Dangers of Being Docile
Manish Gvalani, CFA
Leading an A-Team of Wealth Advisors and building an Unbreakable Future. I also publish a weekly newsletter covering longevity, investing, and human psychology.
“The horrors that we have seen, the still greater horrors we shall presently see, are not signs that rebels, insubordinate, untamable men are increasing in number throughout the world, but rather that there is a constant increase in the number of obedient, docile men.”—George Bernanos
There are two words in the quote above that I would like to elaborate upon - docile and obedient. Let’s understand their definitions first -?
Docile is defined as ‘submissive’
Obedient is defined as ‘complying or willing to comply with an order or request; submissive to another's authority’
What all comes to your mind when you think of such an individual?
?If words like this come to mind, you might think of these people as ready to accept instructions, act on blind belief, and display herd mentality. They may even empty their wallets to purchase goods and services of those they look up to or are inspired by. They might be hoping and praying for their decision to be that one decision that creates lifelong memories or turns their life around.?
“When we face uncertainty, we often manufacture excuses for not getting started. I’m not qualified. I don’t feel ready. I don’t have the right contacts. I don’t have enough time.” - Ozan Varol?
Uncertainty mixed with limiting beliefs leads to unquestioned submission turning millions of people into addictive consumers of ideologies and get-rich-quick schemes.?
You will see more people glue themselves to sidewalks and fewer who put their heads down and engineer solutions. You will see more people gambling in stock markets using derivatives and fewer who learn from the greats and invest wisely. You will see more trying hard to get rich yesterday and fewer playing the long game and taking it slow.?
We too could be victims of this tendency and hence must understand the umpteen forces acting upon us to restrain our curiosity, to not ask questions, and to not dig deeper before making decisions.?
Illusions of Invulnerability
It leads members to be overly optimistic in risk-taking. E.g. Online trainers who teach people to invest in stock markets while making claims that their systems are highly effective in generating profits for the students. Your hope to get rich quickly or your greed for more may make you bite into this grand promise of an online tutor, but watch out for the many snake oil salesmen that await your entry to their land of unlimited fortunes (for them alone at the cost of your time and money).?
Eg. Ghanshyam Tech on YouTube has 1.4 million followers and was recently questioned on social media for putting up fake training videos and showing only profitable trades in a particular account and hiding losses from other accounts.?
Unquestioned beliefs
It leads members to ignore possible moral problems and consequences. E.g. Japan’s judicial system has been known for its brutality and its success rate at generating convictions. It’s only after Carlos Ghosn’s escape from Japan and the umpteen interviews that he has done that we are getting to understand how the system works and how unfair and inhuman it could be for anyone imprisoned in those closed walls. Netflix has a fantastic documentary on this escape and I highly recommend the same.
Rationalizing
It prevents members from reconsidering their beliefs, therefore ignoring warning signs. E.g. Many people go bankrupt on account of leverage that was taken to pursue things they didn’t have and for things they didn’t need, while risking things they did have and did need. This credit-obsessed culture is rationalized by borrowers by thinking that “everyone does it, so why not me” or “you live once, why not live it king size” or some version of this thought process.?
I have sailed in this boat before and it hurt my finances forcing my hand into making poor decisions. Today, I am very skeptical of taking anything on loan or EMI, except for a home for residential purposes.?
Stereotyping
it leads members to ignore or demonize members who may oppose or challenge ideas. E.g. The entire energy industry has been vilified by the green activists who hold very strong views on electrifying the whole world in two years from now. I guess they too have seen some YouTube video that promises green carpeting the planet using some utopian tech that is yet to be invented.?
Even the constant questioning of the Tech industry’s titans reeks of the same stereotyping that implies ‘Big Tech is Bad’. It’s Big Tech that has added to labor productivity worldwide, sustained profit margins of S&P for the last two decades, generated immense employment globally and shaped the world that we live in. But they are still evil because they generate huge profits and keep innovating. This is regulation’s way to get their grip on every industry they can, just like they have done with health care and education.?
I loved the talk that Bill Gurley gave at the All In Summit and his talk was titled 2851 miles. This is the distance from Washington to Silicon Valley and he firmly believes that Silicon Valley thrived only because it is that far from Washington, more than any other reason. I urge you to watch this talk on YouTube. It’s eye-opening in so many ways, especially about the dangers of over-regulation.
Illusions of Unanimity
It leads members to believe that everyone is in agreement and feels the same way. E.g. Blockbuster & Kodak - these are just some of the giants of yesteryears that have turned into just memories today for us. I still remember my 1st Nokia Communicator and I loved the phone (I’m feeling nostalgic now??).
But the surprising element in all these stories is the unanimous decision-making that led to their downfall. Blockbuster’s board was unanimous in their decision to stick to brick and mortar, delaying their entry into online streaming. This was a windfall for Netflix and Reid Hastings, and they hit a home run with this turn of events.?
Kodak did not want to jeopardize their existing business that relied on films and was extremely profitable. Their short-sightedness led them to ignore digital photography, which was invented by their own engineers i.e. Steve Sasson and Bryce Bayer.? Their unanimous decision to pursue conventional photography was the ultimate death knell for the company’s future.?
Anurag Sharma makes a profound statement in his ‘Book of Value’ - “Of course, there is choice in every gamble and gamble in every choice; but it matters a great deal which of the two is dominant in investing endeavors.”
With every choice you make, you could either gamble thoughtlessly and hope the dice lands in your favor. Or you could think through that choice, and make a call that has higher odds for success, if not a promise of certainty. And you will have to make choices at a rate of 10 every minute. Let me share a few examples -?
You will need to develop the muscle to think about these choices in a way that provides you with a generous payoff and with high odds. Without this ability to weigh your choices in terms of payoffs and probabilities, you will give in, turning yourself docile and submissive. Without this muscle, you will say YES more often, taking on more than you need, taking on more than you can afford.?
You don’t have to.?
You could rather pause and spend time to ??
This may look like you are going slower, but it will ensure that you are heading in the right direction. What’s the point of moving fast, but in the wrong direction? What’s the point of being first in a race that didn’t take you where you aspired to go?
What’s the point?
Investor, operator, thinker
1 年The quote from Bernanos reminds me of another by Oscar Wilde. Disobedience, in the eyes of any one who has read history, is man's original virtue. It is through disobedience that progress has been made, through disobedience and through rebellion.