Appreciating Differences - Jack Falt - Ottawa area, Ontario, Canada

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Book Review by Jack Falt

Ware, Jim, The Psychology of Money: An Investment Manager’s Guide to Beating the Market, New York, NY: John Wiley & Sons, Inc., 2001, ISBN 0-471-39074-7, 258 pp.

This book is meant to move money managers out of their old habits by introducing creative thinking into their repertoires. The author is a chartered financial analyst who is also trained to facilitate Jung/Myers theory programs. As someone who has seen 25% of my mutual funds investment disappear in the last year and a half, it would be hopeful to know that there was someone out there who had a clue how to deal with the current bear market. The fact that the book was written in 2001 before the market took it downward turn does give one pause. I would like to know how he fared in the last year and a half. You are only as good as your latest record!

Be that as it may, this book is quite an imaginative book. For the novice investor some of it will be a bit hard to follow, but the way the author uses the MBTI® instrument and offers help for the bottom-line STJs, it is very informative. While you may not be dealing with investment managers, you may have business clients that are cast from the same mould, and you might find some useful tips here to help shake up their thinking.

As with so many books these days, there is the reference to the constant struggle with accelerating change. Those who are not quick to react get trampled under foot. That is discouraging for NFs who want us all to just get along and believe there is enough for everyone. We just hope that there a few SJs who will take pity on us and not let us starve.

The author starts off with the concept of temperament and animal metaphors using the dolphin (NF), owl (NT), fox (SP), but uses lions instead of beavers (SJ). The lion is king and likes to follow the tried and true methods that have worked since time began. The book also describes the eight preferences but the author has a little different twist on each of them as they relate to the investment field.

Every investment manager likes to think that he or she has found the formula that will yield the highest profits. Unfortunately, these formulas don’t stand up to scrutiny. No one has yet to find the perfect answer. In today’s market there is a need for diversified thinking which is what the STJs are least good at. Creative thinking is need to be added to the mix to be able to react to the constant change. This author sees creativity as arising from the intuitive function (yes, I know that sensing can be creative too!). The author uses the Myers-Briggs framework to analyse the behaviour of investment firms and suggest some techniques that might lead to more success in the markets.

There is a strong need for cooperation within firms. The competitive atmosphere is so strongly ingrained within companies that it is difficult for individuals to cooperate even if it is for the company’s and the individual’s benefit. A team approach is needed and there needs to be a balance of types within a team for it to be effective. Most teams that do exist within companies tend to be type-alike groups. They all think the same way so they are not challenged to think out of the box.

A good portion of the book describes how the author works with groups to change their ossified thinking. He uses the acronym ACROBAT to describe the process he uses with clients. A - Assume nothing; C - Change gears; R - Risk discomfort; O - Omit either/or thinking; B - Borrow from other disciplines; A - Ask for help; and T - Tools and techniques. As a facilitator the author helps create a safe space so that people can be open to one another. It is only through openness that creativity can occur. If everyone is protecting the status quo, no one is going to risk suggesting a new idea if it means being open to ridicule.

This is the same old problem that exists in all institutions and groups. To meet the changing situation people have to be open to new ideas. It has to be safe for people to volunteer ideas for consideration. So whether it is an investment institution or within a family, people need to know that their ideas are welcomed and that holding them up for examination does not imply that the person who suggested the idea is being judged.

The author presents his ideas with humour and personal candour. The book is readable and interesting and even if you are not particularly interested in the investment field, there are ideas and group exercises you may find useful. It is certainly a useful book to have if an investment company comes knocking at your door to facilitate a workshop for them!

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List of Articles & Reviews by Jack Falt