Beating Decision Paralysis

Beating Decision Paralysis

Steve Jobs was known for many things — bringing Apple back from the brink, his infamous keynote presentations, his notoriously volatile temperament, his black turtlenecks…

In fact, in almost every single image I can find of Jobs (certainly in those taken since the end of the ‘90s in any case), he is wearing that iconic black turtleneck. Surely one of the most iconic entrepreneurs in history could afford more than one sweater?

Amazingly, Jobs wore the same jeans and black turtleneck every day for the same reason that Mark Zuckerberg wears a nondescript grey hoodie/t-shirt and ill-fitting jeans and Barack Obama wore pretty much the same dark suit every day in office. 

Basically, all of these very rich and successful men decided at some point in their life that making decisions on mundane things like what clothes they were going to wear each day was wasting valuable decision-making energy that could be used to design the next iPhone or steal all our data. The phenomenon they were trying to avoid is called decision fatigue and Zucks is even quoted as saying:

I really want to clear my life to make it so that I have to make as few decisions as possible about anything except how to best serve this community.”

So am I suggesting that we all clear out our wardrobes and start dressing like a real-life Bart Simpson?

You do you, but in my opinion, a lot of this falls under the umbrella of something I like to call ‘productivity porn’ — all those blogs, books, YouTube videos and courses that teach you how to squeeze every single drop of efficiency out of your day by making yourself more miserable. Besides, considering that I’ve been working from home for the past 15 months and have spent no time picking out my daily outfits, I haven’t noticed any increase in brain power at all. 

But maybe that says more about me than anything else.

In any case, although you probably don’t need to go to extremes to optimize your day, decision-making and, in particular, decision-paralysis, are things that investors do need to take seriously. There have been reams of studies conducted into the indecision people suffer when faced with too much choice, but my favorite example is a local burger restaurant here in Dublin that only gives people four choices of what they want to eat — a beef burger, a cheese-burger, a double beef burger, or a double cheese-burger. The entire menu can be printed on a business card and, in addition to the burgers actually being very nice, the lack of choice in what you can eat is actually quite comforting and a draw to the place. 

With an estimated 6,000 companies listed on the NYSE and the NASDAQ, the decision problem for investors is quite obvious. How do you decide between your Apples and Amazons? Your Teslas from your Teladocs? Your AMCs from your… scratch that.

 


Of course, this is the reason for MyWallSt existing in the first place. Our shortlist is designed to cut through the noise and clutter of the market and bring you a relatively concise list of great companies to invest in. But if you’re a beginner investor, this might still be a little too big to make that very first move, so here are some tips to avoid getting stuck at the menu stage of things and just order the big tasty cheeseburger:

  • Buy what you believe in. Invest in a company you understand. Bonus points if you’re already a customer of the company, it means you understand it more than you think.

  • On the flip side, never invest in a company you don’t understand. Don’t get distracted by a hot new biotech startup or the latest company building edge-computing software for whatever it is you do with edge-computing software. If you invest in a tip off Twitter or Reddit, you’re buying into a share price rather than a company, and that will never end well.

  • The first investment you make might very well be the worst one you make. This is because you are the most inexperienced version of an investor you will ever be. The good news is that, with this investment, you’ve instantly just become more experienced and will approach your next investment with a level of insight you didn’t have previously.

  • Dollar-cost average. Edge your way into positions, don’t commit significant amounts of money to the mercy of the market all at once. This means that your decision won’t carry as much financial weight. 

  • Just do it (please don’t sue me Nike). Don’t wait for a stock to hit some notional price. Get some skin in the game and go long-term.

  • If you’re a brand new investor looking for some make sure to check out our brand new Get Started: The Beginner’s Guide to the Stock Market podcast.  

And, if you do find that wearing a turtleneck every day helps you too, go for it. Be careful though, it might help you make decisions quickly, but they won’t always be the best ones:

JamesJames

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