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

never want to reach closure. Though annoying to the judging types,

this dynamic can be healthy and stimulate good decision making.

The goal is to create an environment characterized by what

O’Donnell calls “creative conflict.” He writes:

The problem with conflict is that it can easily be mistaken for

strife. Creative conflict is a facilitator of good decision making,

but strife is cognitively distressing, which lowers the odds that

thinking will be accurate. Conflict focuses on issues; strife, on

personalities, whether overtly or sub rosa. The manager needs to

be comfortable with conflict and willing to let it continue with-

out trying to bring it to a premature resolution [Managing In-

vestment Firms: People and Culture, AIMR Publications 1996].

Again, the “judging” team leader may want to do just that: reach

resolution too quickly. Similarly, the “feeling” team captain may

be uncomfortable with any conflict, given a preference for harmony

and friendship. Orchestrating this team conflict constructively is

the leader’s job, and knowledge of personality styles is helpful.

Consider the three critical elements of investment decision

making that were identified in Brinson’s remark: gathering details

(sensing), analyzing (intuition), and deciding (thinking). Recogniz-

ing, understanding, and leveraging these talents in a meeting is very

powerful. In a typical investment meeting, the conversation will

start in one of two places, usually referred to as “top-down” or

“bottom-up.” The top-down approach starts with the big picture:

the economy, interest rates, world markets, exchange rates, major

news headlines. Investors with a preference for intuition thrive in

this environment. They like talking about concepts and patterns

and trading what-if scenarios. The sensors will get bored quickly.

To them, theory is useless without good, hard facts.

The sensors would prefer to start the discussion from the bot-

tom up. Let’s begin with some company information, some actual

holdings, winning and losing stocks, portfolio performance. They

will give lots of details about holdings, with complete backup in

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