The Psychology of Money - An Investment Manager\'s Guide to Beating the Market

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gibberish. He said that in all his years, only a couple of analysts
ever stopped him to ask “if the emperor had any clothes.”
The technique that I use to get around the “emperor’s clothes”
phenomenon is something I call the Candid Camera technique.
Remember Alan Funt on Candid Camera? A classic setup involved
a person in a waiting room in which the pictures on the walls were
moving slightly. Most of the participants noticed the movement
and then, being human, buried their heads in their magazines. Ignore
it. Pretend it isn’t happening. It’s always easier to do nothing, es-
pecially when you think that no one is watching.
When placed in a situation like this, we all like to think that we
would do the courageous, mature thing. We would calmly point
out to the office manager that something weird is going on with
the pictures: namely, they seem to be shifting on the walls. Right.
Sure. The truth is that we’d do what every other self-conscious per-
son would do: get really interested in a magazine and hunker down.
Trying to look good and save face, aside from being an enor-
mous energy drain, can be a huge impediment to creativity.
How do we overcome this all-too-human tendency? Remem-
ber our goal here: We’re trying to find a way to avoid being buf-
faloed like the analysts in the story were by the mischievous CFO.
What sort of mental technique could we employ to call his bluff?
My technique is to reframe the situation. I imagine that I am
the subject (victim?) of a Candid Camera prank (or a prankster
CFO). Everything changes when I ask myself, “If this were a setup,
being filmed as a practical joke, how would I feel about it when I
viewed it later? Would I feel foolish for not speaking up? Would
I feel silly for not stating the obvious?” When I reframe it in this
way, it helps me avoid the emperor’s-clothes syndrome.
I had occasion to use this technique at a conference in which
a speaker was presenting his outlook for Internet stocks. He placed
a transparency on the overhead projector and began talking about
the outlook for the company—according to the slide, eToys. A
few minutes into his comments, I suspected that we were looking

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