Feb

6

[See Vic's Review of Mathew Hayward's Book, Below] 

 During the 1980s I worked as an investment banker in Australia at what was then and still is the nation’s strongest franchise (Potter Partners now UBS); it was the first choice for finance graduates and corporate clients. Corporate raiders made investment banking a very hot business; and we were faced with the choice between defending Australia’s leading company, BHP, from Robert Holmes a Court, or dumping BHP. As events transpired, we dumped BHP, Holmes a Court could not get control of BHP and our other corporate clients started leaving us. On another deal we underwrote an equity offering, accepted the client’s terms not to have an ‘out’ provision and were left holding stock as the market crashed in 1987. On both deals we had no doubt that we were right; after all we were the smartest people in the room.Little did I know at the time that hubris is man’s cardinal sin, that it is latent in all of us and that it needs to be managed.

In 1992 I started a PHD at Columbia to explore all of that. Contrary to Vic’s assertion [below], the book is not based on anecdotal evidence. It is based on behavioral decision theory which has spawned the field of behavioral finance, in which overconfidence in decision making is found to be the most important and pervasive bias in finance and business. The factors that cause hubris in the work place and beyond, those that Vic mentions in his review, are all based on large sample empirical evidence not a small number of anecdotal examples.Ego Check is a checklist-based approach to help you manage your ego, both personally and professionally. It will stand the test of time because it is based on sound theory and large sample research with senior executives, traders and senior executives.I invite you to visit me at ego-check.com . The knowledge contained in the book would have saved me (and Vic probably) a fortune if I had adhered to it throughout my career. In my experience, it’s a lot more fun to undertake the self improvement that the book points to. On the other hand, if you already have all the answers, this book is probably not for you.


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