I won’t spoil the premise behind Ender’s Game for those who haven’t read it. (BTW, if you haven’t, go and read it now. I’ll wait for your return.)
I’ve often wondered the extent to which people’s judgment is influenced by the significance of the task concerned. I was recently prompted to think about it on Friday, when my brother was relaying his recent success story in golf betting, having converted £25 into around £450.
At the time, he was checking his phone for the progress of Jeev Milkha Singh and Mike Weir. The former missed the cut at two shots over par; the latter made the cut at one under, finishing the event 46th at six over par. Maybe the £450 has gone down a little.
(As an aside, search Google UK for US Masters Result, and the first result up is BBC News’ 2000 round-up. Not what I was looking for.)
If he’d had foresight, then he should have put £25,000 in the pot and converted it into £450,000. But had he done so, would he have been so bold with his betting. Probably not. The significant amount of money would likely have changed his judgment, bringing about less of an appetite for risk.
Likewise, when Kenny Perry teed off on the 17th, he knew he was two shots clear of the field, and was favourite to become the oldest ever winner of a major. Two bogeys and a woeful display during the two play-off holes prevented that record from being broken. In his previous three rounds, he’d parred the 17th on all occasions, and taken two pars and a birdie on the 18th. In the play-off, he secured a par on the repeated 18th, but on the subsequent tenth, he hit a bogey, having hit two pars and two birdies on the regulation plays of the hole. Had he not been aware of the significance of the shots he was playing in his last two regulation holes and the two play-off holes, perhaps his game would not have deserted him.
In the latter example, it’s impossible to divorce oneself from the situation. But where betting is involved, perhaps it’s not. And the same could be true for the gambling that constitutes the stock market.
If my brother supported his bets of choice with his confidence in their being realised, then someone else could place the bets on his behalf, deciding based on the confidence how much to pledge.
Similarly, stock market traders could divorce themselves from the financials of a trade by giving similar confidence and allowing their companies to trade (or opt not to) based on this judgment. Or does the financial implication for traders make them sharper?
On a somewhat related point, I saw an episode of Million Dollar Traders some time ago. A point of advice from the “professional” that struck me as ludicrous was that the traders should always have their money working for them. You should either be banking on the stocks going up, or shorting them and banking on them going down. At all times.
Perhaps this mentality contributed towards the collapse of the financial markets at the tail-end of 2008. Ironically, the advice was being given around the time of the major banks’ stocks yo-yoing on news of bad debts and government bail-outs. Surely a more sensible strategy at the time would have been to admit that you knew not what the fuck the markets were going to throw at you, and to leave the capital unexposed until such time as the uncertainty abated. It’s just a thought.