Latest / Success Story with Scott Clary / Lessons - The Hidden Psychology of Wall Street | Denise Shull - Performance Coach to Hedge Funds

Transcript

Lessons - The Hidden Psychology of Wall Street | Denise Shull - Performance Coach to Hedge Funds · Success Story with Scott Clary

• 0:00
  In this lessons episode, explore how emotion-shaped decision-making and why ignoring them leads to flawed outcomes.
• 0:05
  Discover how fear and embarrassment quietly drive bias and ego in high-stakes choices.
• 0:10
  Understand why identifying what is being felt matters more than suppressing it,
• 0:14
  and uncover how acknowledging emotional signals early improves judgment, adaptability, and long-term results.
• 0:20
  But a lot of people probably were so odd by the work that you're doing because most people don't
• 0:34
  even know where to begin looking like. The decision-making process is sort of taken for granted.
• 0:40
  I think that in our day to day we don't try and delve into why we make the decisions that we make.
• 0:46
  It's a scary concept because when you unpack that, then all of a sudden,
• 0:52
  if you unpack the first bit of it and you understand that maybe why your decision-making process is flawed,
• 0:58
  then that leads to the question, well, then how do I make a good decision?
• 1:02
  And that's a question I have for you. So what do you recommend people after you
• 1:06
  if after you sort of show them the light, so to speak, and they start to understand that every
• 1:12
  decision that they make has all these biases attached to that decision, then how do they go through
• 1:18
  life? Yeah, so the question to learn to ask yourself and the answer accurately, those are two
• 1:26
  seven tasks, but is what am I feeling and why am I feeling it? And you want the answers to be
• 1:34
  the truth. Now, that's easier said than done. A lot of my coaching is like helping people get
• 1:41
  the accurate answer, because what they think they're feeling or why they think they're feeling
• 1:45
  is generally not what it is. This will, by the way, circumvent the cognitive biases.
• 1:53
  So a thing in the behavioral findings, cognitive bias, you know, confirmation bias,
• 1:58
  recency bias, the literature is Wig-Add, your human brain is biased, and there's nothing you can do
• 2:05
  about it, you know, and you're stuck with that. It's not true. It's based on the wrong model of the
• 2:13
  brain. It's based, I mean, it's called behavioral finance or cognitive behavior, because it's like
• 2:18
  thinking and doing, you know, thinking and behaving, you know, like the juices in the family.
• 2:25
  The cognitive behavior world doesn't get that. So like confirmation bias, when you see the thing
• 2:31
  you want to see. Well, everyone talks about how difficult it is to circumvent that or to a verdict.
• 2:38
  Well, all you do is like realize like what's that feeling? And what that feeling is usually like,
• 2:44
  if you, and this happens all the time with hedge fund managers, I mean, I had a relatively
• 2:48
  new client yesterday talking about like he went to his investment committee and he stated like his
• 2:54
  viewpoint and he's in commodities, you know. And so this is my viewpoint and how commodities
• 2:58
  are going to play out. And then he said, you know, if he starts to look like he's wrong,
• 3:04
  you know, he doesn't really want to go back to the investment committee and say, you know,
• 3:07
  on the second thought, never mind, I was wrong. Because why? Because it's embarrassing, you know,
• 3:13
  he's afraid he'll react negatively. So people behave in what looks like confirmation bias.
• 3:22
  I, they only see the data that supports whatever their viewpoint are against.
• 3:29
  Not because they're just programmed to do that. Because at the moments that they're seeing
• 3:36
  conflicting data, they're predicting this future emotion of, you know, that's unsafe, right?
• 3:42
  They're going to be embarrassed. Their boss is going to be mad at them. And they're basically trying
• 3:47
  to avoid that scenario. Well, the truth is if you face that scenario earlier in your process,
• 3:56
  whatever, the chances that you end up with the embarrassment go down. Because like when you,
• 4:04
  you've stated some, you know, prediction to your firm, whatever it is, I don't care, sales,
• 4:09
  investment, I don't care whatever it is. And you start to get information that's not working
• 4:15
  out the way you thought. Well, the sooner you get that and sooner you change course and address,
• 4:20
  you know, the better the odds of a better outcome, right? But if you delay, because you don't
• 4:26
  really realize you're predicting this future embarrassment, the outcomes probably worse.
• 4:33
  But like people have no cognitive ability to override that underlying prediction of embarrassment.
• 4:42
  Except to use their thinking to address, wait a minute, I'm really worried. You know, I don't
• 4:48
  want to try to be wrong, because I have sounded like an idiot that's going to be embarrassing and
• 4:52
  they've already been losing my job, just because people have tenancy catastrophes. But the truth is
• 4:57
  the earlier and incidentally, you can face, you know, alternative data that shows your prediction
• 5:04
  may not be turning up. Like chances are you can course correct earlier. But it requires knowing
• 5:11
  that you're feeling like you're predicting this future problem. That's going to give you,
• 5:18
  it gives you the spades to navigate. That you don't have, if you're just like torturing the data
• 5:25
  to prove that your original prediction is correct. While you're crossing your fingers and hoping
• 5:30
  and experiencing all the same anxiety, oh my god, I hope I try to do that. No.
• 5:35
  Well, when you say, when you when you lay it out, it actually makes a lot of sense. But
• 5:40
  I guess the issue that we're sort of uncovering is a little bit of like you mentioned,
• 5:44
  like we have biases, but after a certain point, there's ego involved. You just don't want to be
• 5:50
  embarrassed. So when you speak to people that operate at this level, the things that are fears,
• 5:58
  are they valid fears? Like in my opinion, they would be valid fears. Like if I make a sales prediction
• 6:03
  and it's totally off at any point when I bring that up with my board, they're probably going to have
• 6:12
  some level of there's going to be some thought like as to whether or not I'm competent. That's
• 6:18
  something that I feel like if you walk through the scenario, it's like completely logical,
• 6:26
  right? Like so this is the thing. Like an emotion, particularly like fear, has a totally bad
• 6:33
  wrap, right? Like you're not supposed to feel fear or give into fear or whatever. And it's not
• 6:42
  true. Like if it weren't for fear, there's a lot of accomplishments we all have that leave
• 6:50
  within to accomplish. Like who would really graduate from college if it weren't for fear?
• 6:55
  You do all this other stuff, you know, but you're afraid of the outcome of only partying and not
• 7:03
  getting the actual degree. Like so you do the work. You know, you really do the work just because
• 7:09
  you want it to work, right? Like you do the work because you're afraid of what'll happen. Like in
• 7:13
  their pure form, fear, frustration, disappointment, have information for us. So we've got two problems.
• 7:22
  We've been told not to recognize any of them and we've certainly been told not to focus on this
• 7:27
  so-called negative ones. When they're in their pure form, they're actually trying to help us.
• 7:32
  They're trying to keep us safe trying to help us get what we want. Like frustration is something's
• 7:37
  going wrong. Take extreme form of frustration. Well, extreme form would be like rage, but let's take
• 7:43
  an interim anger. Why do people get angry? Because they feel as if something's wrong. So at sometimes
• 7:53
  it is and sometimes it's their own personal expectation and that's like the next layer of this,
• 8:00
  what part is real and what part is your own personality, but we can come back to that. Like at its
• 8:04
  core, like if you're angry about something, your psyche is telling you that something isn't the way
• 8:09
  you think it should be. And maybe you should try to research yourself and find out what that is.
• 8:13
  This is supposed to say I shouldn't be angry. Because what the research actually shows is you
• 8:18
  suppress those emotions, particularly the negative ones. The voice in your psyche gets louder,
• 8:24
  so they become more disruptive, not less disruptive. And research actually shows this if you suppress it.
• 8:31
  Yes. I mean, there's, you know, I mean, the truth is, you know, in psychology research,
• 8:38
  you can probably find research to show whatever you want. That's fair, but yes.
• 8:44
  But there's a good body of research that shows that understanding your negative emotions,
• 8:50
  acknowledging them, leads to better outcomes. Particularly, but matters to you. Like there was,
• 8:58
  when I first heard of this research, it was probably 2008. And I met this woman who at that time
• 9:05
  was like a postdoc PhD, and she had done this research project to show that reframing, you know,
• 9:14
  situations was a net positive. And to her credit, her research showed that wasn't true.
• 9:22
  That if you reframed, in other words, you know, took a positive viewpoint or something on
• 9:28
  something that didn't matter that much to you, it worked. But if you did it on something that
• 9:34
  actually really mattered to you, your anxiety levels went up, and it didn't work. Why? Because your
• 9:42
  psychies, like your psyche really is trying to keep you safe. And that kind of includes more
• 9:49
  than safe. Like it includes thrive. So if you have some unpleasant feeling, it's like like,
• 9:57
  you know, all of a sudden, you feel this horrible pain in your leg, and you look down, and you know,
• 10:03
  you've got to gash in your chin for whatever reason, you know. Like what's the point? The point
• 10:09
  of the physical pain is like so that you do something. Why is it any different with emotional pain?
• 10:16
  Thanks for tuning in. If you found this valuable, don't forget to hit that subscribe button so
• 10:20
  you never miss an episode. And if you want to dive deeper into this conversation, check out the
• 10:25
  links in the description to watch the full episode. See you in the next one.