the Blunt Dollar formore raw, honest finance
conversations.
You should ask for feedback.
When people ask for it, thefeedback process goes down.
We all hate it, but it'simportant.
Speaker 2 (00:07):
Welcome to a new episode of the Blunt Dollar.
Sebastian Page is here with ustoday.
He's the head of globalmulti-asset and chief investment
officer at T Rowe Price,overseeing more than $500
billion in assets.
He's also an award-winningresearcher, cfhr holder and the
author of multiple books,including his latest, the
(00:28):
Psychology of Leadership 81% ofAmericans, they want to write a
book at some point in theirlifetime.
Speaker 1 (00:34):
And when I was writing, it was a journey for me
to improve myself as a leader.
Embracing stress is asuperpower.
Optimal performance does nothappen at zero stress.
It requires a certain level ofstress and activation.
In fact, if you were neverstressed or never anxious about
anything, you would not performas well as you do.
(00:56):
If you learn to manage it, youcan drive your performance
higher, your team's performancehigher as well, higher your
team's performance higher aswell.
Speaker 2 (01:12):
This is the Blonde Dollar with Ignacio Ramirez.
Quick disclaimer the views andopinions expressed in this
podcast are those of thespeakers and do not constitute
financial investment or legaladvice.
This content is forinformational and educational
purposes only and should not berelied upon as a substitute for
professional advice.
Always do your own research andconsult a qualified advisor
(01:33):
before making any financialdecisions.
All investments involve risk,including the potential loss of
capital.
And now let's get started withthe episode.
Hello everyone, and welcome toa new episode of the Blunt
Dollar.
Today, I have the huge privilegeof sitting down with someone
who knows both sides of the gamehow to manage billions and how
(01:55):
to manage people.
Sebastian Page is here with ustoday.
He's the head of globalmulti-asset and chief investment
officer at T Rowe Price,overseeing more than $500
billion in assets.
He's also an award-winningresearcher, a CFA charterholder
and the author of multiple books, including his latest, the
(02:15):
Psychology of Leadership.
In this episode, we're divinginto a topic that's often
overlooked in finance, which ishow leadership, psychology and
even sports performance shapethe way we think about investing
, resilience and decision making.
Why do measurable goalssometimes backfire?
How can we rethink success, andwhat does being disagreeable
have to do with being a greatleader.
(02:37):
Sebastian has some fascinatingtakes in all these questions,
and I can't wait to unpack themwith him.
So, whether you're a portfoliomanager, a startup founder or
just someone looking to level upyour leadership game, this
episode is for you.
Sebastian, welcome to the show.
Speaker 1 (02:58):
Thanks, Ignacio.
I'm fired up.
I love doing podcasts becausewe have a little bit more time
to talk.
I just love the format.
Speaker 2 (03:06):
And you're such a natural.
For those of you, by the way,that are not following Sebastian
already, please make sure tocheck him out in socials,
particularly LinkedIn, becausehe's sharing content on a daily
basis pretty much, and it's very, very high quality.
Speaker 1 (03:22):
And you too.
You share great content too,Ignacio.
Speaker 2 (03:25):
Yeah, I'm trying to learn from the best here, you
know.
So before we get started, tellus a little bit about you.
What is it that you're doingexactly nowadays?
Speaker 1 (03:35):
So I'm head of the Global Multi-Asset Division at T
Rowe Price and I'm ChiefInvestment Officer for the firm.
I oversee a team of investmentprofessionals and I represent
the firm.
I oversee a team of investmentprofessionals and I represent
the firm and, as a member of themanagement committee, I help
our CEO run the entire firm aswell.
T Rowe Price.
We have over 7,000 employees,1.6 trillion in assets under
(03:58):
management and we're in over 20countries.
So busy times these days withmarkets.
As you might expect, ignacio,it requires a lot of resilience
100%, although we're not goingto be talking about markets
today.
Speaker 2 (04:12):
You know a lot of stuff about them, but today
we're going to be focusing on acompletely different topic, on
which you're also an expert,which is the psychology behind
leadership and investing.
And, of course, we're going tobe talking about your book.
And I'd like to start with that, because finance is an industry
driven by numbers, performance,metrics, data.
(04:33):
However, some of the mostsuccessful investors and leaders
really can recognize thatpsychology, so the way we make
decisions and we manage stressis just as crucial as technical
skills, and I wanted to ask youwhat inspired you to write this
book about the psychology ofleadership and what is it?
Speaker 1 (04:53):
that you're talking about in it.
Well, I was struggling a littlebit at work and I just wanted
to become a better leader myself.
So in the intro of the book Isay to my readers you're reading
this book for self-improvement.
I wrote it for the same reason.
And let me tell you, ignacio,nowadays you don't write a
(05:18):
nonfiction book for money.
That was not the motivation andI can tell you.
I looked into it and I don'treally believe the numbers and I
don't know if there are goodnumbers on this.
But if I were to ask you,ignacio, how many nonfiction
English language books arepublished per year, you think oh
, that's an excellent question.
Speaker 2 (05:40):
I have absolutely no idea.
Speaker 1 (05:42):
It's a crazy number.
The lowest estimate I've seenis 500,000.
And I've seen estimates of 1million books published every
year.
Per year.
It's a tough business.
Thank you for getting me onyour webcast to talk about the
book.
81% of Americans in a surveyresponded that they want to
write a book at some point intheir lifetime.
(06:04):
Wow survey responded that theywant to write a book at some
point in their lifetime, so Ireally genuinely think the book
will help a lot of people.
I'm not doing this for themoney, and when I was writing,
it was a journey for me toimprove myself as a leader, so
that was the inspiration.
Speaker 2 (06:21):
That's a great inspiration, I would say.
And yeah, hopefully we can getyou a few purchases with this
episode.
You for sure have one over herethat is going to place an order
and finance.
(06:45):
In recent years, top financeprofessionals have turned to
sports psychology to enhancetheir performance, and they've
looked at things ranging frommental resilience to
decision-making on the pressure.
So I wanted to ask you what arethe links between sports
psychology and finance, and howcan investors and leaders apply
these principles to improvedecision making?
Speaker 1 (07:04):
It's fascinating how closely related sports
psychology is with thepsychology of money management.
Think about it In sports, youcontrol your process, but you
don't have full control over theoutcome.
You don't control the weather,what your opponent is going to
do, whatever sport you play,there's a luck component, just
(07:27):
like in money management, andwhat you need is a little edge
that you can replicate over time.
Just like in money management,you need to focus on your
process and understand thedifference between luck and
skill.
Luck and skill and you know,what's remarkably similar is
(07:51):
both disciplines moneymanagement or sports entail a
lot of losing, ignacio.
There's a lot of losing, and sosports psychology is
fascinating because it'sactually about losing more than
winning.
Winning is fine, you know, it'sgreat, but losing is the
opportunity to learn and grow.
Doesn't that sound similar toinvestment management, where you
make a bad decision, you have abad outcome?
Did I follow my process and wasI just unlucky?
(08:16):
Or, which is much harder, was Ilucky on a decision that didn't
follow my process andnecessarily wasn't really good?
You know, I put all myportfolio in crypto and it went
up 100% in two months.
That's you know.
You got lucky, maybe, and I'mnot bashing crypto whatsoever.
I'm just saying like it's apretty concentrated position if
(08:38):
you are, say, saving forretirement, so so many, so many
things are the same.
And I'll just say this aboutsports psychology it's all the
rage right now.
And if you go back to 2012,ignacio, I have this story in
the book.
It's in the intro about FelixBaumgartner.
Have you heard the name?
(08:59):
He's actually done somethingamazing in 2012.
He went up on a balloon 24miles up to the edge of space.
Remember that.
Was it the Red Bull sponsored.
Yeah, I remember now base andreach 840 miles per hour First
(09:23):
person to do that Great storyright.
He was actually trained thewhole time by a sports
psychologist and if you lookinto it, you'll find that all
the pro sports teams now have asports psychologist on staff.
The statistic is something like80% of them use a sports
psychologist, say, the MajorLeague Baseball, but I think the
(09:44):
20 percent are just not tellingyou that they're using them.
So there's a lot of research.
I explore this in the book andit's fascinating the links that
you can make with moneymanagement.
Speaker 2 (09:56):
So many questions on the back of that.
But just one side comment likewhen I saw the video of the guy
jumping from space, I got veryscared because at some point in
the middle it looks like he'slosing control, but then by the
end he stabilizes and makes it.
It was absolutely amazing.
I remember everyone around mewas on the phone, you know,
looking at it, it's one of thosemoments where everyone is
(10:17):
together just for a few minutes.
Speaker 1 (10:19):
And we should give credit to his sports
psychologist.
His name is Michael Gervais.
He publishes great books thatare worth reading as well.
Speaker 2 (10:27):
Yeah, absolutely amazing.
So first question on the backof that do you think there's a
specific sport or a type ofsport that it's closer to
investing than others?
Speaker 1 (10:41):
than others?
That's a good question.
I talk about this in the book.
Roger Federer went viral whenhe made a commencement speech
and he talked about losing and,in a sense, sports psychology.
So let's take tennis.
That's such a good speech, bythe way, I'm investing in the
team sport and there's probablybetter analogies.
But Federer's speech wasfascinating because he said look
(11:06):
as the best tennis players ofall time.
He's played 1500 matches andhe's won 80% of those matches.
But then he said and askedrhetorically what percentage of
the points do you think I lost?
This is Federer talking and helost almost half the points.
(11:31):
He only won 54% of the points.
So that's a small edge, but asmall edge that he repeated
throughout his entire career tobecome one of the greatest
tennis players of all time.
When I think about investing, ifyou have a small edge but a
really good process and you canreplicate it over time, then you
(11:53):
can deliver it with skilledactive management.
I don't really care, ignacio,about average active management.
I think that's kind of not a sointeresting statistic is what
can you get from skilled activemanagement?
That's, repeatable processbased over time, and if it's a
small edge but you can repeat itover time, you'll do well.
The takeaway is you're going tolose, and this is what he said
(12:18):
to the students, right?
They're all excited likethey're starting their
professional lives and he goes.
Whatever you do in life, you'regoing to lose pretty often and
that happens in investing.
Speaker 2 (12:30):
Yeah, 100%.
It's funny you were talkingabout tennis, because it's one
of the sports that I thought youwere going to answer.
The other one that came to mymind is golf, because I play a
lot of golf and a lot of peopledon't notice, but golf is like a
really, really psychologicalgame.
Like I would say the mentalaspect of it is more important
(12:51):
than the technique.
Arguably, when you get to acertain level and I see a lot of
parallels also between golf andinvesting, namely, you've got
to have a plan, you've got tostick to it whenever things go
wrong, because I can 100%guarantee that at some point
things are not going to go asyou thought they would go.
(13:11):
It's impossible to play 18 holeswithout making a bad shot and
it's impossible to investwithout having days where the
market corrects.
So, yeah, definitely, I thinkit's very, very accurate to make
a connection between sports andinvesting.
And what are the specifictechniques from sports
psychology, uh, have you foundparticularly effective in the
(13:35):
investment world?
Is it a visualization?
Is it mental rehearsal?
Is it performance routines?
Speaker 1 (13:42):
The number one thing is to understand and manage your
motivation for what you do.
There's a lot of research ongolf Ignacio in sports
psychology, because it's verymuch a mental game and the
sports psychologistsdifferentiate between two types
of golfers that have twodifferent motivations.
(14:03):
One is ego-driven, and this isa golfer who wants a very low
handicap, wants a trophy anddrive a Ferrari and impress
others.
And, by the way, before I gofurther into this, we all have a
bit of ego motivation inourselves.
Let's not just bash the egomotivation.
(14:24):
It's there and it's amotivational force.
But if you're almost entirelyego motivated as a golf player,
when you lose you're going tosuffer and you're not
necessarily going to use theopportunity to improve.
The second type of golfer that'sdescribed in sports psychology
is one that is mastery oriented,and with mastery, let me know
(14:50):
if it applies to you, ignacio.
Do you get excited if you getbetter at your swing?
This has nothing to do with thescoreboard, nothing to do with
people looking at you making anice shot.
Do you intrinsically getexcited by improving your swing?
You're out there, you'repracticing and you're like, oh,
my swing is getting better.
That is a mastery orientation.
(15:12):
That is getting excited overgetting a better process.
I'm going to pause and see yeah, what.
What percentage do you thinkwhen you play golf Cause I don't
play, I I'm really, reallycan't believe to save my life.
What percentage would you sayis ego, in your case, versus
mastery?
Speaker 2 (15:30):
I would say it's probably like 70% mastery and
30% ego, but ego in a differentway to the one you described.
So not necessarily driving theFerrari and so on, because when
you're an amateur there's noFerraris whatsoever but it's
more about proving to yourselfthat you can achieve a certain
(15:53):
outcome if you put in the reps.
And what I find really, reallycool about golf is that all your
efforts are crystallized in asingle number, which could at
times feel a little bit unfair,but there's rarely any other
sports where a number reallyshowcases all the blood and
(16:13):
tears and sweat that you've putin there.
And in golf you have handicap,and seeing that number going
down after training for hoursand hours and hours is just like
something very tangible andsomething really cool.
And I'm not going to lie, it'ssomething that I personally look
at very closely, but it is notthe most important part of the
(16:35):
journey, at least for me.
All right.
Speaker 1 (16:37):
Let's tell our audience what your handicap is.
Oh my.
Speaker 2 (16:41):
God, you know that like the the worst question that
you can ask anyone, yeah, likewe can skip over it, if you
don't know no, no, I'm, I'mhappy.
You know I'm 5.9, um, which isis decent, but I'm I'm hoping to
break five this uh, this yearhopefully I go below five at
(17:02):
four point something, and thatwill be a good season for me.
Speaker 1 (17:12):
Awesome.
And, by the way, metrics andgoals and some ego orientation
are all part of a highperforming attitude towards what
you do, and it's not black orwhite, it's not ego or mastery.
But to the extent you canimprove or increase your mastery
focus, you're going to have amuch better time doing this and
you're going to have a muchbetter time handling a down day
in the market or a down day inyour portfolio.
(17:34):
But let's translate that tofinance.
We have our metrics and we arepretty ranking metrics oriented
oriented, but at the same time,for example, what I'm trying to
do in my organization is alwayscome back to the process and get
people excited about having abetter process all the time.
Are we fostering a culturewhere the best ideas surface?
(17:59):
If not, what can we do?
And isn't it exciting to improveour culture in terms of getting
the ideas to collide andgetting the best thinking into
the portfolios?
Are we running meetingsefficiently?
Are we using the right research?
Are we allocating our resourcesfor proprietary research in the
(18:21):
right way?
All those things in investing,they're all mastery.
Research in the right way, allthose things in investing,
they're all mastery.
You won't see these effects inthe alpha over the next six
months.
But if you can bring yourthinking or your organizational
thinking around more of amastery orientation and don't
fool yourself, there is egoeverywhere and that's okay but
(18:42):
more of a mastery, tip it 10,20%, more mastery, longer term A
you'll have a better timemanaging money with the ups and
downs and B you will get betterat it than if you just focus on
ego goals.
Speaker 2 (18:59):
Yeah, 100%, and it's crazy how sometimes the best
things happen after asking very,very simple questions.
But yeah, so we're talkingabout handicaps.
We're talking about measurablegoals.
Obviously, working in thefinance industry, that's
something we love.
We live by numbers, right, andmeasurable goals give you
(19:22):
clarity.
But they also have a downside,which is they can lead you to
what you call goal-inducedblindness, where short-term
targets overshadow long-termsustainability.
So why do you think there arethese side effects of measurable
goals and how can we rethinkgoal setting and attainment in
(19:44):
finance to make the whole thinga little bit more healthy?
Hey there, quick favor to askIf you enjoy the blunt dollar,
the unfiltered takes, thestories and the laughs.
The easiest way to support theshow is by tapping that
subscribe button right now whileyou're listening.
And here's my promise.
(20:13):
And here's my promise If you do.
Speaker 1 (20:18):
I'll keep bringing you honest conversations, fresh
perspectives and the kind of andalso includes basically losing
sight of everything else butyour goal.
And that means that people willcheat, people will sacrifice
(20:38):
their well-being.
Nothing else matters than yourgoal, and that is
(21:04):
well-documented in thepsychology literature.
It's called goal-inducedblindness.
I mean, ignacio, I was justlooking into this we just had
one of the deadliest seasons forEverest climbing ever and
nothing special happened noweather, no storms, nothing,
right?
So let's do a thoughtexperiment, no-transcript.
(21:40):
So that's the thoughtexperiment.
And I'm asking you how muchmoney would you take in exchange
for the challenge of eating oneof those gummies, knowing that
four of them out of 100 willkill you?
And I could say would you do itfor a million dollars?
Would you do it for $100million?
Would you do it for a billion?
(22:01):
And this thought experiment Imean, I don't know, I don't
think I would do it, but this isa thought experiment because if
you want to summit Everest,your chance of dying is 4%.
It's the four gummies that cankill you out of 100.
And those deaths are notpredictable.
So that's the classical example.
Is Everest summiting 4% chanceof dying?
(22:24):
And people do it because it'ssuch an attractive goal, and
some of them is just bad luck,but some of them, if you read
about it, is pure goal-inducedblindness.
They know they're not going tomake it, they lose sight of
their oxygen supply or whatever,and they just see the summit.
And so we do that in businesstoo.
(22:45):
We do that in business.
We have these KPIs, theseearnings targets.
You have all these companiesthat ended up Volkswagen,
cheating on their emissionsnumbers and testing Wells Fargo,
creating dummy accounts, justboosting their account numbers,
just to meet some goal, somemeasurable goal.
(23:06):
You know this stuff Enron wasdoing, and WorldCom, and on and
on and on and on.
So I talk about this and Idon't, you know, I don't.
The book is not minimizingambition and measurable goals,
measurable goals.
You know we send people to themoon with goals.
That's the goal.
We're going to do it, and youachieve a lot, but you have to
expand and add goals on process,on mastery, and add goals that
(23:31):
are not measurable, such asfostering a culture of high
performance.
You can't measure that, but itmight be your most important
goal, because everything elsewill follow be your most
important goal, becauseeverything else will follow.
Speaker 2 (23:49):
I am still thinking about the question of the
commies.
I think I'm gonna go to bedtonight like okay, for how much
would I actually do this?
I, I don't know.
Speaker 1 (23:57):
I have to feel you, but for the everest thing it's.
It's actually pain andsuffering, right, but it's just
such an irresistible goal for alot of climbers.
Speaker 2 (24:08):
Yeah, and it must be heartbreaking being there and
knowing, for example, that ifyou go to the top, you cannot
make it back for some sort oftechnical reason, or oxygen in
the tanks, or things like that.
Speaker 1 (24:23):
And, by the way, there are people who have like I
think the world record issomeone summited over 30 times,
and those that have multiplesummits are the best at quitting
.
They know exactly when theyneed to quit.
Speaker 2 (24:37):
Yeah, which makes sense.
Speaker 1 (24:39):
For leadership that's underrated.
Annie Duke has a fantastic booktitled Quit.
It's such an underrated skill.
You know, when you have so muchinvested in a project but the
market has changed and you knowthe market is moving from mutual
funds to ETFs and separatelymanaged account but you have so
(24:59):
much invested behind your mutualfund infrastructure, you need
to not quit but at least be ableto pivot some of your resources
from A to B Underrated skill inbusiness and it's also very
much related to psychology of it.
Speaker 2 (25:13):
Wouldn't that be what the economies refer to as a
sunk cost, really, exactly?
Speaker 1 (25:18):
Exactly, and that's what Annie Duke talks about in
her book.
Speaker 2 (25:21):
I explore that in mine as well so for for readers,
uh, for listeners sorry, that'ssome cause.
What is what, basically, whenyou've invested some money, uh,
but that you should consider itas uh, as lost, and it shouldn't
be part of your uh thinkingprocess anymore, because, no
matter what the outcome is, thatmoney you know, um, you're
(25:41):
basically not going to get itback.
Is that kind of how it?
Speaker 1 (25:44):
works.
It's gone and and Annie Duke'sexample is fascinating it's
about the high-spiel railproject in California.
It's already cost billions andit's now evident that the
projections were completelywrong and the best decision is
probably abandoning the project.
And I know there's somepolitical stuff around that
(26:05):
project as well, but it's a goodexample of it's just not going
to work.
You know you have to stop, butit's hard when you say we've
already paid 10 billion to startbuilding this rail, but you
know the next 10 hundred billioncould be spent somewhere else
(26:27):
10 hundred billion could bespent somewhere else.
Speaker 2 (26:28):
Yeah, it's.
I mean, obviously we're talkingabout psychology here, and, and
leadership, but this clearlyapplies every day to investor
psychology, um, um, and, and,especially when you're losing,
uh money on that position, um,why?
Well, because feelings andemotions influence everything.
Uh, we do in, do in in markets,right, and, and as a result of
(26:48):
that, we have stock bubbles, wehave panic selling during
downturns, and so on, um.
So I think that ties verynicely to my next question for
you, which is how can financeprofessionals apply leadership
psychology to manage theseemotions both their own and
their clients' particularlyduring periods of market
(27:09):
turbulence?
Speaker 1 (27:12):
Look, it's about resilience and managing stress,
or, if you're financial advisors, helping your clients manage
the stress of market drawdowns,which is real.
We all have this view that weshould drive stress down towards
zero, but that's impossible.
You will not go through life.
(27:35):
In fact, optimal performancedoes not happen at zero stress.
It requires a certain level ofstress and activation.
Stress, it requires a certainlevel of stress and activation.
So Tim Ferriss wrote I lovethis quote.
I have it in the book embracingstress is a superpower and that
is relevant to investing, tocounseling clients to take
(27:56):
advantage of difficult moments,for example, to buy equities
when they're down 20%, insteadof panicking and selling
equities.
We all want zero stress andstress will kill you.
Right, there's the researchthat shows that stress will kill
you.
In the book I talk about theideal of resilience.
(28:18):
I use Neil Armstrong for thefirst manned moon landing.
It's a well-known story, butthere's a little background
story behind it that'sfascinating.
So during the first manned moonlanding, famously everything
went completely wrong.
The communication between themodule and Earth did not work,
(28:45):
the module veered off course,the computer stopped working and
they were running out of fuel.
Armstrong took over and landedthe module somewhere else than
it was supposed to land.
Here's the remarkable thing,ignacio he was hooked to a heart
(29:10):
rate monitor.
His average heart rate duringthat entire mission was 75,
which for a lot of people isactually a resting heart rate.
So Neil Armstrong hadincredible being a jet fighter
pilot incredible resilience tostress, and that's kind of the
model and we want to be likethat.
(29:31):
By the way, his heart rateactually spiked to 150 just when
he landed, but then it's verypeople-specific.
Other people will have lowerresilience to stress,
people-specific Other peoplewill have lower resilience to
stress.
And starting to learn tounderstand people's resilience
to stress and their attitude andwe call this, the psychology
(29:51):
researchers call this your levelof neuroticism will really help
you build empathy andunderstand how people react to
things.
And also going back to embracingstress for yourself, you might
realize, nacio, if you'replaying golf and it's not going
well, or if you're in adifficult situation, or if you
have an issue with yourportfolio in the markets, you
(30:14):
might realize that this zerostress, this Neil Armstrong
example, is just not possiblefor you.
And here's the trick that youlearn from sports psychology.
And here's the trick that youlearn from sports psychology you
reframe it as something moreakin to activation, motivation,
and you embrace it, you acceptit.
(30:34):
You're not going to livewithout stress.
And when you start doing thatand you learn that from sports
psychology but other areas ofresearch in psychology you're
going to become more resilient.
So the bottom line, it's notabout this ideal state of zero
stress.
In fact, if you were neverstressed or never anxious about
(30:57):
anything, you would not performas well as you do and you
wouldn't be alive.
Speaker 2 (31:03):
I mean, it's part of life.
Speaker 1 (31:04):
You would be bored out of your mind and there's
research on flow that shows thatthis is also in the research in
psychology.
If you went through life withzero stress you would not have a
5.9 golf handicap.
You would be bored out of yourmind, you would not be motivated
.
And, by the way, if you'regoing to get surgery or if
(31:24):
you're going to get in a carwith a race car driver or
anything similar where there'ssort of you need full attention
and skills, you kind of wantyour surgeon to be a little
anxious about what they're aboutto do.
You don't want that to be atzero stress.
So we have to realize that,embrace it and recognize that it
(31:47):
differs by person we're not allNeil Armstrongs and also
recognize that optimalperformance is achieved at a
certain level of activation orstress and that that level is
different depending on the task.
The more complicated tasksyou'll perform better at lower
(32:08):
stress level.
Archery, you need toconcentrate.
Pop psychology will call itstress, but powerlifting I mean
there's no amount of stress youcan have that is not actually
going to increase yourpowerlifting performance.
(32:38):
Increase your power liftingperformance, right.
So it depends on the task, itdepends on the people.
It's there.
The optimal is not zero.
If you learn to manage it, youcan drive your performance
higher and your team'sperformance higher as well.
Speaker 2 (32:56):
It's funny what you were saying about embracing it.
I was recently watching thisgolf documentary on Netflix
called Full Swing and you see alittle bit of the behind the
scenes of how players approachbig tournaments and so on.
And if there's one common thingthat most of them said, is that
you know, obviously, Sundayfinal day big tournament, you're
(33:19):
in the lead, very stressed, ifyou're going to win a major or
something like that bigtournament.
You're in the lead, verystressed if you're going to win
a major or something like that.
And instead of trying to calmdown, they all say that they
actually embrace that stress,that fear, and try to use it to
fire them up in some way,Because if you try to reject it,
it's not going to happen.
It's part of human nature.
(33:39):
It's impossible to remainoblivious to all the things
going around you.
Speaker 1 (33:44):
I think that's the key right.
The top athlete, the golfer, ismaking the critical shot.
The basketball player needs tomake the three-point shot at the
buzzer.
They get incredibly stressedand anxious but they don't beat
themselves up over it, becauseif you start stressing about
(34:05):
stressing, you're adding anotherlayer of it.
For the research, for the book,I spent a lot of time with a
sports psychologist and he alsohappens to have 40 national
titles in the sport of handball.
His name is Dr Daniel Zimit.
So the sport of handball iskind of like squash, but you
whack the ball with your hands40 national titles, four zeros.
(34:28):
He's a sports psychologist.
He's mastered his sports mentalgame in practice as well, and
Ignacio told me every top and hetrains top athletes Every top
athlete is high in neuroticism.
They get really anxious andthat's part of what motivates
(34:49):
them, but at some point theystop beating themselves up over
it and try to turn it intoexcitement and motivation and
activation.
Speaker 2 (34:59):
Yeah, a hundred percent.
Use it instead of fighting it.
Love it.
I want to talk about somethingelse related to what happens in
our brains when we're inspecific type of situations,
which is the concept of flow,which is when someone is fully
immersed in an activity and isperforming at their highest
(35:19):
level, be it in sports, in musicor even in my personal case,
I've experienced that many timeswhen I'm programming, for
example.
Yeah, could you tell me a bitabout engagement and
psychological flow and howfinance professionals use this
concept to improve focus and howcould they use it for their
(35:43):
decision making?
Speaker 1 (35:45):
For me, it's writing.
I used to write some codeearlier in my career, so you
still code, ignacio, it isdefinitely a flow activity
because you're just fullyengaged and you lose track of
time.
For me, it's actually writing.
There are other activities thatwill get me in flow, but this
dovetails with the priordiscussion on stress and I want
(36:07):
to clarify something on stressand it relates to the psychology
of flow.
We talk about embracing stress.
It's actually an inverted,u-shaped curve and the optimal
performance point is at acertain stress level.
Point is at a certain stresslevel, but beyond that point it
(36:29):
becomes what we all know aboutstress unhealthy and it is bad
for you and you will choke andyour performance will go down.
So those are calledYerkes-Dodson's curves.
They've been studied fordecades in psychology and sports
psychology.
Why I clarify that?
Because we were all here justsaying embrace stress.
Embrace stress If you sufferfrom anxiety.
(36:50):
You don't want to hear that andyou need to really manage it
differently from a clinicalperspective.
But why does this relate toflow?
Flow is an optimal point.
It's kind of like thoseYerkes-Dodson curves.
Flow is when you're engaged insomething and you get immediate
(37:14):
or frequent feedback and thetask is matching your skill
levels.
You're pushing your skills justto meet the difficulty of the
task and below that you getbored and you're not as
productive Above it.
(37:34):
When the task is too difficult,it might be stress or something
else, but when a task isdifficult, too difficult, you're
just going to give up.
So when the research was doneon this years ago, it kind of
changed how people think aboutpositive psychology.
But they hooked people up tosurvey, to monitors and to
(37:54):
survey data.
So they would ask them everyfive minutes for weeks how do
you feel?
How do you feel?
And then they looked at whatthey were doing and that's how
they found this definition offlow.
The writer who came up with it,the psychologist who came up
with it, started to pronouncehis name as Mihaly.
It's since Mihaly, I think.
I always struggle with the lastname.
But that's what it's about.
(38:16):
And I recall, you know, myfirst job, ignacio, was in
general building maintenance Italk about this in the book and
it wasn't a fun job.
I was a teenager, I hadn'tdeveloped any kind of work ethic
, so it was difficult for me.
But all day long, all week long, we were doing different tasks
(38:38):
in general building maintenance.
We were mowing the lawn,painting apartments.
We're going from building tobuilding, scrubbing the parking
lots.
We went to factories and we hadto scrub the ceilings.
It was tough and, looking backon it, there's some tasks where
(39:04):
time would fly and there areother tasks where it would be
excruciating and I'd just bewaiting for the break when we
could have our lunch or snackand if I think about what type
of tasks would be engaging and Iwould lose track of time, those
are the tasks where I could seeprogress in real time.
It wasn't necessarily aboutdifficulty or being hard enough,
(39:25):
it was just the process ofmowing the lawn, for example.
I would get lost in it becauseI could see very clearly how I
was making progress.
But scrubbing the ceiling of afactory where I know we weren't
even making a dent and Icouldn't even see the progress,
that was not a state of flow.
(39:46):
So you can think of flow inthat way, but it's much broader.
It also applies toorganizations.
Teams can get in flow.
You can get in flow inconversations.
I think we're kind of in flowright now because the neurons
are firing and we're having aconversation, I think of an
orchestra.
So there's a team concept toflow.
(40:14):
That's not as appreciated, Ithink, in popular culture.
And look at the end of the day,there is an engagement crisis
in companies.
I don't know if you feelengaged in your work.
I'm sure you feel engaged withthe podcast, but when the last
survey that came out I have ithere only 23% of employees for a
(40:38):
survey responded that they'reengaged at work Only 23, that's
like 77% that are either notengaged or actively disengaged.
And I I think there's somethingwe should think about with flow
get people more feedback,gamify the work, um, organize
(40:58):
the work in a way that generatesa state of mental engagement.
Uh, it's not that hard.
Small rewards along the way,smaller milestones and building
relationships too, which is abig, big component.
Having positive relationshipsat work, I think, would increase
engagement as well.
And again, this concept thatyou can be in flow when you're
(41:19):
in a conversation.
Speaker 2 (41:21):
That's fascinating and that's pretty important,
perhaps a key to startincreasing engagement at work so
my answer to the questionespecially because I'm pretty
sure some of my bosses arelistening to this very engaged,
very happy, very, very happy and, um, I hope to be in the
(41:42):
company for many, many moreyears.
Um, but, jokes aside, I thinkwhat you mentioned about flow
not being something that justhappened within your brain, but
also with other people, isfascinating, because I tended to
think about flow just yeah,within myself, but now that I
think about it, it's also I mean, there's also a romantic side
(42:05):
of it, right, and?
And when you find a partner,someone that you love, you get
into that state of flow in someway when you talk to that person
, because you don't see the timepass, and I never thought about
that, you know, like, what Ifeel with my wife is that state
of flowing in some way.
So, yeah, thanks for addingthat perspective.
Speaker 1 (42:26):
And also at work.
Sometimes I'm with ourleadership team.
People are discussing ideasMaybe we're debating markets,
maybe we're debating businessstrategy and I just look, I step
back and I look at the ideasflying around back and forth,
the intellect's fully engaged,and I think, huh, the team is in
(42:48):
flow right now.
Speaker 2 (42:49):
The soccer team is in flow, yeah, and if they're not
doing that, I guess your role asa manager is to get them there
right, trying to trigger certainpeople asking certain questions
and get them going.
So you need to have theemotional intelligence to
identify the rhythm of theconversation, the levels of flow
, to get them there.
(43:11):
That's pretty cool.
So we've talked about the stateof flow, we've talked about
stress, and intimately relatedto all of this, obviously, is
the concept of rest, I thinkalso especially in finance.
Right, because in financethere's this culture for long
hours, early mornings, marketobsession, which is often worn
(43:36):
as a badge of honor.
But research from fields likeneuroscience and performance
psychology shows that the restand the recovery processes are
very crucial for sustainedcognitive functions, even like
hedge fund managers like RayDalio have openly discussed like
how they use meditation tosharpen their focus.
(43:56):
So what have you found about therole of rest and recovery in
leadership and investing?
Hey there, quick ad break.
Do you work in the financeindustry and have a genuinely
interesting story to share?
I'm always on the hunt forgreat guests who bring raw,
unfiltered insights to the table, or maybe you know someone with
(44:17):
a story worth telling.
Please put us in touch.
You can reach out to medirectly via LinkedIn.
I'd love to hear from you.
And now back to the show.
Speaker 1 (44:32):
I gave this advice to students recently.
I had all this career advicefor them, but at the end my last
piece of advice was take goodcare of yourself.
And here's the thing for methat clicked.
There are three things youreally need to be mindful of and
(44:53):
no one's perfect, but you needto be mindful of your sleep, you
need to be mindful of your dietand you need to exercise.
But the most fascinating partthat I've applied this to my
life that is really important isnone of these work really,
(45:17):
unless you have all threeworking together more.
But I'm not going to change mydiet and I'm still going to
sleep only five hours a night.
That's not as good as if yousay I'm going to improve my
(45:38):
sleep by 10%, I'm going toimprove my diet by 10% and I'm
going to improve my exercise by10%.
Same 30%, say, of your time.
But this balance, these threethings work together and that's
really important for long-term,sustained high performance,
whether it's in sports or lifeor business.
(45:58):
If you exercise, you're going tosleep better at night.
All else you might have othersleep issues, but if you
exercise, generally speaking,it's going to help your sleep.
When you sleep well, it turnsout your hormones and your gut
bacteria.
They're all in balance and withgood sleep you actually can
(46:19):
control your appetite better andthat actually helps with the
diet.
That might be a link thatpeople don't realize.
Think about it If you onlyslept two or three hours, you
kind of randomly get superhungry.
So the sleep helps you controlyour diet.
The sleep and the diet give youenergy to exercise.
(46:39):
So there's three legs of thestool and you can't take one
away Again.
No one's perfect right and it'snot about just losing again
goal-induced blindness.
Don't get goal-inducedblindness, but try to find some
good balance.
Speaker 2 (46:54):
It makes a huge difference like people are
obsessing about, uh, I don'tknow like tweaking little things
in in a process or in a line ofcode and so on and so forth,
(47:17):
and they would spend hours andhours trying to find.
But you know like I canguarantee that just by getting a
little bit more sleep you canmake things or, yeah, make
things progress a lot more, um,than than you could possibly
imagine.
I I read it once from adesigner.
I follow on on LinkedIn Um, andI think it's true, like
(47:40):
sleeping is the number oneproductivity hack.
Speaker 1 (47:43):
Um yeah, I mean, look , there's a book by Matt Walker
out there why we sleep.
I refer to his book in my bookin the psychology of leadership.
But good sleep will improveyour entire physical and mental
health, actually, be mentallymore resilient, you'll be less
prone to disease.
(48:03):
I mean, it's that simple.
Speaker 2 (48:06):
So we're circling around this whole concept of
mental health, I feel, and thefinance industry has
historically been reluctant, Ithink, to acknowledge mental
health struggles.
Yet in recent years, firmsstarted addressing the mental
toll of high pressure roles notonly managers, but also like all
(48:29):
types of employees, I'd argue.
There's companies now offeringin-house therapy and mental
resilience programs and thingslike that.
So do you think the financeindustry is finally changing its
approach to mental health, oris there still some sort of
stigma around discussing thesechallenges?
Speaker 1 (48:47):
I think we're making progress.
Nikolai Tanchin, when he tookover the gigantic Norway fund,
first thing he did he hired asports psychologist to support
his investment staff.
We have a program like this youcan always call on someone and
talk.
My book is about positivepsychology, it's about sports
(49:07):
psychology and I also have afascinating things about
personality psychology.
So it's not about the clinicalside, and I think the clinical
side is incredibly important.
But when you start looking atthe research, the positive side
of psychology is almost asresearched as the clinical side.
(49:30):
And in removing the stigma as anindustry, we just need to focus
, not ignore, mental healthissues.
Right, it's just a wholedifferent thing.
So I don't cover mental healthin my book.
I cover the positive side ofpsychology, but I think that's
the roundabout way that ourindustry is coming around the
(49:50):
positive side of psychology,high performance psychology,
right.
I told my team yesterday we'retalking about, you know, just
improving our presentationskills and doing a training for
our teams.
And I said look, you know,don't, don't think, don't ever
think you're too good to gettraining or counseling or
(50:12):
coaching.
The world's top athletes havecoaches and, increasingly,
mental coaches.
So I think it's coming to ourindustry.
Ignacio, I think it's easierwhen you take the positive route
to it.
Think about the fact that allthese baseball teams all have
now a sports psychologist onstaff.
(50:32):
Shouldn't like all.
And you see this.
It's kind of caricatured insome TV shows.
You know that they have asports psychologist there.
I guess there's one in TedLasso, for example, but also in
some investment TV shows.
But I think that's the way.
Speaker 2 (50:46):
I think we're moving in the right direction
(51:10):
no-transcript, and I feel theworld is changing the way it
looks at this whole thing.
People are now realizing that,yeah, the same way you bring
your car to the garage whenthere's something going on, or
just like once a year to reviewthat everything is working, the
same way you go to the fitnessroom just to exercise and move a
(51:31):
little bit.
It makes a lot of sense to.
You know, hire someone or workwith someone to to look at
what's going on in your brainand and and and your
psychological state in general.
I think it's um, yeah, it's,it's uh.
It's definitely a positivetrend and I'm looking forward to
see how more and more peoplestart doing this in the future.
Speaker 1 (51:54):
Really, I think it can make you a better leader, to
understand positive psychology.
I think it can make you moreresilient, and you know my
entire book.
I have 18 principles, butthey're all about applying the
positive side for betterperformance, resilience and
leadership, and I have a bunchof stories and some attempts at
(52:15):
humor there as well, so it's notjust pure research.
I tried to make it a fun read,so we'll see how it's received.
It's just about to come out.
Speaker 2 (52:26):
I'm sure it's going to be fantastic.
So you're talking aboutleadership.
I'm sure it's going to befantastic.
So you're talking aboutleadership.
Many firms struggle balancingdirect constructive criticism
from leadership and managementwith maintaining trust and
strong relationships withinteams.
Can you give some tips abouthow you see the whole feedback
(52:51):
process and could you explain tous how prioritizing
relationships has helped you inyour work and managing teams in
general?
Speaker 1 (53:09):
There's one trick that is introduced in the
research by Dr David Rock.
He specializes inneuroleadership and the trick to
make feedback easier is to askfor it.
And as a leader, you shouldmodel that you should ask for
feedback, and it turns out thatwhen people ask for it, the
stress of the feedback processgoes down.
Otherwise, everybody hates it,everybody hates it.
(53:32):
I mean, ignacio, if I call youafter this and I go, can I give
you some feedback?
How's that going to feel?
Just that sentence, right?
Speaker 2 (53:43):
Can I give?
Speaker 1 (53:43):
you some feedback.
It's hard, it's almost like afight or flight response, but
feedback is how you improve.
It's hard, you know it's almostlike a fight or flight response
, but feedback is how youimprove.
It's important.
We all hate it, but it'simportant.
So if you start modelingbehaviors and if people get used
to asking for it and asking forit in a forward-looking way.
So what I should do after thepodcast is call you and say hey,
(54:06):
you know, if we do a next one,what should I do better?
What could I tweak for the nextone?
You make it forward-looking.
It comes from you.
It's going to be easier for you,too, to give the feedback when
there's someone asking forfeedback, because feedback is
hard for the giver, not just forthe receiver.
Everybody involved hates it,you know.
(54:27):
It's important.
It helps with self-awareness.
It's also incredibly biased.
Oftentimes you receive feedbackand it reflects more on the
person giving the feedback,their attitudes, their concerns
than yours.
And so you know we all careabout what other people think,
but we have to develop our owntrue north, our own values, our
(54:52):
own goals, and take somefeedback and leave some.
It's been hard for me in mycareer.
I take feedback very, verydeeply seriously, but over time
I've had to learn yeah, some ofit.
I should just ignore.
Speaker 2 (55:10):
Someone told me about this feedback technique, which
I find kind of useful, which iscalled the sandwich technique.
So if I have to say, to givesome feedback, particularly when
it's something that I know isgoing to be a little bit hard
for the other person to hear,you do this sandwich where you
start with something positive,you put the negative, harder
part in the middle and then youwrap up with again something
(55:32):
positive, and that way themessage goes through a little
bit better.
Speaker 1 (55:37):
I think that genuinely helps and I've been
guilty myself of not using itenough and just firing.
And when you reach a certainlevel in an organization, you
have to be really careful,because you might not mean
something, to be too critical,but it's going to maybe ruin
someone's week right Justbecause you didn't use the right
tone.
(55:58):
So it is useful, but it has tobe genuine.
It has to be genuine.
So you have to say somethingthat's genuinely positive about
the situation or whatever you'regiving feedback on, that you
believe in.
Then give the constructive andthen go back, but don't just
(56:21):
make it up.
But it's actually a goodexercise because you pause and
you ask yourself okay, this teamthat I'm giving feedback to,
they're actually doing reallygood work overall.
I'm just annoyed with somefailure that just happened here.
So incredibly helpful tosandwich things.
(56:41):
I've had my own journey on this.
I do it more and more, but youhave to do it genuinely.
Speaker 2 (56:48):
Yeah, I think it also depends a lot on the culture.
I think some cultures are moredirect than others.
Americans, I think, are morestraightforward.
Europeans, southern europeansprobably, are a little bit more
indirect.
Um, but yeah, it's.
It's interesting and that's awhole different conversation,
like maybe for another day thecultural differences when it
(57:11):
comes to management styles andso on.
So I have a question about thetraditional role models in
finance, because we're talkingabout leadership.
I'm assuming a lot of people inthe industry perceive you as a
role model, someone that like toemulate in some way, and
(57:34):
particularly in finance.
I think many investors look athigh profile investors think of
Buffett, dalio, soros, all thesefolks out there as role models,
but following blindly theserole models can also lead to
unrealistic expectations and,more importantly, to poor
decision making.
So what's one common mistakethat we make that you've seen
(57:58):
when considering role models toguide our work in finance and,
most importantly, what can we doto avoid that type of mistake?
Speaker 1 (58:06):
I have a little bit of a fascination with
billionaires.
I've read so many biographiesof billionaires and I talk about
billionaires in the book, Italk about their motivation.
And the fascinating thing, themore you look into it is most of
them are pretty horrible atrelationships.
And you know, the study fromthe longest study on happiness
(58:32):
ever made is from Harvard showsthat the number one factor of
your long-term happiness isgoing to be positive
relationships.
That's it.
So I think there are twomistakes we made.
I know you asked me for one.
One is we don't realize howmuch role models influence our
(58:54):
thoughts and attitude.
It's not just teenagers whowant to dress like Taylor Swift.
The research shows that in oneway or the other, your role
models influence your behaviorsand attitude probably more than
you realize.
Behaviors and attitude probablymore than you realize.
And the second mistake is justto admire people because they've
(59:16):
had so much success, ignoringsomething some of your listeners
will quickly grasp, assumingyou have quantitative analysts
in your audience ignoringsurvivorship bias.
There's people who have beenreally successful because of
incredible luck or really oddcircumstances, or in spite of
(59:41):
being horrible at relationships.
And the fact that they're beinghorrible at relationships
didn't really is it the reasonwhy they've been successful.
So I think when we pick rolemodels, especially amongst
people who have traditionalmetrics of success, we ignore
the fact that there may be amillion people who took the same
kinds of risks and theseweren't the right risks to take,
(01:00:02):
but we're looking at the onesurvivor, the one who flipped 20
heads in a row.
So I think that we make thatmistake.
So what I do in the book is Italk about my parents and what I
admire about each of them, andI had to cut some of it because
I was going on a tangent.
My editor called and said okay,go back to leadership, but you
(01:00:24):
find role models not necessarilyamongst billionaires, but
people who are really good atrelationships, who do really
good work, who keep their headdown, who have lifelong
motivations, that are drivinghow they perform, that are high
achievers by all means.
But it's just a different wayto think about it.
(01:00:46):
So that's one of the takeawaysdifferent way to think about it.
So that's one of the takeawaysthere's a lot about.
I talk about Elon Musk and JeffBezos in one part of the book
where what's your motivation?
If you have all the money inthe world, why do you keep going
(01:01:06):
.
It clearly is not money, and Italk about some of it as social
comparison.
And when they start arguing,this is several years ago, but
they start arguing with eachother on Twitter now called X
about their rockets and you knowwhat?
Bezos wrote a tweet about aself-lending rocket, not giving
(01:01:29):
credit to SpaceX at all forhaving done that 15 times.
So they start arguing back andforth.
They have some of that dialoguein the book, but that shows a
different motivation for them,right?
A social comparison motivation.
It can be powerful, it can beused the right way, it can be a
good thing, but it's not always.
Sometimes.
These aren't perfect people.
Speaker 2 (01:01:49):
By any means it's not always, you know, sometimes you
know these aren't perfectpeople by any means.
So I didn't know you had afascination for billionaires.
But I'm going to recommend youa podcast that I absolutely
loved from the BBC.
It's called Good BadBillionaires, and each episode
talks about a differentbillionaire.
They cover their story, howthey make their money.
Some people you have no cluethey're actually billionaires
(01:02:11):
and all of a sudden you're like,oh wow, some people you've
never heard about.
And at the end it's funnybecause they say is it a good
billionaire, is it a badbillionaire, or is it just like
a neutral?
Did they do something good forthe world or not?
And it's really, reallyinteresting.
But yeah, talking about socialcomparison, do you think?
But yeah, talking about socialcomparison, how can finance
(01:02:33):
professionals leverage thissocial comparison to their
advantage, and when does itactually become a risk in your
view?
Speaker 1 (01:02:39):
So the research shows that 10% of your thoughts in
general, on average, are socialcomparisons.
So you think about how goodlooking you are, how much money
you make, how fast you'rerunning, whatever.
So it's part of human natureand it can get very unhealthy
and it is weaponized, if youwill, through social media,
(01:03:02):
where you're getting socialcomparison through your veins
directly.
But it also has advantages as apowerful source of motivation.
So, ignacio, I like to run andthere's an intrinsic motivation
for me to run.
You go outside, it's cold anddark, you're on your own, you're
(01:03:22):
not impressing anybody and youneed to be self-motivated to run
.
But at the same time, my fastestrunning times were during races
which are completely organizedaround social comparison.
It's like your handicap scorethat you like to look at right.
There's a ranking there,there's an implied ranking, and
(01:03:43):
it's not a bad thing.
So you can do things like, forexample, in our business, I want
us to find efficiencies throughartificial intelligence.
So I can use a little bit ofcompetition, social comparison
to make it interesting and toactually make it relevant to our
business and say something likeover the next three months,
(01:04:05):
we're running a contest to findthe most interesting productive
sources of efficiency leveragingAI, I give my entire team
access to the right tools andwe're going to rank the top
three and celebrate them.
So you know, you can positionit like in a race or you can
(01:04:28):
position it as a healthy sourceof motivation.
There's a lot of nuance,Ignacio, around social
motivation.
It's good, it's bad.
There's a lot of nuance aboutall the psychology concepts that
I explore here.
Speaker 2 (01:04:42):
Well, I mean, there's so much stuff.
We're getting close to the endof the call, so I have to be
very selective with my questionsnow.
But I feel we could talk aboutthis for hours, I agree, but I
think one of the also implicitconcepts when you talk about
social comparison is, yeah, howyou perform against others and
(01:05:03):
in finance.
When I think about that, thefirst thing that comes to my
mind is the power of contrarianthinking, that the first thing
that comes to my mind is thepower of contrarian thinking.
We've all heard WarrenBuffett's philosophy of being
fearful when others are greedy,and so on.
I'd like to hear from you whatdoes it take to be a successful
(01:05:23):
contrarian person in the financeindustry and how can
professionals developindependent thinking generally
speaking?
Speaker 1 (01:05:34):
Now we get partly into personality psychology,
which we didn't talk about muchtoday.
But to be a successfulcontrarian, you need to have a
certain personality trait thatallows you to be disagreeable in
a good way.
So you need to be able to lookat things differently and not be
(01:05:55):
worried about what other peoplethink and act contrary to the
consensus.
Now that sounds obvious andeasy, but in practice it's
incredibly difficult.
Speaker 2 (01:06:09):
So just to clarify disagreeable how do you define
it?
Is it just challenging thestatus quo, asking difficult
questions?
What is it exactly?
Speaker 1 (01:06:19):
So there's a personality we all know
extroversion, introversion.
That's an example of apersonality trait.
There's another one calledagreeableness.
If you're high in agreeableness, you're a people pleaser.
It's difficult for you todisagree and you just like to
get along with people and goalong.
If you're high indisagreeableness or if you're
(01:06:42):
low in agreeableness, thenyou're someone who tends to be
skeptical, who's comfortablewith confrontation and so on.
So in general, to be acontrarian investor, it's going
to be easier for you if you tendto not score too high on
agreeableness.
You're going to have to befacing your clients, facing the
(01:07:05):
media, facing your colleaguesabout a decision that you have
conviction is, but that's out ofconsensus, and that's easier to
do if you have that personalitytrait.
But at the same time, as Iexplain in the book, personality
traits are not set in stone.
They're maybe 30, 40% heritable, so part of your genetics, if
(01:07:28):
you will.
But they depend on thesituation and you can work on
them, which is fascinating whenyou think about it.
Speaker 2 (01:07:38):
So it has to do a lot with conflict avoid-ing-ness.
Speaker 1 (01:07:43):
Exactly.
That would be another way ofdescribing agreeableness.
Are you a people pleaser andyou can go online and take some
tests, like take some questions.
Those are pretty obvious, butwhat's interesting is to compare
how you score yourself relativeto how thousands of other
people score themselves.
So, ignacio, I don't know, Idon't know you that well, I
(01:08:04):
don't know if you score high orlow in agreeableness.
You seem like a fairlyagreeable person to me, but you
can go online and test it andget a score relative to how
others score themselves.
Speaker 2 (01:08:15):
The truth, the truth.
Another thing to do after thiscall I have to think about the
gummies.
And now I have to think aboutmy level of agreeableness.
Speaker 1 (01:08:25):
I don't think you would do the gummies for any
amount of money, right?
Speaker 2 (01:08:28):
Yeah, it's tough when you have kids, even if it's uh
a very small chance yeah, it's,uh, it's.
Yeah, I don't.
I don't think there's anyamount of money really.
Yeah, you will risk that for um.
A couple last questions.
Um, so one important questionactually, because the reason
we're talking today is becausewe're going to be meeting at the
(01:08:51):
CFA Institute Live, which isthe annual event in Chicago.
I'm very excited about that.
What are you going to betalking about there and what are
you most excited about thisevent?
Speaker 1 (01:09:03):
We're going to have a similar discussion.
We're going to talk about moneymanagement, but with a focus on
psychology leadership.
I'm going to prepare somestories to illustrate the
concepts and, Ignacio, I can'twait to be there.
I love being part of the CFAInstitute.
It's been part of my engagementwith the industry for a couple
(01:09:25):
decades now.
Speaker 2 (01:09:28):
Yeah, I think it's going to be absolutely a blast.
If you work in the industry,make sure you come from the 4th
till the 7th of May in Chicago.
There's going to be above athousand professionals, there's
going to be panels left andright, there's going to be
events every evening and there'sgoing to be super smart people
to talk with, like Sebastian.
So make sure you come and maybeto close this conversation,
(01:09:51):
sebastian, if you had to leaveour listeners with one takeaway,
one main lesson from your bookand maybe, to tease them a
little bit, to buy the book andread the rest, what would it be?
Speaker 1 (01:10:15):
what would it be?
The initial title for the bookwas the End in Mind and this was
a nod to Stephen Covey'sprinciple.
Stephen Covey famously wrotethe Seven Habits of Highly
Successful People sold 40million copies.
But my one takeaway would be totake a long-term perspective
and think about, over thatlong-term perspective, where you
(01:10:35):
want to be at the end, the endof your project, ultimately the
end of your life, and this leadsyou to question yourself on
your goals, your values.
I think it makes you moreresilient, so that's the one
takeaway.
So that's the one takeaway.
As far as a teaser, I talk aboutin the book, a story about I
call him the human piranha onsteroids.
(01:10:57):
So buy the book if you want tohear that story.
I have plenty of other storiesabout my own careers, some
projects that did not go welland why.
I talk about Metallica.
I talk about the TV showSuccession.
I talk about Game of Thrones.
There's a lot of hopefullyinteresting things to read that
(01:11:19):
make the journey with meinteresting and also, at the
same time, real research behindthis.
So hopefully people will likeit.
Speaker 2 (01:11:29):
I'm sure they will.
I can't wait to read it,Sebastian.
Thank you so much to all of you.
Make sure to follow him onsocials LinkedIn namely if
you're not doing so already andI'll see you in Chicago.
Thank you so much.
Thank you.
The Blunt Dollar is written,produced, hosted and edited by
me, Ignacio Ramirez.
Everything you hear concept,script, sound, design and
(01:11:52):
production comes straight frommy desk and, occasionally, my
kitchen table.
Thank you so much for listening, and join me in the next
episode of the Blunt Dollar formore raw, honest finance
conversations.
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