STREET DOGS

Smart people believe dumb things too. We hardly ever bother to gather up and analyse all the facts before coming to a conclusion, or choose the most logical and rational explanation.

Most of us, most of the time, come to our beliefs for a variety of reasons having little to do with empirical evidence and logical reasoning. Instead, variables such as genetic predisposition, parental predilection, sibling influence, peer pressure, educational experience and life impressions all shape the personality preferences that, in conjunction with numerous social and cultural influences, lead us to our beliefs.

We then sort through the body of data to select those that most confirm what we already believe, and ignore or rationalise away those that do not.

But as Michael Steinhardt says: “I think one should look at this game — as a professional in the stock market — as a competitive enterprise and you have to think about the fact that there are nameless, faceless legions of people trying to do the same thing you’re doing and trying to outsmart the market. To do it, you’ve got to be better, smarter, more intense, etc.

“I would not think that it could be done by any cerebral process — that it’s a matter of energy and intellect, and emotion and time. It’s a philosophy that not only applies to being a hedge fund manager, but applies to being at the top of any game.

“The difference, if any, is that with the [market] you have the great virtue of being measured every day, or every hour, or any time you press a button. And it’s that judgment that dominates. You can’t say ‘you know, I would have had a great year except for the fact that …’

“It’s all in the numbers and you have to live with that.”