It's The Norm To Conform

In 1951, Solomon Asch set out to conduct a more definitive study of conformity, which psychologists had only looked at for about 19 years.

His classic experiment showed that we are much more persuadable than we’d like to believe, with 32% of the participants agreeing with their peers on a clearly incorrect answer and 75% conforming at least once over the 12 critical trials.

When asked why they gave the obviously incorrect answer, participants said they went along with the group out of fear of being ridiculed or called “peculiar,” while some stated they believed the group.

Why does this matter? A few reasons:

1. It impacts how you lead. Do you create an atmosphere where nonconformists are comfortable speaking up and speaking out or do you only want “Yes men” because your fragile ego and tiny brain can’t handle staff with backbones and deductive reasoning?
2. It impacts how you vote. Our nation is a shit show right now because we continue voting for “the lesser of two evils,” and we drum out of town good candidates because we disagree with them on one minor cause, but we comfort ourselves by joining like-minded groups online who reaffirm our shit-for-brains actions.
3. It impacts how you invest. There’s a concept called survivorship bias that tells you things like, “The (S&P 500) index has returned a historic annualized average return of around 10.5% since its 1957 inception through 2021.” (Investopedia) However, according to Factset.com, the companies on the S&P 500 are rebalanced four times a year, and the committee that makes these changes may choose to change them more often.

And the real kicker is that just because someone works in the White House or on Wall Street, went to an Ivy League school, or became a Green Navy Beret Para SEAL Ranger Kung Fu Master doesn’t mean they are immune from this type of groupthink via peer pressure.

Case in point, today’s real estate market.

Goo-roos like Dave Ramsey tell you that now is a great time to buy a home.

Other real estate professionals are waxing poetically about their wonderful home investment back when dinosaurs roamed the earth and interest rates were 8%, 10%, or even 18% as “proof” of why now is a great time to buy.

Meanwhile, a National Association of Home Builders survey shows sentiment has fallen to 55, a 12-point drop that is the second-largest one-month decrease in its 37-year history. (A year ago, it was at 80. Oh yeah. The only reason this wasn’t the largest monthly drop ever is that the world lost its mind in 2020 when the “experts” shut down the world and the mark took a 42-point nosedive to 30, then YoYo’d back to an all-time high of 90 just seven months later because…of peer pressure…and people waking up that the government is not your friend…but I digress.)

The trend is your friend…until it ain’t! Barely a week ago, “experts” predicted “just” 8.8% inflation: it came in at 9.1%. Just eight months ago, “experts” predicted Bitcoin at $100k by the end of the year: it’s hovering around $20k now. Now real estate “experts” are predicting higher home prices five years from now. (Are you detecting a trend?)

There’s an old adage in poker that if you don’t know who the chump is at the table, it’s you.

Make sure you’re not succumbing to stinkin’ thinkin’ in any area of your life, thereby allowing yourself to be the chump.

Surround yourself with people smarter and better than you to help inoculate yourself from the idiocracy of the world…but still come to your own conclusions.

Your legacy and your family’s well-being depend on it.

Market like you mean it.

Now go sell something.