Susan Cain in her famous book “Quiet: The Power of Introverts in a World That Can't Stop Talking” explains that introverts are great thinkers and arrive at their assessment slowly.
Interestingly a lot of scientists and deep thinkers are part of this ‘introvert’ group. They arrive at their decisions slowly.
A lot of deep thinking is a gradual process, but most people are not trained to think deeply and rationally.
Ancient humans were trained to react instinctively because there was an upside to that reaction.
Imagine they heard a noise from the bushes in a thick forest, the most logical approach was to just run, that’s exactly what ancient humans did. This reaction helped them save their lives. The problem is that we tend to act in the same way even though we are not in the forest.
We want to act so that we don’t reflect and think more about the issue at hand. It’s just easy.
We tend to avoid any doubt by acting fast but lose on the quality of our decisions. Daniel Kahneman explains this as system 1 versus system 2 thinking.
We are trained to work with system 1 of our mind to arrive at decisions.
These days a lot of people have FOMO for real estate. The pricing of real estate projects is at a bizarre level. System 1 says ‘You are losing out, if you don’t act now’. This makes us arrive at a buying decision quickly without thinking too much.
If you force yourself on system 2 i.e. if the price has increased by 100% in the last 3 years and if real estate apartment growth is maximum capped at the inflation in the economy, say 6-7% p.a., isn’t the current price already reflecting future growth?
Maybe in the next 5-6 years, the capital growth may be flat as a best-case scenario. The worst case would be a decline from the current price.
One sign of a leader is quick decision-making. Process-oriented decision-making is often quick.
In 2008, Warren Buffet gave a cheque to Goldman Sachs for $10 billion. The decision was quick, but he had studied the company and management for years and he structured the deal in his favour.
This deal is claimed as one of the finest investment decisions in the world. “Fixed interest rate and later an option to convert preferred equity into common equity.”
As far as the process is defined and then refined regularly, arriving at a quick decision is easy. The quality of decisions will also remain high.
The trick is to be aware of which system you are operating. System 1 or System 2.
Once the decision is made, any new information should be incorporated. This means you should constantly be sceptical about where you stand today given the new set of information.
“When the facts change, I change my mind. What do you do, sir?” - John Maynard Keynes